Spring is almost here and that means it is baseball season. That also means it’s time to renew my hatred for the New York Yankees. I don’t hate the Yankees just because they always win and their obnoxious, bandwagon riding fans, I hate them for how they win and in doing so they are ruining baseball.
You’re probably wondering what this has to do with economics, so I’ll get right to it. The Yankees, as Major League Baseball’s most popular team, bring in the most revenue through ticket sales, merchandise sales, television contracts and so on. This high demand to see their games and buy their apparel allows them to raise prices and bring in higher revenue then all of the other 29 teams in baseball. Last year the Yankees had a disappointing season and seeing the Tampa Bay Rays make the World Series apparently caused the Yankees to get so enraged that they needed to spend money like never before this off-season. This is why I hate the Yankees; they spent 441 million in total contracts, while the other 13 American League teams spent 176 million combined. The Yankees have a monopoly on the best players available to sign. Other teams cannot compete with the money the Yankees have to give to the best players. So when a really good player’s contract is up with a small market team like the Indians or Reds, they decide to not re-sign, instead opting to get paid outrageously by the Yankees. One could argue that the New York Mets and Boston Red Sox can spend as much the Yankees, making it an oligopoly instead of a monopoly, but none of those teams spent money like the Yankees did this off-season.
My solution is that Major League Baseball should impose a salary cap, in other words, a ceiling on the amount of money a team can spend on its players. All of the revenue brought in by teams would be shared equally by the teams. Additionally, baseball should introduce a price floor, a minimum amount of money a team can spend on a roster. Last year the Yankees spent 207 million on their roster, while the Florida Marlins spent 22 million on their team. Alex Rodriguez made more money last year than the entire Marlins team. As a Reds fan and a fan of baseball I’m sick of seeing all of the best players leave their former teams for the Yankees.
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As a devout Yankees fan (sorry), I've always said "Yankees: best baseball money can buy." But I really never thought of it in ACTUAL economic terms. Probably because 1.) I don't know THAT much about baseball and 2.) I never stopped to think about where exactly the revenue was coming from (like as you said "through ticket sales, merchandise sales, television contracts and so on").
ReplyDeleteIt does seem that The Yankees have made some kind of monopoly except that I thought a monopoly could only exist when there was a lack of available substitues. The other MLB teams DO serve as substitutes... popular opinion aside.
The salary cap seems like a good idea. It certainly exists in the NHL, the NBA and the NFL. However, MLB does have a "luxary tax" that is imposed on teams whose total yearly payroll exceeds a certain figure. It might not be the same, but at least it's something? Also, I think it's important to note that even though the Yankees spent $207 million on their roster last year, only twice in the past 30 years has a team won the World Series with a $100+ million payroll... and neither time was it the Yankees.
I enjoy watching the American past-time, but not when it is the Yankees. I think that it is an outrage that baseball is putting so much time and money into steroid testing, which is so worth it BARRY BONDS, that they are ignoring this concept of a ceiling.
ReplyDeleteThe ceiling would not only allow for other teams to have star players, thus boosting their total revenue, it would increase the quality of the game. Team loyalty, or branding in terms of a consumer market, is huge in today's economic state and with the yankees being able to spend $200+ million a year on salary makes me wonder why they aren't doing more with their money.
New York is all about the glitz and glam of big things, but they really need to stop being over done. A ceiling is needed for the mere fact that others team have to be able to make a profit and allow star players the option to stay with the team that made them a star.