What email address or phone number would you like to use to sign in to Docs.com?
If you already have an account that you use with Office or other Microsoft services, enter it here.
Or sign in with:
Signing in allows you to download and like content, and it provides the authors analytical data about your interactions with their content.
Embed code for: Research Paper
Select a size
Senior Research Paper
29 September 2016
Major League Baseball’s Influence on the United States Economy
Major League Baseball (MLB) positively impacts the United States economy through financial stimulation and by giving the population a reason to spend their money on goods and services. There are many different aspects that go into the MLB in order to make it run as a business, and some of these aspects can be looked at both positively and negatively.
Each Major League Baseball team is it’s own company, and the goal of all companies is to make money. Each team can be purchased or sold at their rated value. According The Business of Baseball, a website that lists the MLB rankings on finances, “the New York Yankees is the highest ranked and priced team in the MLB and has a five hundred and sixteen million dollar value in revenue and a thirteen million dollar operating income value” (The Business of Baseball 1). The revenue brought in by each time is taxed and every employee has to be paid, so the money is flowing back into the economy, thus increasing it’s size.
The Baseball “market” is not actually just one market, there are many different sub-markets that play into the overall system of spending money. The prices in one market affects how one team will make decisions in another, and that will affect all the other team's’ decisions. According to Dave Cameron, “there are six primary markets, and those are the offseason free agent market, the offseason trade market, the during season trade market, the
contract extension market, the amatuer acquisiton market, and the arbitration market” (10 Lessons I Learned About the Baseball Economy 1). The two offseason markets run interchangeably, and the prices in one can cause a team to jump to the other. When a team is unsatisfied with the offseason market offers, it can hold that money until either the during season trade market, or by extending someone’s contract. This all comes into play on how much the ballplayer’s salaries are worth and if they’re in a batting slump.
Each MLB player has it’s own individual salary, which costs each franchise a large sum of its income. A chart from USA today shows that “Clayton Kershaw from the Los Angeles Dodgers salary is $33,000,000 per season” (MLB Salaries- MLB Baseball 1). Zach Greinke from the Arizona Diamondbacks is paid $31,799,030 being the second highest paid player in the MLB. The salaries of each player is accounted in the Gross Domestic Product (GDP) per capita each year, and when GDP increases that expands the economy. This can also give a false sense of having a higher GDP and larger economy. Because the majority of the population does not make nearly as much per year, the Major League players drastically shifts the average GDP per capita. Even though there is a false sense of an overall higher GDP, these ballplayers are still taxed and spend their money, thus circulating it back into the economy.
Every Major League team owns a Minor League team, and each Minor League team brings in a large sum of income as well. The MLB pays the players and coaches, so the Minor team makes profit from merchandise and tickets to enter the stadium but does not have as many costs as the Majors. The stadium for Minor League teams are much smaller, making ticket prices lower and cost for the stadium smaller as well. According to Zach Bergson “many minor league
teams pull in big revenue from naming rights and consistent ticket sales” (National Center for Baseball Journalism). Although the Minor League is on a smaller scale, they still create a profit that circulates back into the economy making it larger.
Each fan of a given team can not attend every game, realistically speaking, and as technology advances, the ability to watch or hear the game has progressively become easier. In the 1860’s, news of winning and losing with a game summary was solely delivered through newspaper, but thirty years later the telegraph came out. Every team received three hundred dollars in free telegrams When the radio was invented, Major League teams feared their sales on tickets would go down because people could listen at home for free, but they later realized that broadcasting was a way to obtain free advertisement. While some still listen to games on the radio, the most popular way to watch a game is now on television. In order for these games to be televised, MLB teams began selling rights to their games. In 1911 they started at $1700, but according to Michael J. Haupert, “by the end of the (19th) century they sold those same rights for $52 million per season” (Economic History of Major League Baseball 1). For television today it’s much larger, as having it’s uncommon for the average American to not have a T.V in their home. Haupert also said “In 1966 MLB followed the lead of the NFL and sold its first national television package, netting $300,000 per team. The latest national television contract paid $24 million to each team in 2002” (Economic History 1). Throughout history the reliance on media for Major League Baseball teams has increased and media has become a tool the companies can not live without.
While the upkeep and building of stadiums can be costly, the overall revenue brought in by ticket prices far outweighs the cost. On average, a stadium costs one hundred and ninety eight million dollars, and cost overruns occur frequently (Taxpayers on the Hook for Stadium Costs) . Cost overruns can go anywhere from forty percent to five hundred percent, with an average of seventy three percent. The revenue made at each game is split differently when it comes to the American League and the National League. The American league splits costs between home team and visiting team eighty to twenty and the National League gives the visiting team forty two cents per ticket. When building new stadiums, there is a large amount of work that needs to be done. This creates jobs for the community surrounding. One article remarks “a common argument from stadium proponents is that the construction of new sports stadiums will generate thousands of new jobs for the community” (Baseball and the American City: Economics 1). So with subtracting the payment to the other team and initial cost of construction, Major League Baseball stadiums still create a high amount of revenue, while stimulating the economy.
With the different markets giving MLB teams different places to spend their abundance of money, players salaries being taxed and them spending their income, stadiums being built creating jobs for thousands, and the worth of each individual team going into the economy, our economy shifts outward largely. The economy does better because of MLB baseball.
"Baseball and the American City: Economics." Baseball and the American City, May
2000, www.stadiummouse.com/stadium/economic.html. Accessed 30 Aug. 2016.
Business of Baseball." Forbes, 2016, www.forbes.com/mlb-valuations/. Accessed
20 Aug. 2016.
"MLB Salaries - MLB Baseball." USA Today, www.usatoday.com/sports/mlb/salaries/.
Accessed 13 Sept. 2016.
"Sports and Money: The Economics of Minor League Baseball." Business Journalism,
11 Aug. 2015, businessjournalism.org/2015/08/
sports-and-money-the-economics-of-minor-league-baseball/. Accessed 13 Sept.
"Taxpayers on the Hook for Stadium Costs." USA Today, 25 Nov. 2013,
Accessed 13 Sept. 2016.
"10 Lessons I Learned about the Baseball Economy." Hard Ball Times, 14 May 2014,
"The Economic History of Major League Baseball." Economic History, 3 Dec. 2007,
Accessed 30 Aug. 2016.
the game has progressively become easier. In the 1860’s, news of winning and losing with a game summary was solely delivered through newspaper, but thirty years later the telegraph came out. Every team received three hundred dollars in free telegrams