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"...Freakonomics meets ESPN." —Alan
Schwarz, author, The Numbers Game
Taking Measure of the Many Myths
in Modern Sport
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Reviews | What's Inside | Where to Order | Stanford University Press |
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Chapter
Excerpts
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Chapter Four: Baseball’s
Competitive Balance Problem? from Balancing Baseball, pp. 49-50 The
argument that baseball had a competitive balance problem during the Blue
Ribbon years (1995-99) played a key role in the 2002 labor dispute. The
agreement reached between owners and players included provisions to solve
what Selig and others perceived to be the growing
imbalance in competition. The agreement included both increased revenue sharing
and a substantial luxury tax. The latter has been referred to as a
competitive balance tax or, more cynically, a “Yankee tax.” After reaching a
settlement with the players’ union, Selig offered
the following observation: “the issue here was competitive balance and I feel
this deal clearly deals with that.” Was
the Yankee tax effective? We have already noted that the payroll of the New
York Yankees reached record highs each season after 2002. In 2002 the Yankees
had a payroll 1.86 times larger than the average payroll in baseball. In
2003, the Yankees’ payroll was 2.15 times higher. The next season the Yankees
kept spending, with a payroll 2.67 times the average in the league. The year
2005 brought another record, with the Yankees’ payroll now 2.85 times the
average payroll. Thus the early returns on the “Yankee tax” are not
encouraging. If the 2002 agreement with the players was intended to limit the
spending of the Yankees, so far it has failed. What
about competitive balance? We have noted that competitive balance did not
appear to be a problem during the Blue Ribbon years. In the next six years
(2000–05), though, a different story could be told. Okay, it could be told,
but not by anyone who has listened to our discussion of sample size. We are
only talking about six seasons, so again we do not have enough observations
to reach any conclusions. Nevertheless, it does look like competitive balance
has worsened in the first few years of the 21st century. One
should note that despite the Yankees’ spending, the worsening of competitive
balance does not appear to be driven entirely by New York. Teams like
Seattle, which won 116 games in 2001, and the A’s, which won more than 100
games in 2001 and 2002, also contributed to the worsening of competitive
balance. Both of these teams achieved success without a Yankee-sized payroll.
The story of competitive balance is not entirely driven by those at the top.
We also have to look at the bottom of the standings. A problem at the bottom
in baseball is Berri’s beloved Detroit Tigers. The
Tigers managed to lose 106 games in 2002, an accomplishment matched by both
the American League’s Tampa Bay Devil Rays and the National League’s
Milwaukee Brewers. In all, 2002 was a year of extremes with six teams either
winning or losing more than 100 games. Apparently
the Tigers, though, were unhappy to share the title of worst team in
baseball. In 2003 Detroit managed to lose an amazing 119 games. Why did this
happen? The Tigers basically made a few personnel decisions, both in the
front office and on the field, that did not work out as well as they might
like. Such ineptitude cannot be blamed on market size. Detroit, according to
the 2000 Census, is the ninth-largest market in baseball. Again we return to the
point we made in the previous chapter. One can change the “economics of baseball”
but one cannot prevent owners and managers from making bad personnel decisions. We
can go on and on about the last few years, but we must return again to the
issue of sample size. In talking about 21st-century baseball our sample is
too small to reach definitive conclusions. One could argue that relative to
the 1990s, baseball in the 21st century is less balanced. Then again, from
2002 to 2005, despite the Yankees setting payroll records every year,
competitive balance improved each season in the American League. What does
all this mean? Well, not much. No matter how you slice a small sample, it is
never going to allow you to make a point. When
we look at the entire history of baseball we do have a point. With more than
a century of observations we can clearly see that competitive balance has
improved across time in both the American and the National League. Our next
task is to understand why this improvement occurred. Excerpts (c) 2006 by the Board of Trustees of the Leland
Stanford Jr. University. No further
use, reproduction or distribution of this material is allowed without the
written permission of the publisher. |
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