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Postby noseeum » Thu Dec 07, 2006 3:53 pm

GotowarMissAgnes wrote:As far as I know there is no good study that looks specifically at this issue. But what we do know is that previous studies of baseball markets and economic theory support the notion that higher salaries attract players. There certainly are other factors, but no one can claim on the basis of any evidence that the salary increase had nothing to do with it.


If you interpreted me as saying the rise in salaries from 1970 to now had zero impact on making baseball an attractive option, I certainly didn't mean to say that. I disagreed with you initially on the rises from now into the future, not 1970 to now. Essentially, as long as salaries stay extremely high in relation to other jobs, they're attractive enough. And we all know that will not be a problem. We also know that won't be a problem for NBA or NFL, which is where the initial disagreement started.

Of course we know that the rise from making nothing to making a lot of money will attract players to baseball. But they've been making a ton of money for over 25 years, and they will continue to make even more money, for as far as the eye can see. It's an incentive to make a lot of money, but how much of an incentive is it to make a little bit more than a lot of money? When I'm a regular kid, $2 million or $3 million both sound great. Yeah, when it was $17k, I might say "no way. I'm going to college." In fact, I know a lawyer who was a star hockey player in college in the late 60s. He chose to become a lawyer instead of go to the NHL. He was so good he would form an amateur team to play against the Bruins every year, and they would sometimes win. The pay back then wasn't worth the sacrifice to him. So your point is quite valid from $17k to $2 or 3 million. Less so as it goes higher from here is my point as the incentive is already huge. Still some impact, perhaps, but not a huge one by any stretch.

And I still see no support for your argument that a continued rise in baseball salaries will make athletes choose baseball over football and basketball, which have salary caps. That was the central point of my contention, and I still see no support for it.
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Postby deerayfan072 » Thu Dec 07, 2006 3:58 pm

Gil Meche just got 55 million dollars, if that isn't reason enough for a cap i don;t know what is :-D
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Postby Koby Schellenger » Thu Dec 07, 2006 4:10 pm

deerayfan072 wrote:Gil Meche just got 55 million dollars, if that isn't reason enough for a cap i don;t know what is :-D


He got that from the Royals, a small market team with an owner who is committed to not losing money. Gil Meche is evidence that small market teams can shell out the money for good players and if they don't it is because they choose not to, which they should be entitled to do as they are a business.
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Postby deerayfan072 » Thu Dec 07, 2006 4:21 pm

My point was that this is how much average pitchers are getting b/c they can get it.
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Postby Koby Schellenger » Thu Dec 07, 2006 5:37 pm

deerayfan072 wrote:My point was that this is how much average pitchers are getting b/c they can get it.


But if that isn't affecting who can sign them, why should there be a restraint of trade put on baseball?
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Postby GotowarMissAgnes » Thu Dec 07, 2006 5:47 pm

noseeum wrote: I disagreed with you initially on the rises from now into the future, not 1970 to now. Essentially, as long as salaries stay extremely high in relation to other jobs, they're attractive enough. And we all know that will not be a problem. We also know that won't be a problem for NBA or NFL, which is where the initial disagreement started.


Consider a good high school/junior athlete who is playing both football and baseball and is essentially equally good in both. This is, in economic terms, a person on the margin. He's not choosing between professional sports and some other job. He's choosing between sports. This person could choose either sport as they move through high school and college.

From the mid 1990s, baseball salaries have tripled, while football salaries have not even doubled.

All other things equal, which sport will attract that athlete?

Cumulate that decision over hundreds of thousands of athletes at that age, especially if the recent salary trends continue, and it's not hard to see what happens. Cumulate that over millions of parents deciding whether Johnny should go to Baseball or Football Camp, and it's not hard to see what happens.

noseeum wrote:Of course we know that the rise from making nothing to making a lot of money will attract players to baseball. But they've been making a ton of money for over 25 years, and they will continue to make even more money, for as far as the eye can see.


Twenty five years ago the minimum salary--which is made by about 40-50% of the players--in baseball was $32,500. That's upper middle class, but certainly not a "ton" of money. People focus on the average salary, but many players don't get that. It's only been in the last 15 years that salaries have really increased dramatically.


noseeum wrote:It's an incentive to make a lot of money, but how much of an incentive is it to make a little bit more than a lot of money? When I'm a regular kid, $2 million or $3 million both sound great. Yeah, when it was $17k, I might say "no way. I'm going to college." In fact, I know a lawyer who was a star hockey player in college in the late 60s. He chose to become a lawyer instead of go to the NHL. He was so good he would form an amateur team to play against the Bruins every year, and they would sometimes win. The pay back then wasn't worth the sacrifice to him. So your point is quite valid from $17k to $2 or 3 million. Less so as it goes higher from here is my point as the incentive is already huge. Still some impact, perhaps, but not a huge one by any stretch.

And I still see no support for your argument that a continued rise in baseball salaries will make athletes choose baseball over football and basketball, which have salary caps. That was the central point of my contention, and I still see no support for it.


You are describing what economists call the marginal utility of income, and it is true that economics argues that as income rises, that marginal utility declines. But, it also argues that it is always positive. The effect is always present and will always operate at the margin. So, if that trend continues of baseball salaries rising much faster than football, you will see athletes at the major choosing baseball. I think you already are seeing more and better athletes choosing baseball and that there is some evidence for that, but don't disagree that there's not a huge amount of evidence on that.

We could complicate things even more by adding in career length, the distribution of $ (which impacts the risk), but it's not worth muddying the basic point.
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Postby noseeum » Thu Dec 07, 2006 6:22 pm

GotowarMissAgnes wrote:
noseeum wrote: I disagreed with you initially on the rises from now into the future, not 1970 to now. Essentially, as long as salaries stay extremely high in relation to other jobs, they're attractive enough. And we all know that will not be a problem. We also know that won't be a problem for NBA or NFL, which is where the initial disagreement started.


Consider a good high school/junior athlete who is playing both football and baseball and is essentially equally good in both. This is, in economic terms, a person on the margin. He's not choosing between professional sports and some other job. He's choosing between sports. This person could choose either sport as they move through high school and college.

From the mid 1990s, baseball salaries have tripled, while football salaries have not even doubled.

All other things equal, which sport will attract that athlete?

Cumulate that decision over hundreds of thousands of athletes at that age, especially if the recent salary trends continue, and it's not hard to see what happens. Cumulate that over millions of parents deciding whether Johnny should go to Baseball or Football Camp, and it's not hard to see what happens.

noseeum wrote:Of course we know that the rise from making nothing to making a lot of money will attract players to baseball. But they've been making a ton of money for over 25 years, and they will continue to make even more money, for as far as the eye can see.


Twenty five years ago the minimum salary--which is made by about 40-50% of the players--in baseball was $32,500. That's upper middle class, but certainly not a "ton" of money. People focus on the average salary, but many players don't get that. It's only been in the last 15 years that salaries have really increased dramatically.


noseeum wrote:It's an incentive to make a lot of money, but how much of an incentive is it to make a little bit more than a lot of money? When I'm a regular kid, $2 million or $3 million both sound great. Yeah, when it was $17k, I might say "no way. I'm going to college." In fact, I know a lawyer who was a star hockey player in college in the late 60s. He chose to become a lawyer instead of go to the NHL. He was so good he would form an amateur team to play against the Bruins every year, and they would sometimes win. The pay back then wasn't worth the sacrifice to him. So your point is quite valid from $17k to $2 or 3 million. Less so as it goes higher from here is my point as the incentive is already huge. Still some impact, perhaps, but not a huge one by any stretch.

And I still see no support for your argument that a continued rise in baseball salaries will make athletes choose baseball over football and basketball, which have salary caps. That was the central point of my contention, and I still see no support for it.


You are describing what economists call the marginal utility of income, and it is true that economics argues that as income rises, that marginal utility declines. But, it also argues that it is always positive. The effect is always present and will always operate at the margin. So, if that trend continues of baseball salaries rising much faster than football, you will see athletes at the major choosing baseball. I think you already are seeing more and better athletes choosing baseball and that there is some evidence for that, but don't disagree that there's not a huge amount of evidence on that.

We could complicate things even more by adding in career length, the distribution of $ (which impacts the risk), but it's not worth muddying the basic point.


Everything is true about your hypothetical high school athlete, except for one thing. That athlete is American. The Japanese and Latin American athlete does not have that option. In order to have the football option, you need to be playing it from at least 9th grade on, and they don't.

In Latin America, it's all about baseball. Sure, maybe soccer, but it doesn't compare to baseball in terms of popularity. When was the last Dominican star soccer player playing in Europe? That's more for South America.

And yes, of course the effect of more money is always positive, but I'm arguing it's not nearly as positive over the last 20 years as the scouting and development. You say $33,000 25 years ago is not that much. The per capita income for the Dominican Republic in 2005 was $7500. I can't find it, but you can bet it was way less than that in 1980. So even at only $33k and rising, the marginal utility, as you say, was decreasing rapidly while the investment in scouting and development was increasing rapidly. That was silly money to Latin American ballplayers.
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Postby The Cow » Fri Dec 08, 2006 2:00 am

Half Massed wrote:
The Cow wrote:Call me crazy, but when Ted Lilly get $40 mil over 4 years. I can't help, but think the MLB system is flawed. Now this is a crazy thought instead of spending $40 mil on Lilly how about giving fans a $40 mil break in the price of tickets. That would be about $2.50 off per ticket for 4 years based on an average attendance of 4 mil per year. Lost in the shuffle of all the big money signings is the fans who continue to pay more per ticket, more per hot dog, more per beer etc... Lets not forget that it is the fans that fund most of the new stadiums by again paying more per beer, per cigarrette etc... I think a salary cap is necessay not to protect the billionaire owners, but to protect the fans. MLB owes it to the fans who have supported their product for years to get a salary cap in place. I mean MLB can pay players 100 mil per year and sure maybe that may attract more talent, but in the end who is going to pay that $100 mil contract? The fans. The fans deserve better. And yes a $100 mil per year contract is not that far fetched at the rate MLB is going.

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Payroll and ticket prices are unrelated. Ticket prices are set to maximize revenue not to balance the costs of payroll. Ticket prices are due to demand. For example even if the Yankees cut their payroll in half, the ticket prices wouldn't drop because the fans would still want to see the game. The demand wouldn't change.

A salary cap would not save fans any money.


So you say payroll and ticket prices are unrelated??? The Cleveland Indians keep telling their fans that they can not increase payroll because they are not selling enough tickets. IF payroll and ticket prices are unrelated as you say then theoretically a team can give the tickets away for free and still afford to maintain payroll at its current level. I say ticket prices and payroll are very much related especially in the smaller markets. Lets say all tickets sell for $20 and for every home game there is an average of 40,000 fans. For each home game the team rakes in $800,000 in ticket sales alone. Multiply that by the 81 home games and the team rakes in $64,800,000 in ticket sales alone for the season. A nice chunk of change. Now what happens when the team only averages 20,000 fans per game for the season? Well the ticket revenue falls to $32,400,000, still a nice chunk of change, but 32 mil less than before. This is very similar to the Tribes situation back when they used to sell out every game and noe when they average 20 some thousand a game. It seems to me that 64 mil or 32 mil is a significant amount of money. When I see a team that is not selling out every game raise ticket prices it tells me that they did not raise the price because of demand. They raised ticket prices to increase revenue. I say that one of the reasons teams raise ticket prices is due to the skyrocketing player salaries.

When you say that ticket prices and payroll are unrelated you imply that the ticket revenue is not relied upon by the teams. I mean in my previous example I said what if all tickets were for $20? Well what if all tickets were sold for $5? The team's revenue would plummet to 16 mil a far cry from 64 mil. Now 16 mil would be just fine if the average player salary was $600,000 or so still a nice salary if you ask me. But when the average salary is over 3 mil, the price of the ticket must go up for a team to attempt to stay in the black. 3mil is 5x that of $600,000. So when a team's average ticket price is $5 the average player salary is $600,000 it then follows that an average ticket price of $30 or 6x $5 is appropriate when the average salary is $3mil.

This is just an example. I realize the teams have other sources of income, but I see no reason that one would think that ticket prices are unrelated to payroll.

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Postby mamorris » Fri Dec 08, 2006 8:08 am

The Cow wrote:So you say payroll and ticket prices are unrelated??? The Cleveland Indians keep telling their fans that they can not increase payroll because they are not selling enough tickets. IF payroll and ticket prices are unrelated as you say then theoretically a team can give the tickets away for free and still afford to maintain payroll at its current level. I say ticket prices and payroll are very much related especially in the smaller markets. Lets say all tickets sell for $20 and for every home game there is an average of 40,000 fans. For each home game the team rakes in $800,000 in ticket sales alone. Multiply that by the 81 home games and the team rakes in $64,800,000 in ticket sales alone for the season. A nice chunk of change. Now what happens when the team only averages 20,000 fans per game for the season? Well the ticket revenue falls to $32,400,000, still a nice chunk of change, but 32 mil less than before. This is very similar to the Tribes situation back when they used to sell out every game and noe when they average 20 some thousand a game. It seems to me that 64 mil or 32 mil is a significant amount of money. When I see a team that is not selling out every game raise ticket prices it tells me that they did not raise the price because of demand. They raised ticket prices to increase revenue. I say that one of the reasons teams raise ticket prices is due to the skyrocketing player salaries.

Actually you have it the wrong way around. One of the reasons for the skyrocketing player salaries is the higher ticket (and merchandise, broadcasting rights etc) revenues. The reverse is not true because higher salaries alone won't increase demand for tickets. For that reason, if a team decided to raise their ticket prices then less people will come through the gate and revenue might actually fall. Payroll and ticket prices are certainly related but I think Half Massed's point was that payroll does not drive ticket prices.
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Postby buffalobillsrul2002 » Fri Dec 08, 2006 4:49 pm

The Cow wrote: So you say payroll and ticket prices are unrelated???

I'll still maintain that player salaries don't affect ticket prices at all . I"ll explain why later.
The Cow wrote: The Cleveland Indians keep telling their fans that they can not increase payroll because they are not selling enough tickets.

That may very well be true. But if they sold their tickets cheaper, that doesn't necessarily mean they'd make more revenue. I'm sure somebody in the Indians organization has the job of figuring out what the "best" ticket price for the team is (meaning the price that will make the team the most money). The reason the Indians tell the fans this is because they want you to buy more tickets so they have more revenue.
The Cow wrote:
I say ticket prices and payroll are very much related especially in the smaller markets. Lets say all tickets sell for $20 and for every home game there is an average of 40,000 fans. For each home game the team rakes in $800,000 in ticket sales alone. Multiply that by the 81 home games and the team rakes in $64,800,000 in ticket sales alone for the season. A nice chunk of change. Now what happens when the team only averages 20,000 fans per game for the season? Well the ticket revenue falls to $32,400,000, still a nice chunk of change, but 32 mil less than before. This is very similar to the Tribes situation back when they used to sell out every game and noe when they average 20 some thousand a game. It seems to me that 64 mil or 32 mil is a significant amount of money.


Good example. However, you are missing a huge point here. Do you think the Indians are actually going to make tickets cheaper to be nice to the fans? No... they are going to make tickets cheaper to increase revenue. I understand why you would think that they would need to raise ticket prices in order to "keep up" with player salaries, but this isn't actually true. Let's assume MLB dropped its player salaries to average salary of $1 million per player (this is totally hypothetical). Then baseball teams would spend a lot less. However, they'd still charge the same prices, because baseball teams are businesses. They aren't looking to break even; they are looking to make the most money possible.

The Cow wrote: When I see a team that is not selling out every game raise ticket prices it tells me that they did not raise the price because of demand. They raised ticket prices to increase revenue.


Actually, it must have had something to do with demand. A team is looking to make the most revenue possible. They may have a certain number in mind as a goal, but if they can make more revenue, they will. That's why teams sell tickets. To have a greater revenue.

The Cow wrote: I say that one of the reasons teams raise ticket prices is due to the skyrocketing player salaries.


I say not. I think I explained most of my reasoning as to why not already. The reason ticket prices have gone up is because people are willing to pay that money to go see a game. Ticket prices are going up because teams know that they can make more money by raising prices.

So if your question is How do we lower ticket prices?, I have a simple answer. Don't go to games. Don't buy season tickets. Don't buy food or beer at the games. Make teams lower their game prices by not going to the games. If fans find tickets expensive and don't buy them, then the team has to make tickets/food/etc. cheaper.
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