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Postby noseeum » Fri Dec 08, 2006 5:04 pm

I agree that the main influence on ticket prices is demand. It's not necessarily the goal of a team to sell out games. If you're regularly selling out games, it means the demand is far outreaching the supply.

What you'd prefer is to set a price so that the exact number of tickets desired matches the exact number available. That's next to impossible, so it probably makes more sense to shoot for a target just below selling out, say 95% occupancy.

Just look at what the Yankees have done this offseason with their prices. They continue to raise the prices of the most expensive seats while holding the cheaper seats at their current prices. They're doing this because they sell out the expensive seats all the time, and it's the cheap ones that sell last. Just as buffalobills said, they're trying to maximize ticket revenue under the current level of demand they're experiencing.

I wouldn't say that salaries have ZERO impact on ticket prices, as obviously a primary goal is to cover costs. But even so, supply vs. demand is the main driver. Hence Boston has the most expensive tickets. They keep raising them because they keep selling them out, not because they keep paying their players more.

The Royals can't just say "we're doubling ticket prices to pay for Gil Meche." That don't fly.
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Postby Chrisy Moltisanti » Fri Dec 08, 2006 10:10 pm

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.

The Cow


The fans owe it to themselves to stop buying the $8 beer and paying the high price for the ticket. If I were an owner and read what you just wrote, I'd be raising prices again because you're showing me you're still going to sit there and take it.
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Postby Chrisy Moltisanti » Fri Dec 08, 2006 10:14 pm

GotowarMissAgnes wrote:Second, focus on this section:
"Switching gears, let's talk about the current free agent market. In 2004, players who weren't yet eligible for arbitration (rookies and sophomores, essentially) contributed 1,720 Win Shares to their teams. In 2006, that same classification of players contributed 2,669 Win Shares. That's 1,000 more Win Shares from players making the minimum. Thanks to arbitration, these stars are going to remain relatively inexpensive for the next several years."

Anybody who doesn't think that the more rapid rise in baseball salaries isn't resulting in a better quality of player in baseball, isn't paying attention.


If teams are forced to play less expensive options more often, those players will rack up more win shares than if they played less. I'm paying attention and don't see a direct correlation between rising salary and quality of talent in today's game. Diminishing marginal utility nullified such significant correlation quite a few years ago.

When did the studies you won't post take place?
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Postby The Cow » Sat Dec 09, 2006 12:35 am

Chrisy Moltisanti 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.

The Cow


The fans owe it to themselves to stop buying the $8 beer and paying the high price for the ticket. If I were an owner and read what you just wrote, I'd be raising prices again because you're showing me you're still going to sit there and take it.


You have me all wrong. I don't shell out for many baseball games, however i am willing to shell out for football games be it the Buckeyes or Browns. I see football as an event or a happening, heck they are just more fun and worth the money. I can understand the high ticket prices in football as they only have 8 home games. baseball on the other hand is more like going to see a movie, it seems like you can always go catch a baseball game. Here in the Cleveland area you can see the Indians and 2 minor league teams. I think I went to more Aeros games than Tribe games last year, you get better seats and you pay less. To me a baseball game is a baseball game until you hit the post-season. I realize this is a little off-topic, oh well.

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Postby Chrisy Moltisanti » Sat Dec 09, 2006 1:00 am

The Cow wrote:You have me all wrong. I don't shell out for many baseball games, however i am willing to shell out for football games be it the Buckeyes or Browns. I see football as an event or a happening, heck they are just more fun and worth the money. I can understand the high ticket prices in football as they only have 8 home games. baseball on the other hand is more like going to see a movie, it seems like you can always go catch a baseball game. Here in the Cleveland area you can see the Indians and 2 minor league teams. I think I went to more Aeros games than Tribe games last year, you get better seats and you pay less. To me a baseball game is a baseball game until you hit the post-season. I realize this is a little off-topic, oh well.

The Cow


You know, it says "The Cow" with every post already, no need to repeat it.

I don't think you're "bonding" with anyone here very well when you imply going to a baseball game isn't an event or happening. I love to see teams a players I like. I get plastered some of the time, get lost in the stats and strategy at others, just overall always have a great time. Just like at an NFL game (well I'm always getting bombed there) :-D . I understand the scarcity factor, but consider the forum and the audience man.

Does it cost more to get comparable seats at a NY Giants game compared to a Mets game?
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Postby Half Massed » Sat Dec 09, 2006 7:32 am

The Cow wrote:
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.

The Cow


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.

The Cow


Well several people have already stated it, but ticket prices are set to maximize revenue, not to cover the costs of payroll. A team might claim that this is the case, but that's only so that the fans will continue to buy pricier tickets. Do you really think a team would raise its ticket prices if the fans refused to come, regardless of payroll? And if a team was selling a lot of tickets with a low payroll, do you think they would lower their ticket prices solely because they feel for their fans?

Payroll is a shifting expense, while ticket prices are fixed. It's completely untrue that a team would ever change it's ticket prices because of their payroll. Even in the most logical situation, when a team greatly increases their payroll, they wouldn't adjust their ticket prices based on trying to cover that cost. The only way they'd change their ticket prices is if they think it would increase revenue.

Think about it, ticket prices are a balance between price and volume. The ideal ticket price is a balance between how expensive the ticket can get while still maximizing amount of tickets sold. There is a set answer for this balance. Changing the payroll of the team doesn't affect this balance, unless a guy is brought in who really draws fans, such as a Derek Jeter type.
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Postby GotowarMissAgnes » Sat Dec 09, 2006 12:23 pm

Chrisy Moltisanti wrote:
If teams are forced to play less expensive options more often, those players will rack up more win shares than if they played less. I'm paying attention and don't see a direct correlation between rising salary and quality of talent in today's game. Diminishing marginal utility nullified such significant correlation quite a few years ago.


You'll have to explain more. I can't make heads or tails of your reasoning here. No one is forcing teams to play less expensive options.


Chrisy Moltisanti wrote:
When did the studies you won't post take place?


It's nothing about "won't post them". They are published in academic journals that require a subscription to review. Go to any online source--Google Scholar, Proquest, etc.--and you can read the abstracts, but that's all you'll have access to unless you pay for it.

As I said, the economic studies of the baseball labor market date back to the 1950s at least. That's when the Simon Rottenberg did his work. "Baseball's Labor Market" was published in the Journal of Political Economy in June 1956. JPE published a 50 year retrospective of Rottenberg's work this past summer with many baseball economists writing on these topics.

Rosen and Sanderson's NBER paper on labor markets in professional sports is from 2000. Both authors have a number of other papers on sports labor markets from the mid-1990s to today. Gerald Scully's work on the economics of baseball goes back to the mid-1980s, also continuing to today. He's got a couple books, as well as dozens of papers on it.
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Postby GotowarMissAgnes » Sat Dec 09, 2006 1:22 pm

noseeum wrote: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.


Regardless of where a player lives, rising salaries impact their incentives and decisions. That's the point you consistently dodge. What's true for that American player---that rising salaries provide a stronger incentive to choose American baseball over other opportunities---is true for Japanese and DR players, too. The opportunities vary and the institutions vary, but the incentives and its impact on decisions are similar.

I'm glad to see that we now agree that the effect of rising salaries for Latino player is not zero. I've never disagreed that the academies are not part of the explanation of the influx of foreign-born players. So, we don't disagree on that point either.

It seems the only disagreement is the relative size of the effects, where there is no good data.

In 1980, DR per capita income was about $2,000. Remember that a player's decision is not "become a major league player". It's become "a minor league player who has about a 5% chance of becoming a major leaguer." Minor league players, of course, make much less. Even today, the average minor league salary is about $1,000 a month. I can't find a good source for in 1980, but if they've changed at the same rate as overall wages and prices, that salary was about $500 a month (just for the season, of course).

So, the typical DR player's economic decision might be roughly summarized as "make $2,000 in the DR" or "Play 6 months in the US for 3,000 and work the other 6 months in the DR for $1,000 and get the 5% chance that in 5 or 6 years you'll make $33,000 and have a small chance of making a $150,000 (the average 1980 salary)". Now, that's not a bad deal at all. At minimum you make an extra $2,000 PLUS you get a lottery ticket that's worth at least about $1,500 (.05 times $33,000) and could be worth more.

But compare that to now. Now, the decision is "make 7500 in the DR" or "play 6 months in the US for "6,000 and work the other 6 months in the DR for $3,750" and get a 5% chance that in 5 or so years you'll make 325,000 and have a chance of making $2,900,000 (the average salary in 2005). Now, at minimum, you make about $2,500 more. Your lottery ticket, however, is worth ten times as much AT A MINIMUM.

In economic terms what we would want to do is determine the expected value of that decision, taking into account the probabilities of getting to the majors and making it to the average salary level or even better. This gets us into the risk aspects of the choice I mentioned.

I did a little calculation in Excel with the following assumptions. Starting in 1977 and 1995, a player spends 5 years in the minors, then 6 in the majors. The first 4 years in the majors is at the minimum, then they make the average salary the last two years. The probability for any given player of getting to the majors is assumed to be 5 percent. If you get to the majors, there's a 40% chance you get the average salary, rather than the minimum. I add up all those expected values for each year and discount them to the first year of the decision.

In 1977 the expected value of those 11 years in baseball for a DR player was about $25,000 or roughly $2,000 a year. In 1995, the expected value was $90,000 or roughly $8,000 a year. Nearly 90 percent of the 4 times larger expected value came from the rise in the average salary in baseball. The deal become markedly better for Latino players compared to 20 years prior to 1995.

So, again, without good data, I see no reason to dismiss the rising salaries as an important determinant. The changing structure of the draft and the rules regarding Latino players drove up demand for them from teams and they set up baseball academies. At the same time, rising baseball salaries made the expected return to Latino players increase 4 fold. Both mattered and we don't know how much.
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Postby The Cow » Sat Dec 09, 2006 4:20 pm

I think a big factor in the Latino's decision to play baseball is simple. They receive money for playing at these academies, much of it is under the table. Also when they sign a contract they get a signing bonus, varies by player, but a $10,000 signing bonus to sign with a team is a lot for most Latino players. I mean if your choice is soccer or baseball and the baseball teams want to slide you some much needed money who would you choose? I think the Latino's decision to play baseball has alot to do with this kind of money or money that they can get and need NOW. I am not discounting the million dollar contract they would love to sign at the MLB level. I am just saying that the signing bonus' and under the table money is enough for a Lation to choose baseball because it will feed his family NOW and the fact that he could earn million in a few years is gravy.

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Postby GotowarMissAgnes » Sun Dec 17, 2006 6:57 pm

Chuck Armstrong, Pres. of the Mariners:

"But looking at the current situation from the good-news-glass-half-full perspective, I would proffer the following: a) The opportunities for young athletes to choose baseball as their sport of choice has never been better; b) Unlike the other major sports, Baseball offers the young athlete time for growth and late development as we are the only sport with our own purely internal player development system; c) Baseball careers last far longer than NBA or NFL careers; d) When a professional baseball player's career ends, he still has his body intact and is able to enjoy a long, full and complete life; and, e) Because even mediocre Major League players now can make millions for years, and because of the wonderful pension system in place for retired MLB players, MLB players and their families have now achieved financial security like never before."

If you have not checked out the 31 voices on the state of the business of baseball here:

http://www.bizofbaseball.com/index.php? ... &Itemid=41
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