Comments on: What Can Each Team Afford to Spend? http://www.baseball-reference.com/blog/archives/3671 This and that about baseball stats. Tue, 16 Jul 2013 17:01:55 +0000 hourly 1 https://wordpress.org/?v=4.6 By: JohnnyTwisto http://www.baseball-reference.com/blog/archives/3671/comment-page-1#comment-10129 Tue, 01 Dec 2009 20:45:19 +0000 http://www.baseball-reference.com/blog/?p=3671#comment-10129 It should also be noted that artificially lowering salaries will eventually lead to an inferior product, as potential baseball players choose to do something else.

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By: Red Sox Owner Has A New Plan To Try & Combat Yanks http://www.baseball-reference.com/blog/archives/3671/comment-page-1#comment-10126 Tue, 01 Dec 2009 18:16:56 +0000 http://www.baseball-reference.com/blog/?p=3671#comment-10126 [...] any event, on a related note, Neil Paine offers some food for thought on why baseball needs a minimum payroll [...]

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By: Andy http://www.baseball-reference.com/blog/archives/3671/comment-page-1#comment-10125 Tue, 01 Dec 2009 17:38:34 +0000 http://www.baseball-reference.com/blog/?p=3671#comment-10125 This issue is far more complicated than has been represented here. Ticket prices are pretty straightforward. Teams price their tickets so they maximize revenue and as long as fans (or law firms, etc) want to pay the prices, they will sell. But teams make revenue in other ways. Take, for example, all the advertising money that teams receive from companies that place ads in the ballpark or on TV. (Yes, the TV station gets the money for the TV ads, but it ultimately goes back to the team in the fees paid to air the games.) Where does this advertising money go? It could be looked at the same way as ticket prices, as it's part of the operating capital for the teams that either pays expenses like player salaries or is profit for the team. Who, in turn, is paying out this cash? We are, when we buy those products that are advertised. Expense on advertising is a major portion of expense for many product companies and it is the consumers who pay for that advertising with higher product prices. So it is not just ticket buyers who are fueling the cash going into baseball teams.

But there is another issue on the other side. Let's say that all team's revenues were cut by $20 million (by lowering ticket prices or ad revenue or whatever) and the teams then lowered their payrolls by $20 million. It means that we fans would collectively have $600 million more in our pockets while the players would have $600 million less. Does this actually make a difference? I don't think so. Yes, if ticket prices or product prices suddenly dropped, we would have more money. But eventually salaries would drop (or fail to keep up with inflation to account for that.) Advertising people might lose their jobs. The economy would shrink in some places eventually. Most people tend to look at these situations in terms of immediate impact but not on how things change over time. The fact of the matter is that baseball players spend their money--they buy big houses, cars, etc, and all that money goes to pay for jobs for other people. I frankly don't care whether the money is being spent by 1,000 fans or 10 baseball players as long as it gets back into the economy.

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By: dchich http://www.baseball-reference.com/blog/archives/3671/comment-page-1#comment-10124 Tue, 01 Dec 2009 16:04:42 +0000 http://www.baseball-reference.com/blog/?p=3671#comment-10124 So, the top 30 payrolls of the last 22 seasons represent only 6 WS champs?

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By: ImAShark2 http://www.baseball-reference.com/blog/archives/3671/comment-page-1#comment-10120 Mon, 30 Nov 2009 22:45:32 +0000 http://www.baseball-reference.com/blog/?p=3671#comment-10120 Thanks, N-Paine.

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By: Neil Paine http://www.baseball-reference.com/blog/archives/3671/comment-page-1#comment-10117 Mon, 30 Nov 2009 21:33:58 +0000 http://www.baseball-reference.com/blog/?p=3671#comment-10117 Okay, so from the players' perspective what you're talking about would essentially be the collusion situation in the 1980s, where owners conspired to depress salaries by not bidding the free agents' salaries up -- except, here, the fans and the owners would both be colluding against the players. Then again, I think it would require a single-minded focus on money over wins from both owners and fans to make it happen, because you have to be committed to your team not outbidding everyone for premium talent. For the owners, this isn't a huge stretch, but for the fans it really wouldn't make sense to intentionally have your own team lose in exchange for a few dollars' worth of savings on tickets.

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By: Djibouti http://www.baseball-reference.com/blog/archives/3671/comment-page-1#comment-10116 Mon, 30 Nov 2009 21:12:13 +0000 http://www.baseball-reference.com/blog/?p=3671#comment-10116 Yeah, it's more of a thought experiment than an actual idea because of A) supply and demand B) the loose relationship between ticket prices and salaries and C) no one would ever consent to giving up money. But as to the final point:

"At the same time, though, what you're doing is asking everyone to make less profit so you and I can go to games cheaper, which neither the owners nor the players would ever agree to."

The only people who would lose in this situation would be the players. From the owners perspective, look at it this way. Say an owner spends $100 million on everyday expenses (stadium upkeep, travel, management salaries, etc.) and $100 million on player payroll. Then say they take in $100 million in ticket revenue (no idea what a real number for that would be) and $200 million in other revenue. So overall they have a $100 million profit. If they then slashed payroll to $50 million and ticket revenue to $50 million, they'd still have that $100 million profit, but we'd be reaping the benefits. This assumes that there aren't any relationships between the costs and revenues, which of course there are. But the basic idea is that the players are paid what they're paid because the market has determined their worth. The market determines their worth based on what we're willing to pay indirectly for their services. So if we all woke up one day and decided $30 was too much for a shirt and $20 was too much for a bleacher seat, etc. the market (as seen by the owner's overall profit) would adjust to the point where the players would be making less money. What I'm saying is that in theory this could work in reverse in that if MLB could somehow magically reduce all player salaries, we could all pay less for the product (it doesn't have to be in ticket prices alone) while the owners maintain profit. The underlying problem is that there is no way any businessman worth his salt would turn down an opportunity to make more profit in favor of charging less than his customers are willing to pay.

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By: Neil Paine http://www.baseball-reference.com/blog/archives/3671/comment-page-1#comment-10115 Mon, 30 Nov 2009 20:31:19 +0000 http://www.baseball-reference.com/blog/?p=3671#comment-10115 Oh, wait, I re-read your comment Djibouti, where you say "it goes against the open market policy of supply and demand in that if people are willing to pay $100+ for a ticket, then you can charge $100+ for a ticket". Sorry for assuming you didn't know that ticket prices aren't driven by salaries.

At the same time, though, what you're doing is asking everyone to make less profit so you and I can go to games cheaper, which neither the owners nor the players would ever agree to.

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By: Neil Paine http://www.baseball-reference.com/blog/archives/3671/comment-page-1#comment-10114 Mon, 30 Nov 2009 20:24:57 +0000 http://www.baseball-reference.com/blog/?p=3671#comment-10114 ImAShark2: I definitely read that at the time. BTW, our numbers are just estimates -- they may not include call-ups, players acquired at midseason, etc. For those reasons, it's tough to concretely define a team's "payroll" anyway.

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By: Neil Paine http://www.baseball-reference.com/blog/archives/3671/comment-page-1#comment-10113 Mon, 30 Nov 2009 20:21:18 +0000 http://www.baseball-reference.com/blog/?p=3671#comment-10113 This is a great FAQ about the phenomenon, and why high salaries don't drive ticket prices up:

http://www.baseball1.com/faqs/ticket_prices.html

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