…or why Major League Baseball and its business model are vastly preferable to the NBA and NFL.
It’s fall. And that means it’s the best time of year to be a sports fan. Baseball has its playoffs, the NFL season and college football are in full swing, NBA teams are warming up. Soccer is in full bloom in Europe, and soon players will be lacing up their skates and…what? There’s another NHL lockout? Under Gary Bettman? Say it ain’t so!
The recent spate of labor conflicts within professional sports gives a great launching point to ask the question: Which league has the best business model? If you were NHLPA director Donald Fehr, which league would you want your CBA to most resemble? If you’re an American sports fan what sport supports the values of the country best?
In this post, dear reader, I suggest that out of the major sports leagues in the US, Major League Baseball has the most admirable business model. Read on to find out why….
Football rules the American sporting world. The NFL’s 32 teams generate $9.5 billion dollars a year, while collectively the NCAA’s football programs generated another $2.2 billion. Football is booming in all circles of American life, from college down to Pop Warner leagues. Even high school football is big business, with the Allen Independent School District in Texas being the most extravagant, spending $60 million for a new stadium.
Major League Baseball comes in second among the major leagues, with its 30 teams splitting revenue of $7.5 billion.
The NBA and NHL bring up the remainder of the top 4 leagues, with $4.3 billion and $3 billion respectively in revenue.
Compare this to Europe where soccer rules the roost. The total revenue of European football was 16.9 billion Euros, with the Big Five (Barclay’s Premier League, German Bundesliga, Liga BBVA, Ligue 1 and Serie A) accounting for 8.6 billion euros (about $11.2 billion USD as of Oct. 2012). American football makes up about the same total revenue as the big five major European leagues combined.
But this of course doesn’t tell us the whole story of which league has the best model for business. Putting European football to one side, we should examine how the various US leagues handle their talent pipelines.
Within American sports, college athletics serves a strong role in serving as a developmental league for teenage athletes. Of the major sports leagues, only Major League Baseball and the NHL have any form of developmental system independent of the NCAA. Meanwhile through a combination of age restrictions and collusion with the NCAA, the NFL and NBA work to off-load the costs of developing potential talent to universities and colleges.
The exploitative nature of the NCAA sports cartel has been covered extensively, none more vividly than by Taylor Branch in the Atlantic. Essentially the NFL and the NBA operate in a system where they use unpaid college athletes as developmental fodder, while the universities use these athletes as low cost bodies to fund their football programs.
At a time when we see the long-term effects of even high school football, a sports franchise model that relies upon unpaid children playing for profitable sporting programs seems to me, unethical. To allow major collusion between ostensibly public institutions like state universities and private for-profit sports franchises who receive substantial subsidies from state and municpical governments feels downright criminal.
Indeed professional sports in the United States is perhaps the greatest example of crony-capitalism in the US. Increasing facility costs, with greater taxpayer subsidies. More expensive tickets, less seats. More luxury box seating. All this combines with an inherently exploitative labor model where the average player’s career expectancy is less than 5 years.
Major League Baseball isn’t immune from these charges. Plenty of MLB franchises have taken advantage of their host cities and gotten sweetheart deals on stadiums. But baseball lacks a hard salary cap like the other three major leagues, instead working with a luxury tax and revenue sharing system to help increase parity. When viewed in competitive parity, this system has helped to create more playoff diversity in baseball than the hard salary restrictions in the NFL have.
Arguably part of this stems from the fact that MLB has a viable developmental system, where teams can develop additional talent and take chances on a wider field of players than the NFL. Perhaps more importantly this developmental system isn’t hampered by artificial age limits on drafts or by a need to kow-tow to revenue makers in the SEC or Big 10.
Overall, even if it operates with an explicit anti-trust exemption, Major League Baseball to me seems to be a more moral and sustainable system of player development. It faces no great threats to its talent pipeline like the NCAA does, and its strong player’s association has led to a system where the owners can’t simply off-load bad business decisions by slashing player salaries and salary caps. In short: For the long run, give me Major League Baseball any day of the week.
Nob,
Lots of thoughts on this piece. First off, you ignore how baseball handles player salaries in the early years of their contracts. Arbitration is ridiculous. Players don’t get to sell their skills on the open market until (I believe) year 7 of their Major League career. Seven!
More to the point, even allowing for arbitration, it is likely true that MLB has a more moral system of player development than the other leagues for many of the reasons listed. But that doesn’t necessarily mean it is the “best” system. “Best” can be defined in a number of ways. The NFL makes more money… BEST! The elite NBA players command the highest annual salaries… BEST! MLB is the most moral… BEST! If we’re going to make an argument for “BEST” we need to define the criteria first.Report
Baseball also has the highest guaranteed salaries for major league players (IIRC) and arbitration allows some other stuff.
But yes, you’re right of course. I think best should be defined as most sustainable and least exploitative and least dependent on use of force.Report
I think my greater point was more:
Football and basketball are immoral and very unamerican, at least in so far as most people seem to understand the term.Report
Oh. Yea. This question, at the start, threw me off: “Which league has the best business model?” I read “business model” as, “Which is going to make me the most money for the longest time?” A question that is typically devoid of “morals”.Report
A few initial quibbles – the NBA’s cap IS a cap that signifies the line where a luxury tax is imposed; it also has a revenue sharing plan. It also has a developmental league. (And take it from someone who lives in a state with perennial College World Series playoff schools OSU and UO, MLB absolutely uses colleges and universities to train its talent for free.). Also, the lockouts in both the NFL and NBA happened because they can’t cut salaries or caps without union agreement.Report
The difference between the NBA and MLB’s tax lines is what is allowable after it has been passed. In the MLB, you can continue to spend willy-nilly. In the NBA, there are restrictions.Report
I think there is a great post to be written (and I’m thinking by either Nob or Kazzy here) about how our perception of different American sports is driven by the imagery, subject matter and quality in Hollywood movies.
I am not immune to this, especially with baseball – which I totally view through the eyes of a romantic.Report
Done and done. Here goes:
“We’re suckers for highly constructed narratives.”
Heh… I don’t know how great I am because I’m not the biggest fan of sports movies. I thought “Field of Dreams” was largely oversentimental crap… though I may be misremembering it because I only saw it once.
Personally, I think there are larger forces at work. Was there a slew of basketball movies that sullied the NBA’s reputation made in the late 90s? Or do a certain segment of fans bristle with what they perceive to be tattooed thugs playing defenseless me-ball?Report
Field of Dreams is definitely crap, but I can’t pretend I don’t like listening to James Earl Jones say just about anything. He could say, “I eat babies,” and I’d think it was pretty awesome.Report
On the other hand, Kevin Costner could say, “I want to give you my entire fortune,” and I’d still hate listening to him.Report
True. And he’d say it like he’s reading it from cue cards.Report
Kostner was OK in that movie; sweet and goofy, instead of taking himself so seriously. And he was actually good in Bull Durham. Apparently he needs to play a baseball player with a red-haired significant other to be bearable. And Burt Lancaster was awesome.
The book was better. (Fun fact: the JEJ character was JD Salinger there.)Report
Yeah. Field of Dreams and Bull Durham were maybe Costner’s finest hour as an actor. It was alllll down hill from there.Report
In order of bestitude:
Silverado
Bull Durham
Tin Cup
Field of Dreams
…
…
…
Robin Hood, Prince of Thieves
Waterworld
No Way OutReport
I would argue that there need to be a few spaces after Silverado before any others are mentioned, just as a tribute of it’s sheer awesomeness.
“Today, my jurisdiction ends here.”Report
I had never seen Silverado, but last night I pulled it up on the pay-per-view. I got a bit bored during the “spend half an hour of screen wandering around looking for bad guys to kill until we’ve got all of them” conclusion [1], but until that it was lots of fun. Though it’s a shame John Cleese disappeared so early, to be replaced by (other than Brian Dennehy) much less interesting villains.
“All I did was kiss a girl.”
1. And, geez, those bad guys shoot back like Imperial Storm Troopers.Report
Open Range?Report
I thought Costner was really good in ‘A Perfect World’.
Costner’s kind of like Julia Roberts – somewhat limited range, but can be good if given the right roles.Report
What this country needs – but will never get, of course – is a federal law prohibiting state and local governments from using taxpayer funds or tax-revenue-backed bonds for building professional sports facilities. It would put an end to the constant beggar-thy-neighbor arms race to build bigger and more lavish stadiums and arenas in the hopes of luring teams from other cities.Report
Well, first you’d need to pass a constitutional amendment giving Congress that power.Report
I’m sure you could make some sort of odd interstate commerce argument to structure a crippling tax on sports franchises that indulge in handout behavior.Report
Lawyers make all sorts of odd arguments.Report
And How!Report
Or have Congress let the anti-trust exemptions last, then the FTC/courts/whatever could make such movements illegal.Report
There has always been a narrative that baseball represents American innocence because it is a relatively cheap sport. All you need is a ball, a bat, some mitts, and a field to play in. Many of the great players came from rural areas and small towns. Some came from big cities.
However, this myth of American innocence can always be used to call out minorities in American life for corrupting the spirit of America.
http://www.tnr.com/article/109050/american-shylock-arnold-rothstein-1882%E2%80%931928
I am not against sports or pro-sports but I don’t want to give them myths. They are what they are.Report
And Hugo Chavez is taking credit for Pablo’s home runs. Screw ’em all. It’s still baseball.Report
Basketball is a lot cheaper than baseball, and soccer is cheaper than either.Report
I sorta feel like I should’ve waited on publishing this…so that my other post would get more attention first.Report
Odd, I thought Nob was going to point out that baseball has the only players’ union that’s never suffered a crushing defeat.Report
It was implied that the MLBPA’s strength is part of what makes the business model work better.Report
When viewed in competitive parity, this system has helped to create more playoff diversity in baseball than the hard salary restrictions in the NFL have.
The nature of the game certainly has something to do with it. Winning 100 games (winning percentage just over 60%) is considered very good; losing 100 (winning percentage just under 40%) is a miserable team. In a sixteen-game NFL season, the equivalent would be having the entire league finish somewhere between 10-6 and 6-10. I would argue that playoff diversity would be much higher in the NFL if the game structure were such that regular-season won-loss records stayed in that narrow band. It’s a pretty rare season these days that the NFL doesn’t have at least one or two teams that go 13-3, while no team in MLB history has ever done that well.Report
It also depends on how you define parity. I don’t think new teams in the playoffs is ideal, especially because MLB’s smaller pool of playoff teams increases turnover. In MLB, you have teams like the Pirates and, until this year, the Orioles who had gone a very long time without making the playoffs. Every NFL team has made the playoffs within the past decade.Report
That’s not true. The Bills haven’t been in a playoff game since 1999. And I dunno if the technicalities really count for a lot of the wild card teams…
The fact that there’s 12 playoff teams per 32 teams in the NFL means you have a much better chance of making the playoffs at any rate with 4 divisions per conference and 2 wild cards.Report
Do I need to re-write my comment about playoff systems?Report