Baseball…reminds us of all that once was good and that could be again
…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.