Moneyball

The economics of baseball are lamented by almost everybody not directly involved with the sport–even by many of the fans that actually benefit from the skewed payrolls of their teams: the Red Sox, Mets, Dodgers, Cubs, Angels and, of course, the uber-exorbitant Yankees (well, maybe not Yankee fans). That such is the case–and that television market share is one of the largest driving forces–is hardly news.

I was pondering this point when it struck me that of these five traditional high-spenders, the only one that did not call one of the top three markets home were the Red Sox. Boston is still sizable, #7 on the most recent Nielsen Designated Market Area (DMA) rankings, but that’s still several spots below–not to mention several million people less–than New York, Los Angeles and Chicago, the three two-team cities (sorry, Anaheim, but for our purposes the greater Los Angeles metropolis is treated as one market).

What does this mean? What does it say about the various cities and their fanbases? It was time to run the numbers.

The first interesting, perhaps surprising, fact to surface didn’t even take any comparative calculations. The Detroit Tigers (DMA #11) have the fifth highest payroll this year, one ahead of the Angels. Considering that Detroit’s percentage of US market share (1.684%) is barely half of the lowest of the big three cities (Chicago at 3.052%), the Tigers are spending well above the market share barometer.

Once you take the ratio of payroll to television households, the results become far more interesting. Who would you expect to be on top? Believe it or not, it’s not the Yankees. The Bronx Bombers are seventh to last (let me note here that the Toronto Blue Jays had to be disregarded in this analysis due to the Nielsen DMAs counting only US television households). Nor is it the Mets, Cubs, Dodger, Angels or even the Red Sox.

The grand prize winner in Payroll Dollars Spent to Television Households ratio is the Milwaukee Brewers, clocking in at an impressive $88.57/Household.

To put things in perspective, the aforementioned Tigers are 6th at $59.72/Household and the best showing for any of baseball’s traditional big spenders are the Red Sox, in 9th place with $50.54/Household.

The Yankees? They spend $27.10/Household. And the LA Dodgers come in dead last, spending a mere $17.76/Household.

When you take into account that Milwaukee ranks dead last among major league cities in television households (905,350) and US market share (0.791%), the Brewers’ 16th-ranked payroll of $80.1 million is very impressive.

So what does it say about the Brewers and those other franchises above the curve (such as the Reds, Royals, and Cardinals)? After all, I bet no one out there is willing to believe that the team owners care enough about winning to run their squads at a deficit (at least not until somebody with a personality akin to Mark Cuban buys an MLB franchise).

Actually, the better question is what does it say about the fans of these teams? Truth be told, the fans are the ones spending the dollars–whether that be on tickets, concessions, memorabilia or what not–to make up the television gap.

They have great, loyal, money-spending fans.

Case in point: right before the All-Star break I was watching the Dodgers play the Brewers, and the announcers mentioned how that game was the nineteenth sell-out so far this season at Miller Park. Not too shabby for a team that until the last couple seasons was an after-thought for most baseball fans across the country. Of course, success helps; regardless, it’s impressive fan support. We’re not talking about a team whose fans have garnered notoriety for their rabidity like Red Sox Nation.

Not that these numbers should give anyone reason to claim that baseball’s economics are not skewed–if Major League Baseball could take measures to ensure a more equal economic footing for all teams, the competitive balance of baseball would greatly improve. Until that time, the big spenders will always have an edge. Kudos, however, to those fanbases providing enough support for their teams to give those franchises at least a chance of breaking out from the houses of dollar bills stacked against them.

(For those wondering, raw population numbers generate similar results to the Nielsen household rankings. However, since market share drives ad revenue and since it would be difficult to allocate population in the two-team cities between the two franchises, I chose to use the Nielsen numbers for this analysis.)

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