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New Baseball Teams for New York and Boston?

? The Capital Fundamentalists Ride Again |


| Game Theory vs Behavioral Economics ?

October 07, 2005

New Baseball Teams for New York and Boston?

Michael Mandel

It's the post-season, and once again the Yankees and the Red Sox are in the playoffs. Here's a very simple reason why: There are too few baseball teams in New York and Boston relative to the size of the local economies. As a result, New York and Boston teams have access to more economic resources than anyone else. The conclusion: If baseball wants competitive balance, the best way is to add an extra team in NY and Boston.

My reasoning is simple. The economic resources potentially available to a baseball team depends on the size of the local economy, and the number of baseball teams in the area. In cities with two teams, the economic resources have to be shared (this updates an analysis that I did in 2002 in BusinessWeek).

Take a look at this table. The first column reports the 2003 personal income, in billions, for each local area with a baseball team. The second column reports the 2003 personal income per team...that is, for cities with two teams, we divide the first number in half (the data is based on BEA economic areas).

The cities which jump out, as having the highest personal income per team, are New York and Boston. New York has a local economy nearly 60% larger than LA's, with the same number of teams. And Boston has only the sixth largest local economy--but the five larger economies support two teams, while Boston only has one.

On economic grounds there absolutely should be a third baseball team in the New York area, as was true until the Dodgers and the Giants left. With three teams in the New York area, personal income per team would still be ahead of almost everyone, but the difference would no longer be so enormous.

The case for an extra team is less clearcut for Boston, where an extra team would push personal income per team into the lower half of the distribution. Still, it's probably a good idea.

11:57 AM


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Should Baseball Put a Third Team in New York from SportsBiz

In a very thought provoking post on his Economics Unbound Blog for Business Week, Michael Mandel sets out the proposition that based on personal income per team, New York and Boston should each receive get a new baseball team to restore competitive b... [Read More]

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Tracked on October 18, 2005 12:53 AM

I whole-heartedly disagree with adding another team to baseball anywhere. Although the revenue/per-capita numbers might support it, it does little to fix the true problems with baseball, which are:

1. Outrageous salaries - MLB should look to the NFL as an inspiration for how to run a sports league. NFL has labor harmony and a salary cap. That makes each team competitive. Who would have thought the Bengals would be doing so well or the Packers so poorly? In baseball, it's an expectation that a handful of teams will make the playoffs. Mets? not likely. Devil Rays? NO WAY! Yankees, perennial SHOE-IN.

2. Attendance costs - the plethora of new stadiums the past couple years has allowed owners to raise the ticket costs to levels that are cost-prohibitive to many people. Taking a family of four to a game is easily $200 after parking, ticket prices, food, drinks, and beer. I'm aware that the NFL is more expensive, but there are less games so it should be more, IMO. With the rise of HDTV households, I expect MLB attendence to decline even faster in the future.

Posted by: Wes at October 10, 2005 11:43 AM


Actually, my solution would help your problems, especialy if broadly applied. More competition would lower the revenues of the richest team. In all likelihood, that would lower average salaries, which might also lower the need to boost ticket prices as well.

Besides, Boston could use a new team.

Posted by: Mike Mandel at October 10, 2005 12:21 PM

Who would be fans of this new team?

Yankees fans would never jump ship. Mets fans must be loyal or they would be Yankees fans. What about Northern Jersey you ask?

Well, the Devils have done nothing but win in the NHL and they can't hold a candle in popularity to the Islanders and the Rangers for the local hockey fan.

Could you seriously build a 2 mill/year fan base with the passions for teams already there?

Posted by: jlichty at October 19, 2005 01:37 PM

Parity arguments that cite the NFL are plain ol' silly. "Anyone can win" in the NFL primarily because they play one-tenth the games that MLB does. If you had a sixteen game MLB season, you'd get crazy stuff like the Rays and Jays in the ALCS.

Posted by: jeff at October 20, 2005 02:36 PM


The NFL does NOT have better parity than MLB. The Patriots have won 3 of the last 4 Super Bowls because they are the best team in football. But the best team in baseball is much less likely to win the World Series because of the randomness involved in short series is much greater than any one football game.

Only 8 teams make the MLB playoffs while 12 teams make the NFL playoffs. That creates an illusion of better competitiveness -- making the playoffs -- not real competitiveness.

The NL has had 8 different World Series teams in the last 8 years -- that's half the league! Even in the Yankee-dominated AL, there have been 4 different World Series teams in the last 8 years. By the end of next week, FIVE different teams will have more recent championship rings than the Yankees.

Also, the Mets were in the World Series only 5 years ago. How can you possibly use them as an example of a team usually "not likely" to make the playoffs?

And the Yankees didn't feel like such a "shoe-in" most of the season. Their spot was far from guaranteed right into the last week of the season.

As for the Devil Rays, they finally fired perhaps the worst G.M. in baseball. Stupid teams SHOULDN'T make the playoffs. Check them out again in a couple years.

As for ticket prices, they'll go down when people quit paying them. So far that hasn't happened. For overall MLB attendance to "decline even faster in the future" first it will have to start declining. And as long as people are willing to pay the ticket prices that support salaries, it seems unfair, from a business perspective, to call the salaries "outrageous" (except Eric Milton's salary, that really is outrageous - I'm a Reds fan).

Sorry to go on so long.

Posted by: Arthur at October 20, 2005 04:25 PM

"Yankees fans would never jump ship."


Posted by: michael at November 18, 2005 09:44 PM

How about moving KC to Brooklyn? Call them the Kings County Kings. Keep the colors and the logos. Just need a stadium and no King George in the way!

Posted by: John at October 14, 2006 11:06 AM

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