Table 5-1
Predictions about Rules Changes and Performance
Change
Walk reduced to 8 balls.
Mound moved back to 50’.
Walk reduced to 7 balls.
Walk reduced to 6 balls.
Walk increased to 7 balls.
Strikeout changed to 4 strikes.
Strikeout reduced to 3 strikes.
Walk reduced to 4 balls.
Mound moved back to 60’6”.
Lively ball introduced.
Strike zone narrowed.
Strike zone widened.
Strike zone narrowed.
Designated hitter in the
American League.
Year
1880
1881
1882
1884
1886
1887
1888
1889
1893
1920
1950
1963
1969
1973
Predicted
+
+
+
+
+
+
+
+
Source: Scully (1989, p. 64).
Actual
BA ERA RPG
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
2
Table 5-2
MLB Expansion Team Records First Five Years
Team
Mets
Colt45s /Astros
Senators
Angels
Padres
Expos
Royals
Pilots/Brewers
Mariners
Blue Jays
Rockies
Marlins
Diamondbacks
Devil Rays
Averages
Year
Expand
ed
First
Year
1962
1962
1961
1961
1969
1969
1969
1969
1977
1977
1993
1993
1998
1998
0.250
0.400
0.379
0.435
0.321
0.321
0.426
0.395
0.395
0.335
0.414
0.395
0.401
0.389
0.375
Average First 5 Number of
Years *
Years It Took
to Reach
0.500
0.322
8
0.412
8
0.383
9
0.474
2
0.368
10
0.436
11
0.478
3
0.420
10
0.385
15
0.358
7
0.485
3
0.474
5
0.514
2
0.415
0.423
7.2
*Average is after the first three years for the Diamondbacks and Devil Rays.
3
Table 5-3
Pro Sports League Coverage of the Top 30 Cities by Population
League
#Teams
MLB
30
NBA
29
NFL
32
NHL
30
All Leagues 121
Covered
26
22
24
21
30
% Covered
87%
73%
80%
70%
100%
4
Table 5-4
Pro Sports League Rivalries
Dominant
League
Rivals
Duration
Disposition
National League
(1896)
American Assoc.
1883-1891
Assimilated
Union Assoc.
Players League
AL
Federal League
Negro Leagues
PCL
1884
1890
1901-1902
1914-1915
1923-1950
Middle 1950s
Assimilated
Assimilated
Merger
Buy Out by MLB
Folded
AFL I
AFL II
AFL III
All-American
FC
AFL IV
WFL
USFL
1926
1936-1937
1940-1941
1946-1949
One-Team Merger
Partial Merger
Folded
Partial Merger
1960-1969
1974-1975
1983-1985
Partial Merger
Folded
Folded
NBA (1949)
ABL
ABA
1960-1961
1967-1976
Folded
Partial Merger
NHL (1917)
WHA
1972-1979
Partial Merger
MLB (1903)
NFL (1922)
Source: Author additions to Quirk and Fort (1992, Chapters 8 and 9).
5
Table 5-5
Team Movement in Pro Sports
Team
MLB
Angels
Athletics
Braves
Brewers
Dodgers
Giants
Orioles
Rangers
Twins
Yankees
Moves
Los Angeles-California
Philadelphia-Kansas City-Oakland
Boston-Milwaukee-Atlanta
Seattle-Milwaukee
Brooklyn-Los Angeles
New York-San Francisco
Milwaukee-St. Louis-Baltimore
Washington-Texas
Washington-Minnesota
Baltimore-New York
NFL
Cardinals
Colts
Raiders
Rams
Ravens
Redskins
Chicago-St. Louis-Phoenix-Arizona
Baltimore-Indianapolis
Oakland-Los Angeles-Oakland
Cleveland-Los Angeles-St. Louis
Cleveland-Baltimore
Boston-Washington
NBA
76ers
Bullets
Clippers
Hawks
Jazz
Kings
Lakers
Pistons
Spurs
Warriors
Syracuse-Philadelphia
Chicago-Baltimore-Washington
Buffalo-San Diego-Los Angeles
TriCities-Milwaukee-St. Louis-Atlanta
New Orleans-Utah
Rochester-Cincinnati-Kansas City-Sacramento
Minneapolis-Los Angeles
Fort Wayne-Detroit
Dallas-San Antonio
Philadelphia-San Francisco-Golden State
NHL
Avalanche
Coyotes
Devils
Flames
Stars*
Whalers
Quebec-Colorado
Winnipeg-Phoenix
Kansas City-Colorado-New Jersey
Atlanta-Calgary
Oakland-California-Cleveland-Minnesota-Dallas
New England-Hartford
Source: Quirk and Fort (1992) and on-line team histories. *Cleveland Barons merged
with the Minnesota North Stars in 1978.
6
Figure 5-1
Small and Large Revenue Market Teams in a Two-Team League
$
MRL (0.250)
MR S(0.250)
MR S(W)
W =0
MR L(W)
W =1
W =0.250
Legend: The smaller market team has lower marginal revenue for all levels of winning
percent than the larger market team. MRL(W) > MRS(W) for all W. An example is
shown at W = 0.250.
7
Figure 5-2
Two-Team League Revised
$
$
MRL (W)
MR S(W)
1
MR L
1
MR S
W S =1
WL =0
1
1
W L =1–W S
W S =0
WL =1
Legend: This depiction of the two-team league is a useful adaptation. The larger market
team is portrayed from left to right and the smaller market team is portrayed from right to
left. Since the sum of winning percents in a two-team league equals one, W1L  1  W1S .
But at that winning percent outcome, MR1L  MR1S so it cannot be an equilibrium since
the large market team wishes to buy more talent and the smaller market team will sell it.
8
Figure 5-3
Market Equilibrium
$
$
MRL (W)
MR S(W)
*
MR L = P
WS = 1
WL = 0
*
MR S = P
*
*
W L = 1–W S
WS = 0
WL = 1
Legend: Since the sum of winning percents in a two-team league equals one,
W*L  1  W*S . And this result is an equilibrium outcome. With MR *L  MR *S , neither
team wishes to alter its talent choice. The market equilibrium price of talent is
P  MR *L  MR *S .
9
Table 5-6
Revenue Imbalance in MLB
Measured by the Standard Deviation of Winning Percent
MLB
Year
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
1990s
Ave.
FWF/C
H
.158
.154
.149
.140
.161
.186
.193
.201
.168
BRP
.213
.168
.182
.180
.176
.184
AL
Year
ly %
Cha
nge
-2.5
-3.2
-6.0
42.5
-9.5
6.1
-6.0
-2.2
2.4%
FWF/CH
.168
.151
.152
.147
.176
.195
.220
.222
.179
BRP
.209
.181
.199
.204
.192
.197
NL
Yearl
y%
Chan
ge
-10.1
0.7
-3.3
37.4
-0.7
5.0
-3.1
-5.9
2.5%
FWF/CH
.137
.141
.119
.128
.140
.168
.153
.170
.145
BRP
.206
.147
.156
.152
.156
.163
Notes: FW-F/CH = standard deviations are calculated from revenue data in Financial
World-Forbes/Congressional Hearings data; BRP = standard deviations are calculated
from revenue data in the Blue Ribbon Panel Report (2000). Percentage changes are
calculated on the average of FW-F/CH and BRP for 1995 through 1998.
Year
ly %
Cha
nge
2.9
-15.6
7.6
46.1
-19.8
8.7
-6.7
2.6
3.2%
10
Table 5-7
Payroll Imbalance in MLB
($Thousands)
Year
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
High
22,000
38,900
49,400
51,900
47,500
58,200
61,500
73,400
71,861
85,054
Low
8,000
12,000
9,300
12,800
13,800
13,100
11,700
12,900
8,318
16,176
2000
Aves.
92,538
60,475
16,20
11,588
High/Low Average High/Ave.
2.8
16,408
1.3
3.2
24,908
1.6
5.3
31,258
1.6
4.1
32,321
1.6
3.4
32,461
1.5
4.4
33,121
1.8
5.3
36,073
1.7
5.7
40,061
1.8
8.6
41,080
1.7
5.3
47,371
1.8
5.6
5.0
55,665
35,827
1.7
1.7
Gini
0.136
0.166
0.163
0.180
0.184
0.210
0.196
0.240
0.242
%
22.1
-1.8
10.4
2.2
14.1
-6.7
22.4
0.8
0.215
0.193
-11.2
5.8%
Sources: Published salary accounts available for all of the tabled years, typically obtained
from MLB owners.
11
Table 5-8
Winning Percent Imbalance
Standard Deviation of Winning Percent Adjusted for Season Length
League
NL
AL
NBA
NFL
NHL
1901- 1910- 1920- 1930- 1940- 1950- 1960- 197009
19
29
39
49
59
69
79
3.08 2.22 2.18 2.22 2.40 2.00 2.56 1.74
2.43 2.55 2.25 2.62 2.20 2.43 2.13 1.95
2.44 2.02 2.62 2.36
1.83 1.60 1.73 1.46 1.64 1.58
1.71 1.61 1.53 1.69 1.88 1.90 2.54
198090
1.67
1.67
2.73
1.53
1.91
199099
1.65
1.62
12
Table 5-9
The Standard Deviation of Winning Percents
Year
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Aves.
MLB
0.057
0.061
0.064
0.074
0.072
0.062
0.060
0.084
0.078
0.064
%
7.0
5.7
14.7
-3.4
-12.6
-3.2
39.7
-8.3
5.0%
AL
0.057
0.061
0.063
0.055
0.083
0.069
0.062
0.081
0.076
0.065
%
7.0
3.3
-12.7
50.9
-16.9
-10.1
30.6
-6.2
5.7%
NL
0.057
0.061
0.066
0.093
0.060
0.056
0.059
0.088
0.079
0.064
%
7.0
8.2
40.9
-35.5
-6.7
5.4
49.2
-10.2
7.3%
13
Table 5-10
League Titles in MLB, 1900-1999
League
Titles
Years
Years/Titl
e
American
League
Yankees
Oakland Athletics
Phil. Athletics
Orioles
Red Sox
37
7
9
6
10
98
33
54
47
100
2.6
4.7
5.9
7.8
10.0
National League
NY Giants
LA Dodgers
Bklyn. Dodgers
Cardinals
Mil. Braves
Atl. Braves
Mets
Cubs
Reds
15
9
9
15
2
5
4
10
10
57
43
57
100
15
35
39
100
100
3.8
4.8
6.2
6.7
6.7
7.0
9.8
10.0
10.0
14
Figure 5-4
Gate Revenue Sharing in a Two-team League
$
$
a
MRL(W)
f
d
MRS(W)
g
MRL(W)
WL = 0
*
MR S = P*
P’
WS = 1
MRS(W)
b
*
MR L = P*
c
*
W L = 1–W S
*
P’
WS = 0
WL = 1
Legend: Under gate revenue sharing, if the home team keeps a share equal to , then
both MRS and MRL shift down to MRS and MRL. The new equilibrium occurs at
the same winning percents, W*L  1  W*S . But the price of talent falls from P to P’. The
amount of revenue shared by the large revenue market owner is the area of the
parallelogram abcd. The amount of revenue shared by the small revenue market owner is
area fbcg. The difference between the two is the net gain to the smaller revenue market
owner, easy to see since abcd > fbcg.
15
Table 5-11
The NFL’s 2001 Gate Revenue Sharing Plan
Old 60-40 Plan
Team
Gate Pay
High Gate
55.0 22.0
Average Gate 41.0 16.4
Low Gate
25.0 10.0
Sums
48.4
Receive
8.2 + 5.0 = 13.2
11.0 + 5.0 = 16.0
11.0 + 8.2 = 19.2
48.4
Net
-8.8
-0.4
9.2
New Plan
Team
Gate Pay
High Gate
55.0 22.0
Average Gate 41.0 16.4
Low Gate
25.0 10.0
Sums
48.4
Receive
1/3 x 48.4 = 16.13
16.13
16.13
48.4
Net
-5.9
-0.3
6.1
16
Table 5-12
MLB’s 1995 Local Revenue Sharing Plan
Old 80-20 Gate Sharing Plan
Team
Gate Pay
Yankees
53.0 10.6
Devil Rays
32.0
6.4
Expos
12.0
2.4
Sums
19.4
Receive
3.2 + 1.2 = 4.4
5.3 + 1.2 = 6.5
5.3 + 3.2 = 8.5
19.4
Net
-6.2
0.1
6.1
New Common Pool Plan
Team
Local Revenue
Yankees
175.9
Devil Rays
73.2
Expos
11.9
Sums
Pay
29.9
12.4
2.0
44.3
Receive
1/3 x 44.3 = 14.77
14.77
14.77
44.3
Net
-15.1
2.4
12.8
17
Figure 5-5
The Impact of Luxury Taxes in a Two-team League
$
$
MRL(W)
MRS(W)
*
*
MR L = P
P’
WS = 1
WL = 0
MR S = P
P’
W1 Wt
L
*
W L
WS = 0
WL = 1
Legend: At the spending threshold associated with W1, a tax of t1 = 0.5 (50% on talent
chosen beyond the threshold W1) is imposed. The new equilibrium choice by the large
revenue owner is W t . Since the sum of winning percents is one, the talent choice by
L
the smaller market owner must increase. In addition, the price of talent falls to P’.
18
Figure 5-6
The Impact of a Salary Cap in a Two-team League
$
$
MRL (W)
MR S(W)
*
MR L = P*
C
*
MR S = P*
C
WS = 1
WL = 0
'
WS
C
C
W L = W S = 0.500
WS = 0
WL = 1
Legend: A cap on the price per unit spent on talent of C, along with the imposition of
equal spending, has the following impacts. First, the price of talent falls and payments to
C
talent are reduced by the shaded rectangle, P*-C. At equal spending, W C
L  WS  0.500
and spending by each team is equal at 0.500*C. However, since MRL>MRS on all units
' , both teams have an incentive to violate the cap.
between 0.500 and W S
19
Table 5-13
NFL Caps
Year
DGR
1993
1994
1995
1996
1997
1998
1999
2000
1.575
1.706
2.002
2.168
2.286
2.813
3.185
3.499
NFL
Cap
34.6
37.1
40.7
41.4
52.4
57.3
62.2
Ave. Team
Salary
39.3
37.0
42.5
45.7
43.3
61.4
65.8
Source: Sports Business Journal, 1/31-2/6/00, p. 30.
20
Table 5-14
Team Salary Cap and Total Salaries in the NBA ($Millions)
Year
Cap
Min
Median
Mean
1985/86
1986/87
1987/88
1988/89
1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/2000
$4.2
$4.9
$6.2
$7.2
$12.5
$14.0
$15.1
16.0
23.0
24.3
26.9
30.0
34.0
$2.9
$4.5
$4.3
$3.4
$10.7
$11.5
$14.3
$4.2
$5.4
$5.9
$6.8
$12.9
$15.1
$17.9
$4.6
$5.7
$6.0
$6.8
$13.7
$15.8
$18.4
22.2
25.0
27.7
32.7
38.0
46.2
Mean/Ca
p
1.09
1.16
0.96
0.94
1.10
1.13
1.22
1.39
1.39
1.14
1.22
1.27
1.36
Max
$8.6
$8.9
$9.1
$10.7
$25.4
$25.0
$23.7
Source: Calculated from data in Fort and Quirk (1995, Table 5) and Sports Business
Journal,1/15-21/01, p. 3.
21
Figure 5-7
Rival League Talent Dilemma
League 2
Spend High
Spend High
Spend Low
1 & 2 Major
1 Major
2 Minor
2 Major
1 Minor
1 & 2 Minor
League 1
Spend Low
Legend: The dominant strategy in this game is for both leagues to spend high and obtain
major league status. For example, if League 1 spends high, so should League 2. If
League 1 spends low, League 2 should still spend high. And the same strategy holds for
League 1 since the payoffs are symmetric. But if the costs of maintaining major league
status are too high over time, only one dominant league can survive.