Emsam i sverige utan recept flytande Motilium dos Tadalis dosering rampfeber köpa Phexin amsterdam köpa Trimox i italien eljo Plaquenil bästa pris köpa Panmycin flashback säker sida att köpa Sumycin köpa Altace över disk pris på Tricor på apoteket Benfotiamine och träning dosering våga köpa Diclofenac på nätet är det olagligt att beställa Lariam köpa Urispas danmark lagligt att beställa Aristocort jag vill köpa Ponstel hur kan jag köpa Accutane köpa Aceon receptfritt köpa Geriforte online sverige kan man köpa Endep i frankrike köpa Trimox i sverige flashback köpa Lipotrexate på cypern köpa Lithium i england snabb leverans Acticin köpa Cleocin rhodos köpa Estrace i butik stockholm köpa Imuran inom eu Minocycline migrän dosering Glycomet uttag pris köpa Clonidine på postförskott köpa Hoodia för män köpa Bonnispaz duo var köpa Premarin flashback köpa Atrovent online lagligt kan man köpa Cardizem i sverige Lipotrexate recept sverige pris Celebrex apotek hjärtat köpa jord Brahmi kan man beställa Pariet köpa kvinnlig Metoclopramide köpa Zyban patong köpa Rogaine 5 i eu lagligt att beställa Zocor på nätet köpa Lioresal tyskland köpa Aleve gran canaria Methotrexate gel på recept vart ska man köpa Isoniazid köpa billiga Lisinopril Pilex online utan recept Finast snabb leverans skaffa recept till Shuddha beställa Actoplus online beställa Lotrisone på internet lägsta pris Lozol köpa Suprax online billigt funkar generisk Calan snabb leverans på Erythromycin köpa Septilin i usa kan man köpa Shallaki i kroatien Lukol köpa online Lasix k dosering Lipotrexate dos migrän Celexa bra pris att köpa Tulasi köpa Calcium Carbonate på nätet lagligt kan man köpa Decadron i tyskland är det olagligt att beställa Arcoxia beställa Coreg inrikes köpa generic Levlen Lipothin pfizer köpa Keflex beställa container Protonix sverige snabb leverans beställa Nolvadex pulver beställa Seroflo sverige Lotrisone pris på gatan behövs recept för Panmycin i spanien Nizoral nervositet dosering bästa stället att köpa Dostinex Diflucan kräm pris Isoniazid lägre pris är det olagligt att köpa Suhagra Suprax nervositet dosering bra ställe o köpa Voltaren beställa Pamelor lagligt köpa Pamelor i frankrike vart kan man beställa Prinivil köpa Differin i göteborg beställa Ginseng på nätet lagligt köpa Pilex 10mg kan man köpa Topamax i grekland Rogaine 5 dosering vuxna var kan man köpa Nolvadex köpa Erexin-V i thailand bra ställe o köpa Keftab köpa generisk Danazol i sverige var ska man köpa Azulfidine var kan man köpa Apcalis säkert köpa Bactroban på internet beställa Flagyl ER på internet köpa Styplon barcelona köpa Ventolin kina köpa Erexin-V tallinn är det olagligt att köpa Speman Zestril vet dosering köpa Florinef inom eu kan man köpa Proventil i tyskland köpa V-gel för kvinnor Amaryl dosering vuxna Dostinex var köpa beställa Colospa jelly Clomid på apoteket pris Ranitidine i sverige utan recept köpa Florinef på internet Advair vilken dos Suhagra snabbast leverans skillnad mellan generisk Ophthacare var kan man köpa Cytotec på nätet för hög dos Zenegra köpa Hytrin i vietnam köpa Serpina på nätet billigt köpa Famvir rhodos köpa Colchicine lagligt beställa Dostinex på faktura kan man köpa Citalopram på apoteket köpa Nootropil i filippinerna köpa Actoplus 10mg våga köpa Florinef på nätet Diovan beställa container Torsemide köpa flashback Prevacid och träning dosering hur beställa Dutas billig Noroxin snabb leverans köpa billigaste Fincar köpa Saw Palmetto för kvinnor köp Trileptal snabb leverans Ranitidine vägguttag pris köpa äkta Remeron på nätet Diltiazem dosering rampfeber köpa Kamagra var Apcalis duo leverans Danazol snabb leverans sverige köpa Prednisolone på nätet sverige beställa Serevent utan recept beställa Remeron flashback Big Appeal hög dos köpa Probalan nätet Ashwagandha hög dos köpa Lariam inom sverige recept för Purim köpa Bestina för tjejer kan man köpa Malegra på apoteket i spanien köpa Ciplox på teneriffa tips köpa Toradol köpa Abana i egypten Eurax 100 billig köpa Dostinex patong köpa Azulfidine bangkok köpa Casodex i england köpa Dilantin på nätet sverige köpa Anacin kräm kan man köpa Amitriptyline på teneriffa Arava hexal köpa Rogaine 2 och träning dosering köpa kvinnlig Zyrtec Erexor rekommenderad dos hur stor dos Norvasc ska man ta Zyban snabb leverans köpa Actos i tyskland Cardura k dosering köpa Protonix i bangkok lägsta pris Tetracycline köpa Norvasc i indien Diflucan kräm köpa köpa Grifulvin V på nätet köpa Ranitidine oslo Zebeta usa köpa dosering Evista till hund köpa Imdur i frankrike kan man köpa Clarinex i sverige köpa generic Biaxin lagligt att beställa Lamisil på nätet apoteket Tofranil pris köpa billigt FML Forte Cefadroxil online utan recept var köper man Clarinex utan recept köpa Lotensin över disk är generisk Sumycin farligt Suhagra 10 mg köpa Desyrel dosering sömn köpa Lamictal kroatien köpa Metoclopramide för män köpa äkta Eulexin på nätet beställa Astelin till sverige Gyne-lotrimin utan recept är det olagligt att köpa Prilosec på nätet köpa Flagyl ER oral jelly köpa Kamagra olagligt köpa Toradol på kreta köpa Zyrtec kräm Betapace dosering till katt generisk Evista snabb leverans Albendazole pris apotek sverige köpa Trileptal i usa Prograf generisk Prograf skillnad Clarinex kapslar pris var kan man köpa Ceftin på nätet köpa Metformin i göteborg pris på Citalopram sverige pris på Ranitidine med recept beställa Actoplus lagligt köpa Prograf i butik hur kan jag köpa Cholestoplex kan man köpa Hytrin i danmark bästa stället att köpa Levitra på köpa billigt Tadacip kan man köpa Zyrtec i thailand Cafergot på nätet utan recept köpa Allegra online 2012 dödlig dos av Lynoral kan man köpa Amitriptyline på apoteket i sverige Fucidin och träning dosering beställa container Trazodone göteborg köpa Lanoxin danmark Cytotec liniment pris köpa Lincocin i helsingborg Albenza online utan recept eljo Rizact uttag pris Femara bästa pris är det lagligt att köpa Motrin pris på Forzest i sverige köpa Zebeta tallinn Aldactone shampoo köpa beställa Emsam olagligt köpa Ralista säkert på nätet fungerar generisk Anafranil Nexium duo leverans beställa Shatavari flashback försäljning av Mircette köpa Himcolin jelly skaffa recept till Zaditor Cardura på recept köp Fosamax snabb leverans Lopid dosering migrän Meclizine dos nervositet var kan jag köpa Detrol köpa Pletal estland köpa Naltrexone online sverige Lamictal pris på apoteket lagligt att beställa Astelin på nätet olagligt att beställa Baclofen på nätet Zovirax nervositet dos köpa Rosuvastatin butik kan man köpa Viagra receptfritt i spanien beställa hem Toradol köpa Hydrochlorothiazide sverige flashback köpa Levlen seriöst köpa Zyrtec phuket hyra container Big Appeal pris köpa Rogaine 5 på rhodos köpa Entocort 10mg beställa Benfotiamine online flashback köpa Tretinoin 20mg beställa Nimotop på nätet flashback Prednisone duo leverans apotekets pris på Betapace beställa Mycelex-g online köpa Tegretol sverige 2012 bästa pris på Cleocin kan man köpa Trazodone spanien Proscar hög dos köpa Ventolin spanien kan man köpa Celadrin på mallorca farligt köpa Finpecia på nätet vart beställa Pyridium köpa Finax oslo beställa Ciplox på nätet flashback svårt att få recept på Danazol vart ska man köpa Alli dödlig dos av Pristiq Dipyridamole pris gatan pris på Ventolin i sverige kan man köpa Fluoxetine på apoteket i spanien beställa Cephalexin sverige köpa Benicar för tjejer generisk Alavert i sverige Desyrel 10 mg köpa köpa Lanoxin i ryssland köpa Avapro i göteborg köpa Indinavir grekland köpa Renagel i helsingborg köpa Renagel jelly köpa Lynoral i riga Bestina dosering sömn kan man köpa Alesse i england kan man köpa Colospa receptfritt i spanien hur beställa Proventil Prednisolone dosering migrän kan man köpa Cephalexin i thailand kan man köpa Fincar receptfritt Mobic köpa jord Serophene bra pris köpa Shallaki tabletter köpa kvinnlig Tulasi kan man köpa Zyloprim i turkiet lagligt att beställa Chloroquine på nätet Buspar turkiet pris Exelon säker leverans kan man köpa Robaxin i turkiet är det lagligt att köpa Torsemide på nätet vill köpa Beconase AQ Biaxin dosering till katt billig Aceon sverige apoteket Aciphex gel pris köpa Artane sverige 2012 var kan man köpa Noroxin Yasmin snabb leverans köpa Plendil i bulgarien lagligt köpa Flagyl ER beställa Compazine 2012 kan man köpa Pilex på apotek köpa Albendazole internet lagligt beställa Wellbutrin lägre pris på Flomax beställa hem Celadrin bästa pris på Elimite köpa billig Ampicillin Slimex jelly snabb leverans Plaquenil dosering migrän kan man köpa Cefadroxil i sverige generisk Viramune sverige köpa Hydrea inom eu köpa Actos jelly köpa Kytril grekland köpa Elimite på gran canaria Erexin-V gel på recept pris Aciphex på apoteket köpa Abana barcelona apotekets pris på Decadron Deltasone dos urinvägsinfektion kan man köpa Famvir på mallorca Midamor mot ångest dos köpa Phexin i turkiet Antivert oral jelly köpa kan man köpa Aceon på nätet köpa billigt Hydrea pris på Wellbutrin på apoteket billig Pletal snabb leverans bra ställe att köpa Confido köpa Terramycin i kina beställa Naltrexone på nätet 2014 köpa Imdur gel vart beställa Plendil var kan man köpa Zenegra på nätet Pariet dosering vuxen beställa Keftab billigt recept för Calan beställa Keflex från sverige köpa Prazosin kroatien kan man köpa Ethionamide i tyskland beställa Himcocid på nätet 2014 köpa Duphalac oral jelly köpa Calcium Carbonate stockholm köpa Tulasi i vietnam beställa Promethazine 2012 skaffa recept till Diabecon kan man köpa Zyrtec i italien köpa Prilosec bangkok kan man köpa Speman i usa köpa Aceon 10mg säkra sidor att köpa Inderal köpa Uroxatral sverige 2012 Cefadroxil dos migrän beställa Gyne-lotrimin på faktura köpa Geriforte i butik köpa Seroflo receptfritt kan man köpa Lincocin receptfritt köpa Zenegra på postförskott apoteket Robaxin gel pris köpa Carafate i sverige forum fungerar generisk Nolvadex lägsta pris på Nolvadex Cholestoplex dosering till katt hyra container Keflex pris Vermox på apoteket pris kan man köpa Clonidine i italien Ciplox pris i sverige lagligt att beställa Carbozyne viagra Valtrex köpa köpa Dramamine i sverige flashback köpa jord Rumalaya olagligt att köpa Cialis lagligt att köpa Norvasc vågar man köpa Lopressor på nätet kan man köpa Charboleps på apotek Cardura migrän dos Bestina flytande dosering kan man köpa Alesse i danmark Trimox i sverige utan recept Phexin snabb leverans sverige köpa Alli apoteket Avodart för kvinnor pris var köper man Pamelor utan recept köpa Top Avana i ryssland köpa Strattera grekland beställa Omnicef Micronase säker leverans köpa Olanzapine oslo köpa Midamor rhodos Artane tabletter pris sverige köpa Shuddha göteborg beställa Minomycin inrikes köpa Clarina på kanarieöarna köpa Topamax säkert på nätet köpa Combivent från england säkra sidor att köpa Augmentin Cozaar köpa flashback Anafranil var köpa Shallaki utan recept i sverige generisk Diltiazem snabb leverans pris på Celebrex på apoteket Keflex dosering ångest är det lagligt köpa Aciphex på nätet vill du köpa Voveran flytande Diarex dosering lägre pris på Aspirin Indocin 100 billig var kan man köpa FML Forte receptfritt Compazine liniment pris beställa Micronase från sverige i vilka länder kan man köpa Suprax receptfritt är det olagligt att köpa Aspirin på nätet kan man köpa Prinivil i prag apoteket hjärtat Lioresal pris var köpa äkta Brahmi köpa Zyloprim i danmark beställa Amoxil olagligt vart ska man köpa Evista pris på Alavert sverige köpa Vantin på ica Lipothin nervositet dos beställa Estrace på nätet lagligt Minocycline var köpa beställa blå Styplon Top Avana strömställare pris Erythromycin pfizer köpa våga köpa Forzest på nätet generisk Nizoral snabb leverans Zenegra 100 billig Midamor strömställare pris vad är generisk Zyban köpa Cardizem från sverige köpa Toprol i usa Famvir gel pris apoteket Lipotrexate kräm köpa var beställa Lady era köpa Femcare online köpa Cleocin i ryssland sänkt pris på Bupropion köpa Stromectol jelly kan man köpa Lasuna i usa köpa Zoloft duo Avodart köpa online dosering Deltasone k Imdur köpa på nätet Proventil dos migrän beställa container Confido köpa Flonase super active Omnicef att köpa var kan man köpa Himcocid duo köpa Anafranil i sverige forum Naprosyn dosering till katt sänkt pris Cleocin Emsam pris gatan sänkt pris Finast Propecia dosering halsfluss köpa Clozaril polen kan man köpa Saw Palmetto på apoteket skillnad mellan generisk Digoxin köpa Feldene gel Actos 10 mg köpa Voveran gel pris apoteket köpa Toprol i göteborg köpa Bactrim grekland köpa billiga Imdur köpa Arimidex apotek köpa Trileptal i malmö var beställa Pariet Elimite receptfritt pris Paroxetine mot nervositet dos vad kostar Doxazosin på recept beställa Lipothin inrikes Estrace flytande dosering köpa Dapoxetine från sverige köpa Trimox kroatien köpa Noroxin på nätet lagligt Remeron pris sverige Silagra utan recept i sverige köpa Nitrofurantoin säkert pris på Prazosin sverige beställa Procardia utomlands
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Interview - Andrew Zimbalist - Sports Economist PDF Print E-mail
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Written by Maury Brown   
Sunday, 08 August 2004 12:00

Andrew ZimbalistWhen the discussion of the economics of baseball are discussed in the media and beyond, most often you'll find Andrew Zimbalist in the mix.

This interview covers the debate over the public subsidy of stadium development, to territorial rights, especially as it pertains to the Baltimore/Washington, D.C. area, to the current revenue sharing system, plus more, Zimbalist covers all the bases.


The numbers are staggering.

Since 1992, when Bud Selig took over as Commissioner of Baseball, there have been 15 new or renovated ballparks. In the case of the new ballparks, all have had some form of public subsidy involved, totaling well in excess of a billion dollars when all is said and done and leases are fulfilled. This new stadium development is touted by MLB as being a panacea towards overall franchise success, regardless of the fact that many see franchise sustainability being coupled, in large part, to wins and losses as well.

With this large volume of stadia development has been the constant struggle to try to quantify the economic impacts of ballpark development within local, state and regional domains, and one of the most visible economists to speak to this current environment has been Andrew Zimbalist.

Zimbalist serves as Robert A. Woods Professor of Economics at Smith College and his resume is  peppered with consultation as it pertains to baseball. To Wendell, Chritton & Parks in the Florida State League/Florida Marlins arbitration case, to the Major League Baseball Players' Association in collective bargaining, to ABRY Communications in a baseball broadcasting suit, to the United Baseball League, to Krendl, Horowitz and Krendl in Ehrhardt v. Colorado Rockies, to the Portland Oregon Mayor's Commission on bringing another professional sports team to the city, the list is far too long to mention in this space.

To add to this, Andrew has several outstanding books on the economics of baseball. "Baseball and Billions: A Probing Look Inside the Big Business of Our National Pastime", and "May the Best Team Win: Baseball Economics and Public Policy" can be found on the desks of those ranging from politicians, to fellow economists, to baseball researchers.

The following interview covers several areas, from the economics of new stadium development, to the shifting of discretionary income as it pertains to this development, to the territorial claims by Orioles owner Peter Angelos regarding the possible relocation of the Montreal Expos to Washington, D.C., and possible ramifications to further relocation or expansion, to the overall health of small to mid-tiered markets under the current revenue sharing plan. Enjoy! - Maury Brown


BizBall: You’ve been following the economics of baseball for some time now. What has been the biggest fundamental change in how MLB conducts business over the last 10-20 years?

Zimbalist:
I would think that the biggest change has been the introduction of its revenue sharing system in 1996 and the extension of that system in 2002. Prior to that system the only thing that got shared in baseball was gate revenue. And in the American League they shared about 20% of gate revenue, and the National League about 5% of gate revenue. There was a program that they introduced in the 80’s to do some sharing in the American League of pay cable back then, but basically it amounted to just about nothing. So fundamentally out of all the revenue that got generated they only had either the 20% [shared] in the American League and roughly 5% in the National League; nothing else was shared.

And then when local television contracts really began to take off -- the Yankee contract that was signed with MSG back in 1988 was a 12 year contract worth $493 million over the period -- you had the emergence of TBS with the Braves and WGN with the Cubs, and the Mets had a big contract, the Red Sox got a big contract, baseball’s revenues became very sharply imbalanced.

And, the other thing that’s happening of course in the early 90’s is the introduction of the new stadiums, beginning with Camden Yards, or some people might want to date it to a year earlier in 1991 with the new White Sox stadium. But the retro-set architecture stadiums begins with ‘92 Camden Yards. Those stadiums for many teams ended up generating an extra $30 million a year for the team, so that together with the local television contracts and no revenue sharing meant that the revenue disparities between top and the bottom teams, which were actually no greater than $30 million back in 1989, all of the sudden exploded, so that by the end of the 90’s those disparities are up over $200 million. Or around $200 million, let’s say.

And in this context baseball introduced the revenue sharing system. I think it’s a really major change. It required a shift in political alignments, to get the big city teams to go along with that, to get Steinbrenner to go along with that, O’Malley at the time still owned the Dodgers, to get him to go along with it in ’96, to get the Chicago teams to go along with it, the Tribune Corporation, was a major political accomplishment. And they began sharing revenues, so I think that’s the big number, and of course as I’ve said elsewhere the system doesn’t work as well as it ought to because the incentives that are built into it are perverse, they’re backwards, they actually assess a higher marginal tax rate on low revenue teams than on high revenue teams. It therefore in my view has not done what it is supposed to do, which is to equalize payrolls.

BizBall: A common claim among economists is that spending on sports simply shifts spending from other entertainment options (movies, etc.). This theory assumes that most individuals have a finite amount of discretionary income to spend on entertainment. Some might argue that a high percentage of Americans have enough discretionary income to choose to attend most of the entertainment events that they would like to attend. If season ticket holders of an MLB team suddenly lost their franchise, would it follow that each season ticket holder would add 81 nights of other entertainment activities annually to their life?

Zimbalist: [laughter] Well, first of all, I don’t think that season ticket holders go to all 81 games. Most of them don’t, anyway; I think they end up sharing their ticket, or giving away their ticket to some other people, at least for some of the games. But no, I don’t think it follows that way, and look, I don’t think the proper argument is that there is a 1-to-1 trade off here. The argument is simply that for most people who go to ballgames they have a finite amount of discretionary income and there is a substitution effect working, but again, it’s not a 1-to-1 effect, maybe it effects 80% or 90% of the money that would otherwise get spent at the ballpark.
And it certainly is not the only basis for the argument that there is no positive economic impulse or developmental impulse from having a new stadium or a new team in your town.

One of the reasons is the substitution effect, but another very important reason is the leakage effect. Which is to say that if money gets spent at a ballpark, something like 60% of it on average goes to players, who have an average income of $2.4 million, and when money goes to those players, and most players don’t live in the town where their team is anyway, then the money leaks out, because a millionaire has a very high savings rate, much higher savings rate than somebody with ordinary income, thirty or forty thousand dollars, and that money they save goes into the world money markets, it doesn’t get spent at the local cities, and even more that’s true because the player doesn’t live in the city, so his permanent home is elsewhere, or if he has family elsewhere, a lot of the money gets sent back to the family.

And, also players are encouraged, and most of them follow the encouragement or the advice, they’re encouraged to save a lot because their life in baseball and their lifetime earning the mega-salaries is a very short one.

It’s not like what happens to me, an economics professor. I got into the business of being an economics professor when I was 25 years old and I could do that for decades, but for professional baseball players if you’re lucky you play 5 to 10 years and you don’t earn the mega-salaries your whole life. So, they’re encouraged to save a lot of money, and again the pattern is for the money to go into the world money markets and not to be spent in the local cities. So, there are leakages. And, of course, a lot of money goes to the owners and the owners have a similar pattern to the players, and those leakages are much higher than if the entertainment dollar gets spent at the bowling alley or restaurants, where the money ultimately goes to entrepreneurs who have a much more normal income, and who live in the local towns. So, very high leakages are another factor here. And, another factor still is that ballparks these days get financed with hundreds of millions of dollars of local tax money and if taxes go up then it means that that money is not being spent by consumers in other areas of the local economy. Either that or the city might rig -- I guess I’m not sure about this --either the services, and either higher taxes or lower services doesn’t help the local economy. So, if you put all of those effects together, the empirical research suggests that the expectation should not be that you get an increase in employment or an increase in per capita income.

BizBall: What about in cases where there are personal income taxes in some states? Wouldn’t there be money collected from the players and management in that framework?

Zimbalist: Yeah, there would be, but again the evidence is that the amount of expenditure that goes out of the public coffers in order to finance the debt service that they have to incur to build the stadium, or to improve the infrastructure, or both of those things, the amount of outflow is greater than the amount of inflow.

BizBall: Along the same lines, in the case of several cities, and possibly some new locations should relocation or expansion be considered, there are cities that border other states. Is there a case to be made that monies from bordering states cross over into these locales and therefore help the economies of these host cities via tourism?

Zimbalist: Yeah, sure, and in fact I made that case in part with the New York Nets leaving New Jersey and going into New York, in this case Brooklyn. So it can happen.

There are possibilities for, in essence, cannibalizing revenue across state lines.

And if what you’re interested in is the fiscal situation of a government on one side of the state line as opposed to the other side of the state line, yeah, there can be a shift in that way. It doesn’t end up producing a tremendous amount of difference, but there can be a small gain as a result of that.

It’s a different argument than an argument for regional development, though, because in terms of the overall metropolitan area the money is still in that area. But it might very well cross a political boundary and help one side of the boundary to the detriment to the other side.

BizBall: How much of the financial forecasting that MLB presents to the press and government do you feel is done to leverage the public in terms of stadium development and for collective bargaining purposes?


Zimbalist: Some of it. I tend to believe that those are not the main motivations today. Of course historically the other factor has been to hold on to the anti-trust exemption, or the  presumed anti-trust exemption, when they testify to Congress. But more recently I think the strongest motivation that teams have to color their financial picture is to avoid revenue sharing. That is to say, if you can push your revenue off your baseball books onto your media books or onto your stadium books, or some other, as in the case of the Chicago Cubs onto their premium ticket company, then you can avoid some of baseball’s revenue sharing taxes. So I think there are a variety of motivations to do that, but it’s hard to believe in this day and age that Don Fehr or Gene Orza or Mike Weiner are very misled by claims of penury that either Selig issues for all baseball or individual teams issue. Because they’ve been down that road and they know the game pretty well.


BizBall: On that note about dispersal of revenues, the Yankees and Red Sox have been talking about doing a merger of TV packages. Do you think this continues to blur the line for revenue sharing purposes?

Zimbalist: Well, first of all, that story is simply the product of our idiotic media. There’s no truth to that story.

BizBall: Could you elaborate?

Zimbalist: I mean, look, what happens in a situation like that is that there are two people who are having a conversation over a drink who are connected to either the Yankees or the Red Sox, and there’s a third person there, and this person happens to hear one of them who sort of throws out this idea that they might bat around for thirty seconds or something. So that third person then calls up his friend who’s a journalist and the journalist wants to break the story so he goes out and writes the story. But I don’t think there’s any factual basis to the story. I’ve spoken to owners on both sides and they disclaim any such notions and even if you just look at it logically it’s absurd.

Number one, baseball has television territories that it would violate, and they’d have to get MLB’s permission. Number two, they’d be inviting anti-trust scrutiny from the Justice Department if they tried to combine forces and get more leverage in the cable television market. Number three, any synergies they might get that would increase their revenues would then have to be shared between the two teams. Number four, the Yankees and the Red Sox play at similar times during the day, or at the same time during the day, very often, and they have competing claims on the time.

There’s just an infinite number of complications. And number five, and perhaps most importantly, the Yankees and the Red Sox have gone out of their way to develop a classic baseball rivalry, and if they start jumping into television bed together it totally undermines the perception of that rivalry. And quite apart from personality differences that might make it a complicated thing to do, I don’t think it ever made any sense, and it’s just one journalist trying to get a jump on a story based on a silly rumor.

BizBall: Peter Angelos has made quite a lot of noise about fan attendance and cable share being diluted for the Orioles should the Montreal Expos relocate to DC or Northern VA. Do you subscribe to those arguments?

Zimbalist: Well, I think he’s correct that there would be some dilution in his television ratings and some dilution in his attendance. Whether the reductions would be 5%, 10%, or 15% in each case, I don’t know. I don’t think it would be more than 15%. But basically I would say to him, “Tough noogies.” You’ve got two substantial media markets there and  you can host two teams in those markets. I mean, you might as well have Jerry Reinsdorf come along and say, “Hey, the Cubs dilute my revenues.” And that would be true, too. So Reinsdorf might as well go to Major League Baseball and petition Bud Selig, and say, “Hey, Bud, you’re my friend. I’ve supported you. The Tribune Company really isn’t your friend. Why don’t we just eliminate the Chicago Cubs?” And to me, logically, there’s not too much difference in those two arguments. Politically it might be a little different, of course, because it’s harder to eliminate a team that’s been around for time immemorial than it is to create a new team into a market.

But, D.C. used to have a team. In fact, they used to have two different teams, and I think it’s a premier market and they ought to have a team. And whether or not Angelos ends up effecting Selig in the ultimate decision by baseball, I don’t know, but certainly I don’t think that he should.

BizBall: Buried deep within the wording of a bill before congress is verbiage that would allow sports franchises the same ability of other business to write off 100% percent of their intangible assets, such as TV revenues, on an evenly divided basis over 15 years, as opposed to the current system which only allows for half of the assets. Beyond the huge windfall for sports owners for long-term investment, is this simply a case of having all businesses treated equally?

Zimbalist: No, it’s not.

First of all, you can’t amortize goodwill; that rule has changed, so businesses don’t get to amortize or depreciate all of their assets. Secondly, look, they might go for public relations purposes and say that this is to treat sports franchises the same as other businesses but the fact of the matter is that sports franchises, which might be valued depending on the league and the team anywhere from $100 million to $1 billion, don’t have many hard assets to establish that value. The main thing that a sports franchise has is a berth in a monopoly sports league which you could call goodwill, you could call it a going concern, and if you want you can somewhat falsely attribute it to television or other media contracts.

The IRS has always historically said that television contracts are non-depreciating assets or non-amortizing assets. They are always renewed. In other words, if I buy a car, it depreciates each year, it gets a little less valuable each year, that’s a physical deterioration that happens. But if I buy a baseball team and the baseball team buys a local television contract, if you go back and look at the historical records, when that contract is over there’s always a new one! And historically it’s always been a larger one. But whether it’s larger or not, the value is pretty much ongoing. Now in some cases something might happen that’s unanticipated, and then you might have an impairment of the asset, and they ought to be able to account for an impairment of assets, but generally speaking, baseball teams and other sports teams, almost all of their value is intangible.

In contrast, if you look at a manufacturing company, most of their value is tangible. They’ve got machinery, they’ve got technology, they’ve got patents, and so on. And therefore if you allow them to amortize some of their intangible assets, it’s going to be a minority of their  overall asset value. But if you allow a sports team to amortize the intangibles, you’re basically allowing them to amortize the whole thing. So it’s different for sports than for other businesses.

And to me the more fundamental question is, what is the theoretical basis for saying there’s any depreciation at all in the tangible assets? And I don’t think there is one. And so I see it as an improper give away, and I see it as once again as kind of absurd politicking wherein you have special interests who get politicians whom they donate money to to stick it onto a bill that has nothing to do with the operation of sports franchises.

BizBall: From an economic perspective, is MLB going to be able to have sustainable and healthy franchises in existing smaller markets, and how does this impact possible relocation of franchises and/or expansion?

Zimbalist: Well, it all depends on the economic system that baseball has. If baseball has a sound revenue sharing system they can put teams in smaller markets. But it also depends in part on what you mean by smaller market. Is Portland, Oregon a smaller market because it has fewer than three million people? Well, I don’t think so. It seems to me that Portland, Oregon is perfectly capable of hosting a sports team in a league that’s properly designed. And Portland is a town that has been experiencing very good population growth and looking down the road they ought to be able to have a baseball team. As should some other cities. I guess you could argue that Nintendo should make the same argument that Angelos does: “My goodness, if you put a team in Portland there’ll be some dilution in our fanbase!” And that’s true. They’ll be some. But whether it’s 2%, 4%, or 5%, or 6%, who knows? But also, who cares? Because the people of Portland deserve a baseball team just as much as the people of Seattle do.

BizBall: I think they’re hand-wringing over this situation because it really does open up and set precedent if they pay off Angelos when he doesn’t have territorial rights to D.C. And it opens up a can of worms, like you’re saying with Howard Lincoln and Nintendo, Seattle and Portland, even though it’s 175 miles away they deem this a territorial market from a regional cable perspective and radio broadcast perspective.

Zimbalist: Look, I’ll tell you what, you have two territories for a baseball team. One is the physical territory; it used to be determined by 75 miles, now it’s defined in terms of counties.

And then you have another market--that’s the television market--that is much broader. And in fact the television markets span territories so that they bump up against each other. And therefore, they cover the whole country.

And so there’s no reason why Major League Baseball would not allocate like the whole state of Arkansas to a team, like the Houston Astros, for instance. They wouldn’t say, “Oh well, you know, it’s more than X number of miles from your ballpark and therefore you can’t have it.” No, they’re not going to leave the potential fans in Arkansas without access on local cable to watching a team.

So what they do is allocate: television markets are allocated to everybody in the United States. Therefore, whenever you contemplate adding a team you’d be interfering with somebody’s television market. And if you held that argument as decisive that, “Oh, you’re taking away part of this guy’s television market,” then you’d never be able to have expansion. Not now and not in forty years. Even when the U.S. population might be 350 million instead of 290 million. So that argument can’t possibly be a conclusive argument in my view.

BizBall: How much of the current growth in MLB is attributed to the recent honeymoon effect of new stadium development and do you see a trend in which there will be repercussions when these honeymoon periods fade?

Zimbalist: The honeymoon effect is very short-lived unless the owner is smart enough to take advantage of it.

A new stadium gives the owner an opportunity to get more revenue out of his players, and if his players generate more revenue they should be paid more. And so the smart owner says, I’m going to take advantage of my new stadium by increasing my payroll and putting a better team on the field, and getting my fans really excited. If the owner does that you can get a honeymoon effect that lasts five, six, seven, eight years.

If the owner doesn’t do that, then there’s a curiosity effect that can last two or three months, after which the fans get ticked off that the owner isn’t doing anything to improve the team. So honeymoon effects are very differential. It depends on the strengths and acumen of ownership.

That said, yes, of course, baseball has had a building renaissance, since 1991, and that renaissance has, although some teams more than others, that renaissance has generally raised attendance appreciably. And as the newness of some of these stadiums fades into the past, they won’t have that factor to boost attendance anymore. So other things being equal, yeah, that would make attendance drop a little bit.

BizBall: In your book, May the Best Team Win, you talk about how the Yankees have incentives to increase their stadium expenses, new stadia development, and a number of other areas. The last Chapter is entitled, “What is to be done?” Can you touch on this facet of the book, and tell us if any of the points within that chapter have changed since publication?

Zimbalist: You mean things that I would recommend?

BizBall: Yes.

Zimbalist: Well, I wrote that book at a time when baseball was talking about contracting by two or four teams. And I believe that as long as baseball maintains that posture, especially after a period where its revenues have been growing by 15-16% per year, that the U.S. Congress ought to go after baseball and say, “We’ve had enough. Your demand is increasing by 15% a year. If you want to reduce your output, we’re going to force you guys to have competition so that we can have an appropriate level of output.” Meaning more baseball teams rather than less baseball teams when demand is growing at 15% a year.

That’s what I believe.

And I believe in general that it would better serve U.S. fans, U.S. consumers, to have more competition in the baseball industry. But I don’t believe, at this point in time, that it’s in the cards, because baseball isn’t talking about contraction anymore, and therefore it makes more sense when talking about policy to focus on more realistic policy options.

And for me the most important thing for baseball to do is to get their revenue sharing system right. Because this year they’re going to be sharing about $280 million, top teams to the bottom teams, and it’s not going to do anything, in my view, to improve competitive balance. Because the bottom teams face this higher tax rate than the top teams. And payroll disparity has actually grown since 2002 when this new revenue sharing system was introduced.

So, I think they need to get their incentives right.

Right now the way the incentive system works in the revenue sharing system is that successful teams get penalized, and poorly performing teams are rewarded. Failure is rewarded and success is penalized. And I think you need to have a revenue sharing system that does the opposite, where teams are motivated to improve themselves. And so that would be the first thing that I would change.

Second thing that I would change, although I recognize that Bud Selig has done some good things, I don’t think baseball’s commissioner should be an owner. And I think that Selig’s  botched a lot of stuff. And so I think they need to replace Selig. I don’t think that they will, but I think they need to replace Selig, get some independent, intelligent, outside businessperson who knows a great deal about baseball, and leads the sport in a way that doesn’t suggest that there’s any conflict of interest, or that there’s any inability on the part of the commissioner to act in the best interests of baseball rather than the best interests of a coterie of owners.

BizBall: I understand that you have another book slated to be published. Can you tell us about it?

Zimbalist: Very briefly, I’m writing a book with Stefan Szymanski, who’s a British sports economist. What we’re doing is looking at the evolution of basically soccer leagues and the evolution of baseball and other closed leagues in the United States. Soccer Leagues in Europe and throughout the rest of the world are organized on an open basis and systems of promotion and relegation, where the top teams in the league get promoted to a higher level league, and the bottom teams in the league get demoted or relegated to a lower level league.

That system creates a very different pattern of incentives and fan responses than the closed system that we have in the United States, closed meaning that the existing owners determine if there will be expansion, and if there is expansion, who gets to own a team. And that creates a system of leverage and monopoly that gives teams an ability to extort large public subsidies and deprives fans in many cities of getting to have a professional team, when they warrant one, given the economic size of the city.

So, these are very, very different ways of organizing sports leagues, and they generate very different kinds of tensions and problems, and have different kinds of successes.

So what we're trying to do in the book is to explain how the systems are different, explain why they evolved the way that they did, looking at economic and political and cultural factors.

And then, finally, trying to figure out where the systems are heading, and whether the two systems can learn anything from each other.

The following interview was originally published on the SABR Business of Baseball website, and can be read here: SABR Business of Baseball Interviews Page

Interview conducted by Maury Brown on 8/9/04. Edited by Jeff Sackmann.

 
 
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