Incentives Baseball Teams use to be Successful

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What to do When You aren't Winning

How Teams Make Money When They aren't Winning Games

When baseball teams aren’t winning their games, it’s sometimes difficult for them to find ways to make money.  But with the flowing economics, teams have found ways to make more money. I used the articles Investotopedia and espn, which are both reliable, because investopedia understands economics aspect and espn understands the sports aspect.  Teams use different tools and tricks to create and make more money for themselves to become a better team, especially when they cannot make money by winning games.

http://sportsunbiased.com/

Baseball teams can use things like TV deals, which have certain channels to cover their games specifically, which pay money to always have the teams support. Also, since most people watch baseball live, the channels can incorporate commercials within them without having people skip through them.  Local channels can also support their local teams, such as a specific Chicago channel always covering and supporting the Chicago Cubs, which gains the team more local fans which are able to go to games and support them financially.  Teams can also use agreements or sponsorship's to supply them with more money, such as nike or adidas which pay for players to wear their merchandise, along with players endorsing the merchandise for more money.  Authentic jerseys that can cost a lot of money also raise money for the teams through agreements.  Lastly, name brands advertised in stadiums bring more money in for the companies, and advertising brings a lot of money in for the teams.  

Inside the stadium, people want concessions, and since people have to eat at games, the concessions “can bring in millions of dollars annually, even brought in $53 million for the Yankees in 2013,” which is one of the huge factors for making more money within the stadium for a team.  Teams can make concessions more expensive since people want beer, water, peanuts or food to eat during a baseball team. Improving stadiums and their experience can draw in more people as well as money, because a cooler, more unique baseball stadium may make people want to go visit it, and a better stadium experience would also be better, drawing more people in to see it.  Lastly, stadiums have things like  Pay-for-play, or games where people pay money to win prizes, like a lottery game, or a type of game where people can be interactive with the stadium.  This can bringing in revenue to the team by inviting people in to bring more money into the team.  

Player salaries based on a teams income

How a teams income affect player salaries

The players are the reason the game of baseball even exists.  In its entirety, teams salaries are the basis for how much a player is paid, but it can be fluctuated based on the player itself, and their personal skills. I looked at commercial appeal,  which is reliable, because it uses statistics and is very updated based on what is happening in the MLB today.  This can be seen through how much an overall team’s income is, in relation to how much they pays each player.

cdn1.thecomeback.com

The statement that the more money a team has overall, they can pay their players more and they can get better players all around can be supported by a lot of teams, such as Los Angeles Dodgers, who are highest paid team with a $277 million payroll, and they pay Clayton Kershaw one of the highest salaries in MLB, with $31 million per year. So it goes to show that a team with more money is able to pick up better players, as well as keep them with very high salaries, which can lead them into the postseason, to be more successful as a team.  Just like the New York Yankees, with the biggest net worth in the MLB, $32 billion.  They can pick up more big name players which keeps their revenue up, keeping them at the highest net worth for years.  This goes to show how teams who have much more money are able to put that money into finding more players, without making a huge dent in their annual income, which can lead them to better teams overall.

On the other hand, teams who don’t make as much, or even the lowest net worth/overall salary can still afford to pay players and pick up talented players that bring more wins for their team.  Looking at the Miami Marlins for example, they have the lowest payroll of only $61 million, it’s difficult to understand why Giancarlo Stanton of the Miami Marlins, who signed in November 2014 for $325 million over 13 years, can be paid and promised so much money from a team who has such a little amount of money to pay their players.  The Los Angeles Angels, with a salary that doesn’t exceed the top 10 in all of salaries,  it’s hand to grasp the concept that they can pick up such highly paid players, like Mike Trout, Albert Pujols, and Josh Hamilton, along with Jered Weaver and CJ Nelson, all with annual salaries over over $20 million.  This goes to show where a team puts their money, and what they believe will be giving them the biggest profit, as well as more wins over losses to advance them in the MLB.

Next Blog post: if teams aren’t winning, what do they do to gain profits?

Baseball stadiums and their affect on MLB economy

How do stadiums have an affect on a team’s overall income?

Baseball stadiums have been some of the main reasons fans come to visit a city, as well as go to the baseball games for decades.  The article from stadium mouse  shows how the stadiums affect the economy of a team, as well as the city that surrounds them.  This source is reliable because although it doesn’t have an author or a publisher, it cites a multitude of sources it used, that are all very reliable, while still putting everything in it’s own, easier to understand words.   The stadiums are a huge reason for the overall economic success for teams in the MLB through the attraction of fans, and the fluctuation of the economy around them.

therealchicago.com

Baseball stadiums have been great ways for teams to attract fans for quite a long time, and many teams have been using their stadiums to their benefit. Places like Chicago and Boston have a significantly greater amount of people that come to travel there, not only for the sights, but for their memorable stadiums.  Wrigley Field and Fenway Park draw tourists in, which especially helps out the teams like the Cubs and the Red Sox, who are continuously filling up their stands from game to game.  The reason this can help a team’s economic status so greatly, taking a team like the Cubs for example.  They have yet to win a world series title in 108 years, yet people still want to go to their games, and people still want to fill up their stands because of their field.  Through this, you can see how stadiums are a huge factor for a team’s economy, because if they aren’t pulling fans in with a winning record, they can pull them in with an iconic, or unique stadium that keeps the money rolling in.  

On the outside of the stadiums, we can take a look at the cities, and how they are impacted by the building of them.  A city can decide to build, rebuild or revamp an old or beaten down stadium.  The people in the city around them have to pay taxes for the construction, as well as other commodities that come with it.  “When cities choose to build stadiums and/or arenas, they do so with multiple public tourist and user-oriented revenue streams. These sources - including hotel/motel car taxes, business taxes, and special lotteries, are directly and indirectly linked to economic development, job creation, and long term community growth.” as said by the author, showing how the world around the team is affected in the long run.  This is important, because with the economy around the stadium growing, more people can buy tickets and go to the games, not only to see the stadium, but to be able to support their team.  With more people able to go, the more and more money flows into the team’s overall income, changing their economy whether it’s a small fraction, or a big change.

A Team's Record Reflects Their Revenue

The economics of the MLB is the reason for fluctuation of the amount of money a baseball team has.  The source I used was econedlink for economics 101, along with econedlink for economics 201 of baseball, both on econedlink which is a website about economics of different topics.  It’s reliable because it’s a website specifically based on educating people on the economics behind different subjects, and it was published by the council of economic education. Baseball is an ever changing, growing, and shrinking economic system, due to the wins and losses of teams along with their overall revenue. The amount of money a baseball team usually receives changes the outcome of how they perform in the league.  

http://cdn.fansided.com

Baseball teams overall revenue plays a huge role on the quality of players they can get, the amount of games they win, and how well they play/how far they go in their league.  The amount of money a baseball team has can help them buy better, higher quality players to play for them.  Baseball players sell their specialized labor (hand eye coordination, ability to hit ball at fast speeds) and that’s what teams buy, not the actual person.  Teams with more money are able to buy higher quality players that can help out their team to gain higher standings in their league, american or national. “An economist would say that owners should pay employees close to the value of the employees' contributions to the company. Economists call contribution the "Marginal Revenue Product" of an employee.” Which is saying that a team should be able to pay a player based on how good they are, or how much of a contribution they put into a team.  This is why a very popular or good free agent would choose to go to a team that is offering them more money over one that isn’t offering as much to them, because the player wants to get the most money possible, for the most utility possible.  Therefore, the teams that don’t get as much revenue won’t be able to buy those special skills that better baseball players posses over the less skilled players.

The more popular teams, such as the New York Yankees will have higher ticket sales, because tourists and fans from in state will want to go watch a more popular team, whether or not they are good that year.  While teams that aren’t as popular, such as the Arizona Diamondbacks, will not have as many people going to watch them. Thus causing a higher revenue in ticket prices for the more popular teams versus a lower revenue for the less popular. Today, the average player salary is 4 million dollars, and teams with more or less revenue are able to pay their players over or under the average “Only three of the top eight teams in the National League had an average player salary lower than the MLB average. Only three of the bottom eight teams in the National League had an average player salary higher than the MLB average.” these statistics are saying that the teams that are able to pay their players higher salaries have better overall records than those who aren’t able to pay their players as much. Overall, the more money a team has, the more likely they are to gain higher standings in regular and postseason games due to the quality of the players they can buy.

My next post: How the fans play a role in a team's revenue

Economics of the MLB

http://seancochran.com

• RESEARCH TOPIC/TITLE: Baseball/MLB

• KEY ECONOMIC PRINCIPLE I’M ADDRESSING:  people (usually) respond to incentives in predictable ways.

• OVERALL RESEARCH QUESTION THAT CONNECTS MY TOPIC TO THE ECONOMIC PRINCIPLE:

What incentives do baseball teams have to be successful within the MLB

• 3-4 SUB QUESTIONS/TOPICS THAT HELP ADDRESS THE OVERALL RESEARCH QUESTION and EMBEDDED LINKS TO RELIABLE SOURCES THAT HELP ANSWER THE QUESTION
• How does wins and losses of teams change the team's overall income?
• Link to article on econedlink basics of the economics pt. 1
• Link to article on econedlink basics of the economics pt. 2
• Link to article on beyond the box score teams get better, more fans, better economy
• How are salaries of individual baseball players affected by a team’s income?
• Link to article on commercial appeal player salaries ups and downs
• Link to article on beyond the box score how salaries are affected by team
• Link to article on forbes economics of free agency