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.
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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
