Money in Baseball - Research Paper Example

Money in Baseball Table of Contents Positions from which MLB Makes the Most Money 2 Annual Revenue 3 Racial Discrimination 4 Average Salary of Players in the MLB 6 Comparison of Baseball with Other Major Sports 7 References 8 Bibliography 10 Positions from which MLB Makes the Most Money Major League Baseball (MLB) is the professional level baseball organization. The National League and American League were jointly operated by MLB. In the year 1869 the league was formed (MLB, “Baseball Commissioner”). The major sources of the revenue that are generated by MLB are through the National League and the American League. It has been recorded that there has been increase of 50% in the revenues of MLB in 2004 as compared to 2000 (Isidore, “Baseball close To Catching NFL as Top $ Sport”). The revenue that increased was through the sales of tickets and the online resale of tickets. This was the reason for the increase in the revenues of MLB. To increase the revenues, MLB had signed a deal with the eBay’s unit StubHub that permitted people to buy and sell tickets. This had affected the revenues of MLB and they were being benefited in rising revenues (Isidore, “Baseball close To Catching NFL as Top $ Sport”). The other sources of revenue generation that was utilized by MLB was the options such as official website of MLB selling different merchandises, tickets and other items through ‘satellite radio broadcasts’, television game packages and other options for revenue (Isidore, “Baseball Close To Catching NFL As Top $ Sport”). The radio broadcast at the initial phase was merely for free publicity, but as the game became more professional there were contracts between the radio broadcaster and the leagues. At the initial stage there were less revenue generated and it was only at a local level from the local radio broadcasts. Later around the year 1950, Liberty Broadcasting System added National radio broadcasts of the games played in the regular season. The inclusion of national radio as well as television broadcasts has helped in the teams in MLB to generate more revenues (Haupert, “The Economic History of Major League Baseball”). The television was used as the source for revenue. The league had contract with the television broadcaster and this became the source of revenue that started from 1946. There has been immense increase in the revenue from this source from 1946 till the current situation (Haupert, “The Economic History of Major League Baseball”). From the franchise value MLB earned revenues. They have created their brand value and this assisted in franchise value appraisal. In the year 1998, the latest team to join MLB had paid US $130 million to MLB for the privilege (Haupert, “The Economic History of Major League Baseball”). Annual Revenue The revenues of MLB were higher for the year 2007. There was 7.7% of increase in the revenue with 30 teams in MLB that was estimated to be approximately US $5.5 million. The average team worth at the year 2008 was at US $472 million and it was higher than 9.5% as compared to 2007 and it was more than 143% as compared to 1998 when estimated by the Forbes. In the year 2007, there were only three teams that had incurred operating losses namely Blue Jays, Red Sox and Yankees with an operating loss of US $1.8 million, US $19.1 million and US $47.3 million respectively. Even with the operating losses the teams such as Yankees and Red Sox were able to pay huge dividend that was generated from their unconsolidated cable networks (Ozanian & Badenhausen, “Business of Baseball”). The total revenue generated from the television contract with MLB from 1964 to 2002 was approximately US $12874.00 million. Furthermore, the total average revenue that was collected from the sale of tickets was approximately US $451.41 from 1964 to 2002 (Haupert, “The Economic History of Major League Baseball”). In the year 2001, the average team revenue generated from the local radio and television contracts was approximately US $19 million. The Montreal Expos and Yankees received during this period approximately US $536000 and US $52 millions respectively from their local and television contract. The average franchise value in the year 1920 was US $7.122 million that stood to US $288.86 million in 2001. There have been huge changes in the franchisee value of the baseball game. This was due to the increase in the number of stadiums in different regions of the US and Canada. During the period from 1991 to 1999, eight new stadiums were constructed that benefited the owners of the teams to increase their revenues as the stadiums were only for MLB teams. When these stadiums were opened at that period of time the annual franchise values were increased by 20% (Haupert, “The Economic History of Major League Baseball”). Racial Discrimination Racial discrimination in the general labor market is related to comparing the wages of different people belonging to different communities, places and races (Pager, “Race at Work: A Field Experiment of Discrimination in Low-Wage Labor Markets”). Players from all over the world enter the US for the baseball competition. MLB players generate millions of US Dollar in a year to play the game. There has been strong history in the US labor market regarding the racial discrimination. In this labor market the racial discrimination takes place in the form of pay discrimination and hiring discrimination. There is lack of action programs and equal employment legal action for the professional sports (Irwin, “Racial Discrimination in Major League Baseball: Can it exist when Productivity is Crystal Clear”). According to the research study by Will Irwin, it revealed that there are top players in MLB, who belong to the poorest area of Latin America and this explains that the baseball industry is less resistance to class (Irwin, “Racial Discrimination in Major League Baseball: Can it exist when Productivity is Crystal Clear”). There are several industries where advanced level of education is obligatory and it becomes practically unfeasible for the children from the poverty country to achieve employment in that industry. However, MLB is such an industry that does not depend upon the education; instead they focus upon the athletic ability. This is a trait that can develop in even poorest circumstances, it does not fall victim to create biasness in class. There is less racial discrimination in MLB, since the discrimination will only result to hurt their chances of winning (Irwin, “Racial Discrimination in Major League Baseball: Can it exist when Productivity is Crystal Clear”). A report by Francesca Di Meglio showed that Major League Baseball umpire’s make calls that are in favor of the pitchers, who belong to the umpire’s race and ethnicity. Francesca Di Meglio stated that “when these umpires show subconscious preferences, they are tainting the system that the sport uses for valuing pitchers and determining their salaries” (Di Meglio, “Baseball: Racism behind the Plate”). There are lots of controversies related to the professional sports and it is still prevalent in the industry that there is lack of proper evidences in hiring, wage payments, favoring certain players, umpires call and other factors. Average Salary of Players in the MLB According to OECD, wage or salary rates are the rates rewarded for nominal time of employment that consist of basic wages and pay, cost-of-living allowances and other regularly paid allowances (OECD, “Average Wage or Salary Rates”). The minimum salary rate for a player for each day of service in MLB was US $380000 in 2007 that stood to US $400000 in 2010. In the year 2011 it was proposed that the rate of 2010 along with cost of living would be included that was estimated to be US $500 (Vanderbilt University, “2007-2011 Basic Agreement”). The average salary in the year 1892 was US $60163.80 in Boston NL. During 1800s the highest salary was US $246250.00. In the year 1989 the average salary was US $483269.38 in Dodgers Twins and during 1980 the highest salary was US $4006895.59. There was immense increase in the salary pay. In the year 2001 the average salary was US $2197397.00 and the highest salary during 2000 was US $22322742.55 (Haupert, “The Economic History of Major League Baseball”). The growth trends in MLB salary with ticket prices and television revenue are presented below in figure 1, Figure 1” Average Revenue and Salary (Haupert, “The Economic History of Major League Baseball”). Comparison of Baseball with Other Major Sports There exists competition between National Football League (NFL) and MLB. At certain period NFL had gained better advantage and their revenues were higher than MLB. However, MLB gained more advantage due to their new stadiums, franchise and value creation for their teams and players that raised the revenues and increased the love for the game (Isidore, “Baseball Close To Catching NFL As Top $ Sport”). References Di Meglio, Francesca. “Baseball: Racism behind the Plate”. March 12, 2011. Business Week, 2007. Haupert, Michael J. “The Economic History of Major League Baseball”. March 12, 2011. MLB, 2010. Isidore, Chris. “Baseball Close To Catching NFL As Top $ Sport”. March 12, 2011. CNN, 2011. Irwin, Will. “Racial Discrimination in Major League Baseball: Can it exist when Productivity is Crystal Clear”. March 12, 2011. Illinois Wesleyan University, 2004. MLB. “Baseball Commissioner”. March 12, 2011. Baseball, 2011. Ozanian, Michael K. & Badenhausen, Kurt. “Business of Baseball”. March 12, 2011. Forbes, 2008. OECD. “Average Wage or Salary Rates”. March 12, 2011. Definition, 2003. Pager, Devah. “Race at Work: A Field Experiment of Discrimination in Low-Wage Labor Markets”. March 12, 2011. Virginia University, 2008. Vanderbilt University. “2007-2011 Basic Agreement”. March 12, 2011. Department of Economics, 2007. Bibliography Arcidiacono, David. & Ryczek, William J. Major League Baseball in Gilded Age Connecticut: The Rise and Fall of the Middletown, New Haven and Hartford Clubs McFarland, 2009. Brush, Daniel J. & Et. Al. Major League Baseball: An Interactive Guide to the World of Sports. Casemate Publishers, 2009. Harmer, Sharon. If I Were a Major League Baseball Player Capstone Press, 2009. MLB. “Club By Club Baseball Ticket Information”. March 12, 2011. Ticketing, 2011. Porterfield, Jason. Major League Baseball: The Great Steroid Scandals The Rosen Publishing Group, 2009. Riess, Steven A. Encyclopedia of Major League Baseball Clubs Greenwood Publishing Group, 2006. Swaine, Rick. The Integration of Major League Baseball: A Team By Team History McFarland, 2009. Read More