Moderated by:
Bob Costas, Keynote Speaker, Author and Broadcaster
And,
John Genzale, Executive Editor, Sports Business Journal

Panelists:
Clark Griffith, Sports Lawyer and former owner, Minnesota Twins

Marvin Miller, Founder, Major League Baseball Player's Association

Roger Noll, Author, Professor of Economics, Stanford University

Allen Sanderson, Author, Professor of Economics, University of Chicago

Andrew Zimbalist, Host, Author, and Professor of Economics, Smith College
 

November 17, 2000
Northampton, Massachusetts

    To understand the importance of competitive balance and its appendage, financial soundness, it is very important to look first at the very nature of the game. It is in the nature of baseball that we find the reason for competitive balance's importance, because balance is baseball's very essence and attracts fans, holds their interest from game to game, season to season and generation to generation. Competitive balance is a state of mind that allows fans to articulate a scenario in which their team can win, if not now, then next year.

    Baseball is 160 years old, or so the story goes. It was in 1839 that Alexander Cartwright decreed that the distance between the bases be 90 feet, which was the most crucial decision in the game's history. The magic of the game lies in its balance of the extreme difficulty of making a safe hit, the best do it 35% percent of the time, and most just 26% of the time, and the near perfection of the defense where the clumsiest infielder makes 97% of the plays he is involved in. The magic of the game is in that 90 foot distance that separates the infielders so that hits can be made over and between them, but not so far that they can't throw out runners. The incredible balance between offense and defense is the stuff of another symposium, but balance is the essence of baseball's appeal.

    The game's design creates a very elemental competitive balance among the teams. In the major leagues championships are decided by victory or defeat in every fifth game, both teams having won two of the preceding four games. A team's marketing appeal is based on its perceived ability to win games. The value of any game is based on the present perception of equality among the teams and that the outcome is in doubt. As we start the 2001 season, there is no doubt as to the group of teams that will dominate.

    The long history of the focus of the game's managers has been to maintain competitive balance and associated fan fervor. This search for competitive balance has taken several turns and twists, all of which have involved economic factors and player control. When the professional leagues were formed in the 19^th century, players were free to contract with any team each year. This system caused economic problems and infuriated the fans of teams that were essentially broken up each year. The reserve system, that first allowed the reservation of five players, then seven, then eleven, then fourteen, then all, was in place at the end of that century. Player attacks on the system were common and strikes by several player associations occurred. The system and the game prospered in those years at the beginning of the last century. This era ended with the coming of Babe Ruth and the first of the Yankee dynasties.

    This first dynasty, based on market size, the new Yankee Stadium, which conferred market power, and wise management, continued until the 1940s. The second dynasty was based on the same elements as before and added control of minor league teams. The Yankees' minor league affiliates in the 1940's were so numerous that they were divided into three divisions. The addition of television in the 1950's created the third dynasty. At this time, CBS paid the Yankees up to $550,000 dollars a year to broadcast Saturday games of the week on its network. In the mid 1950s the other teams forced the Yankees to share the money. After rancorous dealing, they did. The first Yankee offer was to share 25% of the money, 75% for the Yankees and 25% for the other seven teams. The other teams demanded and ultimately got all of it. This sharing of national television money, plus the other teams' increasing sophistication in the area of player development, started the end of the dynasty after 1964. Additionally, an amateur draft was introduced, internal professional drafts were added, and the Yankees were out of the World Series until 1978.

    Baseball's glorious 1980's found different teams winning, based on the economic and operational balance that had been achieved. The next Yankee dynasty, a true oligarchy of a few teams, began when cable revenues, based on market size, provided the Yankees with $50,000,000 per year, and several other big market teams lessor amounts. This dynasty continues today and only promises to increase in dominance.

    It is my hope, my dream and my prayer that baseball owners and players work together to find that magical midpoint that mimics the balance of the game itself. It is at that point that baseball can be returned to its proper place of predominance in American sport.