Two Sports Myths and Why They're Wrong

1. Player salaries do not cause ticket price increases

Rather than salaries causing ticket price increases, it is ticket price increases that cause salaries to rise.

Causality reversed. The common belief that rising player salaries lead to higher ticket prices is a myth. In reality, the chain of economic events begins with increased fan demand for games and related products. This higher demand allows owners to raise ticket prices, which in turn increases revenue. With more revenue, owners compete for player services, bidding up salaries.

Data disproves myth. Analysis of recent MLB data shows:

• 43% of teams behaved counter to the myth
• Correlation between salary changes and ticket price changes was essentially zero (0.01)
• Similar patterns observed in NBA, NFL, and NHL

Historical perspective. When adjusted for inflation and compared to economic growth:

• MLB ticket prices have not risen dramatically over time
• Average MLB ticket prices have grown slower than per capita GDP since the 1960s
• Only NFL tickets show significant increase compared to per capita GDP

2. MLB is not falling behind the NFL in popularity

Clearly, something happened . . . beginning in the 1950s.

Shifting preferences. While NFL has been more popular than MLB since the 1970s, this shift began in the late 1940s, not recently. The Gallup Poll shows:

• Prior to 1972, higher percentage favored baseball
• By early 1980s, preference reversed to football
• Preference for football has remained stable since 1982

Historical context. Both MLB and NFL have long traditions of popularity:

• Baseball dubbed the "national pastime" early on
• College football gained popularity with iconic players in early 20th century
• NFL attendance grew significantly in 1920s and 1930s

Economic performance. While recent total revenues favor NFL ($7.8B vs $6.8B for MLB in 2010), MLB has been holding its own:

• MLB/NFL total attendance ratio stable around 4 since 1970s
• MLB per-game attendance growth rate higher than NFL's since 1972
• In 2011, average MLB game attendance was 30,227 vs 66,892 for NFL

3. NFL's historical dominance in TV revenue persists

In inflation-adjusted values, in 1964 the NFL generated more than three times the revenue of MLB from national broadcasting rights ($8.5 million per team vs. $2.6 million per team).

Long-standing advantage. The NFL has consistently dominated MLB in national TV rights revenue:

• 1964: NFL generated 3x more revenue than MLB
• Current: NFL generates about 5x more revenue than MLB
• NFL: $126 million per team
• MLB: Roughly $20-30 million per team

Increasing gap. NFL has grown its national contracts faster than MLB:

• Both leagues have seen dramatic increases
• NFL gains have been "ratcheted," especially in last two contracts

Incomplete picture. This comparison of national contracts misses a crucial factor:

• MLB teams have significant local TV/radio contracts
• NFL sells all rights in national contracts

4. MLB teams have significant local media contracts

Unfortunately, there are only scant data on the value of local TV rights across MLB, but there are some.

Local revenue importance. While NFL dominates national contracts, MLB teams benefit from substantial local media deals:

• Yankees reportedly generate nearly $200 million annually through YES network
• In 2001, MLB's "Local TV, Radio, and Cable" category totaled $739 million (2012 dollars)
• Per MLB team: $55.7 million from local media (2001 data)

Narrowing the gap. When local contracts are considered:

• 2001 NFL national contract advantage reduces from $65 million to about $10 million per team
• True comparison of media revenue is much closer than national contracts alone suggest

Data limitations. Comprehensive, current data on local MLB contracts is not readily available, making exact comparisons challenging.

5. MLB franchise values are growing faster than NFL's

At both the minimum and maximum values, the growth rates in MLB have swamped those in the NFL.

Impressive growth. Both MLB and NFL team values have grown significantly over the past decade:

• Growth rates far exceed typical real economic growth (2.5-3%)
• NFL teams still worth more on average: $1 billion vs $523 million for MLB (2011)

MLB catching up. Despite lower absolute values, MLB teams are growing faster:

• Minimum value MLB teams: 50% higher growth than NFL
• Maximum value MLB teams: 30% higher growth than NFL
• 2000-2011: Minimum MLB team value rose from 30% to 40% of NFL counterpart
• 2000-2011: Maximum MLB team value rose from 70% to 90% of NFL counterpart

Historical shift. Early examples showed MLB dominance, but NFL surpassed in 1970s:

• 1940s: MLB team sales prices 5x higher than NFL
• 1970s: NFL expansion fees more than double MLB's

6. Youth participation in baseball is not declining

Clearly, participation has increased over the most recently depicted decade, so actually more young people are playing baseball.

Participation growth. Contrary to popular belief, youth baseball participation is increasing:

• National Association of High School Federations data shows growth
• Both baseball and football participation growing slower than overall sports participation

Contextual factors:

• More sports options available to youth today
• Unclear if some players are switching from baseball to football
• Growth in participation doesn't necessarily translate to fan interest

Implications for fan base:

• No evidence of declining interest in baseball among youth
• Participation growth suggests potential for continued fan base expansion

7. TV ratings decline affects both MLB and NFL

Again quite interestingly, the same is true of the Super Bowl!

Shared trend. Both World Series and Super Bowl ratings have declined over past four decades:

• World Series decline larger in percentage terms
• Super Bowl also experiencing significant viewership drops

Possible explanations:

• Increased entertainment options competing for viewers
• Shift to new viewing platforms (internet, mobile devices)
• Changes in overall media consumption habits

Need for broader analysis:

• TV ratings alone don't capture full picture of league popularity
• Important to consider new viewing options (streaming, social media engagement, etc.)
• Comparative data on MLB vs NFL performance on new platforms needed for comprehensive assessment

8. Revenue sharing and salary caps don't impact competitive balance

But these arguments are specious, since they already buy into the myths of revenue sharing and salary caps—which actually haven't had much impact on balance, if any at all in any league including the NFL.

Ineffective measures. Despite popular belief, revenue sharing and salary caps have not significantly improved competitive balance:

• No clear evidence of impact in any major league, including NFL
• MLB has adopted similar revenue sharing to NFL without balance improvements
• MLB's luxury tax has shown no effect on competitive balance

Misplaced focus. Calls for MLB to emulate NFL's business model often center on these mechanisms:

• Comprehensive revenue sharing
• Exclusively national TV contracts
• Salary caps

Alternative factors. League competitiveness likely influenced by other variables:

• Market size and local revenue potential
• Team management and decision-making quality
• Player development systems
• League structure and scheduling

9. MLB and NFL broadcast accessibility is similar for fans

Aside from the occasional NFL blackout, fans in any city can rest assured that they will see their NFL team every week and their MLB team every night.

Fan experience. Despite different approaches to TV rights, fan access to games is similar in both leagues:

• MLB: Mix of local and national TV rights
• NFL: National TV rights only
• Result: Fans can reliably watch their local team in both leagues

Regional focus. Both leagues effectively regionalize their broadcasts:

• Ensures local fans can watch their team consistently
• Maintains strong connection between teams and local markets

Business strategy difference. The main distinction lies in league-level strategy:

• NFL: Sells single package of regional broadcasts
• MLB: Allows teams to sell local rights separately
• Impact on league/team revenues, but minimal effect on fan viewing experience