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Andrew Zimbalist

The Bottom Line
Observations and Arguments on the Sports Business

Andrew Zimbalist

In this Q&A, Temple University Press author Andrew Zimbalist makes his observations and arguments on the sports business.

Q: "Following the money" seems to be a good way of following sports. Why do you feel this has been the case?
A: Sports today is big business. If you don't follow the money, you don't understand the sport, you don't understand why teams sign one free agent and not another, why they make trades, why they seek new stadiums or arenas. It would be like trying to understand U.S. foreign policy without considering oil.

Q: Can you discuss players' salaries skyrocketing? Has this always been the case? Was Babe Ruth the A-Rod of his day? You indicate that Michael Jordan was actually worth his $33M in 1997 because he generated extra revenue for the Bulls. What conclusions can you make about the trend over time? Are the players by and large really worth it?
A: Since free agency came to sports labor markets, players'salaries have skyrocketed to approximate their values. Jordan was actually worth more than $33M to the NBA in 1997. The secret is that sports leagues actually do need some mechanisms to curtail free market outcomes.

Q: The Yankees are often criticized for "buying their team," and you discuss the importance of one franchise not dominating the league. How do you—and teams—react to these kinds of suggestions?
A: In my view, the Yankees are playing by the rules. They also haven't won the World Series since 2000, and they are the club that other teams love to beat. All sports leagues need mechanisms to promote balance on the field. In baseball it is revenue sharing, but until now, MLB's system has not had the right incentives. Baseball needs to redesign its sharing, not criticize owners who seek (and achieve) success.

Q: The World Series, The Super Bowl, The Olympics. In your opinion what sports event seems to be most affected, or burdened by economic issues?
A: Add some more: the NCAA finals, The Word Cup.... Money is front and center for all of them.

Q: In one essay, you discuss that Seattle had record home attendance in 1991, but that the city almost lost the league. How can such ironic things happen? Should fan-owned teams, like the Green Bay Packers, be the future of ownership?
A: Fan- or city-owned teams is a lovely idea—one that accords with the hundreds of millions of dollars of public subsidies and extensive free media coverage that teams receive, but the major sports leagues in the U.S. do not allow it for a controlling interest in the franchise. The Packers' structure dates back to the early 1920s and is grandfathered by the NFL.

Q: You talk about "owners treating teams not as a profit center but a means to generat[e] profits for their other investments." What is the benefit of this when it—as you suggest—mostly generates tensions between players and owners?
A: Sports teams, because of their cultural prominence, provide great leverage to their owners. Ownership gains instant connections to an area's media, politicians, and businesses. It offers opportunities to establish or develop related companies, such as regional sports channels. Teams also offer substantial tax sheltering benefits. To understand whether buying a team is a good investment, one must go well beyond the reported bottom line on the team's income statement.

Q: When you see a half empty stadium, how does a franchise goose sales? The NBA, you write in one essay, did OK in 2001 when they weren't doing so hot as a league. Is it just a bad team, or it is sometimes the apathy of the citizens? How do mediocre clubs turn a profit? You don't hear about too many teams in an established league failing.
A: It varies league by league, but all leagues have shared revenue. In the NFL, the shared revenue in 2006 exceeds $130 million per team. The shared revenue enables mediocre teams to stay afloat and sometimes earn profits.

Q: You write much about labor relations and lockouts. When teams strike for more money, it seems that the fans are the ones who lose.
A: Yes, fans lose, but so do the owners and the players. The typical player has a major league career of three to five years, depending on the league, and an average salary of $1.5 to 4.5 million. With such short careers and obscene salaries, players, these days, are loathe to strike.

Q: You write that, "the college sports system has elements that are both hypocritical and corrupt," and your analysis of Jeremy Bloom's situation resonates. How can folks be so shortsighted over not spending dollars that make no sense?
A: There are no easy answers to the contradictions and economic irrationality of big-time college sports. Basically the system perpetuates itself and grows because of entrenched interests and the absence of a political coalition to do anything about it.

Q: Do you think that the greed in the industry will ever by curbed? Can ticket prices ever be raised so high that no one will pay them? Are companies who buy box seats really bearing the cost for owner's making a profit (at the expense of fans)?
A: Like most businesses, sports teams need to follow the market. Although some owners get carried away, and although sports leagues have more pricing power due to their monopoly status, the greed in the sports industry is generally no different than anywhere else in our economy.

Q: How do you think the steroid scandals, player strikes, and other hindrances are affecting sports? What is the lasting impact of these events, and how can sports be improved to avoid them?
A: The steroid problem will not go away anytime soon. New compounds, masking agents, and delivery systems assure this, as does the prospect for gene doping a few years down the road. The problem of performance enhancers has been around for decades, not just in sports but throughout our society—ask any college student studying for finals on speed. Fans basically seem to be forgiving about player transgressions.


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