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
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
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.