Economics of Pro Sports

Not something, I usually blog about, but this caught my eye, particularly after suffering through 2 Pirate games already this season: basically the Pirates are pocketing the millions of dollars they get in revenue sharing from MLB (more than $18 million this year) instead of spending it on making the team better, which they agree to do when they accept the money (although the terms are such that they are almost impossible to enforce).

The article estimates the Pirates revenue at well over $100 million. Using the rule of thumb from the very succesfull NFL salary cap that about 1/2 of revenues should go to salaries, the Pirates are spending a ridiculous 1/3 of their revenues on payroll.

Even worse, unlike the A's (as detailed in Moneyball) who make the most of what they have, the Pirates make ridiculous decisions like signing Benito Santiago, a 40 year old catcher.

University of Chicago economist Allen Sanderson has this to say:

"It's conceivable that somebody could just market the ballpark as having nice views of Downtown, great food and giveaways. At that point, if you can sell that, the quality of the team might not matter at all. It might not be what the fans or taxpayers of Pittsburgh want, but it's lovely from the ownership standpoint."

Having been twice already this year, including a 3 1/2 hour 7-6 loss last night, I think this is exactly what they are doing. It is a beautiful park, parking is easy, at least by Chicago and Boston standards and my kids don't really care that they are really a AAA team.