Fields of Green

In the World of Sports Economics, Andrew Zimbalist Knows the Score
Andrew Zimbalist

Andrew Zimbalist says the sheer enormity of baseball revenues have been sufficient to quell any labor discord since 1995 because, no matter how the pie is sliced, owners and players are both getting a big piece.

It was bedtime, and Andrew Zimbalist’s son was worried.

It was the spring of 1990, and Major League Baseball owners had dug in on a lockout that would eventually delay the start of the season by about a month. And that saddened 11-year-old Jeff — an avid fan with baseball cards plastered all over his walls — because, he told his father, he wouldn’t be able to play Little League ball, either.

“It was a peculiar comment,” said Zimbalist, a professor of Economics at Smith College. “I explained to him why the major-leaguers weren’t playing, and that it wouldn’t stop him from playing. Then, as I was walking out, he said, ‘hey, Dad, you’re an economist. Why don’t you write a book about baseball economics?’”

It was a precocious question coming from a preteen, but it got Zimbalist thinking. “I went to the library and starting looking up sports economics,” he said. “And I found that no one had written a book about the economics of baseball.”

So he worked up a proposal and some sample pages and whisked them off to a publisher, thinking he’d never hear anything back. But two weeks later, the editor called with a $30,000 advance to write the book. The end result, titled Baseball and Billions: A Probing Look Inside the Big Business of Our National Pastime, became a business bestseller in 1992, and Zimbalist began receiving invitations to TV and radio talk shows — and requests to do more writing.

That he did — following up Baseball and Billions with eight other sports-themed tomes, covering such wide-ranging topics as college athletics, Title IX equality, the economic impact of teams and stadiums on cities, and, of course, baseball, which he has revisited in three other books.

In the process, Zimbalist, now one of the country’s leading ‘sports economists,’ has found himself increasingly in demand — not only in the media, but as a legal consultant in dozens of cases involving salary arbitration, collective bargaining, antitrust laws, and even litigation involving teams, cities, and leagues.

“All sports, from baseball and football to NASCAR, tennis, and golf, have lots and lots of issues, and we live in a very litigious society,” he told BusinessWest. “Anyone can find something to sue someone over. There’s always something going on.”

All of which has helped Zimbalist, who began his career as an expert in Latin American economies, to carve out a starting role in a vastly different arena.

Halftime Adjustments

Zimbalist’s career arc has taken him well outside his original goals.

As an undergraduate in the 1960s, a time of war and social upheaval, he majored in economics as a way to understand the world. He eventually became intrigued with questions of poverty and economic development in Latin America, a broad subject on which he has written several books. He arrived at Smith in 1974, teaching comparative economics.

But his shift into sports economics has introduced him to far different subjects, such as Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums, to quote the title of his 1997 book.

“My basic finding was that, as a general matter, cities should not anticipate that building a facility or attracting a team will have an impact on the general economy,” he told BusinessWest.

“If the deal is done in the best conceivable way and the stars align properly,” he explained, “maybe you’ll see a small positive impact, and if the opposite occurs, you might have a small negative impact. Now, if the plan comes with other components, such as a village around the stadium with integrated themes, then you can say the overall project is pro-development, but you can’t say that of a stadium by itself.”

In 1999, Zimbalist delved into the lucrative world of collegiate athletics with Unpaid Professionals: Commercialization and Conflict in Big-Time College Sports. He doesn’t argue, as some have, that college athletes should be paid, partly on the basis that colleges don’t pay other amateur talent, such as orchestra musicians.

At the same time, however, he acknowledges that the big money generated by sports programs, particularly football programs at top Division I schools, have led to an uncomfortable hybrid boasting both professional and amateur elements. By some estimates, he said, a star football player may generate more than $1 million for the school by himself.

“If I had my druthers, I’d sever these big-time programs from college,” Zimbalist said. Athletes would still play at the college stadium, but be paid by an independent team affiliated with the school. In return for the exposure, the college would offer a lifetime free pass — four years of free tuition, room, and board if the athlete ever has the motivation to attend the school.

“That would get rid of all the contradictions right there,” he said. “They would no longer have to pretend to be students.”

While the influx of money has arguably changed college athletics considerably over time, said Zimbalist, Major League Baseball has changed enormously just since the 1980s and early 1990s, when strikes and lockouts occurred every few years, culminating in the strike of 1994-95 that erased the World Series for the first time in almost a century.

“Baseball was dysfunctional from a business perspective then,” said Zimbalist. “The owners couldn’t agree with each other, let alone the Players Association. But historically, baseball had never had any real competition, and it grew very arrogant, with lax business practices, and didn’t innovate at all. It had no central marketing department. As a business, it was limping along.”

But the lengthy, bitter strike — the last one the sport has endured, in fact — changed all that. “The strike was finally a recognition by both sides that they were wasting a treasure,” he said. “The fan reaction and media reaction were extraordinarily negative, and it scared them. They felt like they had to get their act together and cooperate with each other.”

That crystalizing moment dovetailed with the ascent of Milwaukee Brewers owner Bud Selig into the commissioner’s chair. Selig is widely credited with many of the popular innovations in baseball since 1995, including interleague games, playoff wild cards, market expansion, and — most notably — revenues that have been growing by an average of 11% per year.

“One of his greatest strengths has been that he knows the owners, and he spends countless hours talking to them about their issues. He was an effective force in turning baseball in the right direction,” said Zimbalist, who chronicled Selig’s achievements in 2006’s In the Best Interest of Baseball? The Revolutionary Reign of Bud Selig.

“The economic riches have become so great that the players lost all appetite for going on strike, and the owners lost their appetite for doing lockouts,” he said. “As imperfect as the situation seems to them sometimes — everyone has something to complain about — the bottom line is that everyone does pretty damn well, and under those circumstances, everyone has learned to get along.”

Shutting Out the Competition

Few would deny that the professional sports world, with its billion-dollar coffers and individual monopolies that typically allow one league to dominate each sport, is fertile ground for greed and even corruption.

However, Zimbalist stops short of calling for federal regulation, noting that even baseball’s legendary anti-trust exemption, so often discussed during the strike of 1994-95, is more a symbol today than anything else.

“We’ve had anti-trust laws in this country since the 1880s,” he said, “and they used to be vigorously enforced to prevent monopolies from forming and abusing customers.

“They used to be somewhat effective,” he continued, “but since at least Ronald Reagan and maybe back further, they’ve been eviscerated, and new standards for finding companies in violation make it very difficult to prosecute. It’s almost as though society has deemed that monopolies are bad, but trying to prosecute them is worse, just a waste of resources.”

Given that scenario, he noted, it’s easy to understand how fans of average and lower income are slowly being priced out of the experience of watching live sports.

“Revenues have gone way up, players’ salaries have gone way up, and consumers have to pay a lot more to attend events,” said Zimbalist. “All of this could be taking place at a lower level. If stadiums didn’t extort large sums from cities, they’d have to play in more modest facilities and generate less revenue. Players would get paid less, ticket prices would be lower, and profits would be lower. It’s the exact same game, but ratcheted down a notch or two.”

He doesn’t blame the owners or players, though — “they want to maximize their profit, just like anyone else would do in their situation” — and doesn’t expect the system to change internally. But he says government interference isn’t the answer, either.

“If we knew how to regulate in this country, I would be more in favor of that, but regulators tend to get captured by industry and the morass of bureaucracy,” he said.

“I could see it on the world stage, where members of a commission put checks on policies,” he continued, “but I’m not sure the U.S. political scene could accommodate that very well.”

Two decades considering such debates, and immersing himself in the financial nitty-gritty of the games we play and watch, haven’t made Zimbalist less of a fan — just one with a more critical eye.

“I’m a different fan than I used to be,” he said. “I have less-focused preferences than I used to. I’ve worked with so many teams and leagues that I’ve come to appreciate many of them. So I tend to root for the teams of my friends, people I respect and like. My preferences are much more evenly distributed, but that just means I have more horses in the race.”

And if he gets too jaded? Well, there’s always Little League.v

Joseph Bednar can be reached at[email protected]

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