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9. Gate Sharing
- University of Nebraska Press
- Chapter
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189 9 GATE SHARING The way in which competing teams split up the gate receipts from their game is a fundamental issue in professional sports. Many people believe that gate-sharing exists to redress inequalities in revenue. There is a strong presumption that New York teams end up paying out more to the Green Bays of the league than they receive from such teams, but this is only a presumption. Such a pattern might be dubbed a Robin Hood effect. In most industries, owners of successful firms often desire to drive out owners of less successful firms, so professional sports team leagues differ from most industries. Since the championship teams need rival teams to beat, there is a place for weak teams in the league and a rationale for subsidizing weaker teams. If teams are forced to share part of their home gate receipts, the benefit (denoted by economists as the marginal revenue product, that is, the additional revenue) derived from signing a talented player could be reduced because of the sharing. Such a reduction would lower the incentive to sign the talented player. The reduced incentive to sign talented players might keep wealthy teams from signing too many such players; it could also suppress the demand for top players, which would hold down player salaries. This simple story, though, might not be accurate under actual circumstances, as a key assumption underlying many economic models was that the stronger a team was, the worse it drew on the road. The subsidization aspect is dubious on another level. Owners, especially owners of successful teams, appear to disagree with the notion that they should subsidize owners of weaker teams. If you owned the Yankees, your attitude might be, “I should get a large piece of the pie when I visit Kansas City, since I’m bringing in a strong, well-paid, attractive club. When the 190 Gate Sharing Royals start bringing in a strong, well-drawing club to Yankee Stadium, I’ll be willing to share more revenue.” The effect and the intent of revenue sharing, then, are ambiguous. This chapter examines the experiences of two professional sports leagues with dissimilar gate-sharing plans during the 1950s: the National Football League (nfl) and baseball’s National League (nl). The experiences of the two leagues provide useful contrasts with regard to the efficacy of their different plans. Because congressional investigations required owners to divulge financial records for the 1952–56 seasons, this is a good era to study. With this financial information, we can examine whether the nl and nfl wanted gate-sharing rules simply to help poorer teams in smaller cities, or whether there were other motivations for such rules. Was the nl’s revenue-sharing plan flawed by its seeming lack of generosity (in terms of proportions of home gate revenue shared) compared with the nfl’s plan? In addition, the National League altered its revenue-sharing plan during the period examined. The change in the plan provides some clues as to the owners’ attitudes regarding gate sharing. Finally, examining the gate-sharing experiences of the 1950s will shed light upon the debate concerning whether fans preferred absolute (opponents with the best records) or relative (opponents with similar records to the home team) quality in the visiting team. Previous Commentaries on Gate Sharing Baseball historian Harold Seymour and witnesses at the 1951 congressional hearings implied that gate-sharing rules were intended to redress revenue differences between teams that drew well and those that did not, but the owners often sang a different tune. Seymour wrote, “Appreciating the results of inequality of markets, the owners tried to compensate by sharing gate receipts.”1 He also chronicled the underlying animosity between owners of large-city teams and their peers. The National League had difficulties with its New York and Philadelphia clubs during its inaugural season of 1876. The large-city owners refused to travel west to play some clubs, and, instead, offered to pay the western clubs handsomely if they would come east. The National League eventually, but only temporarily, settled on a fixed guarantee of $125 instead of a percentage split in 1886. Owners of [54.89.70.161] Project MUSE (2024-03-29 00:39 GMT) Gate Sharing 191 teams in the smaller cities favored the percentage split, with the Detroit manager complaining, “We should be nice suckers . . . to go to Boston or to Washington and put big money in their treasuries for $125.”2 Albert Spalding, owner of the Chicago...