Wins, Losses, and Empty Seats: How Baseball Outlasted the Great Depression

8. Manipulating the Schedule to Increase Revenue

8. Manipulating the Schedule  to Increase Revenue Fans often take scheduling for granted. At the beginning of the season , they may glance at a schedule to see when the most desirable opponents will come to town. College football and basketball fans pay attention to strength-of-schedule rankings, since not all team schedules are created equal. Economists have applied the Coase Theorem to the movement and distribution of playing talent in professional team sports. The theorem states that resources will be efficiently deployed as long as property rights are well defined and there are low transaction costs. Transaction costs are the costs of finding someone to deal with, the cost of negotiation, and the cost of monitoring and enforcing an agreement. Economists have not applied the theorem to other aspects of team sports. For instance, how does the theorem apply to allocating another valuable property right: holiday home dates in major league baseball? For much of major league baseball’s history, holiday doubleheaders have been among the best-drawing playing dates. During the 1930s and the period immediately following World War II, the Major Leagues usually allocated the three holidays—Memorial Day, Fourth of July, and Labor Day—on an equal basis. Teams would alternate having home games on Memorial Day and Labor Day one year and then the Fourth of July the next. Due to the differences in on-the-field abilities of the teams, as well as the large disparities in stadium capacities and popu- 170 Using League Rules to Aid in the Recovery lation bases, the teams had significant differences in drawing power. Rearranging holiday home dates toward the New York Yankees, Detroit Tigers, and Cleveland Indians and away from the St. Louis Browns and Washington Senators held potential to increase the league’s total revenue and profits. In this chapter we will compare the American League’s experiences before World War II and for a brief period after the war. If ever a professional team sports league needed revenue-enhancing innovations, the American League needed them during the Great Depression. After the war, while several American League teams had unprecedented attendance , three American League teams struggled to remain profitable. Leagues and Schedules Many economists have noted the hybrid nature of professional team sports leagues. The leagues acted as cartels in protecting territorial rights, setting minimum ticket prices, and creating a standardized product. Within the league, however, teams competed for playing talent and other property rights. As James Hart of the National League Chicago team stated in 1901, “We compete for players, we compete for points, we compete for games.”1 This chapter focuses on his statement , “we compete for games.” A league could let teams arrange games among themselves, with only a few stipulations, such as equal numbers of road and home contests with each opponent. The National Association of Base Ball Players (1871–75) followed this procedure, but the league faced a problem. Owners of teams in large cities desired to play other large-city teams on the best dates. George Halas, owner of the Chicago Bears in the National Football League, testified before Congress: “Naturally each team wanted to play a team which would draw the most fans. . . . It reached the point where the Giants, Green Bay, and the Bears became the most sought after teams to play. . . . We had to have official scheduling. . . . By making the season more interesting to the fans, this action benefited each member club and helped to stabilize each club.”2 Second, acceptable 171 Manipulating the Schedule scheduling appeals to fans, who desire a clear-cut league champion. While these may be laudable goals, another key question arises: Do leagues use scheduling to increase and maximize collective revenues and profits? Initially professional sports leagues evolved from individual clubs that paid top players. These teams did not play within a league framework and were essentially free agents. Certainly the primitive, laissez-faire approach to professional sports, as exemplified by the Cincinnati Red Stockings of 1869–70 and subsequent barnstorming clubs in professional team sports, had drawbacks. Harry Wright, the organizer and business manager of the Red Stockings , must have spent much of his time as a modern-day athletic director does: sending and receiving telegrams as he scheduled games, negotiating apportionment of the gate, and arranging for travel and accommodations. Since the Red Stockings took on a wide variety of baseball clubs, one could argue that the team...