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

By David George Surdam | Go to book overview

Introduction

You own a baseball team during the 1930s. Your customers are facing declining incomes. In addition, the consumer price index is falling. In the words of the old American Express ads, “What will you do?” Before you decide, consider that you also possess both price-setting (monopoly) power for your product and single-employer (monopsony) bargaining power over your primary labor input. How will these powers affect your decisions?

You have these powers because Major League Baseball is a cartel. A cartel is a group of firms that band together to make some decisions jointly for the group’s mutual benefit. Members may see greater profits as the cartel tries to establish monopoly prices, although individual firms may find it advantageous to cheat on the cartel agreement. The American League and National League gained an explicit exemption from antitrust laws in a Supreme Court case dating from the struggle with the Federal League in 1914–15 Because the cartel gives you territorial protection against other teams moving into your city, you have price-setting power. You have single-employer power thanks to the reserve clause that binds players to just one team.

Economists and the general public are keenly interested in cartels. Since antiquity, people have suspected conspiracies that injured the public interest by fixing prices and other shenanigans. Since the enactment of the Sherman Antitrust Act (1890) and the Clayton Antitrust

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

Table of contents

  • Title Page iii
  • Contents v
  • Acknowledgments ix
  • Introduction xiii
  • Prologue Clash of Titans 1
  • 1- The Financial Side of the Game 5
  • 1- The American Economy and the State of Baseball Profits 7
  • 2- Why Did Profits Collapse? the Revenue Side 27
  • 3- Why Did Profits Collapse? Player Salaries and Other Expenses 59
  • 4- Farm Systems 95
  • Conclusion of Economic Side 109
  • 2- The Game on the Field 111
  • 5- Competitive Balance 113
  • 6- Player Movement 131
  • 3- Using League Rules to Aid in the Recovery 157
  • 7- Helping the Indigent 159
  • 8- Manipulating the Schedule to Increase Revenue 169
  • 4- Innovations to Boost Attendance and Profits 195
  • 9- Radio and Baseball 197
  • 10- Baseball under the Lights 219
  • 11- Other Innovations 247
  • 12- How Effective Were the Innovations? 279
  • 13- The Inept and the Restless Franchise Relocation 285
  • Epilogue the End of An Era 301
  • Appendix 1- Radio and Sunday Ball's Effect on Attendance 307
  • Appendix 2- Dramatis Personae 309
  • Appendix of Tables 315
  • Notes 353
  • Bibliography 399
  • Index 405
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