To many baseball fans and non-fans alike, economic conflicts such as labor-management antagonisms and the disparity between small-market and large-market teams have lately tended to overshadow the action on the playing field.  Consider, for example, the recent dominance of postseason play by big-spending, big-market teams, or the frequently voiced charge that the recent assaults on the record books by Mark McGwire, Sammy Sosa, and others are largely a function of their underfinanced, under-competitive opponents. This course will focus on Major League Baseball's recent economic history and will consider a variety of other topics such as:  the link between pay and performance, the sport's financial health, determinants of the demand for baseball games, racial discrimination, and the game's antitrust exemption.

Office hours: T Th 2-4, and by appointment

Prerequisites: ECO 101 (introductory microeconomics) or ECO 200 (introductory macroeconomics)

Required texts

Burk, Robert F. Much More Than a Game: Players, Owners, and American Baseball Since 1921. Chapel Hill, NC: University of North Carolina Press, 2001.

Quirk, James, & Rodney Fort. Hard Ball: The Abuse of Power in Pro Team Sports. Princeton, NJ: Princeton University Press, 1999.

Course reading packet, available at the College Store and Kraftees.

Optional text

Lardner, Ring. You Know Me Al. New York: Dover Thrift Edition, 1995 [1914]. A classic of baseball literature, this short novel is a hilarious first-person account of a vain and semi-literate pitcher's rise to the big leagues.

Course web site

This site, which is also accessible through my home page, is worth checking periodically. It will include future updates to this syllabus, a complete list of course materials on reserve at the library, and links to related sites.

Assignments and grading

Your grade in this course will be a weighted average of your scores on two in-class exams, a comprehensive final exam, a short "team paper" and presentation, and miscellaneous assignments.

There will be no make-up exams. Students who have a valid excuse for missing an in-class exam and notify me in advance of the scheduled exam will have their grades recomputed so as to give no weight to the missed exam and extra weight to the final exam. Students who miss an exam and do not notify me of it until afterward should expect to receive a zero on that exam.

The team paper and presentation will analyze a particular major league team from a business perspective. Key issues will include the following: the team's profitability in recent years; the size of the team's market; the relative importance of media revenues, gate revenues, and other stadium revenues in the team's total income; the team's payroll and other expenses; the team's ownership and its likely role in the coming round of contract negotiations. There will be about twenty-five student teams in all, and each will cover a different major league team.

The miscellaneous assignments will include two problem sets (including one on our review of economic principles), occasional quizzes (which may include pop quizzes), and anything else that comes to mind.

The weighting of the different course components is as follows:
 

Draconian policy on cheating

Any student who is caught cheating on any of the exams will automatically fail this course. A student who is caught cheating on any other assignment will receive a zero for the item in question and will moreover be hit with "treble damages," meaning that the assignment will receive three times its usual weight (say, 15% instead of 5%) in the final determination of the student's course grade.

Course outline and schedule
 

Week	Dates	Topics
1	Aug. 27, 31	Introduction: Major League Baseball as a Commercial Product What to read: * Course syllabus (every word!) * Kurson, Ken, "The Baseball Fallacies: Five Myths of a Broken Business," Esquire, April 2001, pp. 110-111. * Eisenberg, John, "Savor This Season, Then Hope for the Best," The Baltimore Sun, July 17, 2001 (Internet version). * Ozanian, Michael K., & Kurt Badenhausen, "Cable Guy," Forbes, April 16, 2001 (3 pp. Note especially the estimated valuation, revenues, and profits [operating income] of the 30 major-league teams). * Associated Press, "World Champs Also Have Highest Payroll," ESPN.com, April 4, 2001. Internet: http://espn.go.com/mlb/news/2001/0404/1167511.html (3 pp.). * 2000 Major League Final Standings   NOTE:  Class was canceled on Wed., Aug. 29 because Prof. Dighe was sick.
2	Sept. 5, 7	Review of Economic Principles Concepts will include: Optimization; Supply and demand; Shifts of a curve versus movements along a curve; Market equilibrium; Monopoly pricing * (The notes for these lectures, not including graphs, are posted on the Internet and accessible via the course web site.) * Quirk, James, & Rodney Fort, "Update (for the Paperback Edition," pp. xvii-xxvi of Pay Dirt: The Business of Professional Team Sports. Princeton, NJ: Princeton University Press, 1992. MON., SEPT. 3: LABOR DAY -- NO CLASSES THURS., SEPT. 6: LAST DAY YOU CAN ADD THIS COURSE
3	Sept. 10, 14	Review of Economic Principles, cont'd (See description of week 2.)   NOTE: Class was canceled on Sept. 12 because of the 9/11 terror attacks.  Class on Sept. 14 was devoted to a discussion of those attacks and their context.
4	Sept. 17, 19, 21	What Drives Ticket Prices? * Quirk & Fort, ch. 4 ("Players"; 18 pp.) * Team Marketing Report, "Major League Baseball: 2001" (comparison of team ticket prices, "fan cost index"), May 6, 2001. Internet: http://www.teammarketing.com/fci_mlb.html (1 page). * Solomon, John, "The Price Is Wrong," Slate, Feb. 8, 2001. Internet: http://slate.msn.com/tagteam/entries/01-02-08_100470.asp (1 page). MON., SEPT. 17: LAST DAY YOU CAN DROP THIS COURSE
5	Sept. 24, 26, 28	Franchise Finances * Quirk & Fort, ch. 5 ("Owners"; 24 pp.) * Richard Levin, George Mitchell, Paul Volcker, & George F. Will, "The Economic Condition of the Game" and Chart 16, from The Report of the Independent Members of the Commissioner's Blue Ribbon Panel on Baseball Economics, July 2000. Internet: http://www.mlb.com/mlb/downloads/blue_ribbon.pdf (4 pp.). * Ozanian, Michael K., & Kurt Badenhausen, "Baseball Going Broke? Don't Believe It," Wall Street Journal, July 27, 2000, p. A22. * Ozanian, Michael K., "Too Much to Lose," Forbes, June 12, 2000, pp. 94-100 (4 pp.). * Badenhausen, Kurt, & William Sicheri, "Baseball Games," Forbes, May 31, 1999, pp. 112-117 (4 pp.). * Ozanian, Michael K., "Selective Accounting," Forbes, December 14, 1998, pp. 124-134 (3 pp.).
6	Oct. 1, 3, 5	Are Small-Market Teams Still Viable? * Zimbalist, Andrew, "MLB Imbalance Shows up in the Numbers," Sports Business Journal, December 18-24, 2000, p. 50. * Barra, Allen, "Spread the wealth," Salon, June 16, 2000. Internet: http://www.salonmagazine.com/news/sports/col/barra/2000/06/16/revenue/index.html (4 pp.). * Fatsis, Stefan, "Pittsburgh's Field of Dreams: Fancy New Baseball Stadiums No Longer Ensure Success; Pirates' $175 Padded Seats," Wall Street Journal, April 11, 2001 (2 pp.). WED, OCT. 3: FIRST MIDTERM EXAM
7	Oct. 8, 10, 12	The Baseball Industry as a Monopoly Pro Sports League; The Antitrust Exemption * Quirk & Fort, chs. 1 ("The Scene of the Crime"), 6, ("Leagues") and 8 ("Breaking up That Old Gang of Mine") (total of 62 pp.) * Surowiecki, James, "How to Bust the Baseball Trust," The New Yorker, May 15, 2000, p. 43.
8	Oct. 15, 17, 19	Making Sense of Player Salaries: Can It Be Done? * Quirk & Fort, ch. 3 ("Unions"; 25 pp.) * Zimbalist, Andrew, "Player Performance and Salaries," Chapter 4 of Baseball and Billions. New York: Basic Books, 1992 (30 pp.).
9	Oct. 22, 24, 26	Racial Discrimination in Baseball's Labor and Product Markets * Burk, pp. 76-82 and 95-104 (16 pp.) * Scully, Gerald W., "Race Discrimination in Baseball," Chapter 9 of The Business of Major League Baseball. Chicago: University of Chicago Press, 1989 (11 pp.). * Regalado, Samuel O., "That Special Hunger," Chapter 1 of Viva Baseball! Latin Major Leaguers and Their Special Hunger. Chicago: University of Illinois Press, 1998 (5 pp.) * Associated Press, "A way out: Baseball providing a new life for Latins -- and vice versa," November 27, 1999. Posted on cnnsi.com/baseball/mlb/news (3 pp.). * Barra, Allen, & Rob Neyer, "Baseball's Pre-1947 Greats Perhaps Weren't So Great," Wall Street Journal, April 18, 1997. FRI., OCT. 26: LAST DAY OF COURSE WITHDRAWAL PERIOD
10	Oct. 29, 31; Nov. 2	An Economic History of Baseball, 1845-1920: Was It "Just a Game" Back Then? * Frommer, Harvey, ch. 1 ("Roots") and pp. 30-60 of Primitive Baseball. New York: Atheneum, 1988 (58 pp.). * Jennings, Kenneth, pp. 3-10 of ch. 1 ("Early Collective Bargaining") of Balls and Strikes: The Money Game in Professional Baseball. New York: Praeger, 1990. * James, Bill, "A Decade Wrapped in Greed," pp. 110-112 of The Bill James Historical Baseball Abstract. New York: Villard Books, 1988. * Burk, Robert F., "War and the Quest for Normalcy, 1916-1920," Chapter 8 of Never Just a Game: Players, Owners, & American Baseball to 1920. Chapel Hill, NC: University of North Carolina Press, 1994 (31 pp.).
11	Nov. 5, 7, 9	An Economic History of Baseball, 1921-1940 * Burk, chs. 1 ("A New Era, 1921-1929") and 2 ("Working on a Chain Gang, 1930-1940") (total of 57 pp.).
12	Nov. 12, 14, 16	An Economic History of Baseball, 1941-1965 * Burk, chs. 3 ("War and Revolution, 1941-1949") and 4 ("Men in Gray Flannel Suits, 1950-1965") (total of 74 pp.). FRI., NOV. 16: SECOND MIDTERM EXAM
13	Nov. 19	An Economic History of Baseball, 1966-1972 * Burk, ch. 5 ("Miller Time, 1966-1972"; 38 pp.) WED.-FRI., NOV. 21-23 -- NO CLASSES -- THANKSGIVING BREAK
14	Nov. 26, 28, 30	An Economic History of Baseball, 1973-1988 * Burk, chs. 6 ("Star Wars, 1973-1979") & 7 ("The Empire Strikes Back, 1980-1988") (total of 79 pp.) * James, Bill, "The Messersmith Case," pp. 263-265 of The Bill James Historical Baseball Abstract. New York: Villard Books, 1988.
15	Dec. 3, 5, 7	Baseball's Recent Past, Its Present, and Its Future * Burk, ch. 8 ("Armageddon, 1989-2000"; 43 pp.) * Walker, Sam, "Full Count and Empty Seats," Wall Street Journal, October 12, 1999 (2 pp.) * Brattain, John, "Decline and Fall of the MLBPA," MLBtalk.com, January 18, 2000 (no longer available online; 5 pp.).

SAT., DEC. 15, 10:30-12:30: FINAL EXAM (COMPREHENSIVE)

***

Baseball Wisdom

"The great trouble with baseball today is that most of the players are in the game for the money that's in it -- not for the love of it, the excitement of it, the thrill of it."
-- Ty Cobb, ballplayer, 1925

"I'm constantly amazed at the softheadedness of even the best baseball writers, who yearn for some remote past where 'money wasn't so much a part of the game.' When, I wonder, was that time? Does anyone who thinks about it for one minute believe that ballplayers voluntarily played for less than they were worth, or that owners fought for one hundred years to keep the reserve rule because of idealism and not because of a profit motive? Is there something romantic in seeing former ballplayers, the heroes of the writers' childhoods, pumping gas or tending bar (both honorable occupations) when they could have been living in relative comfort? Why did the issue of greed only enter the picture when the players finally got a fairer slice of the pie?"
-- Marvin Miller, founding executive director of the Major League Baseball Players Association

"You go through The Sporting News of the last 100 years, and you will find two things are always true. You never have enough pitchers, and nobody ever made money."
-- Donald Fehr, executive director of the Players Association (sarcastically)

"Anyone who quotes profits of a baseball club is missing the point. Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss, and I can get every national accounting firm to agree with me."
-- Paul Beeston, President and Chief Operating Officer of Major League Baseball

"In my view, what I found [in 1965] was [that baseball players] were the most exploited people I had ever seen ... worse than Cesar Chavez's grape pickers at the time."
-- Marvin Miller, former Executive Director of the Major League Baseball Players Association

"Gentlemen, we have the only legal monopoly in the country and we're f---ing it up."
-- Ted Turner, owner, Atlanta Braves

"My position is that while the players don't deserve all that money, the owners don't deserve it even more."
-- Jim Bouton, former Yankees and Seattle Pilots pitcher

"You're full of s--- and I'll tell you why."
-- Casey Stengel, former Yankees and Mets manager