Sunday, December 11, 2011

Would fans have been better off if they hadn't got rid of the Reserve Clause?

The immediate thought that triggered this post come from some of my Facebook friends, who are Cardinals fans.  They've been lamenting the Albert Pujols signing with the Angels.  Without explicitly saying it, they've spent much of their lifetimes being loyal to the team, so why doesn't a player like Pujols reciprocate?  By way of comparison, the Yankees resigned Derek Jeter and Mariano Rivera just a year ago.  Those two will retire in pinstripes, no doubt.  So I can empathize, though I view rooting for a National league team a kind of character flaw. 

Of course, one thing leads to another in our thinking.  Star professional athletes are in the top 0.1% in the income distribution.  I don't begrudge what these athletes make, at least not directly.  It's the indirect effects that makes me wonder.  One related thought is that free agency in the player market caused professional sports franchises to me aggressive about generating revenue, and part of that came through raising ticket prices.  When I was a grad student in the late 1970s and as a young faculty member in the early 1980s, I seem to recall that bleacher ticket prices at Wrigley Field were $3.00, sold on a first come first serve basis, and generally available for weekday games.  Take a look at what the pricing is like today.  (Click on the Bleacher Pricing tab.)  For General Admission tickets there is now priority seating.  The lowest priority seats are $17, slightly more, in my estimation, than the inflation adjusted price from 30 years ago.  The highest tier pricing is more than four times that. 

I really don't know whether at the ballpark revenues count for a significant chunk of team earnings or if it is TV commercials that do that. But I've got the feeling that pro sports ticket pricing created a kind of aura that has spilled over to the College game.  Check out Illini Men's Basketball pricing of tickets for single games.   Tomorrow night's game against Coppin State, which definitely will not sell out, has C level ticket prices at $22.  (C level is the basketball analog of the bleachers in baseball.)  For Big Ten games, that might very well sell out, the C level price is $40. 

Would ticket prices have been much more modest today had the reserve clause persisted?  The argument for is that without the pressure from paying for high profile free agents, teams wouldn't have squeezed the fans so much.  The argument against is that income inequality in the larger society and/or Baumol's Cost Disease, would have driven up the ticket prices anyway.  Look at the price of tickets for Broadway shows or for going to the symphony as away to see the argument against.  My guess is that both factors matter and the effects are about equal.

Then think of some of the madness in sports and ask whether getting rid of the reserve clause had any impact on these behaviors.  Would weight training have become as omnipresent?  Would performance enhancing drugs have so infiltrated the big times sports culture?  Today the Ryan Braun story is the lead article on the site.  Given all that has come before, one has to ask:  how can such behavior persist?  The answer, assuming rational economic actors, is that there is such a huge upside for the player if he doesn't get caught.  It's that upside which justifies taking the risk.  Would there be such an upside if we still had the Reserve Clause?

The syllogism is:  money is power;  power corrupts, so....  We are seeing some of this at root now with the absurd realignment of college sports conferences.  Would maintaining the Reserve Clause had weakened the force of this corruption by substantially lessening the money flow? 

At best one can only guess at an alternative history of sport.  So I intend this piece as enlightened speculation, nothing more.  It is an argument that fettered markets may very well be better than the alternative.  I wonder how many other fans would agree.

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