More on Competitive Balance in Baseball

Posted on October 26, 2006 by


Today I posted a comment on baseball’s revenue sharing at The Sports Economist. In this post I argued that revenue sharing has not caused payrolls to become more equal in baseball. Additionally, I noted that baseball has not become more competitive since the institution of the 2002 labor agreement.

The statement about competitive balance reflects an argument offered in The Wages of Wins. Specifically, we argue – following the lead of the late evolutionary biologist Stephen Jay Gould – that competition in sports is driven by the size of the underlying population of talent. As the talent pool expands, sports leagues become more competitive.

This is how this argument was explained in the book:

From the Wages of Wins (pp. 57-58)

If we measured and plotted the distribution of athletic talent in a population we would see a normal distribution, or a bell-shaped curve. Most people would have talent close to the average. A few people, such as those picked last in elementary school—we suspect many of these became the economists who liked to talk about farming instead of baseball—would be in the far left of the bell curve. Another small group of athletes, though, would be in the far right of the bell. This group of athletes would be the very best in the population.

Gould argued that these very best athletes would be relatively equal. Why? According to Gould there is a biomechanical limit to athletic ability.

…. The idea that there is a limit to athletic ability is important to our story of competitive balance. Consider how many athletes we can expect to see close to the biomechanical limit. This number depends upon the size of the population. If you have a very small population, few athletes will approach this limit. Consequently, teams will have to fill out their rosters with players who are not among the best possible.

… Now as the athletic population expands, more and more people will have talent closer to the biomechanical limit. Consequently, more and more teams will have access to talented players.

…. What does all this have to do with baseball? Prior to 1947 Major League Baseball players were white and tended to be born in the eastern United States. When Jackie Robinson took the field for the Brooklyn Dodgers, all this began to change. The racial integration of baseball expanded the population of players baseball drew upon. In addition to integration, teams began to look outside the United States for playing talent. Today professional baseball players come from the Dominican Republic, Puerto Rico, Venezuela, Cuba, Mexico, Australia, Japan, Korea, Spain, Belgium, the Philippines, Singapore, Vietnam, Great Britain, Brazil, and the Virgin Islands. Moreover, according to the Blue Ribbon Panel (p. 45), in the year 2000, more than 40% of the players under contract to Major or Minor League clubs were foreign-born.

So here is the basic story. Over the latter half of the 20th century baseball increasingly employed both African Americans and players born in other nations. Following the arguments of Gould we would expect this expansion in baseball’s talent pool would improve competitive balance.

As detailed in the book, Martin Schmidt and I examined the statistical link between the pace of integration, supply of foreign talent, and competitive balance. Our results appeared in Economic Inquiry in 2003.

Our findings in a nutshell… we found that changes in competitive balance were driven by changes in the population of talent baseball drew upon. Baseball’s amateur draft and the institution of free agency were not found to significantly impact changes in competitive balance.

This is important because Commissioner Bud Selig would argue that the Yankees need to give money to small market teams – like the Milwaukee Brewers – to improve competitive balance. There is little evidence that baseball had a competitive balance problem in the 1990s and furthermore, our work suggests that league policies do not drive the level of balance. Well, let me amend that statement. League policies, with the exception of actions that impact how many people play baseball, do not impact the level of competitive balance.

If baseball is truly concerned about balance it should do everything to promote baseball to children, both in the United States and around the world. If children stop playing baseball, the population of available talent will decline in the future, and then baseball might indeed have a competitive balance problem. Of course, if children stop playing baseball today, baseball might also have trouble finding people to watch the games tomorrow. Maybe competitive balance at that point might be the least of baseball’s worries.

– DJ

Posted in: Baseball Stories