Some Baseball Teams Lose but Still Make Money. Big Deal.

Some Baseball Teams Lose but Still Make Money. Big Deal.

Some Baseball Teams Lose but Still Make Money. Big Deal.

A blog about business, finance, and economics.
Aug. 26 2010 3:57 PM

Some Baseball Teams Lose but Still Make Money. Big Deal.

The Deadspin Papers on baseball's hidden economics are an enlightening read and an impressive journalistic coup. Upon reflection, though, they don't contain or imply much that couldn't be predicted. Major League Baseball's revenue-sharing system all but guarantees that some teams will benefit "unfairly," which seems to mean that they have losing seasons but still make a profit—some of which could be used to buy better players.

And, so ... what? Revenue sharing may well introduce perverse incentives at the margins. But its removal is on almost no disinterested party's agenda, and would undoubtedly give big-market teams a greater advantage than they already enjoy. That scenario, MLB tribal elders ruled a decade ago (PDF), would be worse than the status quo.

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Any league sport is by definition a zero-sum game : Every win entails an equal and opposite loss. That concept applies here as well (metaphorically if not theoretically): For every greedy, losing Pittsburgh Pirates, there is a scrappy, winning Tampa Bay Rays

Are there ways to tweak revenue sharing that would take away the theoretical economic incentive to lose games? Maybe—please leave them in comments below.  

James Ledbetter is the editor of Inc. and the host of Panoply’s podcast Inc. Uncensored.