Marginal Revenue and Labor Strife in Major League Baseball
Author(s)
Oorlog, Dale R.
Abstract
Professional baseball has a history of intense labor disputes, which have caused games to be canceled or postponed every few years. At the same time, player salaries grew at a compound rate of 13.5 percent per year from 1976 to 1993, reaching an average of $1.1 million in the latter year. Team owners, who are generally extremely wealthy businessmen, complain that players’ demands are making the business unprofitable. This dispute among millionaires leaves most fans confused and disgusted with both sides. This article offers an economic explanation of labor strife in baseball. While spectator revenue is dependent on individual players’ performance and contribution to victories, broadcast revenue is not. There is currently no way for individual players to claim a share of the increasingly important category of broadcast revenue, except through collective action.
