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Why do some teams act like they don't want to get better?

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I'm going to put on my Sports MBA hat right now and give you guys an online lecture online discussion starter as to why teams do certain things in their efforts or lack of efforts to win. All of this is based on economic theory with a really strong sports background and we all know economists don't always get things right. Still, it might give Gaslamp Ballers a little bit of extra ammo when you're talking sports with the relatives this weekend. All credits to Rod Fort as it was his class where I learned this stuff.

First off, let's look at the following chart:

The axis with the dollar signs is a baseball team's income. The y-axis is the winning percentage. See the 1.000? That's where you win all your games.

Not scared off yet? There's more after the jump for the adventurous...


OK. This is for the rest of you brave folk (or for people who were in my sports econ class and are looking to make sure I got this particular lecture correct). I'm glad you kept clicking. I always knew that Gaslamp Ballers were intellectuals at heart.

Let's give some assumptions that sound pretty reasonable.

  1. People generally like to watch winning teams.

  2. The more people that watch, the more money the team will make

  3. Regardless of what Moneyball told you, spending more money is still the easiest and most straightforward way to field a good team.
So that's easy enough. Let's look at the next chart:

What does this chart signify? Basically, it's the relationship between winning and profit. If the team never wins (the big blue dot) then obviously the team's going to lose money. How much they lose depends on how much they spend. As a side note, I'd think that a team that managed to lose all of their games would experience a very slight spike when compared to teams who lose, say, 140 games just because there would be the morbid fascination of watching a team get killed.

In any case, as the chart shows, there's a point for every team where that team starts to actually make some money. Forget all the fancy pants accounting that teams do. They actually do make money at some point and that point is where the blue line crosses the x-axis.

However!! What happens if a team just keeps on winning? Just like, wins and wins and wins? Obviously, that would be crazy awesome for the fans, right? People would pack the stadium. TV and radio ratings would shoot through the roof. Advertisers and sponsors would be knocking down the door with their genitals in their hands.

The trouble is, the y-axis for our chart is the actual profit that the team makes. Let's imagine the type of team that it would take to win all 162 games. You'd have to have hall of fame starters every game. You'd be playing every game like it was your last. Your bench would have to be three and four deep with all-star caliber players.

How much does it cost to field a team like that? Quite a bit. Now imagine how much it would cost to field a team that could win 150 games or even 140 games. We're talking about numbers well beyond what even the Yankees spend.

That takes us to the next chart...

It's pretty reasonable to think that even the Yankees and their well oiled media machine would eventually be spending so much money to field the perfect team that they would max out the market in terms of how much people are willing to pay. When you get to that peak, it suddenly becomes a situation where an owner is losing money in his or her effort to get better.

So what does that mean to a team like the Padres? We're the 6th or 7th largest city in America depending on your mood, but we're only the 26th largest media market. If the Padres put together the best team ever, we still couldn't come close to making the kind of money that New York could make.

This finally brings us to the last chart I'll throw at you:

Now the thing isn't to scale, but the blue line represents a large market team and the orange (pumpkin?) line is a small market team. Since we know that a small market team can't do as much as a large market team to make money, it stands to reason that the small market team is going to peak sometime before the large market team.

It's also becomes reasonable to think that the peak of the small market team may actually occur below .500 or at the very least someplace below where the team would actually be competitive.

In the Padres case, I like to believe that the market is such that they can be profitable with a team that's good enough to win 95 games, but I'm pretty sure that the peak for the Padres might actually occur somewhere around 88 games, which would be competitive in the west, but unfortunately unimpressive in the playoffs.

So for those of you who are wishing for the magic day when the Padres payroll bumps up to $90 million, you might have to keep on wishing. Or maybe get a couple hundred thousand of your friends to watch more TV.