An economic analysis of team movements in professional sports

Abstract

The past few years have seen baseball franchises move in and out of Milwaukee, Kansas City, Seattle, and Washington, and current rumors have the San Diego Padres and Minnesota Twins on the verge of moving as well. Movement of baseball franchises has become an important issue in discussions in the Congress and elsewhere relative to the antitrust exemption afforded baseball. This paper attempts to provide an economic analysis of franchise moves in professional sports within the context of the economic theory of professional sports leagues developed in Rottenberg and EI-Hodiri and Quirk. The basic conclusion reached in this paper is that while franchise moves can act as temporary expedients in correcting for an imbalance of playing strengths and revenue potential within a sports league, such moves offer no long-run solution to the fundamental problem that plagues professional sports, namely the tendency of the big-city teams to dominate the sport. Furthermore, the history of franchise moves in baseball indicates that the moves that have taken place have generally acted to intensify the extent of imbalance within baseball rather than to correct for such imbalance. While there are some indications that the wave of franchise moves within baseball might be coming to an end, the experience of baseball, when applied to other professional sports, offers scant evidence of any self-regulating mechanism within sports to protect the fans of small-city sports franchises from the threat of movement of their franchises. 

Part I of this paper outlines the economic structure of a professional sports league, a structure common to the four major team sports of baseball, football, basketball, and hockey, and indicates the implications of this rules structure for the distribution of playing strengths by teams within a league. The role played by franchise moves within this structure is then discussed. Part II presents a brief historical survey and analysis of franchise moves that have taken place in organized baseball, beginning with the move of the Boston franchise to Milwaukee in 1953. The final section of this paper discusses the public policy issues that are involved in franchise moves.

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