In the comments to The Extortion Game post, Shonk makes a very good point.
Another thing to keep in mind is that expansion degrades the quality of the product: expansion brings 25 players who would otherwise have been in the minors into the major leagues, meaning the average player’s skill level drops. Presumably, this would lead to a decline in attendance figures and other revenue sources that would partially counteract the gains from the sale of a new franchise. That’s all pretty hard to quantify, I would imagine, but it’s something to keep in mind.
Pretty hard to quantify indeed, but I thought I would try anyway. This diagram plots the change in average attendance per game and the change in the US population to MLB player ratio by decade. Using the Gould hypothesis of player quality, the greater the population per player the better the competition will be. Expansion lowers the quality of competition and the Pop/Player ratio.
There does seem to be a slight negative relationship between attendance per game and the Pop/Player ratio, but the observations are so few and I have left out many relevant factorts that I would not draw any strong conclusions from it. Yet, I think it is interesting that there may be a positive relationship between the overall quality of play and attendance.
BTW, you should check out Shonk’s excellent weblog, Selling Waves.