MLB and the Economy

There is an interesting story in today’s New York Times on baseball during the Great Depression. I don’t have much time to comment but I thought I would post a chart mapping MLB attendance and GDP from 1920–1960.

Attendance and GDP

Clearly, there was (and is) a relationship between the economy and MLB. Still, I’m an optimist about the current situation. Though top-tier sports are not recession-proof, I think there are a few reasons to think they are less sensitive to economic downturns than other sectors of the economy. Despite the down year, baseball’s attendance declined by about 1.1 percent. And when compared to 2006, attendance was up 3.4 percent. Even if fewer people go to the ballpark or buy deluxe cable packages, watching sports on television (and the internet) is cheap entertainment. Fans are loyal, and quite reluctant to give up sports even when times are tough. And the underemployed have more time to watch baseball.

Since 2003, MLB revenues have grown at an annual rate of over 12 percent—though we’re still waiting on 2008 numbers—and attendance has averaged 2.5 percent growth. My feeling is that the current recession will stunt growth rather than do serious damage. Yes, some people in MLB will loose their jobs, and maybe even player salaries will suffer a bit; though, I think they’ll be the last thing touched. The credit crunch may cause some teams to give jobs to players who they’d rather keep in the minors, when previously they would have preferred to pay a superior veteran a higher wage.

I think the article’s conclusion sums up the resiliency of baseball nicely.

Remarkably, while thousands of banks collapsed during the Depression and millions of people lost their jobs, no major league baseball franchises folded or moved during the period (though at least two changed hands, including the Boston Red Sox).

“The teams muddled through,” said Rodney Fort, a professor of sports management at the University of Michigan. “We know from this truly historic episode that things didn’t go to hell in a handbag.”

At least today, we’re not dumb enough to impose a 10-percent federal amusement tax like the one implemented in 1932.

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