A few weeks ago, I attended a couple baseball games within the span of a week with my family. We only had 3 tickets to one of the games, so my dad tried to buy a rock pile ticket for cheap. They were sold out, and coincidentally the game was also a sellout. He bought one from a vendor, and did so for over face value. The next time, we saw the same vendor, but this time, you could get a ticket for under face value. My mind immediately went to econoamics after completing AP Macroeconomics this past semester, thinking about how supply and demand change price level. This inspired me to dig deeper and think about how else economics could be applied to baseball and the business that is Major League Baseball.
If you look at a schedule of games, you’ll likely see games marked as “premium” games, “value” games, or just normal games. The price of tickets for the game depends on this label. Teams predict what games will be in high demand and label them as premium and increase prices, since they will have the same supply of tickets, just more demand. However, if they label it as a value game, tickets are often cheaper than usual, since the team is predicting that there will not be as much demand for the game. They then can sell their supply of tickets for a lower price in order to attract consumers to the ballpark.
One of the driving factors in baseball is competition, which is also a big part of economic theory. This then leads to trade, except rather than goods, teams are trading for player services to fit their needs. If they need a pitcher, they trade for a pitcher. But just like in economics, the trade has to be mutually beneficial to occur. If it’s not mutually beneficial, the trade will not occur, as a team will not give up the player unless they receive the players they need in return.
Major League Baseball teams span in many different markets of the United States as well. Ballparks employ many people, driving down unemployment and helping the overall economy in each region. Their economic performance will fluctuate depending on the phase of the business cycle. While baseball still will employ people, the audience it reaches will be different during a recession, and it may drive prices in accordance with the stage of the business cycle that it is in. Even in times of war, like in World War II, many MLB teams held donation drives to help the wartime economy.
Teams even have influence outside of the United States. While this is not exactly like the foreign exchange market, there are parallels. For background, most of the players that are recruited come from the regions of Latin America. Teams scout out talent and then offer players a certain amount to come play in their system. The team has a certain international budget, so it cannot create a monopoly. When a player receives such an offer, they must weigh the costs and benefits of what it would mean for them.
Economics has more of a presence than people might first think, but the economy really is all around us. I hope that this gave an interesting perspective on how economics may influence an area that you may not think about at first! If I ever think of other topics to apply economics to, they will definitely appear on here too.
