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Unformatted text preview: [‘I‘II' '1 VII" fill KV‘T I‘I‘l Fill—IV ”1I'K1i—Hlllfi HR! IIHTV III! In" I V'lilv "I'H'rl r rr ll v-uvr II! n rnv lime, ll In unlikely llml lln' owners. ol the (hustle. llml Inllli llw monl t‘lhlht‘ mlo Homls’ conimcl lo mvm mm. This [nouns lhal lionils.’ mnlrihution to these uni-x peeled revenues was overaml above what the owners oi lhoGianls thoughl he prob= ably would be worth, on average, for the 200i season, and we haven't included any roven ucs beyond those al the stadium. This bonus to the owners makes it clear that Bonds was worth his $10.3 million (and then some) in 2001. The value of the Barry Bonds Show also spilled over to the rest of the league. Prior to a visit by Bonds and the Giants toward the end of the season, the San Diego Padres hosted the Arizona Diamondbacks (August 31 through September 2) and then the St. Louis Cardinals (September 3 through September 5) in a seven-game home stand (there was one double-header). The total paid attendance for both series was 154,013, or about 22,002 fans per game. Just after those seven games, in a three-game series against the Giants, 156,183 fans attended the San Diego—San Francisco games. That is 52,061 on average, per game, or an additional 30,059 per game over the immediately preceding series. Again, the Team Marketing Report average ticket price for San Diego was $13.74, and the Padres’ fan cost index was $127.46. So the conservative estimate of the Barry Bonds Show’s value to the owner of the Padres was $413,013 per game ($1.24 million total), and the top end could have been as much as $957,830 per game ($2.87 million total). Even with any other variation that might have occurred, such as the weather or a particularly interesting Visiting team, it is clear that the increase in revenue can be attributed mainly to the history—making performance of Barry Bonds. The Experience—Earnings Relationship MRP develops over time. In economics, this is called the experience—earnings relationship. MRP on all jobs starts low, increases rather quickly, tops off, and then may decline as skill diminishes or health declines with age. This applies to sports as well. Table 7.4 shows data on experience, performance, and earnings for a particular MLB pitcher, Randy Johnson. The table shows that Johnson’s lifetime record is 246 wins and 128 losses, a 0.658 winning percent. His per-game earned run average (ERA, or on average the number of runs he would usually give up in nine innings) shows a typical pattern—erratic at the beginning and improving over time. Of particular interest to us, however, is the way that pay and experience are related. Figure 7.1 charts Johnson’s pay as compared to his experience; this is called an experience—earnings profile. It is clear that the relationship between pay and experi- ence is as we would expect with any job. But there is a special sports twist. Through his first 3 full MLB years (1989—1991),]0hnson’s salary was very low. In the third year, something special happens for baseball players. They become eligible for arbitration (covered in detail in Chapter 9). If a player and team owner cannot reach an agree- ment in the third year, then the decision may go to an independent arbitrator, who must choose either the amount the player is asking or the amount offered by the owner. The effect, even for players who do not go to arbitration, is a dramatic increase in salary. Johnson’s salary increased nearly four—fold in the fourth year, from $486,500 to nearly $1.9 million (both in 2004 dollars). Apparently, his improvement after that was sufficiently impressive that the Mariners’ owners increased his salary steadily. Johnson’s road to fabulous riches had a bump in 1998. He couldn’t reach an Chapter 7 The Value of Sports Talent 215 ...
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