NFL vs. MLB Labor Markets

Fascinating economic contrasts. Vince Gennaro says:

We need only to look at broadcast ratings of the two leagues’ respective championships to underscore this local-national dichotomy between baseball and football. The Super Bowl’s broadcast ratings have virtually no connection to the participating teams, while World Series ratings rise and fall with the size of the market of the N.L. and A.L. champs. Whereas both leagues have seen solid appreciation in franchise values in recent years, the lower variability associated with N.F.L. revenues and costs yield a more favorable risk adjusted return than the up-and-down fortunes of an M.L.B. owner.

Baseball tends to favor the players, both stars and journeymen alike, with higher compensation, longer careers, and contracts that are guaranteed in the event of an injury. Also, because baseball is without a salary cap and many teams depend on winning to drive the revenue engine, owners tend to award lavish contracts to an impact player in the hopes that he will carry the team deep into October, unlocking future revenues. Baseball’s Alex Rodriguez has agreed to a contract worth nearly $30 million per year, while N.F.L. stars Peyton Manning and Tom Brady each make about $10 million per year. So it may pay to groom your young one to become a big league baseball player, but be sure to tell him to invest his spoils in the ownership of an N.F.L. team.