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The Wages of Wins
The Wages of Wins
Taking Measure
of the Many Myths
in Modern Sport
.
.
.
An Imprint of Stanford University Press
Stanford University Press
Stanford, California
© 2006 by the Board of Trustees of the
Leland Stanford Junior University
All rights reserved
Berri, David J.
The wages of wins : taking measure of the many myths in modern
sport / David J. Berri, Martin B. Schmidt, and Stacey L. Brook.
p. cm.
Includes bibliographical references and index.
ISBN 0-8047-5287-7 (cloth : alk. paper)
1. Professional sports—Economic aspects—United States.
2. Professional sports—Social aspects—United States. I. Schmidt,
Martin B. II. Brook, Stacey L. I. Title.
GV716.B47 2006
338.4'37960440973—dc22
2005036651
Notes 223
References 263
Index 273
list of figures and tables
2.1 Average Regular Season Attendance, NBA, 1954–55 to 2004–05 17
2.2 Average Regular Season Attendance, NHL, 1960–61 to 2003–04 19
2.3 Average Regular Season Attendance, NFL, 1936 to 2004 20
2.4 Average Regular Season Attendance, MLB, 1901 to 2004 21
2.1 25 Years of Labor-Management Strife in Professional Sports 12
3.1 Linking Payroll to Post-Season Success in Major League
Baseball: 1995–1999 30
3.2 Linking Payroll to Post-Season Success in Major League
Baseball: 1989–1993 35
3.3 Linking Payroll to Post-Season Success in Major League
Baseball: 2000–2004 35
3.4 The Relationship Between Wins and Relative Payroll in Major
League Baseball: 1988 to 2005 40
4.1 Competitive Balance in the American and National League:
Decade Averages, 1901–2005 47
4.2 The Recent History of Competitive Balance in Major League
Baseball 48
4.3 The Average Level of Competitive Balance for a Variety of
Professional Team Sports Leagues 61
5.1 Twenty Years of Competitive Balance in North America 66
5.2 Leaders at the Gate: 1992–93 to 2003–04 73
5.3 What Explains Regular Season Gate Revenue? 75
viii
5.4 The Attendance Leaders on the Road: 1992–93 to 2003–04 77
5.5 What Explains Road Attendance? 78
5.6 Stars on the Road in 2004 79
6.1 Correlation Coefficients for Various NBA Statistics and
Winning Percentage 93
6.2 Teams with the Highest Offensive Efficiency in 2004–05 97
6.3 Teams with the Highest Defensive Efficiency in 2004–05 98
6.4 The Value of Points and Possessions in Terms of Wins 101
6.5 The Value of Various NBA Statistics in Terms of Wins 103
6.6 Evaluating the Player Statistics for Kobe Bryant and
Shaquille O’Neal, 2003–04 105
6.7 Evaluating the Unassisted Wins Produced: Kobe Bryant and
Shaquille O’Neal, 2003–04 108
6.8 Evaluating the Accuracy of Wins Produced, 2003–04
Regular Season 110
7.1 What Explains Current Per-Minute Productivity in the NBA? 116
7.2 Evaluating Wins Produced: Kobe Bryant and Shaquille
O’Neal, 2003–04 120
7.3 Connecting Player Wins to Team Wins: The Miami Heat,
2004–05 122
7.4 Connecting Player Wins to Team Wins: The Los Angeles
Lakers, 2004–05 124
7.5 Analyzing the Contenders for the 2004 MVP Award 126
7.6 Analyzing the Contenders for the 2005 MVP Award 129
7.7 Connecting Player Wins to Team Wins: The Minnesota
Timberwolves, 2004–05 vs. 2003–04 130
7.8 Twelve Years of the "Best" Players in the NBA 132
7.9 Ten Years of Kevin Garnett 134
7.10 Nine Years of Allen Iverson 135
7.11 Reliving the First Round of the 1996 NBA Draft: Career
Performances from 1996–97 to 2004–05 137
8.1 The Greatest Team Ever: The 1995–96 Chicago Bulls 144
8.2 Connecting Player Wins to Team Wins: The Chicago Bulls,
2004–05 vs. 2003–04 150
8.3 Evaluating the Top NBA Scorers, 2004–05 154
8.4 Michael Jordan’s Playoff History 157
8.5 Playoff History of Five NBA Stars 158
8.6 Tim Duncan in 2004–05 159
8.7 Analyzing Extended Playoff Performances, 1995–2005 160
ix
9.1 Brett Favre in 2004: Game-by-Game Performance 166
9.2 Factors Impacting a Team’s Offensive Ability 170
9.3 The Value of Various Quarterback Statistics 172
9.4 Tom Brady vs. Donovan McNabb, 2004 Regular Season 174
9.5 Tom Brady vs. Donovan McNabb, Super Bowl XXXIX 176
9.6 Eleven Years of the "Best" Quarterbacks in the NFL 178
9.7 The Top 40 Quarterback Performances, 1995–2005 179
9.8 Eleven Years of Brett Favre 181
9.9 Percentage of Current Performance We Can Explain with
Past Performance 183
9.10 What Explains Current Per-Play Productivity in the NFL? 184
10.1 Ten Years of Glenn Robinson 194
10.2 Where Wins Produced and NBA Efficiency Agree 196
10.3 Twelve Most "Underrated" Players in 2004–05 197
10.4 Twelve Most "Overrated" Players in 2004–05 198
10.5 Twelve Years of the "Best" Rookies in the NBA 201
10.6 Unanimous Selections to the All-Rookie Team, 1995–2005 202
10.7 What Explains an NBA Player’s Salary? 206
10.8 Predicting the Annual Wage of the 2004–05 NBA Sophomores 211
preface
Every day sports are played. Teams win and teams lose. Joyous fans celebrate each
win while losers dream of better days. With each event, numbers are recorded.
These numbers tell us who won, who lost, and more importantly, these numbers
tell us why some fans are so happy and others so sad. The question “why?”, though,
is difficult. To know why, one has to understand the stories the numbers tell.
This is where we step into the picture. As professors of economics, we have been
trained in the art and science of statistical analysis. In fact, this is our job. Our job
is to use statistics and math to study economics. Of course, no one told us what
specifically we should study. So while sports fans go to work each day at a job they
may love or hate, we go to work every day applying our skills to the study of pro-
fessional sports. Yes, we get paid to study sports.
What have we learned from our studies? We have learned that the numbers
generated by sports are poorly understood. Much of our research, which employs
the standard tools of economic theory and statistical analysis, contradicts what we
hear repeated by sports writers and the players and coaches working in profes-
sional sports.
Much of this research has appeared previously in such academic journals as the
American Economic Review, Economic Inquiry, Applied Economics, and the Journal
of Sports Economics. Unfortunately, these journals are not generally read by many
people. So the stories we have told have not been widely heard. And that is the ba-
sic problem. Although there may be “fans” of our work, we think we can count the
number of “fans” on one hand—and we probably do not have to use all our fin-
gers. Granted, it is not the size of the audience but its enthusiasm that matters.
Nevertheless, we would like to bring our work to a wider audience.
xii
Hence we come to the purpose behind this book. We wish to explain to as gen-
eral an audience as possible the findings we previously only presented in academic
journals and at academic conferences. Given that our work is about sports, and
many people find sports to be both fun and interesting, there is some reason to be-
lieve such a book will be of interest to people outside of academia.
We do face one problem in telling our story. All of our writings to date have
been written for a very tiny audience of fellow academics. We were quite certain
that the approach we offered in our academic articles could not be used in a book
for a general audience. Hence we faced a dilemma. How can we explain what we
have done in economics and sports without using the math and statistics we have
grown to love and adore?
Our answer was found in Freakonomics, the book by Steven Levitt and Stephen
Dubner. Levitt and Dubner collaborated on the story of Levitt’s academic re-
search, and in the process, wrote a best-selling book. What lesson did we learn
from this work? In economics, math and statistics rule the day. From Levitt and
Dubner we learned that one can tell the story of research in economics without re-
lying on any technical details. Although our story is about the numbers sports gen-
erate, the math and statistics we employ will be relegated to endnotes and the web
site [www.wagesofwins.com] associated with the book. If you are not interested in
the technical details, your ability to enjoy our story will not be impaired.
Although we are economists, the stories we tell are first and foremost about
sports. So as you turn the pages you will see the names of Ty Cobb and Tony
Gwynn, Michael Jordan and Allen Iverson, Brett Favre and Peyton Manning, and
many other sports stars from yesterday and today. We will also mention the work
of many great writers, like Bob Costas, Allen Barra, Alan Schwartz, and John
Hollinger. We need to emphasize, though, that this book is also about economics,
so we will be mentioning major names in our disciplines, such as Adam Smith, Al-
fred Marshall, John Kenneth Galbraith, Ronald Coase, Douglas North, and Her-
bert Simon. And finally the book is about sports economics, so we will also men-
tion the “stars” of our field. Hence we will discuss the work of Simon Rottenberg,
Andrew Zimbalist, Gerald Scully, and Roger Noll, as well as many others.
Much of this work could not have been completed without the help of many,
many people. We wish to thank the people who took the time to generously review
earlier drafts of this work: Our list of reviewers includes Richard Campbell, Stef
Donev, John Emig, Rodney Fort, Michael Leeds, Jim Peach, and Dan Rascher. The
suggestions each offered greatly enhanced this work.
Additionally we wish to thank the people who answered various questions we
had along the way. This list includes Allen Barra, Richard Burdekin, John-Charles
xiii
Bradbury, John Fizel, Jahn Hakes, Brad Humphreys, Anthony Krautmann, Dean
Oliver, Darren Rovell, and Stefan Szymanski.
Much of the academic work we based this story upon could not have been com-
pleted without the help of several economists we have written with in the past.
This list includes: Erick Eschker, Aju Fenn, Bernd Frick, Todd Jewell, Rob Sim-
mons, Roberto Vicente-Mayoral, and Young Hoon Lee. We would also like to
thank all of the economists who have participated in sessions on sports economics
at the Western Economic Association. These sessions, organized in the past by
Larry Hadley and Elizabeth Gustafson, have been a tremendous help in our work.
The people of Stanford Press, specifically Martha Cooley, Jared Smith, John
Feneron, and Mary Bearden have been tremendous. This book would not have
been possible without Martha, so she certainly deserves a great deal of credit—al-
though none of the blame for any of our mistakes.
Finally, the list of people we have to thank includes our families, whose support
is very much appreciated. So Dave Berri would like to thank his wife, Lynn, as well
as his daughters Allyson and Jessica. Lynn took the time to read each chapter of
this book, and her suggestions went far to overcome the limitations in our writing
abilities. Martin Schmidt would also like to thank his wife, Susan, as well as his
children Michael, Casey, and a third one to come soon. Finally, last but not least,
Stacey Brook would like to thank his wife, Margy, and his sons Joshua, Jonah, and
Jeremiah.
January 9, 2006
The Wages of Wins
1 games with numbers
Sports are entertainment. Sports do not often change our world; rather they serve
as a distraction from our world. Though sports can often lead to heated debates
and occasional violence, in the final analysis sports are mostly about having fun.1
Beyond the painful losses and possible violence, there is another not-so-fun as-
pect of sports. Sports come with numbers. And analyzing these numbers involves
math. For many, math was not a favorite subject in school. Math can be hard. Math
can be confusing. Math can be scary. So why do people in sports introduce some-
thing that is not fun into something that gives our life so much joy and pleasure?
Why do sports need all these pesky numbers?
Our answer begins with a simple observation. Typically fans follow teams, not
players. Jerry Seinfeld has observed that people can hate a player who plays on an
opposing team, then love the very same player when he plays for their team. For
Seinfeld, this means that people are really just “rooting for clothes.”
Although teams are what people follow, the actions of the individual players
impact what we see for the team. When a team wins, we praise the players who we
think made this happen. When our teams lose, we are just as quick, if not quicker,
to blame the players who are responsible for making us feel so bad. How do we
evaluate these individual players? Without numbers, this would be difficult. To see
this point, consider the question of who is the best. Any fan of a team sport like
baseball, basketball, or football can answer this question. Can one answer the ques-
tion, though, without using any numbers?
Of course, every once in a while a coach or sportswriter will argue that the
games are not about the numbers. From their logic, if one really understands the
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