Sports Economics: NFL, MLB, NHL, and the Effects of the Depression

Jonathan Williams@@jonathanbwCorrespondent IFebruary 27, 2009

Times were good, expansion had created a larger, more robust league. Money flowed from several sources as owners and players ratcheted salaries to new heights.  The biggest and best were superstars.

Then the markets fell and fell.  The banks failed, people found work harder and harder to come by.  Governments sought ways to bail out their citizens, much of it to no effect. 

This is not this the present day, but the decade of the 1930s.

The roaring '20s saw professional sports reach levels of national obsession.  Major League Baseball went from a local sport to a game of Ruth, Gehrig, Mack, and John McGraw. 

The NFL grew from being a small middle American league to the big cities on the east coast.  The NHL has defeated other rivals to become the major hockey league, with big stars and big pay checks.

In 1929, a lot changed.  As the economics of sports changed, many found themselves deciding between food and sports, so food won.  Teams that had been kings of yesteryear fell to pieces or bankruptcy, as owners found all their other businesses collapsing.

To see the effect of the depression, all one has to do is look at the NFL.

In 1929, the NFL had 12 teams, by 1932 they were down to eight teams.  In 1930, three teams moved.

The NFL would not really stabilize until 1937, when the remaining 10 teams started to rebuild.

The NHL also started the 1929-30 season with 10 teams.  They also found that teams without solid financial footing began to collapse. In one case, the Ottawa Senators suspended operations, reestablished the team, moved, and then finally folded within five years. 

The Montreal Maroons, one of the original teams, like the Senators, also began to struggle, and by the mid-1930s collapsed.  The New York Americans limped along mostly under the collective ownership of the league until they folded, leaving the so-called "Original Six" teams in 1942.

Baseball, the premier sports league in North America, struggled with decreasing gates and revenue streams, becoming a bit thinner. However, on the whole, the big leagues survived intact.  It is amazing to think that not one team moved in this decade.

Major League Baseball may have survived because of its popularity and the fact that most of the 16 teams were located in the biggest cities in America, unlike the other two leagues.

As the depression grew, baseball sought to reclaim fans through various means of promotions and by changing old habits.  Night games were first introduced in this era.

Looking at the current era, if we are entering a similar period, one would imagine similar sets of circumstances will affect all leagues. 

The NFL, due to popularity, will be the one best able to survive with all teams intact.  Their economic model is most secure.

The NHL and the NBA are the most vulnerable for reasons similar to those of the NHL and NFL in the 1930s.  Too many small market teams and not enough revenue streams.

One could easily see the NHL losing several teams if economies keep getting worse.  Certainly the NBA is also vulnerable.

Major League Baseball is better situated but, as we can see, they may find teams like the Marlins or the Rays (who have had attendance issues) being in for a rough ride.  What is probably worse is the position the minor leagues are in, as their bottom lines are less broad.

While the MLB may keep all their teams intact, minor leaguers may find jobs harder to come by.  The parallels are certainly intimidating.


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