Baseball's Big Market Advantage; How Much Does Size Really Matter?

If you look at the Yankees, Dodgers, Cubs, it’s obvious.  Oh evil empires, thou hast a big market advantage thast gives you unfair deep pockets!  What’s a Pittsburgh to do?  But wait, if you look at the Mets, Angels, White Sox, who play in the same markets, the advantage isn’t so big after all.  If you look at the Washington Nationals (a big market over 2MM households) the advantage is non-existent with the low attendance and the worst TV ratings in the majors.  Oh, BTW, some big market teams don’t win so often; ask the poor Cubbies. 

Is it really possible that market size disparities can be overcome? Yes.

OK, another factoid.  In 1989, 20 years ago, the big markets were still the big markets, right?  However the Yankees drew only 2.1 MM--outdrawn by up to .5-1MM by each of three “smaller market” teams--the Blue Jays, Cardinals, and Orioles--that's for the birds!

Now let’s do some statistical analysis.

This year, based on statistical correlation, the size of the market explained only about 35% of the variance in attendance (even less correlated in 1989, when the top 5 teams were the Blue Jays, Cardinals Dodgers, Mets, As).  We also see huge variance in TV ratings that can overcome market size differences; in the 9-s for the Red Sox, 6-8 range for the Cardinals, Phils, Tigers, Brewers, Mariners and less than 1.0 for Washington and the A’s (regional sports networks).  That’s not about market size, that’s about knowing how to build fan interest.  An example is that the Cardinals play in a pretty small DMA (TV) market that is half the size of Texas but have about twice the RSN viewers.

So it turns out that baseball statistics prove that size matters, but not as much as you’d think. The financial wherewithal of your team is one-third based on the size of the market and two-thirds based on “other stuff” which I would summarize as the ability for a team to create that special relationship with its fans like the Cardinals have had for decades.  Building fan love can be done in any size market and is not a given in big markets.  People might think the Cubs, Yanks, Red Sox always sold out; no way—fan devotion was much less 20-30 years ago. 

Any market can sell out and any team can potentially get big Nielsen ratings. On the flip side, any big market can lose the interest of its fans.  It’s about having a great management team.  Although it is certainly easier in a big market to generate funds, small market teams have plenty of opportunity to generate the money to compete.

Size matters but not as much as you think.