by bobster1985
I wish the Yankees symbolized the American economy:
[Via danieldrezner.com :: Daniel W. Drezner]
It kills me to write this post, but I’m about to defend the New York Yankees. I do it only to make a point about the American economy and free competition, so bear with me.
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The Yankees are acting the way smart companies should be: spending to remain competitive. The interesting analysis of the numbers for different professional sports indicates that baseball is the most competitive one, that the large amount of money spent by the Yankees actually creates less of a dynasty than those seen in basketball.
Now, could the Yankees spend less money and be competitive? Probably but then more of the profits would probably go to the owners, not the players. I would rather that the huge amounts of money go to the workers than to the owners.
As in business, there are two models for innovation: create your own (best farm system) or buy someone else’s (free agent). Oakland has been successful with the former, while New York has followed the later.
This sets up a nice feedback loop for the Yankees. People will only pay lots of money for a game if the team is worth watching and has a chance for the post-season. There is a lot of demand for Yankee tickets, driving up the price. But, there had better be a wonderful team on the field or people will not go. Then the demand drops.
If you have lots of money, it is actually easier to buy someone else’s creativity. The best creative solutions to problems usually come when money is lacking. Oakland does a wonderful job with little money but finding and nurturing the best young players. But since these great players eventually move on to teams that pay them a lot more, Oakland has to continually be creative to remain competitive. The Yankees only have to spend money.
But it is still a trick to put the right sort of team together. The Yankees are generally creative with how they spend their money and just do not throw good money at bad players. The Mariners tried to do this for a few years, in order to maintain some competitiveness. They had a huge payroll and an awful record. Simply spending money is not the right approach.
Spending money wisely is important and the Yankees have done a pretty good job of this. Now if American companies could just do more of that also.
Technorati Tags: Economy
