In: Economics
13) Why do some baseball teams have many wins, but are not as profitable as some teams who do not have as good of a win-loss record?
13.
There are different reasons to it.
The teams who have many wins, have higher costs in terms of
salaries of the players, cost of operations, size of the team and
other overhead costs, but some teams not having such a win record,
are more cost efficient and have smaller and close knit team to
operate with. It makes these teams to be more profitable as they
have lower costs. It is the reason that the teams with not so many
wins, are more profitable than the teams with more wins. The other
reason is the higher impact of an equitable approach in advertising
and broadcasting revenue income distribution among the teams, than
the advertising and broadcasting revenue income distribution to be
based on performance. It means, all the baseball teams are sure of
getting a specific minimum income and afterwards, it is their
efficiency in cost and revenue management that makes them more
profitable. So, the profit earning does not rely heavily upon the
wins. It also causes teams with more wins to be less
profitable than the teams with less wins.