Two Dead Soldiers

A fascinating column from DePaul University's Peter Bernstein. Take a look at this graph:


Source: Chicago Sports Review

For every year from 1991 to 2004, the Cubs payroll was either the same as or exceeded ticket revenues. Since 2004, ticket revenues have exceeded payroll. This permanently lays to rest two canards stated by Tribune apologists:

1) The increase in ticket prices is used to offset increases in payroll.
As any finance person will tell you, ticket prices are set at the price where revenue is maximized, not where payroll is financed. And that price is set where supply equals demand. Bernstein show us that demand increased each time the Cubs had a good season:

“In other words, two things drive up Cubs ticket prices -- if last year's team was good or, if not good, if the team was at least better than the year before.”

Read: PAYROLL IS NOT A FUNCTION OF TICKET PRICES

2) The Trib wasn’t cheap, the just didn’t spend wisely.

Starting in 2004, the year AFTER the Cubs had their best season in 14 years, ticket revenue EXCEEDED payroll. That means the TV revenue, radio revenue, internet revenue, hot dog revenue, etc. WAS ALL GRAVY.

This team could have had Miguel Tejada, Pudge Rodriguez AND Carlos Beltran AND still made a profit commensurate with what the Cubs had made the previous decade!

Damning stuff from the DePaul economics department. Makes me proud to have a diploma from business department there.