Wednesday, October 17, 2007

Bill James on competitive balance research

Ten days ago, Bill James wrote an article for the Boston Globe on what he thought would be the next big things in sports research. Bill's main answer: competitive balance. Is it bad for basketball that the best teams win games, divisions, and championships more often than other sports? How can the games be made more competitive? That, according to Bill, is where research is going in the next generation.

Economists, who have been looking at these issues for a while now, were a little upset that Bill didn't seem to know about them.
Dave Berri wrote,

" ... although James believes he is presenting “new” questions, much of his column focuses upon issues that are “old hat” to economists who have studied sports over the past few decades."

At The Sports Economist, Skip Sauer wrote,

"But while the answers are elusive, the study of competitive balance is not "virgin territory." Anyone answering the call of Bill James (and perhaps Bill himself) might profit from using google scholar, a fabulous little tool. The result it delivers is not consistent with the notion that this is 'virgin territory' ... "

And Sauer then gives us an actual
screen print from Google, showing some 3300 academic papers containing the words "competitive balance."

Over at "The Book",
Tangotiger argued that

"Bill James is a self-confessed non-follower of research, publicly stating that he doesn't keep up. He really shouldn't then be commenting on what has or has not been studied, since most would assume that he keeps up with the field."


I have to agree with these comments. Bill James did indeed err in implying that competitive balance is virgin territory for sports research. It most clearly is not. However, I disagree with some of the other comments from the sports economists, the ones that argue that the research has come up with strong answers to Bill's questions.

To summarize Bill's comments on basketball, he argues that the NBA has a competitive balance problem because

(a) players don’t try hard in the regular season, knowing that the better team wins so often that one play probably won't make a big difference;

(b) the playoff picture is decided in December, which reduces fan interest in the second half of the season;

(c) with playoff series as long as they are, the better team is favored so overwhelmingly, and upsets are so rare, that the sport becomes less interesting to the fans; and

(d) it is possible to correct these problems by changing the rules of the game and season.

At "The Wages of Wins," David Berri acknowledges that competitive balance in basketball is lower than in other sports. But he questions whether or not fans care. His reasons?

(a) attendance and revenues in the NBA are way up in the past ten years or so.

And that's it. Berri does mention that the issue of competitive balance and attendance has been studied – and he gives a few references – but he doesn't mention any of the results. He doesn't address Bill's discussion of whether you can increase competitive balance by changing the rules of the game. (Indeed, he has previously implied that such a thing is impossible, arguing that basketball has an imbalance because of "the short supply of tall people," rather than by the fact that basketball has so many possessions with a high chance of scoring on each.)

At Skip Sauer's blog, the argument is similar. Indeed, Sauer quotes Berri in noting that "The NBA does not ... have a problem with attendance." To his credit, though, Sauer notes explicitly that we don’t actually know much about fans' demand for balance; and, again to his credit, he does quote "some well-known results:"

"One tentative conclusion from people who have been thinking about this issue for some time (i.e. most of us), is that while competitive balance is clearly essential in some degree, the payoff function around the optimum may be really flat. The two most successful leagues in the world, the NFL and EPL, have vastly different degrees of balance, suggesting other factors are likely much more important in generating fan interest ... "

And that's fair enough. But that doesn't answer Bill's question, which was, "what level of competitive balance is best for the league?" Sauer is answering a completely different question: "how important is competitive balance compared to other factors?"

And, with respect to Sauer and Berri, the fact that NBA attendance is increasing doesn't mean that competitive balance is unimportant. McDonald's is doing well even though Big Macs cost more than they did ten years ago. Should we infer that customers don’t care about price? People are buying relatively fewer Buicks than in the 60s, even though Buicks are much better cars than they used to be. Does that mean buyers don't care about quality?

The logic here just doesn't make sense to me, especially coming from economists. Isn't it possible that attendance in the NBA might be even stronger if you tweak the game a little more to the fans' liking? Isn't it a bit naive to look at increasing attendance and blindly conclude that the current level of balance must be exactly what the fans want?

I agree with Bill that we don’t know how fans react to different levels of balance, in the short or long term. On the one hand, I can see how some fans don’t like it when the better team is almost certain to win. On the other hand, I kind of enjoyed it last Monday when the Cowboys were 6:1 favorites over the Bills and almost lost. And I also enjoy an occasional blowout. It's reasonable to assume that some fans prefer imbalance, while some prefer balance, isn't it?

So which set of fans is more important? Should leagues cater to one set over the other? Should they try to balance the two somehow?

Is there any study that tries to figure out the optimum? There might be, but I haven't seen it. Indeed, I have seen studies that beg the question, by assuming the more uncertain the outcome, the more the fans like it.
That doesn't make sense to me.

That's "within game" competitive balance. What about competitive balance within a season? Or competitive balance over a number of seasons?

MLB attendance and revenues are way up. But, from my standpoint, I'm less interested in baseball than I used to be. There are many reasons for this – one is the fact that baseball cards are so expensive that I don't know the players anymore. But another is that team spending is so unbalanced that I feel like I'm watching payrolls more than players. This year, the Yankees had an amazing second half and made the playoffs for the Nth consecutive year. Am I impressed? Well, no – they spend so much more than any other team that *of course* they keep making the playoffs. If I were a Yankee fan, how could I have pride in my team, knowing that they win through the pocketbook?

In the past, when my team won, I could be proud of them for drafting well, or judging talent, or making good trades, or even just putting it all together and having a good year. These are, perhaps, weak reasons for feeling pride in the accomplishments in a bunch of strangers, and maybe I'm not typical. Maybe most fans can feel just as much pride that their ownership is successful enough in their shipbuilding business that they can spend some big bucks on their team. To each his own.

But which type of fan is dominant? And will that change over time? Right now, MLB might be making lots of money because the best teams happen to be in the biggest cities. But over the long term, will that get boring? Will Yankee fans be more likely to lose interest when it sinks in more and more that their team's success is just being bought? Will other cities lose interest for the same reason?

Will a salary cap make fans more loyal, if they know that money is taken out of the equation? It would to me. I've been waiting 40 years for my Leafs to win the Stanley Cup – but if they were to have bought one, by spending three times as much on salaries than any other team, I would have probably been too disgusted to celebrate. It seems to me that to take pride in a team, you need them to have won a fair fight. Now, as I said, it could be that other fans aren't like me – but isn't this something that someone should be studying?

Taking this a bit further, is it just coincidence that the cities with the most rabid fans appear to be the ones with a history of failure? Will interest in the Red Sox start to drop once the World Series becomes a distant memory? Is it possible that it's actually in the long-term financial interest of the Cubs and Leafs to *not* win a championship, and milk their fans' longing for another few decades? If so, perhaps competitive balance in *winning seasons* is a good thing, but competitive balance in *championships* isn't. Who knows?

I haven't read all the studies or
blog posts that Berri and Sauer (here are some of Sauer's) listed on the topic of competitive balance. But the ones I *have* seen don’t really address the more complex questions. Some of them concentrate on the math – which sports have more competitive balance, and which less? Some of them discuss what certain changes – say, a luxury tax – will have on the level of balance. Some of them do some regressions on balance vs. attendance. All reasonable issues, but none that put much of a dent in Bill's question – "what makes a league succeed?"

"The issue of what is good for leagues is virgin territory," Bill wrote. That's not correct – the issue is out there, and sports economists have produced a significant literature on the topic. But what have we learned from that literature?

I would argue that Bill is almost correct: the *questions* are not virgin territory, but the *answers* are.

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