Innovations and Value Creation in Major League Baseball, 1860–2000

AYA S. CHACAR London Business School

WILLIAM HESTERLY University of Utah

‘The one constant through all the years Ray has been Baseball. America has rolled by like an army of steamrollers. It has been erased like a blackboard, rebuilt, and erased again, but baseball has marked the time.’ (Terrance Mann, played by James Earl Jones, in the movie Field of Dreams).

‘I take it as given that markets provide efficiency and innovation. The question then becomes, where would you oppose a market? For example, I oppose a market in professional baseball. I do not care about other sports, but in baseball I value equity and tradition more than efficiency and innovation. I would like to see the cities own the teams, with revenue sharing and no free agency for players. That would lead to team continuity and to fewer advantages for big-market teams. In education, I also value equity. However, in contrast with baseball, I do not dismiss innovation and efficiency. In baseball, if there is no innovation, and the quality of play holds steady, that is acceptable. Not so with education, where I believe that we need progress.’ (Arnold Kling, 2000)

Professional sports leagues are important businesses in developed nations. They are also relatively large businesses. In Major League Baseball, for example, both attendance and television revenues have passed the billion-dollar mark, while some franchise values are nearing the same threshold. Moreover, these professional sports leagues have significance beyond economics; they are an important phenomenon from a sociological standpoint as well. Arguably, there are few, if any, other industries where the general public follows the daily activities and transactions of the industry as closely as those of professional sports leagues. Such importance is reflected in the massive public subsidies granted in the last decades to build stadiums and arenas in many cities. Despite this importance and high visibility, professional sports leagues have received little attention from

Business History, Vol.46, No.3, July 2004, pp.407 – 438 ISSN 0007-6791 print/1743-7938 online DOI: 10.1080/0007679042000219184 # 2004 Taylor & Francis Ltd. 408 BUSINESS HISTORY organisational scholars. This is unfortunate since, given their well-documented histories, professional sports leagues provide an exceptional opportunity to learn about issues such as innovation, institutionalisation and change. Among professional sports leagues, Major League Baseball (MLB) in the US is particularly noteworthy of study, since it is probably the first successful modern professional sports league in that country and many of its conventions were adopted by later leagues. Hence, MLB developed an organisational form that has become institutionalised in the US. Moreover, as reflected in the above quotation, Major League Baseball is often depicted as the epitome of consistency in American life. Indeed, many baseball fans and authors are traditionalists. These traditionalists view the game as an unchanging anchor in American life and like to hold on to the images of the pastoral myth that baseball evokes. Some of these, like Kling, are also anti-change, or what Postrel describes as stasists.1 Not only do they view baseball as an unchanging constant throughout the industrial age of the US, they also argue emphatically that baseball should resist change. Important questions are suggested by those who maintain baseball’s constancy. First, does the reality match the rhetoric? Is it true that baseball has maintained a pristine form that has been largely unaffected by innovation? Unfortunately, innovations in Major League Baseball have never been documented in a systematic way, despite claims about it being the ‘father’ and ‘inventor’ of the league model. While thousands of books have been written about baseball, not a single one has focused on innovation.2 Second, is innovation necessary for success or is tradition a more important resource in this case? While most tend to think of innovation as beneficial, several scholars have in fact argued about the benefits of constancy. For example, some population ecologists have argued that replication ability is essential for success, as such, change and innovation will create ‘liability of newness’ hazards to organisations.3 This research aims to address in a systematic fashion the above questions about variation, causes and consequences regarding innovation in major league baseball. After compiling and analysing the data that is available about innovation in Major League Baseball from its inception to the present, we are able to draw some conclusions about innovation in baseball. First, while the traditionalist’s views on baseball’s constancy have some grain of truth to them, they are, at best, outdated if not inaccurate. We show that baseball has been anything but a constant from the inception of the National League (NL), the precursor of MLB, in 1876 to the present and argue that innovation has influenced the way baseball has evolved both as a game and as a business. We also argue, however, that the rate of innovation has varied dramatically over time. This variation in innovation rates corresponds to three eras or regimes that have occurred in the Major League Baseball industry. We label these eras as the emergence and fermentation era, where the league model emerged and was refined; institutionalisation, when innovation slowed down and resistance to change was very high; and the renaissance era, when innovation at the league level resumed. We are also able to draw some clear conclusions about the consequences of innovation in baseball. MAJOR LEAGUE BASEBALL 409

Despite the prevailing rhetoric about constancy as a key to baseball’s success, our evidence clearly shows that innovation has had a positive economic impact on Major League Basketball. A final set of questions concerns why such dramatic variations in innovation have occurred during baseball’s history. Innovation was to some extent driven by different forces in the three eras. Much of the variation, however, may be explained by employing and extending new institutional reasoning. While innovation was indeed beneficial in the early days of Major League Baseball, it led to the legitimisation and institutionalisation of its rules and practices. Such institutionalisation then lead to a lack of innovation and resistance to change which is somewhat consistent with the expectations suggested by institutional theory. Once organisations become highly institutionalised, they become highly resistant to innovation. Changing such institutions is a process that is little understood,4 with most institutional theorists maintaining that changes or innovations occur when institutionalised organisations are exposed to dramatic exogenous shocks. These shocks render ineffective the long accepted ways of doing things,5 and thus lead organisational participants to question taken for granted understandings and try new forms, routines or solutions. In this case, even the woes of the Depression were not an effective impetus for change, but, rather, changes came from the actions of entrepreneurs who demonstrated their value and created enough competitive tension for other teams to adopt these innovations and eventually accept innovations as a potentially beneficial activity. We expand on our thesis below and present extensive evidence of innovation in Major League Baseball, drawing on numerous historical accounts and archival sources of the baseball industry from the 1870s to the present.6 When possible, we also show the financial gains that can be imputed to each innovation.7 For the purpose of this article we consider as innovations changes that originated in the baseball sector or changes that were first introduced elsewhere and then adopted by MLB teams. One caveat is in order. It is likely to be impossible fully to represent and discuss in a single article all the changes occurring during professional baseball’s 125-year history. Nevertheless, we are confident that we have captured the major areas of innovation and change.

II The roaring success of the first professional team, Cincinnati’s Red Stockings, encouraged other teams to pursue commercialism openly, eventually leading to the professionalisation of baseball and the formation of the National Association of Professional Base Ball Players in 1871 (NAPBBP). In those early days, even the best teams found it difficult to make money because of bidding wars for players that often wiped out profits, and high instability and low reliability of competing teams, which meant that scheduled games were often cancelled because one of the teams was a no-show. In an attempt to solve these problems, William Hulbert, assisted by Harry Wright, founded the National League, which 410 BUSINESS HISTORY led to the collapse of the NAPBBP in 1876. They resorted to experimentation and innovation. In the process, the NL developed the model for the modern professional sports league, and superior league policies. The leagues also introduced major changes in labour policies and game rules. After the 1901 merger with the American League (AL), formerly Western Association, innovations slowed down dramatically but the newly formed MLB saw its team adopt steel and cement ballparks, which became landmarks of the first half of the twentieth century. Other innovations were also initiated by individual teams, with some spreading to the rest of the league. While it is hard to quantify in monetary terms all of the innovations presented below, it is clear that these innovations eventually stabilised the National League and made it the first financially viable league. Major League Baseball eventually came to dominate and supplant the other leagues.8 With the exception of the American League, all the baseball leagues that followed the NL eventually folded or never made it as a major league.9 Probably the most significant innovation of that time is the league model, partially developed by the NAPBBP and further refined by the NL. Its founder drafted the first NL constitution after intensively quizzing the experts on the game at that time and reflecting about the sources of dissatisfaction with the prior league.10 In its first year of operation, the NL limited the number of franchises to cities with populations greater than 75,000 to ensure their financial viability. It also introduced fixed schedules arranged by the league, in advance, and teams were forced to play on those preset dates.11 The NL also introduced territorial rights for teams, and competition limited to contests between league members. While it is hard to quantify the impact of each league rule introduction or modification, one innovation in league practices that had measurable economic benefits was the World Series (WS), a tournament between the best teams in the NL and the AL, introduced in 1903. The first WS was two years after the NL and AL agreed to co-operate and was so popular at its introduction that many fans had to be turned away at the gate and the MLB made over $100,000 from the eight World Series games held that year. Given that the average total payroll for a team was about $40,000, this was a significant source of additional revenue. A simple modification of the World Series format from 1919 to 1921 also helped offset the losses due to the war-shortened 1918 season during World War I. This modification entailed moving temporarily from a best of seven game format to a best of nine arrangement, thus adding up to two highly lucrative play-off games to the league’s schedule.12 Another important innovation in league practices and policies involved establishing relationships with other baseball leagues. The NL clearly defined its organisational boundaries, but also set up a number of alliances with competing leagues, which were co-opted, weakened or destroyed. While the NL limited competition to members of its league, it nonetheless organised controlled events with other leagues. A major alliance with other leagues was the National Agreement (known first as the League Alliance, set up in 1877/78),13 started with MAJOR LEAGUE BASEBALL 411 the two other dominant leagues of the time, the American Association and the Northwestern Union. The National Agreement set up a code of conduct for leagues, especially in the area of labour policies, and was joined by 14 leagues in 1900.14 The NL also organised the first inter-league series, a popular but loosely organised post-season series between the NL winner and the American Association’s (AA) winner. The collapse of the AA ended this series, but it became the precursor of the World Series.15 The teams that composed the NL represented yet another critical area of experimentation. The NL constantly re-examined its organisational boundaries, optimising by adding or removing teams from its fold. While the NL had a clear identity, its membership list was constantly changing to maximise league performance and/or weaken or absorb other leagues. The NL added stronger teams from other leagues and expelled the weaker ones within its own ranks or relocated them to more promising cities. For example, the New York Mutuals and Philadelphia Athletics were expelled from the league for refusing to play on their assigned dates, and Milwaukee for not paying its bills.16 In 1884, the NL accepted in its fold St Louis, the strongest team of the Union Association (UA), the competing league that had decided not to adopt the reserve clause. The defection of St Louis to the NL served to accelerate the demise of the UA.17 The NL also accelerated the demise of the AA when its Giant team bought the AA’s best team, the New York Mets, and when it advised the AA to expand to compete directly with the renegade Players’ League (PL), a move that weakened both the AA and PL substantially. Eventually, half of the AA teams joined the NL while the other half were bought out.18 The PL also folded when its financial backers sold them out to the NL.19 Finally, a ‘merger’ with the AL was organised when its fan base grew bigger than the NL’s and it started posing a significant competitive threat. Even then, however, the NL’s only major concession during the merger was the relaxation of the no Sunday games rule, which was beneficial to the NL.20 Subsequently, the only major challenger to the MLB was the Federal League, which also settled with the MLB.21 A final innovation in league policies was the advent of Sunday games. The push for Sunday games also started before the turn of the century despite sabbatarian attacks. With the help of the ‘social gospel’ movement, Sunday games were legalised in three cities by 1902 (Chicago, St Louis and Cincinnati), and by 1918 also in Cleveland, Detroit, New York, and Washington. By 1920, only three teams, Boston, Pittsburgh, and Philadelphia did not allow Sunday play though each of these eventually relented between 1929 and 1933.22 Other important areas of innovation in league policies related to labour practices. A key achievement of the NL was to formalise the distinction between players and owners, one that was not pronounced prior to the 1870s. This distinction allowed for the development of labour policies that controlled the movement, actions and the pay of players. In 1879, the National League’s teams agreed that each would reserve five players on its roster. These players, who were not told of the arrangement, could 412 BUSINESS HISTORY not be signed by any other team. First proposed by A.G. Mills, the reserve clause conferred to teams the exclusive employment rights to players.23 Before the reserve system was introduced, players enjoyed unrestricted free agency and the best players, called revolvers, went to the highest bidder. A few years later, the reserve list grew to include each team’s full roster of 11 players. The NL went even further in 1883 in its attempts to reduce players’ power. The National Agreement established at the time focused on reducing player piracy (signing players from other teams) and blacklisting players who jumped their contracts. In 1886, the NL instituted the first salary cap. The top pay was set at $2,500 and was reserved only for the best players. Pay was scaled down from this top tier. Finally, the players’ reserve clause was written into the contracts of minor leaguers for the first time in 1888.24 Owners also invented the ‘sales system’, treating players like any other assets and selling them at whim.25 The reserve clause and the disappearance of competing leagues reduced players’ mobility and their salaries and power plummeted. The use of the reserve clause, salary caps and agreements among leagues to suppress or reduce competition for players continued for decades. The league also vigorously defended its labour practices in court, leading to the landmark Supreme Court decision of 1922 that gave the MLB exemption from antitrust legislation and protection for the reserve clause, thus giving the league complete freedom over labour policies. While it has become such an integral part of MLB that it is not often thought of as an innovation, spring training was another labour practice begun in this period. Spring training involved an approximately month-long pre-season training period in a warm climate such as Florida or Arizona. This practice was started by the Philadelphia Phillies’ annual pre-season trip to the southern US in 1886, but its roots probably go back to barnstorming in the 1870s.26 By 1905, all MLB teams had adopted trips to the South for spring training.27 This practice helped increase the performance of players and even generated revenue to the owners from exhibition games. The NL also cracked down on player gambling and game fixing. In fact, the NL, under the leadership of Hulbert, was the first not only set to rules but also to enforce them. For example, the league banned for life four players found guilty of gambling. Others found guilty of such infractions were expelled and blacklisted. One of the most important innovations was the shift from wooden ballparks to cement and steel ballparks. At its inception, baseball was played on open fields, but soon after the owners fenced their parks and installed wooden stands. Unfortunately, frequently little design thought had gone into building these bleachers. Thus these early stadiums were a major fire hazard and were prone to collapse.28 While the first modern ballpark is often considered to be the bricks and steel Baker Bowl built by the Phillies in 1895, the first cement and steel ballpark was not erected until 1909, the Athletics’ Shibe Park. In addition to reducing fire and accident hazards, the new cement and steel structures also showed major improvements over wooden structures and added a number of amenities such as MAJOR LEAGUE BASEBALL 413 elevators and ladies’ powder rooms with attendants. All but two teams, the Phillies and Cardinals, moved to concrete ballparks between 1909 and 1916.29 While necessitated by the problems characteristic of wooden bleachers, cement and steel structures were nonetheless associated with a significant improvement in attendance for adopting teams vis-a`-vis other teams in the MLB. Cement and steel ballparks were also built to emulate theatres and palaces, as part of the movement to increase the respectability of the game. As can be seen in Figure 1, league-wide attendance was in decline from 1909 to 1916, the period during which most wooden ballparks were replaced by cement and steel structures. However, as shown in Table 1, the teams moving to the cement and steel structures witnessed a significant increase in attendance vis-a`-vis other teams in the league. For example, the first entry in Table 1 shows that the Philadelphia Athletics moved to Shibe Park, their new concrete and steel park, in 1909. The average attendance was 523,257 in the three years prior to the move to the new ballpark and increased to 623,190 in the three years after. This increase represented 19 per cent versus a two per cent increase for all other teams in the league in the same period. On average, a new ballpark saw an average increase in attendance of 3.7 per cent compared to a 5.6 per cent decline in the MLB as a whole. Beside the innovations on league governance, the league experimented with the official rules of the game. The first written game rules appeared before 1845,30 but numerous rule changes were made from 1876. Many of these rule changes were

FIGURE 1 TOTAL MLB ATTENDANCE, 1901–2001

Source: www.baseball1.com. TABLE 1 THE DIFFUSION OF CONCRETE AND STEEL BALLPARKS AND IMPACT ON ATTENDANCE

Team New Park Name Year New 3-Year Average 3-Year Average % Attendance % Attendance Ballpark Attendance Before Attendance After Change Change Opened Ballpark Ballpark for team for MLB* Philadelphia Athletics Shibe Park 1909 523,257 623,190 19 2 Pittsburgh Pirates Forbes Field 1909 365,609 468,513 28 2 St Louis Browns Sportsman’s Park III 1909 475,710 274,715 7 42 2 Chicago White Sox South Side Park/ 1910 592,601 579,177 0 7 6 Comiskey Park Cleveland Indians1 League Park II 1910 386,312 293,456 7 24 7 6 New York Giants Polo Grounds II 1911 728,495 647,667 7 11 7 7 Washington Senators Griffith Stadium/NPII 1911 165,014 307,126 86 7 7 Boston Red Sox Fenway Park 1912 585,848 505,216 7 13 7 14 Detroit Tigers Tiger Stadium 1912 455,589 405,866 7 11 7 14 Cincinnati Reds Crosley Field 1912 296,544 234,264 7 21 7 14 Brooklyn Dodgers Ebbetts Field 1913 270,440 255,812 7 5 7 16 Boston Braves Braves Field 1915 219,304 288,010 31 7 1 Chicago Cubs Wrigley Field 1916 279,555 383,720 37 7 5 New York Yankees2 Yankee Stadium I 1923 1,182,084 919,289 7 22 6 Average: 3.71 7 5.57

Notes: 1. Major renovations as opposed to a new ballpark. 2. Attendance had already doubled after the 1920 signing of Babe Ruth and had outstripped the old stadium’s capacity. As such, it was practically ‘physically’ impossible for attendance to increase. 3. These figures are obtained in the following manner. First, we calculated for each team the change in attendance associated with the new ballpark by comparing the average attendance for the three years before compared to the three years after the new ballpark erection. For each ballpark, we then calculated the equivalent league-wide change in attendance by comparing the average attendance for the MLB (excluding the attendance for the team with the new park) for the three years before and the three years after the erection of that same new ballpark. We repeated this exercise for each new ballpark then averaged the increases by ballparks and the corresponding changes at the league level. A t-test indicates that the differences detected between the league wide changes and the team-level changes are statistically significant at the 0.01 level. These figures are highly conservative as the increases at the league level are computed using other teams’ changes in attendance, as opposed to comparing only to teams that did not erect a new ballpark. Sources: L. Koppett, Koppett’s Concise History of Major League Baseball (Philadelphia, PA, 1993); J. Thorn, P. Palmer, M. Genshman and D. Pietrusza, Total Baseball (Kingston, NY, 1999); www.majorleaguebaseball.com, and www.ballparks.com. MAJOR LEAGUE BASEBALL 415 intended to increase appeal to the fans by facilitating higher batting averages, greater frequency of home runs and, ultimately, more scoring. For example, moving the pitcher’s mound back in 1893 resulted in a significant increase in batting average of 0.035, thus increasing the game’s dynamism. In 1910, the addition of the cork centre to the baseball made the game livelier and in 1920 the banning of trick pitches, and the introduction of a live ball led to a dramatic increase in scoring and home runs from 7.68 runs per game to 9.69 runs per game on average.31 This last change contributed to a dramatic 34.6 per cent increase in attendance in 1920.32 Marketing and promotion of MLB were minimal. There is little evidence that promotional activities such as game promotions and advertising were widespread. Perhaps the most important marketing experiments involved pricing. The NL chose to focus on the conservative middle-class segment, and it developed a set of coherent policies to fulfil its customers’ needs. Following its inception, the NL set a minimum admission price of 50 cents, double what the rival American Association was to charge, banned the sale of alcohol at games and prohibited Sunday contests.33 The MLB’s attempts at curbing players’ drinking and gambling was also part of the strategy to ‘clean up the game’ in order to attract the more conservative middle class. League executives and players also spoke often to civic groups in order to promote baseball.34

III

‘Baseball people generally are allergic to new ideas. We are slow to change.’ (Branch Rickey, LIFE1954)

Following this initial period of experimentation and fermentation, an economic- ally viable set of league rules and MLB policies eventually became established to a highly stable level that we label institutionalisation. A number of innovations, made during the previous era, became taken for granted components of Major League Baseball and went largely unquestioned for nearly half a century. Such taken for granted ‘routines, customs, traditions, and conventions’ became constraints that limited innovation in the institutionalisation era.35 Institutiona- lisation was reinforced by a number of factors. Most important were the total disappearance of competition from other leagues and the dominance of owners over players, both facilitated by the official sanctioning by the Supreme Court of the MLB’s practices; the removal of the expulsion threat that used to hang over the head of non-performing teams; and the granting of unquestioned power to a highly conservative and anti-change commissioner, Judge Kenesaw Landis. In each of the areas that we examine – league policies, labour practices, ballparks, game rules, marketing practices and broadcasting – league-level innovation was quasi-absent and team-level innovations were actively resisted. 416 BUSINESS HISTORY

Changes had slowed down dramatically after 1903, but came to an almost total halt following the construction of the new cement and steel ballparks. In fact, about three generations of baseball fans saw a relatively unchanging MLB. They went to the same original cement and steel ballparks from their erection in 1910– 16 and for four subsequent decades and they played, or watched the game played, under the same general rules, and heard or compiled the same official statistics from about 1903 to 1975. While the lack of changes at these levels may have given the impression of static inertia in baseball, changes were still taking place and were essential to the survival and prosperity of the game. While the league as a whole resisted change, a number of institutional entrepreneurs introduced several innovations, even though they had to fight the baseball establishment and were often shunned by it. These institutional entrepreneurs demonstrated the benefits of particular innovations and created competitive pressures on other teams, pushing them eventually to adopt these innovations. Prior to these changes, and as shown in Figure 1, attendance growth stagnated in the 1920s then declined significantly during the Great American Depression. In 1931, the NL barely broke even, while the AL lost $156,000. From 1932 to 1934, the AL lost more than $2 million; the NL teams also incurred heavy losses, with each team losing money two out of three seasons. Following World War I, the Phillies and Boston Braves were near bankruptcy, and Cincinnati and Pittsburgh and a number of other teams also had shaky finances. Franchise prices were relatively static during that era.36 On the other hand, the minor leagues recovered much faster from the depression, and by comparison the National Football League (NFL) used this occasion to reorganise, consolidate and strengthen its teams, leading to a stable and successful league. The eventual adoption of a number of innovations helped turn around the fortune of the MLB and put it on the path to financial recovery and led to the eventual renaissance of the following era. Generally, however, this era can be summarised in the following quotation from the famous baseball historian David Quentin Voigt:

owners regarded [radio and motion pictures] with hositility. . . .Owners cursed radio because they saw it as a threat to live attendance . . . [and] opposed anything that threatened to make a free show of baseball, including radio broadcasts and night baseball . . . In sum, baseball’s hesitant union with radio proved to be a useful adjustment to the new wonderworld of electronic leisure. As for night baseball, the acceptance of the new radio dimension was most difficult for conservative owners.37

Similarly White points out that ‘in the midst of dramatic cultural changes through 1945, including two World Wars, a major depression, and the emergence of the automobile and the airplane, Organised Baseball seemed to have maintained essential continuity’.38 In fact, the changes in this era seemed primarily driven by MAJOR LEAGUE BASEBALL 417 the action of the institutional entrepreneurs rather than by the dramatic exogenous shocks taking place during that period. League membership, which had been highly dynamic until 1903, remained unchanged for a period of more than 50 years. Tables 2A and 2B show the extent of membership changes over the years in the National League, respectively the Western Association/American League. The first entry in Table 2A shows that, from 1876 to 1885, teams were added, removed or moved city almost every year during that decade. In the following decade, team additions and removals took place seven out of ten years, but no teams belonging to the NL moved city. In the following decade, four teams were removed from the Western Association and another one relocated in preparation for upgrade to Major League status. The geographic boundaries and composition of the league had become taken for granted.39 Mergers amongst teams, a frequent event in the past, stopped after the

TABLE 2A TEAM STABILITY IN THE NL

Time Period Number of Teams Teams Teams Frequency Teams Added Removed Moving City of Change 1876–1885 6–8 11 13 3 9 out of ten years 1886–1895 8–12 11 8 0 7 out of ten years 1896–1905 8–12 0 4 1 2 out of ten years 1906–1915 8 0 0 0 0 1916–1925 8 0 0 0 0 1926–1935 8 0 0 0 0 1936–1945 8 0 0 0 0 1946–1955 8 0 0 1 1 1956–1965 10 2 0 2 2 1966–1975 12 2 0 1 2 1976–1985 12 0 0 0 0 1986–1995 14 2 0 0 1 1996–2001 16 2 0 0 1

TABLE 2B TEAM STABILITY IN THE WESTERN ASSOCIATION/AMERICAN LEAGUE

Time Period Number of Teams Teams Teams Frequency Teams Added Removed Moving City of Change 1894–1895 7 0 0 1 1 out of two years 1896–1905 7–9 4 3 5 5 out of ten years 1906–1915 8 0 0 0 0 out of ten years 1916–1925 8 0 0 0 0 1926–1935 8 0 0 0 0 1936–1945 8 0 0 0 0 1946–1955 8 0 0 2 2 1956–1965 10 2 0 1 1 1966–1975 12 2 0 3 3 1976–1985 14 2 0 0 1 1986–1995 14 0 0 0 0 1996–2001 14 1 0 0 1 Source: J. Thorn, P. Palmer, M. Genshman and D. Pietrusza, Total Baseball (Kingston, NY, 1999), pp.105–9. 418 BUSINESS HISTORY absorption of the Federal League. Another changing feature of the league in the past, team names changes, had now became static.40 Innovations, particularly at the league level, were few in this era, but two modest innovations were introduced: the All-Star game in 1933 and the establishment of the Hall of Fame in Cooperstown, New York in 1936. The All-Star game was in large part a response to the financial woes of the Depression. It involved a single game in the middle of the season where the best players of each league played against each other. From its inception, the game was extremely popular. The first such game drew about 49,000 fans and grossed an estimated more than $56,000.41 A lesser innovation in terms of its economic value was the introduction of the Baseball Hall of Fame, in Cooperstown, NY, in 1939, following the 1936 induction of the first group of players. What was arguably the most important innovation of this era, night baseball, was not initiated at the league level. Indeed, Judge Landis and other league executives actively opposed night baseball. Even when night baseball proved to be a commercial success, MLB owners and the commissioner were reluctant to adopt or allow night games. The number of night games in fact did not increase until President Roosevelt made a public plea to team owners to do so in order for war workers to be able to watch the game after their shift was over.42 The attitude towards night games at the time is illustrated by the following comment by Washington owner Clark Griffith: ‘There is no chance of night baseball ever becoming popular in the bigger cities. People there are educated to see the best. High-class baseball cannot be played under artificial light.’43 Larry MacPhail, an outsider to the MLB, who had introduced night lights in a minor league franchise in St Louis and managed to attract significantly better crowds than the Cardinals, convinced Powel Crosley to buy the Cincinnati Reds, whose attendance had dropped by more than 300,000 between 1926 and 1934. In proposing night baseball for the major league games, MacPhail broke ranks with other owners, who opposed the highly progressive Cincinnati general manager. In May 1935, the first night game in the MLB was played between the Phillies and the Reds. At Larry MacPhail’s invitation, Franklin Roosevelt threw the switch from the White House to turn on the lights. Reds attendance increased by over 100 per cent, as shown in Table 3, which chronicles the first night game for each team and the associated increase in attendance. Other teams were still slow to adopt night lighting. The Dodgers, under MacPhail, who had moved from Cincinnati, were the second team to install night lights, three years later. Even though the Dodgers duplicated much of the Reds’ success with a 68 per cent increase in attendance, it took more than four years for the majority of teams to follow suit and install lights in the stadium and hold regular night games.44 Even though by August 1946 games in both leagues were scheduled for play at night, the Tigers waited until 1948 to introduce night lighting and the Cubs until they were threatened with a move of the League championship 40 years later.45 Night games helped increase attendance, as day attendance was becoming harder for fans. As Table 3 shows, every team increased attendance following a switch to night MAJOR LEAGUE BASEBALL 419

TABLE 3 THE DIFFUSION OF NIGHT BASEBALL

Date Team Percentage Change in Attendance 1822 First commercial use of lighting 1880 First night baseball game 1930 First successful minor league baseball night game at the Kansas City Monarchs 24 May 1935 Cincinnati Reds 121 1938 Brooklyn Dodgers 68 6 May 1939 Philadelphia Athletics 7 1 June 1939 Philadelphia Phillies 46 27 June 1939 Cleveland Indians 15 14 August 1939 Chicago White Sox 85 24 May 1940 St Louis Browns 90 24 May 1940 New York Giants 8 4 June 1940 St Louis Cardinals 20 4 June 1940 Pittsburgh Pirates 31 28 May 1941 Washington Senators 7 11 May 1946 Boston Braves 200 28 May 1946 New York Yankees 152 3 June 1947 Boston Red Sox 5 15 June 1948 Detroit Tigers 34 18 August 1988 Chicago Cubs 13 Notes: Percentage change in attendance is calculated by taking the change in average attendance for a team’s first two years after adopting lights. Sources: G.E. White, Creating the National Pastime (Princeton, NJ, 1996); www.baseball- almanac.com. games, and many enjoyed dramatic boosts. Night games also eventually helped increase revenues from game broadcasts. Though new ballparks had served to increase attendance in the emergence era, the owners did not use new ballparks to create value in the institutionalisation era. Despite evidence of increased attendance after the erection of a ballpark, not a single team built a new stadium in its existing city between 1923 and 1966, even though some teams moved into already existing stadiums. As some observers at the time noted, while owners blamed their problems on TV, the war and the subsequent depression, they had not realised that fans were shunning the game because they were played in old rundown ballparks located in city centres that had become dreary and congested and that often lacked adequate parking. As with ballparks and league policies, many of the labour practices established in the emergence era became deeply entrenched in the institutionalisation era. With Judge Landis vigorously defending the status quo, there were no changes in the reserve system or in the owners’ domination of labour relations. Owners focused on redrafting the National Agreement to control the minor league teams better, and especially their pay policy in an attempt to compress wages. This agreement was a constant source of dispute with the minor leagues, and was constantly being redrafted. 420 BUSINESS HISTORY

Despite the stasis at the league level, however, two important innovations were initiated to deal with the shortage of players and players’ costs; the involvement of African-American players and the farm system. Both innovations were long resisted by MLB, particularly Judge Landis, and neither diffused rapidly. The key agent for change in both of these innovations was Branch Rickey, described as the God Vulcan by Voigt: ‘In Greek and Roman Mythology the god Vulcan made the weapons for the Gods. He was ugly and unloved but none of the other Olympic Gods could have lived without him. His baseball’s equivalent was Wesley Branch Rickey.’46 Branch Rickey was the driver behind these two key innovations in labour practice. As an executive for the cash-poor Cardinals, he sought to reduce his dependence on player purchases and trades. In 1918 Rickey started developing the ‘farm system’, through which he bought minor league teams, or developed exclusive working agreements with such teams, allowing him exclusive rights to their players. Consequently his team never had to buy players, and made significant gains selling players to other teams. The farm system helped transform the Cardinals from a perpetual loser to a perennial power. The team won league championships four times between 1928 and 1934, and finished first or second in 15 out of 20 seasons between 1930 and 1949. At their peak, the Cardinals controlled 32 minor league teams. Also, at one point three out of every eight players in the MLB had first signed a Cardinals contract.47 While this practice was allowed in the 1921 agreement, other owners were extremely critical of the farm system. Given the Cardinals’ success, however, a number of teams eventually realised its benefits and started building up their own, despite the anti-farm system stance of baseball’s commissioner, Judge Landis.48 The diffusion of the farm system, however, was very slow, with most notably the Yankees, Tigers, Indians and Dodgers starting their own farm systems by the 1920s and 1930s. It was not until 1932 that the New York Yankees started building their own farm system, and the Dodgers had to wait for Branch Rickey’s move there in the 1940s to start building their own, and eventually formidable, farm system.49 In contrast, those teams that did not adopt the farm system model until the 1950s became persistent losers. Branch Rickey, who started his career coaching at a university while studying for his undergraduate and then law degrees, was also one of the first owners to hire college-educated players. He saw this as a way to have more disciplined players.50 But probably his most important labour innovation of the time was the recruiting of African-American players. Again it was Branch Rickey’s actions that accelerated the integration of African-American players, who had been part of a rich pool of talent that went untapped for more than half a century.51 Freed by the death of Commissioner Kenesaw Landis, who opposed the admission of African-American players into the major leagues, and probably influenced by the civil right movement, Rickey decided to scout in the black leagues.52 He was able then to overcome the resistance of the other owners by going to the press and announcing that the MLB team owners were trying to pass a resolution against the hiring of African-Americans. MAJOR LEAGUE BASEBALL 421

Rickey’s first hire, Jackie Robinson, first played in 1946 in the International League in Montreal, a city believed to be more racially tolerant. Following his roaring success on the Dodger’s farm team, Robinson’s contract was then bought by the Dodgers, and in 1947 he became the first African-American player to play in the major leagues in the twentieth century. This event not only had an extraordinary impact on baseball but was a watershed event in American society.53 The diffusion of the adoption of African-American players by teams is documented in Table 4. Bill Veeck was the innovator in his league, hiring the first African-American player in the AL, Larry Doby. However, it took 12 years for all teams to have African-American players on their rosters. The perennial champion, the Yankees, waited until 1955 to hire Elston Howard, but the Red Sox held out the longest. Not until 1959 did an African-American player become a member of the Red Sox. Nonetheless, the slowness with which AL teams had been signing minority talent probably helped increase the imbalance between the NL and AL, which may have contributed to declining attendances in the AL. Attendances for the AL dropped from an average 1.3 million per team per year between 1947 and 1949 to 906,000 per team for 1963–65.54 Teams which began to adopt African- American players obviously benefited, as it gave them access to the then cheaper and highly talented labour pool. In fact, six of the first seven National League Rookies’ Awards were given to former Negro Leaguers.55 The more direct short- term economic effects were mixed. Of the eight teams which used African- American players before 1954, six experienced declines in attendance. The

TABLE 4 THE DIFFUSION OF THE HIRING OF AFRICAN-AMERICAN PLAYERS

National League American League Year Team Player Year Team Player 1947 Brooklyn Dodgers1 Jackie Robinson 1947 Indians Cleveland Larry Doby Dan Bankhead 1949 New York Giants2 Hank Thompson 1947 St Louis Browns3 Hank Thompson Monte Irvin 1950 Boston Braves4 Sam Jethroe 1951 Chicago White Sox Sam Hairston 1953 Chicago Cubs Ernie Banks 1953 Philadelphia Athletics5 Bob Trice 1954 Pittsburgh Pirates Curt Roberts 1954 Washington Senators6 Carlos Paula 1954 St Louis Cardinals Tom Alston 1955 New York Yankees Elston Howard 1954 Cincinati Reds Chuck Harmon 1958 Detroit Tigers Ozzie Virgil Nino Escalera 1957 Philadelphia Phillies John Kennedy 1959 Boston Red Sox Pumpsie Green Notes: 1. Now Los Angeles Dodgers; 2. Now San Fransisco Giants; 3. Now Baltimore Orioles; 4. Now Atlanta Braves; 5. Now Oakland Athletics; 6. Now Minnesota Twins. Source: www.baseball-almanac.com/firsts/first8.shtml. 422 BUSINESS HISTORY exceptions were the Dodgers, who enjoyed a one per cent increase, and the Indians, who were in the midst of a promotional revival led by Bill Veeck. The longer-term effects on attendance as opposed to costs may have been more positive. Moreover, it may well have been that the hiring of these players actually stemmed a decline that would have been even worse had they not been hired. While major changes in playing rules generated increased scoring and increased fan interest in the early days of baseball, such changes were few after the merger of the AL and NL with no major changes after 1901. Voigt argues that resistance to change was the leitmotif of the whole of the Silver Age and that ‘the rules stayed the same except for a 1901 change that found the Americans accepting the National Code and thus adopting the foul-strike rule’. He also reminds us that in fact the league went back for some time to the backward ‘single-umpire’ system.56 Whether the slow-down started in the early 1900s or the 1920s, it is clear that after the 1920s all changes in game rules were minor, such as the use of a deader ball for some years.57 Given the tremendous impact of radio and television on the economics and popularity of baseball, it is ironic that MLB strongly resisted broadcasting baseball through both of these media. However, owners, Judge Landis, and even the press, were slow to perceive the commercial benefits that radio could bring, and resisted it as though it were the enemy.58 While radio broadcasting began in 1920 and had spread widely during the decade, radio broadcasting fees represented only 0.3 per cent of total revenues by 1930. William Wrigley, the Cubs’ owner at the time, was the first to allow the broadcasting of all his team’s games on the radio in 1935. Other teams followed suit very slowly, however. As late as 1938, the three New York teams agreed there should be no radio broadcasts in New York. Radio broadcasts eventually proved to be a major source of new income, with 1939 radio revenues amounting to 7.3 per cent of the teams’ total and varying from $33,000 for the Cardinals to $110,000 for the Yankees. By the 1940s, radio broadcasting rights had increased dramatically.59 While radio broadcasting was eventually accepted, television broadcasting was subject to the same resistance as radio. In fact, the owners prided themselves on ‘keeping television out’ and consistently rejected offers to air baseball games on television despite stagnating revenues. While the first game was broadcast in 1948 in Chicago, it was not until 1950 that the first All-Star game was shown on television, and not until the following year that the first nationally broadcast game was aired featuring the Dodgers versus the Giants.60 Throughout the 1950s, the owners refused to allow national television broadcasts of games into markets with major league teams.61 Another example of the ossification that characterised the institutionalisation era was the owners’ reluctance to improve their marketing practices. The owners did little to increase the appeal of the game and their revenues, despite a constant increase in promotional expenses in other American businesses from the 1860s. As Heylar notes, promotions were practically non-existent: ‘Typical was the MAJOR LEAGUE BASEBALL 423

Cincinnati Reds’ idea of promotion: a three-foot square sign on the front of Crosley Field that said: Game Today. . . . Baseball people believed, essentially, that real men didn’t market.’ 62 Resistance to more active promotions of baseball continued despite the success realised through promotions by one maverick owner: Bill Veeck. During his ownership of the Cleveland Indians from 1946 to 1949, Veeck introduced numerous promotions such as pre-game circuses and post-game fireworks, among many others. He also increased attendance by introducing many ‘firsts’ into the game, including the first African-American player in the AL and the oldest (and African-American) rookie. Attendance increased from 558,182 the year before Veeck took ownership to a then record 2,620,627 three years later.63 He then owned the worst team in the league, the St Louis Browns (now Baltimore Orioles), from 1951 to 1953. There he increased attendance by 60 per cent despite the teams’ sorry performance on the field, using novel marketing tactics, including outrageous door prizes (including live pigs, beer and cake), and staging weddings at home plate.64 In general, baseball executives viewed Veeck’s marketing efforts as undignified. According to one baseball executive, ‘the other owners looked down their noses at him. They thought baseball was too pure for all that’. Veeck returned the favour as he is reputed to have said that ‘baseball must be a great game, because the owners haven’t been able to kill it’.65

IV After more than four decades of stasis, MLB began to take a less hostile attitude towards change. A number of factors probably contributed to this change. External political pressures, though not overwhelming, became an issue with congressional hearings in the 1950s to re-examine the antitrust exemption of baseball and concern from prominent New York political leaders over the move of the Dodgers and Giants to California. A more serious disturbance to the status quo originated from within baseball itself. For the first time since the nineteenth century, the players effectively organised themselves into a cohesive bargaining force. As a result, the players’ share of baseball revenue went from under 15 per cent in 1969 to over 60 per cent within 15 years. While the initial reaction to these developments was at best defensive, they led to less resistance to the innovative efforts of institutional entrepreneurs. In the renaissance era, relatively few innovations took place in the official game rules, but other areas were rife with change. League composition and league rules, promotions and ballparks changed dramatically. Despite increased competition from professional football and basketball as well as other entertainment sources, revenue increased ten-fold between 1969 and 1989, and revenue growth was again outstripping attendance growth, which merely doubled during this same period. Moreover, franchise values increased dramatically after a period of stagnation. While values had remained below $10 million until 1970, they rose rapidly after that, as shown in Figure 2. In fact, the last franchise to be sold, the 424 BUSINESS HISTORY

FIGURE 2 AVERAGE SALES PRICE OF A FRANCHISE PER DECADE

Source: L. Koppett, Koppett’s Concise History of Major League Baseball (Philadelphia, PA, 1993), pp.481–3.

Red Sox in 2001, fetched a price of $665 million, which was lower than the highest bidder’s at $750 million. While league composition remained unchanged in the institutionalisation era, the renaissance era witnessed the most dramatic shifts in league composition since the nineteenth century. Traditional aspects of league composition were questioned, mainly the permanence of a franchise’s tie to a city, the geographic boundaries of the league, and the number of teams in the league. While the renaissance era did not start until the mid- to late 1960s, some involuntary changes in league composition and team locations were the precursors of the renewal of innovations at the league level. The first franchise relocations of the early 1950s – St. Louis to Baltimore; Boston to Milwaukee; Philadelphia to Kansas City – were the first such changes in league composition. These moves incrementally expanded MLB’s geographic boundaries with Milwaukee and Kansas City not far behind Chicago and St. Louis respectively. These moves also involved the weaker team in a two-team city moving to a city that had previously been without a major league team. The next league composition changes were far more radical. In 1958, despite severe league resistance, O’Malley orchestrated the move of the two New York teams, the Giants and Dodgers, to the West Coast, specifically San Francisco and Los Angeles.66 Both franchises, particularly the Dodgers, were financially sound and enjoyed a large and loyal following in New York.67 One result of the Giants’ and Dodgers’ move to the West Coast was a major political uproar. To thwart the threat of political action and the start of a competing league, O’Malley then managed to convince the league to expand.68 MAJOR LEAGUE BASEBALL 425

The AL expanded in 1961 for the first time since joining the NL in 1901, adding the Angels and the new Senators, who were renamed the Rangers. The NL added the New York Mets and the Houston Astros in 1962. League expansion brought direct revenues in the form of a $2 million franchise fee per new team, distributed among existing teams. Expansion also generated additional income to the owners from the sale of players to the new teams. Expansion was followed by further franchise moves, which aimed to shift to the new population centres of the US. The Senators left Washington and moved to Minnesota, becoming the Twins. Then, in 1966, the Braves moved again, this time south to Atlanta, and in 1968 the Athletics moved again, going west to Oakland. Soon after its creation, the new Senators franchise moved to Texas and became the Rangers, thus leaving the Washington establishment irate for the second time. All the franchise moves of the era had a positive overall impact on team attendance. Table 5 shows that a franchise moving to a new city saw its attendance increase by an average of 96.9 per cent in the three years following its move compared to an increase of only 12 per cent for other teams in the league during the same time periods. The 1961 expansion also seemed to have opened the floodgate, with four more teams being added in 1969 (the Royals, Brewers, Expos and Padres), two more in 1977 (the Blue Jays and Mariners), two more in 1993 (the Rockies and Marlins) and another two just a few years later (the Diamondbacks and Devil Rays). Not all of these new franchises have been successful, which has led MLB in 2001 for the first time in about 100 years to consider league contraction by eliminating teams. Expansion also led the way to an elaboration of the post-season tournament to determine the MLB champion. Divisional play, introduced in 1969, increased post-season games from a possible seven games to a possible 17. Again, in 1977 the league championship format was changed to a best of seven format from a best of five, followed by more divisional format change in 1995. Each change increased the number of post-season games and thus both attendance and broadcast revenues. It also allowed more teams to retain hope of winning a championship late in the season, thereby keeping interest and attendance high throughout more of the season. League composition was not the only area of dramatic change in the renaissance era. Radical changes in labour policies transformed the distribution of talent between teams and the distribution of wealth between owners and players. After the farm system and then hiring African-American players diffused among the teams, these policies only provided parity to their adopters in the area of the labour policy rather than the initial advantage provided to the first adopters. So owners then resorted to dealing with players’ shortages by signing rookies, dubbed ‘bonus babies’, for large bonuses. By 1964, the problem of ‘bonus babies’ had apparently ‘wandered into the realm of the absurd’.69 With bidding wars for novice players continuing, and signing bonuses reaching unprecedented sums, the owners introduced the June Rookie Draft in 1965. The goal was to control the signing bonuses while distributing the talent more equally across all teams. TABLE 5 FRANCHISE MOVES IN THE TWENTIETH CENTURY AND VALUE CREATION

Move Team Park Status Average Attendance Average Attendance % Attendance % Attendance Year in the Three Years in the Three Years Change for Change for before the Move after the Move the Team MLB1 1953 Braves New ballpark 571,048 1,987,874 248 7 5 (Boston to Milwaukee) 1954 Orioles/Browns2 New ballpark 369,941 938,050 154 92 (St Louis to Baltimore) 1955 Athletics2 New ballpark 431,293 1,103,092 156 12 (Philadelphia to K.C.) 1958 Giants3 Existing ballpark 702,405 1,496,704 113 14 (NY City to San Fran.) 1958 Dodgers3 Existing ballpark 1,091,083 2,056,829 88 7 9 (Brooklyn to LA) 1961 Twins/Senators Existing ballpark4 611,347 1,365,497 123 7 9 (Washington to Minnesota) 1966 Angels New ballpark5 1,778,844 2,279,767 28 14 (Los Angeles to Anaheim) 1966 Braves New ballpark 816,950 1,023,782 25 12 (Milwaukee to Atlanta) 1968 Athletics New ballpark 676,304 798,018 18 7 2 (Kansas City to Oakland) 1972 Rangers Existing ballpark6 799,350 847,654 6 1 (Washington to Texas) Average: 96.9 12 Notes: 1. This percentage change in attendance is for the MLB excluding the moving team during the same time period. 2. Major renovations as opposed to a new ballpark. 3. Team moved into an existing ballpark temporarily until the new stadium was built. 4. This stadium was built in 1955 and then enlarged in 1960 in time for the Twins to move in. 5. A new franchise at the time, the Angels played first temporarily in the Dodgers’ Stadium. 6. This stadium was built in 1965 and then remodelled in 1971 in time for the Rangers to move in. Source: www.baseball1.com. MAJOR LEAGUE BASEBALL 427

Further radical changes in labour practices were imposed upon the owners, but some may have contributed indirectly to the tremendous revenue growth during this period. The advent of free agency in the mid-1970s led to higher salaries and costs for owners, but to more excitement and revenue as well. George Steinbrener, the owner of the New York Yankees, epitomises this paradox. He resisted free agency: ‘I am dead set against free agency. It can ruin baseball.’70 Nevertheless, he was also the first to realise that ‘you measure the value of a ballplayer by how many fannies he puts in the seats’. He paid Catfish Hunter, the first free agent, a then astonishing $2.85 million four-year salary, after his release from the Athletics, which at that time was three times higher than the next highest salary in MLB. Later, Steinbrenner signed Reggie Jackson before the 1977 season, thus starting a strategy of using famous players to succeed on the field and in the box office. Free agency helped bring about significantly more parity to the MLB, with most teams winning at least one division title since its introduction. Again, changes in ballparks were slow and small, but rapidly increased. The first six new ballparks built during this era were for franchises moving to a different city. They were also primarily multipurpose (serving baseball, football and other sports), as they were built by municipalities to attract major sports teams to their cities. Rapid construction activity followed, with 24 other new ballparks and several more planned, as shown in Table 6. The surroundings of the new baseball stadiums were shaped to obtain the ‘ideal park design’ rather than fitting the stadium to its surroundings, as had been the case in the past. Other major ballpark changes also took place. Some of these innovations included using dome roofs on ballparks and the controversial use of artificial turf, which became more commonly used in the NL but did not spread to all teams. Also, while many ballparks built early in the renaissance era were multipurpose, later ballparks ushered in the return of the classic baseball-only park, dubbed the ‘new classics’ or ‘retro’ designs. The new stadiums were furnished with luxury seating boxes that were often rented out for corporate entertainment, and generated significant additional revenues to the teams. Table 6 also shows that teams who built new stadiums during the renaissance era saw their attendances go up by an average of 52.4 per cent compared to an average of 5.7 per cent for other teams. Also, new parks were also highly likely to be chosen to host the All-Star game within the first five years of their opening. In addition, teams with new ballparks tended to enjoy renewed on-field success, with 16 such teams reaching the play-offs within three years of opening a new ballpark Recently, Joe Giles, the Phillies’ director of business development, commented on this phenomenon as follows:

It’s kind of like a snowball: As you have a new stadium and you have more revenue, then you can get better players, then you can draw more people, then your TV ratings are better so you can charge more for advertising, you sell more merchandise, sell more concessions. And there’s a reverse snowball effect when you have an old, outdated stadium that’s not exciting. TABLE 6 NEW BALL PARKS IN THE RENAISSANCE ERA AND IMPACT ON ATTENDANCE

Open Year Team Ballpark Name Average Attendance in the 3 Average Attendance in the 3 % Attendance Change % Attendance Change Years before New Stadium Years after the New Stadium for the Team for MLB1 2 1966 Angels Anaheim Stadium 1,778,844 2,279,767 28 14 2 1966 Braves Atlanta-Fulton County Stadium 746,504 1,351,854 25 12 1966 Cardinals Bush Stadium 1,185,014 1,938,097 63 12 2 1968 Athletics Oakland-Alameda County 676,304 798,018 18 7 2 2,3 1972 Rangers Arlington Stadium 799,350 847,654 6 1 1970 Pirates Three Rivers Stadium 789,955 1,423,513 80 0.1 1970 Reds Riverfront Stadium 893,215 1,638,723 83 0.1 1971 Phillies Veterans Stadium 630,735 1,443,495 129 3 3 1976 Yankees Yankee Stadium II 1,274,409 2,150,466 69 16 1977 Expos Olympic Stadium 857,377 1,654,312 93 24 1982 Twins Metrodome 769,605 1,126,272 46 19 1989 Blue Jays Skydome 2,609,694 3,754,231 44 10 1991 White Sox Comiskey Park III 1,387,986 2,725,467 96 9 1992 Orioles Oriole Park at Camden Yard 2,535,208 3,249,381 30 7 1 1994 Indians Jacobs Field 1,484,682 2,718,698 83 7 17 1994 Rangers The Ballpark at Arlington 1,950,385 1,823,753 7 6 7 17 1997 Braves Turner Field 2,667,438 3,270,083 28 24 3 1998 Angels Edison International Field 1,778,844 2,279,767 28 14 2000 Mariners Safeco Field 2,919,885 2,914,6244 2000 Tigers Comerica Park 1,600,346 2,438,6174 2000 Giants Pacific Bell Park 1,898,199 3,318,8004 2000 Astros Enron Field 2,403,750 3,056,1394 2001 Brewers Miller Park 2001 Pirates PNC Park 2003 Reds Great American Ball Park 2003 Padres New Padres ballpark

Average: 52.4 5.67 Notes: Only new stadiums for existing teams are listed. Other stadiums were erected during and before that era for extension stadiums or for teams that moved from one city to another. The impact of stadiums that came on line after 1999 cannot be estimated yet). 1. This percentage is for the industry, including the teams building new stadiums. As such, the numbers shown underestimate the relative increase in the firm’s revenue relative to the industry 2. Franchise move. 3. Major renovations as opposed to a new ballpark. 4. Ballpark built over the location of the old one. 5. Less than three years of data is available post-move for these ballparks. Source: www.baseball1.com. MAJOR LEAGUE BASEBALL 429

You have trouble drawing fans, so you can’t afford the good players, your TV ratings go down, merchandise sales go down. We’re fighting that battle.

The area that changed the least in the renaissance era was probably the rules. Nonetheless, a few major changes to the rules of the game took place. By far, the most prominent rule change was the designated hitter (DH) rule, introduced in the AL in 1977. The DH rule allowed another player to bat in place of the pitcher, thus allowing teams to substitute an effective batter for their worst. The rule was intended to improve dramatically hitting performance and increase attendance, which had been trailing behind the NL by a substantial margin.71 Attendance did increase by 22 per cent over the three years following the inception of the DH rule, but this increase was only one per cent higher than the NL. A new live ball was introduced (1993–97) after a uniform ball had been in use. This new ball made the game livelier, increasing scoring and home runs significantly. This innovation coupled with others resulted in a significant increase in attendance in that era, as shown in Figure 1. The owners finally realised the synergies between television and baseball, charging significant fees to allow the broadcast of games. In turn, many Americans rushed to buy TV sets in order to watch their favourite game.72 By 1966, owners were taking full advantage of TV, with TV revenues reaching $27.5 million.73 For a long time, marketing was left to a few institutional entrepreneurs while other teams and MLB did little or nothing to promote baseball. Like Bill Veeck before him, Charles Finley was an institutional entrepreneur in this area in the 1960s and 1970s. Like Veeck, he was maligned by his peers to the point where they schemed about how to get him out of baseball.74 The marketing of baseball was transformed at both the team and league level during the renaissance era. Institutional entrepreneurs such as Veeck and Finley had demonstrated the benefits of marketing, and their promotional philosophies were finally diffused widely in the 1970s. Major promotional giveaways, for example, became a fixture for all MLB teams during this period. Fundamental changes occurred at the league level under Peter Ueberoth’s leadership. Ueberoth negotiated lucrative television contracts and dramatically increased activities aimed at raising revenue from other activities. Ueberoth also devised marketing schemes that received numerous corporate sponsors’ support, as he had done in organising the 1984 Olympic games in Los Angeles.75 The MLB dramatically increased its promotional expenditure, and owners also increased their merchandising efforts under Commissioner Ueberoth. The teams saw a substantial rise in their merchandising revenue. As late as 1984, teams typically earned only about $40,000 a year from merchandise, while merchandising revenues in 2001 were greater than $1.5 million per team.76 Another major promotional innovation linked to ballparks in the renaissance era was the move towards commercial sponsorship of the ballparks, usually associated with a change of the park name to that of the sponsor. Historically, 430 BUSINESS HISTORY park names had been neutral, except for the names of a few parks that were owned by some of America’s business dynasty owners, including Wrigley and Busch.77 Starting in the 1990s, team owners widely accepted the practice of lending a team’s ballpark name to a commercial entity. Historical ballpark names were replaced by company names, with owners gaining millions of dollars in the process. Most new ballparks built in that time took on commercial names. Starting with the Colorado Rockies, whose ballpark is now known as the Coors Field, 15 other teams adopted corporate names for their stadiums. Commercial sponsorship of baseball park names proved to be highly lucrative. Again, this innovation led to a significant increase in revenues to the teams, as shown in Table 7, with the average team gaining about $2 million a year in additional revenue from such sponsorship.

V Our findings allow us to provide conclusive answers to two of our research questions, and suggest some important theoretical extensions. First, we have demonstrated that the romantic notion suggesting that baseball has been a great constant in American society contains only a grain of truth. From the late 1910s, few changes occurred in each of the areas that we examined. The institutionalisation period was characterised by a freezing of the status quo and tremendous resistance to innovation at the league level, led by the then commissioner, Judge Kenesaw Mountain Landis. The MLB went through almost half a century of stagnation, where the rate of innovations decreased significantly, and team owners and commissioners resisted many innovations such as radio and television broadcasts. However, even during that period, ‘constancy’ is not an accurate descriptor of the MLB. Despite the general hostility to innovation, a few entrepreneurs, such as Branch Rickey and Bill Veeck, introduced a number of major innovations. Following their proven success, and the competitive pressures they created, these innovations were then imitated, albeit slowly, by other teams with most, such as night baseball and radio broadcasting, diffusing league-wide. These few changes, notably the farm system, admission of African-American players, night baseball, and radio and TV broadcasting, were all of the major sort and exerted a tremendous economic and cultural impact on Major League Baseball. Moreover, when we consider the eras that preceded and succeeded the institutionalisation era, then it is even more demonstrable that profound changes have occurred in baseball’s overarching league policies, labour practices, ballparks, rules, marketing practices and broadcasting. The early years of baseball were characterised by a slew of innovations on many dimensions, including the development of the business model or fundamental operating policies of a modern sports league and even dramatic changes in the rules of the game itself and labour policies. Taken together, these changes helped the National League survive while other leagues folded, leading to the first commercially successful baseball leagues in the US. TABLE 7 COMMERCIAL SPONSORSHIP AND BASEBALL PARK NAMING

Agreement Team New Ballpark Estimated Date Name Total Value Price Includes: 3/91 Colorado Rockies Coors Field* 4 $30m Equity stake in the new franchise, sponsorship, and park naming rights. 4/95 Arizona Diamondbacks Bank One Ballpark $66m for 30-year $1m annually for naming rights and another $1m each year to be spent on advertising for the team’s games on radio and television. $325,000 yearly to the county. 9/95 San Francisco Giant 3Com Park $.5m Naming rights through the end of 1995. 3/96 Milwaukee Brewers Miller Park $41.2m Naming rights and exclusive signage inside and outside the ballpark. $1.2m in 1996 then $2m a year for 20 years beginning in 1999. 4/96 San Francisco Giants Pacific Bell Park $50m Naming rights for 24 years and technological assistance in building the stadium. 9/96 Cincinnati Reds Cinergy Field Cinergy will pay Hamilton County $1.4m in 1996, $1.3m in 1997, $1.2m in 1998, $1.1m in 1999 and $1m in 2000. Cinergy also will pay $25,000 per Reds post- season home game and $50,000 per Bengals post-season home game, up to $150,000 a team. The five-year agreement will last until September 2001, or until a new stadium for the Cincinnati Reds or the NFL’s Cincinnati Bengals is built, whichever comes first. 1996 Florida Marlins Pro Player Naming rights bought by this division of Fruit-of-the-Loom 2/97 San Diego Padres Qualcomm Stadium $18m Naming rights for 20 years. 8/97 Oakland Athletics UMAX Coliseum $17m Naming rights for over 10 years. (DEAL FELL THROUGH and ended in court in 98 with the stadium’s old name brought back.) 9/97 Anaheim Angels Edison International $50m Naming rights and sponsorship for 20 years. $2.5m a year. Field 5/98 Montreal Expos Labatt Park $68.8m Naming rights and sponsorship for 20 years. 6/98 Seattle Mariners Safeco Field $40m Naming rights for 20 years. More than $1.8m a year. 8/98 Pittsburgh Pirates PNC Park $30m Naming rights for over 20 years. More than $1m a year. 9/98 Oakland Athletics Network Associates $5m Naming rights over five years. Coliseum 12/98 Detroit Tigers Comerica Park $66m Naming rights to the site, in a 30-year deal. 8/96 Tampa Devil Rays Tropicana Park Agreement with Tropicana Dole Beverages of unknown nature. 4/99 Houston Astros Enron Field $100m to Naming rights for 30 years. Enron also to build a parking garage and conduct $200m energy management.

Notes: *The naming and partial ownership of the Colorado Rockies was initiated by Bill Coors, who had watched for years its rival, Anheuser-Busch, benefit from the marketing synergies available from the Busch-owned St. Louis Cardinals’ Busch Stadium. Sources: Various newspaper articles. 432 BUSINESS HISTORY

The institutionalisation era also eventually gave way to a period of renaissance or a time of important innovations in the business of baseball. Fundamental to many of these innovations was a change in team owners’ approach to view baseball as entertainment, thus making them more receptive to innovations in both the business and game of baseball. A second central finding of our study also challenges both conventional wisdom and some theoretical speculation that innovation is economically risky. We have shown that several innovations, in particular, contributed substantially to the economic status of teams – in sum, they created tremendous value.78 New ballparks were built, with major changes in design being introduced. A few major rule changes were introduced, like the designated hitter rule, but also the style of play changed dramatically from the ‘dead-ball’ style of play to the ‘big-bang’, with its emphasis on more home runs and scoring. Promotions and marketing were introduced, and new media, namely radio and television, became new ways of spreading the baseball gospel and earning additional revenues. League policies changed on a number of dimensions. Team composition and location were dramatically altered; teams moved cities, teams were added and the league expanded to the South and to the West, and the interdivisional play format was changed. We have shown that most of the above changes resulted in dramatic increases in attendance or revenue. Our inductive research also suggests three key contributions to our theoretical understanding of organisations and innovation. First, the success of MLB led to the institutionalisation of its rules and practices. This institutionalisation was beneficial, and was sealed by the Supreme Court ruling which granted the MLB exemption from antitrust laws, and thus protected it from any further competition. This institutionalisation also had a negative side, as it led to a dramatic resistance to change at the league level. The increasing success of MLB coupled with the Supreme Court ruling shielded MLB from competition and contestation over the division of revenues. This not only reduced the incentive to innovate,79 but also facilitated a taken for grantedness in the way baseball people viewed their game and business. Thus, a period of quasi-complete institutionalisation transpired. As suggested by some institutional theorists, particularly North,80 this period was highly stable in both its fundamental institutional rules (e.g. the reserve clause) and the institutional environment (e.g. shelter from antitrust litigation), as evidenced by a four-decade period of relatively scant or slow innovation. Both teams and the MLB hierarchy actively resisted innovations such as radio, television, night baseball and the inclusion of African-American players. It is important to reiterate, however, that important innovations – night baseball, the farm system, radio broadcasting, and the introduction of African-American players, for example – were introduced in this period. A second implication for institutional theory is suggested by examining further the impetus behind innovation and contrasting it with current institutional reasoning. New institutionalists usually attribute change in an institutionalised system or de-institutionalisation to exogenous shocks81 or to entropy within the MAJOR LEAGUE BASEBALL 433 system.82 In contrast, exogenous shocks appear not to be the predominant driver of innovation in baseball. Rather, individual entrepreneurs played the more significant role in effecting change. Thus, the impetus behind innovation was what North and others83 term institutional entrepreneurs. MacPhail (night baseball), Rickey (farm system; breaking of the colour barrier), and O’Malley (franchise moves), particularly, conceived new innovations and were able to endure and surmount the resistance from the baseball establishment to introduce them to their teams. After the performance benefits of these individual innovations started being proven and/or after they created competitive tensions, other owners started copying them. Diffusion was, however, arguably slower than in other eras, with innovations such as night lighting and the farm system, and was primarily at the team rather than the league level. In the renaissance era however, the speed of diffusion increased dramatically. For example, it took more than two decades from the introduction of night lighting in American sports for it to diffuse across MLB teams, but then it took only about a decade for the practice of hiring African-American players to spread. Moreover, the renaissance era also saw the resumption of changes and innovation at the league level. Expansion was the first of such league-level innovations, starting in 1961. Other major league-level innovations during that era include the national telecast of all regular season games which dramatically increased TV revenues (1966 onward), the dramatic increase in league promotional expendi- tures (1969–80), the dramatic increase in merchandising under Peter Ueberoth (1984 onward), the introduction of the designated hitter rule by the AL (1977) and the modification of the strike zone (1988). Proving why more rapid diffusion of innovations in the renaissance era occurred is difficult. It seems highly plausible, though, that the ‘taken for granted’ approach owners took to the status quo was eventually overturned at the league level. Once owners began to see alternatives to traditional locations and league composition, they found it easier to question other traditional practices and policies. In essence, the taken for granted meta- norms about the desirability of constancy in baseball began to be questioned and eventually overturned. In conclusion, we have addressed what is a little studied but important organisational institution: the modern professional sports league. Our long-term perspective has also allowed us to address the widely acknowledged theoretical void in understanding institutional change. We are still far from a comprehensive theory of why and how institutionalised organisations change, but this article represents some useful steps towards such a goal. In addition to answering some major questions on innovation in general and in MLB, this essay is one of very few to examine such an important institutions over such a long time-frame. Most research on innovation and institutions has been cross- sectional or has examined phenomena over short durations.83 If we are substantially to advance our understanding of institutions and how they change through innovation, such a long-term historical approach is not only promising but also essential. 434 BUSINESS HISTORY

NOTES 1. V. Postrel, The Future and its Enemies: The Growing Conflict Over Creativity, Enterprise, and Progress (New York, 1998). 2. We did not find a single book whose title or subject classification contained the word ‘innovation’ and no one book that focused on change. We did an exhaustive search in four book databases: the Library of Congress, the Baseball Hall of Fame Library, the Harvard Library and an online-based meta-search engine for books. The result of our research was also confirmed in an email communication on 4 Jan. 2002 from James L. Gates Jr., the Library Director of the National Baseball Hall of Fame and Museum, Inc, which has the most extensive collection of baseball material. 3. M. Hannan and J. Freeman, ‘Structural Inertia and Organizational Change, American Sociological Review, Vol.49 (1984), pp.149–64. 4. P. Ingram and K. Clay, ‘The Choice within Constraints: New Institutionalism and Implications for Sociology’, Annual Review of Sociology, Vol.26 (2000), pp.525–46. 5. C. Oliver, ‘The Antecedents of Deinstitutionalization’, Organization Studies, Vol.13 (1992), pp.563–88. 6. The primary histories that we used include R.F. Burk, Never Just a Game: Players, Owners, and American Baseball to 1920 (Chapel Hill, NC, 1994); idem, Much More Than a Game: Players, Owners, and American Baseball Since 1921 (Chapel Hill, NC, 2001); J. Helyar, Lords of the Realm (New York, 1994); L. Koppett, Koppett’s Concise History of Major League Baseball (Philadelphia, 1998); D.R. Marburger, Stee-Rike Four! What’s Wrong with the Business of Baseball? (Westport, CT, 1997); M. Miller, A Whole Different Ballgame (New York, 1991); B.G. Rader, A History of America’s Game: Baseball (Chicago, IL, 1992); H. Seymour, Baseball: The People’s Game, Vol.II (Oxford, 1990); H. Seymour, Baseball: The Golden Age, Vol.III (Oxford, 1971); J. Thorn, P. Palmer, M. Gershman and D. Pietrusza, Total Baseball (Kingston, NY, 1999); D.Q. Voigt, American Baseball, Vols.I and II (University Park, PA, 1983); G.E. White, Creating the National Pastime (Princeton, NJ, 1996); and A. Zimbalist, Baseball and Billions: A Probing Look Inside the Big Business of Our National Pastime (New York, 1992). 7. It should be noted that not all innovations and experimentation will be successful. A number of experiments were made in baseball and then scrapped because they were not found useful. The innovations omitted, however, tend to be quite minor compared to the changes we emphasise in this essay. 8. Most historical accounts stress that the NL was a cartel and followed policies to keep it as such and eliminate competition, see, for example, Burk, Never Just a Game. We believe these observations are true but chose in this study not to address them. Arguably, the focus on the NL’s anti- competitive practices has led to a lack of emphasis on the extent of innovations made by the NL during that early era, which is what we are trying to achieve in this study. 9. These leagues included the American Association (1882–91), Union Association (1884), Player’s National League (1890), and the Federal League (1914–15). Burk, Never Just a Game, Vol.I. In fact, not only most leagues folded, but also most teams. In a study of pro-baseball teams in the post-bellum era, Ted Vincent found that a full three-quarters of proteams did not survive for more than two years (cited in Voigt, American Baseball, Vol.I). 10. Wright’s major concern was the stability of the league’s membership and the difficulty at scheduling games with competing teams. In Voigt, American Baseball, Vol.I, p.43, based on Wright to William Hulbert (letters) 5 Feb. 1875. Both Wright and Hulbert quizzed Chadwick who was inspired by his cricket experience (Voigt, American Baseball, Vol.I, pp.6–7, based on Harper’s Weekly, 18 Oct. 1858 and 22 Oct. 1859). Another big problem of the era was contract jumping (Beadle’s Dime Base Ball Player (1876), pp.63–4). 11. In comparison, the NAPBBP formed in 1871 had open membership to anyone who paid the membership fee set only at $10. Each club had to arrange its own schedule and its constitution and rules had simply been copied from the old Association rules. Umpires were unpaid and the ‘honour’ system was used to deal with the problem of revolvers. Voigt, American Baseball, Vol.I, pp.36–7. 12. The World Series revenues eventually jumped to half a million dollars by 1912. Burk, Never Just a Game, pp.136–243; Voigt, American Baseball, Vol.II, p.49. 13. Seymour, The Early Years, pp.98–100. 14. Voigt, American Baseball, Vol.II, pp.73, 127, 131, 143; Burk, Never Just a Game, pp.73, 75–6, 80. MAJOR LEAGUE BASEBALL 435

15. Burk, Never Just A Game, p.79. 16. Koppett, Koppet’s Concise History, p.38; Voigt, American Baseball, Vol.I, p.121; Seymour, The Early Years, p.86. 17. Voigt, American Baseball, Vol.I, p.80; Seymour, The Early Years, pp.160–61. 18. Voigt, American Baseball, Vol.I, pp.120–21; Seymour, The Early Years, pp.260–61. 19. Burk, Never Just a Game, pp.112–14; Voigt, American Baseball, Vol.I, p.150; Seymour, The Early Years, pp.240–44. 20. Burk, Never Just A Game, p.156. 21. Seymour, The Golden Age, pp.230–33. 22. Voigt, American Baseball, Vol.I, pp.87–8. 23. Mills was concerned that teams and leagues were failing because the richer teams were stripping poorer teams of their players in mid-season, leading to the collapse of these teams and to a marked reduction in league balance in Spalding, Official Baseball Record (1915), p.47. 24. Burke, Never Just a Game, p.100. 25. Seymour, The Early Years, p.110. 26. M.E. Friedman, ‘Spring Training’, in Thorn et al. (eds.), Total Baseball, p.570. 27. Friedman, ‘Spring Training’, pp.572–3. 28. For example, South End Grounds, home of the Atlanta Braves, burnt down in the Great Roxbury Fire that started in the aftermath of a fight in the bleachers between two players in 1894, and spread, damaging or destroying 170 adjacent buildings. League Park, home of the Reds, succumbed to fire in 1900 and the Polo Grounds III, home of the Giants, burnt down in 1911 in a fire that lasted two days. Exposition Park, home of the Pirates, used to flood periodically when the Allegheny River rose. Thorn et al. (eds.), Total Baseball. 29. Exceptions are as follows. The St Louis Cardinals stayed until 1920 in Robison Field, initially built in 1893 and renovated after the 1898 fire. At that time, the Cardinals moved in with the St Louis Browns into Sportsman Park. The Phillies remained in the Baker Bowl until 1938, when they shared Shibe Park with the Athletics. Finally, the Yankees were slow to build a cement and steel ballpark, but the team shared the Polo Grounds with the Giants from 1913 to 1922, before moving into the cement and steel Yankee Stadium. Thorn et al. (eds.), Total Baseball, pp.97, 99, 101. 30. Some sources set this date to 1834 and others to 1842. However, the most widely accepted account is that of the New York Knickerbockers players creating the first formal rules of the game. G. Waggoner, K. Moloney and H. Howard, Spitters, Beanballs, and the Incredible Shrinking Zone: The Stories Behind the Rules of Baseball (Chicago, Il, 2000). 31. Burk, Never Just a Game, p.245. 32. Though its economic consequences are impossible to quantify, the adoption of official statistics was another area of innovation. Many of baseball’s official statistics were adopted prior to 1876, but the MLB also introduced, or adopted as official, numerous game statistics during the fermentation era. The new statistics adopted led to an increase in reporting on the game in newspapers and later on the radio channels and helped attract even more fans to the game. 33. This strategy contrasted with the AA’s, which sets its admission price at 25 cents, allowed Sunday games and allowed alcohol sales in its stadiums. Burke, Never Just a Game, p.57. 34. Voigt, American Baseball, Vol.II, p.208. 35. D.C. North, Institutions, Institutional Change and Economic Performance (Cambridge, MA, 1990), p.83. 36. Koppett, Koppett’s Concise History of Baseball, p.481. 37. Voight, American Baseball, Vol.II, p.231. 38. White, Creating the National Pastime: Baseball Transforms Itself, p.277. 39. White (ibid., p.69) argues that the original boundaries made perfect sense considering the transportation modes of the times and the need for a ‘relatively compact transportation network’ in order to avoid having teams constantly on the road. These boundaries, however, made less sense as the population moved South and West and commercial flights became available. 40. During that same period, professional football was starting to take hold with the American public. The first professional football league to become successful, the NFL, was constantly changing. In fact, from its inception in 1920 to 1933, when the league was reorganised into ten teams, 45 teams were added to the NFL, 45 folded, nine played only for one season, three were inactive for one season, one was disbanded, and one moved to the AFL. 41. Chicago Tribune, 21 May 1933. 436 BUSINESS HISTORY

42. Spink, Judge Landis, pp.242–3, 277–8. Experiments with night illumination had taken place in a number of industries, with New York stores hanging electric light garlands to attract customers to their stores starting in 1822. The first night game was staged in 1880, and night baseball games were first played from 1930 in the black and minor leagues and had proven hugely successful. In contrast, the NFL had its first night game more than five years before the first night game in Major League Baseball. 43. Frank C. Lane, ‘Romance of Night Baseball’, Baseball Magazine, Vol.45 (1930), pp.483–6. 44. See White, National Pastime, chapter 5; Voigt, American Baseball, p.204. 45. The story goes that Philip K. Wrigley was ready to install night lights at the Cubs stadium in the early 1940s, but then donated them to the war effort on 8 Dec. 1941. P. Lowry, ‘Ballparks’, Total Baseball, pp.280–81. ‘It was not until the threat of shifting the Cub’s League championship series to distant St Louis that night play became a reality at Wrigley Field.’ In 1988, the Cubs played their first night baseball game at home. 46. Voigt, American Baseball, Vol.II, p.159. 47. Polner, Branch Rickey, pp.83–95; Seymour, Baseball’s Golden Age, pp.413–20; Sporting News, 25 Jan. 1923; Burke, Much More than a Game, pp.64–6; ‘Prospectology 101: The June draft’, www.thebaseballpage.com. Rickey’s actions also helped the minor teams he controlled to prosper with the influx of better players and fans. In fact, Rochester, one of the Cardinal’s farm teams, won the International League’s pennants from 1928 to 1931 and then in 1940. 48. Judge Landis, the MLB commissioner, criticised it as anti-competitive and freed a number of players from their minor league contracts and McGraw, another team owner, ridiculed it among others. Voigt, American Baseball, Vol.II, pp.161–2, 147–8; Sporting News, 10 Oct. 1921; 20 Dec. 1928; 21 March 1929; 18 Dec. 1930; 1 April 1943; 30 Nov. 1944. 49. Polsner, Branch Rickey; Branch Rickey ‘The Farm System’; Burke, Much More Than a Game. 50. Voigt, American Baseball, Vol.II, pp.159, 218. 51. Surprisingly, historical records show that in the early days of baseball a handful of African- American players had played in the minor and major leagues, and all-black teams had been part of some minor leagues. In 1884, the first African-American Major Leaguer was hired, Fleetwood Walker. Over the years, a gentlemen’s agreement among the owners and open racism by some of the players and owners kept African-American players out of the game, even though some African-American trainers had been used. 52. Burke, More Than Just a Game, p.55. 53. In contrast, the Mexican League hired a Black American in 1938. The fledgling NFL teams had also hired a number of African-American players between 1920 and 1933, when an unofficial ban on their hiring was instituted. The modern NFL also broke the colour barrier before the MLB in 1946, when the progressive Los Angeles Rams owner hired two African-American players 54. It is obviously hard to say what accounts for the decline in attendance. Some have argued that it was the Yankees’ dominance, but the slowness in drawing from the black leagues’ pool probably also contributed to the problem. 55. Joe Black, Jim Gillian, Sam Jethroe, Willie Mays, Don Newcombe and Frank Robinson. 56. Voigt, American Baseball, Vol.I, p.50. 57. Other notable rule changes include the 1958 AL rule requiring players to wear helmets, following its development and introduction by Branch Rickey, one of the great innovators of the time. 58. Radio broadcasting officially began in the US in 1910 with a transmission from the Metropolitan Opera House in New York City. In August 1921, the first MLB game was broadcast play by play, with the Pirates beating the Phillies. Two month later, the first World Series game was broadcast, also by KDKA in Pittsburgh. White, Creating the National Pastime, chapter 7. 59. Organized Baseball, pp.1602–3, 1606–7; Sporting News, 21 Dec. 1933; 16 Aug. 1934; 3 Dec. 1936; 21 Dec. 1936; The Digest, 9 Oct. 1939; White, National Pastime, chapter 7. In 1947, A.B. ‘Happy’ Chandler, the baseball commissioner then, negotiated a substantial $475,000 three-year broadcasting contract for the World Series, which served to establish the players’ pension fund. Then, in 1949, he negotiated a seven-year $4.37 million contract for the radio broadcasts of the World Series, which also went to the pension fund. In 1950, he also negotiated a six-year $6 million contract that included the broadcasting rights of both the World Series and the All-Star game. 60. Helyar, Lords of the Realm, p.69; Voigt, American Baseball, Vol.II, p.303. Experimentation and regular TV broadcasting started in the 1930s and NBC aired the first baseball game in May 1939, a contest between Princeton and Columbia. In August of that same year, the first MLB game, MAJOR LEAGUE BASEBALL 437

between the Dodgers and the Reds, was broadcast on W2XBS. World War II then delayed further broadcasting efforts, but after the war television was slowly but surely accepted in American homes. 61. In contrast, the NFL embraced television much earlier than baseball, with national broadcasts of games beginning long before. 62. Helyar, Lords of the Realm, p.74. 63. Voigt, American Baseball, Vol.II, p.276. 64. His most famous promotion at that time was signing up, for one game, the shortest player ever, the 3ft. 7 in. tall Eddie Gaedel. Another of his famous promotions at that time was Grandstand Managers’ Day, where more than 1,000 fans, armed with Yes/No placards, decided what the team’s strategy should be. B. Veeck, Veeck as in Wreck. 65. Ibid., p.276. 66. The MLB was slower than other leagues at having West Coast teams. The NFL was first again, with the Rams moving to LA in 1946 and the inclusion of the AAFC’s San Francisco 49ers in 1950. 67. Walter O’Malley, the Dodger’s owner, was perhaps the most financially oriented of owners and an innovator of the time. With a background representing bankrupt companies, he worked to insure that the Dodgers never faced such a destiny. While he claimed that the Dodgers were in deficit in 1950, to support his actions, Congressman Emanuel Celler, who was investigating antitrust accusations, showed that the Dodgers were actually highly profitable from 1945 to 1949. In contrast, professional football used opportunistic franchise moves and expansions earlier than MLB. For example, in 1946 the Rams moved from Cleveland to Los Angeles and in 1960 the Cardinals moved from Chicago to St Louis. 68. Expansion was, at least in part, a response to the popular and political outcry resulting from six teams moving to new cities. Hoping to capitalise on the void generated by the moves, Branch Rickey, with a number of backers, planned to start a third major league, the Continental League. 69. Rookie Rick Reichardt was signed by the new LA Angels for $250,000, more than the combined pay of two of baseball’s greatest players, Frank Robinson and Mickey Mantle. www.thebase- ballpage.com/features/junedraft. 70. www.baseballlibrary.com. 71. The designated hitter rule was actually first introduced by NL president John Heydle and supported by Connie Mack in 1928 but rejected by the AL. It was finally introduced by the AL, under the sponsorship of one of the institutional entrepreneurs of the time, Charles Finley. 72. Voigt, American Baseball, Vol.II, p.303. 73. New York Times, 28 Feb. 1966. 74. Finley owned the Athletics from 1960 to 1980. In the early years, the As were an underperfoming team, so Finley moved the team to Oakland, where he stimulated attendance with a number of promotional innovations. Among others, he introduced Charley O the mule, staged the burning of a bus, and was the first to use non-white and grey uniforms, substituting green and gold uniforms. Finley also installed the first computer-activated scoreboard. Finley paid players to grow moustaches and adopt funky nicknames such as Catfish Hunter and Blue Moon Odom. 75. When Ueberroth took over, overspending had caused 21 out of the 26 teams to lose money. By 1987, baseball as an industry was profitable for the first time since 1973, and by 1988, Ueberroth’s last year, not a single club lost money. 76. Helyar, Lords of the Reams, p.336. 77. In fact, when August Busch bought Sportsman Park in 1953 and named it Budweiser Park, he drew so much criticism that he had to change it to Busch. Soon after, however, he introduced Busch Bavarian Beer. 78. A separate question is who captured the value created. The capture question is beyond the scope of this study, but the labour battles between owners and players have been central to the economic story of baseball. 79. This reasoning follows Kenneth Arrow’s well-known argument that monopolists have less incentive to innovate than firms with more contested market positions. K. Arrow, ‘Economic Welfare and the Allocation of Resources for Inventions’, in T. Nelson (ed.), The Rate and Direction of Inventive Activity: Economic and Social Factors (Princeton, NJ, 1962). 80. North, Institutions. 81. N. Fligstein, ‘Social Skills and Institutional Theory’, American Behavioral Scientist, Vol.40 (1997), pp.397–405. 438 BUSINESS HISTORY

82. Oliver, ‘Antecedents’, pp.563–88. 83. See, for example, North, Institutions; J. Beckert, ‘Agency, Entrepreneurs, and Institutional Change: The Role of Strategic Choice and Institutionalized Practices in Organizations’, Organization Studies, Vol.20 (1999), pp.777–99; P.J. DiMaggio, ‘Interest and Agency in Institutional Theory’, in L.G. Zucker (ed.), Institutional Patterns and Organizations (Cambridge, MA, 1998), pp.3–21. 84. T. Dacin, J. Goldstein and W.R. Scott, ‘Institutional Theory and Institutional Change: Introduction to the Special Research Forum’, Academy of Management Journal, Vol.45 (2002), pp.45–57.