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Wednesday, March 2, 2011

Major Market Advantage


Recently there has been a lot of talk about how only "Major Market" sports teams are able to compete for the right to employ the best players and subsequently compete for a title.  I decided to dive into the numbers to see if this was true.

First, I defined "Major Market" by looking up the most populated metropolitan areas in the United States according to the 2009 population numbers.  Here are the top 10:

1) New York - 19.1 Million
2) Los Angeles - 12.9 Million
3) Chicago - 9.1 Million
4) Dallas - 6.4 Million
5) Philadelphia - 6 Million
6) Houston - 5.9 Million
7) Miami - 5.5 Million
8) Washington DC - 5.5 Million
9) Atlanta - 5.5 Million
10) Boston - 4.6 Million

Now many people might not consider all of these places to be Major Markets, I certainly don't.  I would probably consider the top 5 to be Major Markets.  Although Houston and Philadelphia only have a difference in population of almost 100,000 people, the sports media tends to focus more on teams in the Eastern Time Zone and I felt like it was a nice, even cut-off point.

I defined cities 6-10 as teams that represented "Middle Markets". All other markets are made up of less than 5 Million people, and while Boston is also under 5 Million in population they would easily be more if you include the entire “New England” area (which compromises much of their fan base).

I also thought that the internet might be a factor in the results.  With the birth of blogs and the ability to see almost every game on TV these days, sports stars simply do not need to migrate to a Major Market in order to sign endorsement deals like they did in the mid-20th century.  I choose 1997 as the cut-off point because that is the year people point to as the year the internet really took off.  In 1997 nearly 10% of the people living in developed countries were using the internet, by 2010 that number had sky-rocketed to over 65% and continues to grow at almost a 2% per year rate.
It is also important to define the number of teams are in each market.  For the purpose of this exercise I included New Jersey based teams as part of the Major Market group and all Canadian based teams as part of the Small Market group.
Here are my results broken down by the 4 major American sports, the market size, and the pre/post internet era:

Major Market
Middle Market
Small Market









NFL
Titles Won
% of Total
Titles Won
% of Total
Titles Won
% of Total


1967-1996
10
33%
5
17%
15
50%

1997-now
1
7%
3
20%
11
73%

Total (45)
11
24%
8
18%
26
58%










# of Teams
% of Teams
# of Teams
% of Teams
# of Teams
% of Teams



Teams (32)
5
16%
5
16%
22
69%









NBA
Titles Won
% of Total
Titles Won
% of Total
Titles Won
% of Total


1950-1996
16
34%
19
40%
12
26%

1997-now
6
46%
2
15%
5
38%

Total (60)
22
37%
21
35%
17
28%










# of Teams
% of Teams
# of Teams
% of Teams
# of Teams
% of Teams



Teams (30)
7
23%
5
17%
18
60%









MLB
Titles Won
% of Total
Titles Won
% of Total
Titles Won
% of Total


1903-1996
44
47%
11
12%
39
41%

1997-now
7
50%
4
29%
3
21%

Total (108)
51
47%
15
14%
42
39%










# of Teams
% of Teams
# of Teams
% of Teams
# of Teams
% of Teams



Teams (30)
8
27%
5
17%
17
57%









NHL
Titles Won
% of Total
Titles Won
% of Total
Titles Won
% of Total


1927-1996
14
20%
5
7%
51
73%

1997-now
5
38%
0
0%
8
62%

Total (83)
19
23%
5
6%
59
71%










# of Teams
% of Teams
# of Teams
% of Teams
# of Teams
% of Teams



Teams (30)
9
28%
3
9%
18
56%










Titles Won
% of Total
Titles Won
% of Total
Titles Won
% of Total

ALL SPORTS

Pre-1997
84
35%
40
17%
117
49%

1997-now
19
35%
9
16%
27
49%

TOTAL
103
35%
49
17%
144
49%










# of Teams
% of Teams
# of Teams
% of Teams
# of Teams
% of Teams



Teams (122)
29
24%
18
15%
75
61%


These results prove my theory completely wrong.  If you just look at the number of titles won by Small Market teams (144) compared to Major Market teams (103) you might be able to argue that there is no advantage to being in a Major Market.  However, once you include the percentage of teams in each category, it becomes clear that Major Market teams do indeed have a decided advantage. 

The leagues with the most imbalanced title distributions are the NBA and the NHL.  The NHL is easily explained as I put every Canadian team in the Small Market category and they accounted for 41 of the 83 total titles.  Since hockey is a sport predominately played by Canadians, it makes sense that Canadian teams would place a higher importance on winning (i.e. spending money on the best players) and thus win more titles than their American counterparts.  It is also important to note that many American NHL franchises are owned by NBA or NFL owners who would much rather use their money to compete for titles in those sports.

The NBA results are probably best explained by what has happened in the NBA over the last few years.  LeBron has moved from Cleveland (Small Market) to Miami (Mid-Market) and Carmelo moved from Denver (Small Market) to New York (Major Market).  This isn’t a new trend.  In fact, NBA players are the ones most known for moving to large markets so it should make since that the titles are heavily distributed towards the larger markets as well.

All of the leagues had dynasties greatly affect the numbers.  In the NBA the Lakers and Celtics have almost 1/3 of all the titles between just the two of them.  The Yankees have celebrated 27 World Series titles, and like I said before the Canadian hockey teams account for almost half of the names etched on to the Stanley Cup.  I thought about throwing some of those dynasties out to compare numbers, but I ultimately decided that the best study was one that included all of the title winners.

So why do Major Market teams have such an advantage over Small Market teams? I was initially planning on arguing that the Green Bay Packers, San Francisco 49ers, San Antonio Spurs, etc. were able to keep their superstars and win multiple titles because they were run by smart owners and general managers.  While players ultimately decide the outcome of the games on the field, smart owners and GM’s are the people that are putting the teams together.  LeBron and Carmelo stayed with their respective teams for 6 years and gave each franchise every chance to succeed. Neither GM was able to surround their superstar with a capable supporting cast, so they left for a better environment, even if that wasn’t necessarily a better team.

While I still believe that smart people can win in sports no matter where their franchise is located, I think the smartest people choose to work in the biggest markets.  Take this for example; I heard on Mike & Mike (ESPN Radio morning program) the other morning that if Mark Cuban (Dallas Mavericks Owner/Billionaire) were to gain control of a baseball team and move it to Idaho he could make it successful by just simply choosing to spend as much on his players as the Yankees do.  While I agree with this concept, I found a fatal flaw in the logic. 

Mark Cuban is a smart businessman; this is proven by the fact that he is a self-made billionaire.  Smart businessmen generally try to surround themselves with other talented people and have very little tolerance for failure and work together to make smart choices that will most benefit their respective organizations.  Thus Mark Cuban would never move a team to Idaho.  Teams in Major Markets have 5+ Million people willing to pay for their tickets, buy their merchandise, and watch their games on TV.  This creates a decided monetary advantage for the Major Market teams, money that these organizations can use to recruit better players and then have a better chance at winning more titles. 

Finally, I wanted to touch on the 1997 internet based cut-off point that I included in my study.  If you look at each individual sport, you could probably make an argument that either the internet was helping the Small Market teams (particularly in the NFL) or hurting them.  Ultimately, when you compare the combined title winners from all sports the percentages are nearly identical.  I thought this was pretty cool, and was able to just write off the discrepancies in each individual sport to the fact that it is a smaller sample size thus more greatly affected by recent dynasties.  I would be interested to see if this trend continues or if Major Markets will always have an advantage of their Small Market counterparts. 

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