Thoughts on steroids

by on February 2, 2004 at 7:21 am in Economics | Permalink

Professional sports face the unusual problem of trying to manufacture dominance and competitive balance at the same time. On one hand, the race to the title cannot be too lopsided, or fans of the lesser teams will lose interest. Revenue-sharing and salary caps are common (but not universal) in major league sports. On the other hand, stars and superlative performances draw fans. Most NBA fans look back with nostalgia to the days when the Lakers and the Celtics were the dominant teams, meeting each year in a dramatic showdown at the end of the season.

On net, it appears that leagues would prefer to have more superstars and outstanding performances. NBA fans eagerly embrace high school phenom LeBron James, in the hope he will be the next Michael Jordan. Home runs have been good for baseball attendance.

Now steroids can have one of two possible effects. First, steroids may make it easier to produce spectacular performances. It is commonly charged, for instance, that some of the superlative home run seasons (Barry Bonds?) are the result of steroids and related drugs. If this is so, steroids may make a sport more fun for fans and more lucrative for both stars and non-stars.

A second possibility is that steroids level relative performance. They make all players bigger and stronger, but make it harder for any single player to stand out. In that case a league may seek to ban steroids. The profit-maximizing set-up, of course, is probably a general ban but only loosely or selectively enforced. Some players get the steroids and others do not. Arguably this is what we see. A league will try to ban steroids, but not too hard. Steroids are a relatively cheap way of manufacturing stars.

Note that the Olympics probably prosper more from competitive balance than from a single dominant country. Was it really so much fun for the rest of the world to watch the Soviets win all those medals? This would predict that the Olympics should take special care to ban performance-enhancing drugs, which is indeed the case.

By the way, if you don’t think that economists will apply their discipline to everything, read this, thanks to Roger Meiners for the pointer though don’t expect it to convince your wife.

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