An interesting article on Cafe Hayek, from the marriage of economics and sports. Add the Kansas City Royals, and it’s guaranteed to get play here:

Even though the Royals are terrible, the Yankees can’t drop them from their schedule. Despite fielding a mediocre team, when the Yankees or the Red Sox come to town, the Royals draw a nice crowd. Even though the Royals are terrible, the owner keeps the team. Can a different owner buy him out the way he would if another asset weren’t used to its full potential? It’s possible but it’s not easy. There are only 30 baseball teams. If an owner sells he can’t just buy another one. So the non-monetary thrills of owning a team can’t be easily replaced. As long as an owner gets sufficient non-monetary thrills from being an owner, he will rationally turn down lucrative offers.

The other owners would prefer a more profitable franchise in Kansas City, but not too profitable. They would prefer better attendance when the Royals come to their parks but they are happy that the Royals are not a threat to win the pennant. So there is little incentive for the other owners to force out the owner in Kansas City for performing so badly. The owners almost never force out a mediocre owner who doesn’t try very hard. Having a few of those is tolerable.

As a Royals fan from youth, this explains a lot to me. It also highlights the pitfalls of artificially high barriers to entry, such as licensed professions. Fortunately, in the case of my Professional Engineering licensure, the state has a high interest in forcing incompetent people out to protect the integrity of the license. That’s simply not done in baseball or other sports leagues.