The Economics of Everyday Things - 52. Little League

Episode Date: June 17, 2024

Youth baseball — long a widely accessible American pastime — has become overrun by $10,000-per-year, for-profit travel leagues. Zachary Crockett peers inside the dugout. SOURCES:Linda Flanagan, author.Nick Mackenzie, future New York Yankees shortstop.R.J. Mackenzie, physical education teacher and baseball dad.John Miller, journalist and baseball coach. RESOURCES:"The Cost of Youth Baseball Is Getting Absurd," by Adam Minter (Bloomberg, 2024)."Perfect Game Sees Prosperity Thanks To New Investments In Youth Sports," by Wayne G. McDonnell, Jr. (Forbes, 2024)."How America Sold Out Little League Baseball," by John W. Miller (America Magazine, 2022)."In Youth Sports, Talent Helps but Money Rules," by Roman Stubbs (The Washington Post, 2022).Take Back the Game: How Money and Mania Are Ruining Kids Sports and Why It Matters, by Linda Flanagan (2022)."State of Youth Sports: Parents, Policymakers Better Appreciate Physical Activity, Face Barriers to Help Kids Play," by Jon Solomon (The Aspen Institute, 2022). EXTRA:Take Back the Game: How Money and Mania Are Ruining Kids Sports and Why It Matters, by Linda Flanagan (2022).

Growing up in the early 90s, R.J. Mackenzie's life revolved around baseball. And in his hometown of Pomona, New York, it was all about Little League. Little League was like the thing. That's what we all looked forward to. It was just the focal point of the community. That's where everybody went in the spring and you lived and died with whatever team you played on. For Mackenzie, Little League was pretty chill.

Sometimes he pitched, sometimes he played first base or third base. Other times he just goofed off with his friends in the dugout. And for his parents, it was an affordable and convenient way to keep him busy. They drop him off at practice with the volunteer coach and pick him up a few hours later. Baseball became McKenzie's lifelong passion. He went on to play in college and became a physical education teacher

in a suburb outside of New York City. These days, he's focused on the baseball career of his 13-year-old son, Nick. Trying to make the major leagues, that's really what I want to do. And who do you want to play ball for? The Yankees. It's very obvious.

But Nick's youth baseball experience is very different from his dad's. I would say I probably play seven days a week and seven hours a day. Yeah, on the weekends for him, it could be seven, eight hours. And then during the week, it's right after school. And then sometimes right after that is another game. It's like full go until mid-August, like every single day. Nowadays, it's kind of little leagues getting left in the dust and everybody's playing travel. These travel baseball teams don't just require more time.

They cost thousands of dollars a year. And they're part of a broader shift toward for-profit youth sports in America. If you're willing to pay the membership fees, they will happily take your kid. I know of owners of for-profit travel baseball clubs making over $200,000 a year running, essentially, Little League baseball teams. For the Freakonomics Radio Network, this is the economics of everyday things. I'm Zachary Crockett. Today, Little League.

When professional baseball became popular in America in the late 1800s, there weren't any formalized youth leagues. If you were a kid who wanted to be the next Honus Wagner or Cy Young, your best bet was to get some friends together and go to a local sandlot. That changed after the First World War. The 20s had been this time of prosperity and allowed men the leisure time they needed or wanted to coach their kids and that's when youth baseball really came into its own. That's John Miller. He's a self-described baseball nut. I played in Little League, I played in college, I played Men's League semi-professionally in my 20s, I worked as

a scout for the Baltimore Orioles, I've done all kinds of things in baseball. Miller is also a journalist who's written about the history of youth sports. He says that a number of youth baseball clubs were formed throughout the 1920s and 30s, but one of them eventually rose above the rest. Little League was basically the one that won out. Little League was founded in 1939 in Williamsport, Pennsylvania by a lumberyard clerk named Carl Stotz. He wanted to provide an affordable way for boys to get into baseball.

The earliest teams were funded by sponsors like a local dairy farm and a pretzel company. Players who came of age in the 50s and 60s almost all played Little League baseball. The classic structure in the old days was Little League, then high school, and then college. Today, there are a number of nonprofit baseball leagues for kids, like Pony, Babe Ruth, and American Legion.

But Little League is the largest of the herd, with around two million participants from the ages of four to 16. It has thousands of local chapters across every US state and in more than 80 other countries. The Little League Charter is based on sportsmanship and volunteer coaches, volunteer umpires, participatory roles, like you have to play every player in every game.

Because the teams and games are run by volunteers, local Little League chapters don't have much overhead. Uniforms, equipment, and field maintenance usually cost in the low five figures. Leagues cover those costs through grants, fundraisers, and modest membership dues, usually $100 to $300 per kid per season. If a parent can't afford the dues, they get a free pass. The organization won't allow any player to be turned away for financial reasons.

The ethos, I mean, it's very much that cost is not part of the equation. This is for everybody who wants to play baseball, and it's not going to cost you a lot of money. The Little League organization also has a secret weapon to help keep this ethos alive. The Little League World Series. Regional Little League teams in the U.S. and in other countries around the world compete in a tournament that culminates in Williamsport Pennsylvania the event

generates an estimated 40 million dollars a year for the local economy and ESPN pays little league millions more for the broadcast rights the success of little league has helped turn youth baseball into a ubiquitous part of American culture. And that means competition. So the impetus to have private baseball clubs, or what's usually called travel baseball clubs, it really started in the 1990s and it came out of Little League. The Little League World Series was so popular and so successful that it became this cultural icon. People would watch the Little League World Series and they would

dream of playing in this tournament. And all over the country, you had very ambitious coaches, baseball dads, who would gear up every summer and try to advance to go to Williamsport. And then they would get knocked out in mid-June or early July and have another two months of summer with nothing, no baseball to play. And so private operators started organizing tournaments and charging two, three, $4,000 a season and then hiring professional coaches. And that became a consumer product that a lot of families, especially in the suburbs, wanted.

That includes families like the McKenzys. RJ first realized that his son Nick had talent at around nine years old. He was throwing the ball harder and batting better than the other kids in Little League. So RJ started shopping around for a travel baseball league. And in Orange County, New York, where the Mackenzies live, there was no shortage of teams to choose from. Within an hour of my house, I would probably say there's 20-30 teams that you can play on. Nick is now 13 and plays on two different travel baseball teams, the OC Smash and OC Regulators. He also still plays in his local little league

and on a middle school team made up of the best seventh and eighth graders in the area. RJ and his wife both work full-time as teachers and getting their five foot six, 105 pound slugger to all those games requires some logistical jujitsu. Yeah, it's busy. It's an everyday job on top of your regular job. Can we get him to this practice? If we can't get him, then his grandparents pick up the slack and they'll take him.

And then it's calling the coach from one team and another team and trying to hopefully work out, you know, can we move this practice? He can't make this one, he can make this one. So it's difficult. It's also a big financial sacrifice. Little League only charges a registration fee of a few hundred dollars per season. So it's difficult. It's also a big financial sacrifice. Little League only charges a registration fee of a few hundred dollars per season. But travel baseball is a different story. Sometimes it could be as cheap as like a thousand dollars up to, you know, some of these ones

are five, six thousand dollars just to register with the team. Registration fees usually wrap in the cost of uniforms, coaching, and practice facilities. And at the higher end, teams might also cover the entry fees for tournaments, which can be hundreds of dollars each. But they don't tend to cover the cost of all the travel to get to those tournaments. You start adding in, you know, we're a family of four. So all four of us are going to the hotels for the weekend. You're feeding four people, you know, Friday, Saturday, Sunday, gas, mileage,

wear and tear on your car. I mean, you're probably looking for like an average travel team, probably somewhere in that $8,000 to $10,000 range per season. I have some friends that are, you know, they're up around the $15,000 to $20,000 range. On top of that, you've got the cost of equipment. Cleats, a helmet, a travel bag, a good glove, and some very pricey bats. You're talking, you know, some of these good bats are $400. Most of these kids are swinging the bats for one year

and then getting a new one. Do you buy new bats every year? I hate to say, but yeah, he'll get like two, three bats a year. And then McKenzie still has to pay to watch Nick play. His tournament games often take place at privately owned sports complexes that charge five or $10 to get in.

Yeah, it's become a business now. I would definitely say there's a lot of profit to be made. John Miller coached a for-profit team himself a few years ago in Pittsburgh. He's run the math on travel baseball leagues, and he says they're making a killing. I mean if you run 20 teams and you charge $5,000 a season for 12 kids per team that's 1.2 million dollars in revenue. The coaches are paid basically minimum wage. I was paid $3,000 for a season so 1.2 million minus 60,000 to pay all the coaches and then minus your cost for balls and for entering these tournaments and for

facilities to practice in. And it's not hard to see how you can have profit margins of over 30 or 40 percent. One estimate values the for-profit youth sports industry at around 28 billion dollars, up from $3.5 billion just a decade ago. The growth is largely fueled by private equity firms, who are pumping hundreds of millions of dollars into sports complexes and travel clubs. There are companies like Perfect Game, which host baseball tournaments with entry fees that can top $2,000. But these costs don't seem to be driving parents away.

In fact, a 2019 survey by the Harris Poll found that one in three parents take fewer vacations to fund their kids' sports. One in five has considered taking on a second job or delaying retirement. Between 2021 and 2022 alone, the share of American kids playing travel sports doubled to 29%. And that's a problem for the organization that started it all.

You need the best players who can kind of lead the game to make it functional. And if you lose them, the little leagues will fall apart. That's coming up. the little leagues will fall apart. That's coming up. John Miller says that for top youth baseball travel teams, recruiting the best players can get intense. I coached four years in this private club in Pittsburgh and after the second year, my best player got recruited by another club that was bigger and had more resources and the kid was 11 and the coach who was 50 years old was texting this 11 year old with recruiting pitches. So this is something that happens in private baseball like 11 year old kids just getting recruited like free agents?

All the time. And the parents? They shop around too. Many parents are obsessed with finding the right travel baseball club for their kid and will shop for a travel baseball club the same way they shop for a car or a nice house. Some of these private clubs have ridiculous names that try to appeal to people's sense of kind of like testosterone, fuel, ambition, you know. I've seen hardcore elite. That word pops up all the time. These sort of flashy brands, flashy colors, they try to create to draw in more parents and families.

For the really elite players, the training can get pretty hardcore. They have velocity camps now where you can send a baseball player just to improve their velocity pitching. So you do a lot of like weighted ball training and special drills and you end up throwing 100 miles an hour and probably blowing out your elbow. I mean, that's kind of what the youth baseball landscape looks like now. But travel baseball is no longer just for highly skilled kids. But travel baseball is no longer just for highly skilled kids. Most clubs are not that discriminating.

They will happily take your money. I went to a tournament last weekend. I was kind of shocked in how average or low the level was. Experts say that this trend is playing out across other youth sports, too. My name is Linda Flanagan, and I'm the author of Take Back the Game, How Money and Mania are Ruining Kids Sports and Why It Matters. Flanagan has researched the commercialization of youth sports and its impact on kids and their families.

When I was growing up, which was quite a while ago, sports were something parents signed their kids up for to get some exercise to keep them busy. They were local focused on fun low cost, you know, basically recreational Now that youth sports focus on the commercial interests of adults rather than the human interests of the child Flanagan says there's a reason parents of average athletes are spending thousands of dollars on for-profit sports leagues. What's happened is that now college recruiting takes place almost entirely

through these pay-to-play clubs and private tournaments because they can see more kids that way. So it does in, help them get into college. It helps them get recruited by college coaches. On its website, Perfect Game markets its tournaments as the largest amateur baseball scouting service in the world. Scouts from nearly all NCAA Division I teams and all 30 major league baseball clubs go to check out the players. Flanagan says that parents worry that their kids will get left behind if they don't compete at the highest level.

Look, we're a capitalist, competitive society, and youth sports parents are probably more naturally competitive than other parents. And it feels like, well, you want to give your child an edge. It's all about keeping them one step ahead of their peers. It's that brutality cascade where if everyone else is doing this and you're the dummy who didn't, then your child is left with nothing. Many kids who play travel baseball tend to stay in Little League, at least until they're 12 for a chance to play in the Little League World Series. But R.J. McKenzie says the talented kids who stay aren't fully invested. Once they start getting into like 13, 14, 15, then the kids really drop off. But up to 12, you'll still see a lot of the talent stay. But they're not participating in every game. They're

not living and dying with every Little League game like it used to be. They're not participating in every game. They're not living and dying with every Little League game like it used to be. Miller says this disengagement is affecting the quality of play in Little League. Baseball doesn't function at all if you take away the top third of the talent. If you don't have the strike throwers and the kids who make the basic plays, the game just falls apart. Balls go to the backstop, there's walkathons. It's very boring.

Which means the remaining parents start to pull their kids out. So what's happened is, as the best players have left to play travel, the leagues remaining, the level goes down and the parents realize how boring it is. And so they go looking for a league that has your basic functional baseball with strike throwers. And that's the private league or the private teams. And so they end up paying, well, I think it was like a baseball tax to go play baseball.

According to the Aspen Institute, three of 10 parents say their kids community sports program has declined in membership, merged with another program or closed altogether. In many cities and towns, it's becoming harder for parents to find a baseball league they can afford. I once Googled the professions of all the parents on my team, and it was like four things. It was like finance or financial planning, medical stuff or medical sales, legal stuff

like lawyers, or construction contracting. And it was like 99% white. I think in four years I had one black player. They're all blonde with mullets and they have names like Jackson, Braden, Caden. You know, the danger is as one former Major League baseball catcher, Charlie Moore put it to me, it becomes a country club sport. Since the rise of for-profit youth baseball in the 1990s, the percentage of black players in major league baseball has been chopped in half to around 8%. Across the board, youth sports participation has gone up for higher income families.

And then in lower income communities, there aren't the options there used to be. It's feast or famine. There are some efforts to fix these issues. Some of the for-profit leagues, like Perfect Game, have their own initiatives to reduce the cost of tournament play. Major League Baseball runs an organization

called Reviving Baseball in the Inner Cities, or RBI for short. It claims to cover the cost of league play and tournaments for underrepresented communities. And in many cities, there are subsidized programs that will take kids to the same tournaments the travel leagues go to for a fraction of the cost. Other communities have used public funding to revitalize existing sports leagues. States are now using more of their public dollars to underwrite youth sports organizations. We saw this in Illinois. They appropriated $10.5 million to that end. The city of Philadelphia has done the same. Minneapolis-St. Paul,

they used funding to eliminate all fees for youth sports for three years and it saw a massive increase like a 38% increase in numbers of participation of kids. Meanwhile, some of the parents who can afford travel baseball for their kids are wondering if the sports obsession has gone a little too far. My husband's an athlete. I was a coach for 19 years, but sports aren't that important. I mean, they should be like a part of life. They should be like the salt of life, not the food.

And it has become the food for many families. Parents can only see that later, like, wow, you got a little carried away. But other parents, like R.J. McKenzie, are willing to stick it out to see what happens. In the beginning, I'll be honest, there was little talent. I could see that he was athletic, but he wasn't a baseball player yet.

As he progressed and got older, we started to really see the talent come out. I'm not gonna say he's a great player yet, but he's a really good player. For me, it's not about him getting a scholarship or anything like that. It's something that he shows value in and he puts in the work ethic and all that stuff.

It's money well spent. For the economics of everyday things, I'm Zachary Krakow. This episode was produced by me and Sarah Lilly and mixed by Jeremy Johnston. We had help from Daniel Moritz-Rapeson. I have fond memories of picking daisies in the outfield when I was playing Little League. Imagine that now you'd be screamed at. The Freakonomics Radio Network, the hidden side of everything.