The Old Ball Game

Abstract

The first professional base ball clubs came in two varieties: stock clubs, which paid their players fixed wages, and player cooperatives, in which players shared the proceeds after expenses. The authors argue that stock clubs were formed with players of known ability, whereas co-ops were formed with players of unknown ability. Although residual claimancy served to screen out players of inferior ability in co-ops, the process was imperfect because of the team production problem. Based on this argument, the authors suggest that co-ops functioned as an early minor league system in which untried players could seek to prove themselves and eventually move up to wage teams. Empirical analysis of data on player performance and experience in early professional base ball provides support for the theory.