Supply and Demand
The economics law of supply and demand played a large role in how the North American professional leagues operated. In the marketplace the value of a product or in this case an asset, is determined when the supply is equal to the demand. Should the demand be larger than the supply the asset (a professional sports team) increases in value. Today each league is operated under this model to ensure an owners investment appreciates. In March 2025 the Boston Celtics were sold for $6.1 billion, the highest price of any North American franchise. This represents an increased value of seventeen times from the Celtics last purchase in 2002, of $360 million.
Over Supply: The NBL
Of the four sports enterprises in the post World War II years, basketball was the only one where supply exceeded demand. In 1935, the Midwest Basketball Conference was established and changed its name to the National Basketball League (NBL) two years later. The league was comprised of cities surrounding the Great Lakes that were established into a East and West Division. Teams were sponsored by local companies that varied from the owner of a butcher shop to industrial giants like Firestone, Goodyear and General Electric. Market size a normal determining factor in the awarding of a franchise was a non-factor in the NBL. Teams were located in Oshkosh and Sheybogan Wisconsin to Akron Ohio as well as Chicago and Pittsburgh. Clubs played in local gymnasiums with capacities that didn’t exceed 5,000.
If there was one thing that was consistent in the NBL, it was the inconsistency. In the 12-year history of the league, there was never the same number of entities from one season to the next.
In too many instances the NBL was plagued by teams that folded, due to a lack of proper funding. Prior to the start of the 1941-42 season, Akron, Hammond and Detroit teams dropped out of the NBL. They were replaced by Fort Wayne Pistons, Indianapolis Kautskys and Toledo Jim White Chevrolets. The Oshkosh All-Stars dominated the NBL with five consecutive (1938-1942) championship appearances, winning two championships.
The NBL vs. The BAA
A new challenge was present to the NBL teams when on June 6, 1946 the Basketball Association of America was formed. Known as the BAA, five of the 11 team owners were proprietors of National Hockey League teams who looked to fill open dates in the arenas which they owned. Geographically, the BAA franchises were located in the east and didn’t present a direct challenge to the NBL markets, which were predominately in the mid-west.
For the 1946-47 basketball season the two leagues combined represented 23 franchises, an oversaturation of the market. Creation of the BAA eventually resulted in a bidding war for players, which in turn escalated player’s salaries. BAA owners already had other successful businesses which they could rely to generate their profits. They did not have to concern themselves with their new franchises turning an immediate profit. Owners of the NBL teams with the exception of Fort Wayne, were all losing money. Unlike the BAA owners, stakeholders in the NBL couldn’t afford long term to continue sustaining losses.
Four of the original eleven franchises in the BAA folded after the first year of operations. In a fight for the survival of the fittest, it seemed the NBL would prevail. In its second year of operations the BAA reduced the playing schedule from 60 to 48 games, as a cost savings measure.
Maurice Podoloff commissioner of the BAA took an aggressive approach in an attempt to keep his league alive. His strategy was to steal the best NBL franchises and move them to the BAA. Podoloff successfully persuaded Fort Wayne, Indianapolis, Minneapolis and Rochester to switch over to the BAA for the 1948-49 season. Stripped of its cornerstone franchises the NBL was destined to an eventual collapse. Podoloff accepted six of the NBL clubs to join the newly named National Basketball Association (NBA) for the 1949-50 campaign, to formally end the NBL. Each of the franchises provided a $50,000 performance bond as a commitment to the NBA. Over bloated to seventeen franchises wasn’t an immediate concern, Podoloff correctly assumed that the small market former NBL clubs couldn’t survive long term. The commissioner didn’t consider this as a merger of the two leagues, but as an expansion by the NBA. No records or statistics from the NBL are recorded as part of the NBA history.
Limiting Supply: The NFL
While the NBA didn’t adhere to the law of supply and demand by exceeding the supply, the National Football League did the exact opposite. Having survived the challenges of the Great Depression and World War II, club owners started to turn a profit throughout the 1950’s. Long- time proprietors George Halas (Chicago Bears), Wellington Mara (New York Giants) George Preston Marshall (Washington Redskins) controlled all matters pertaining to the NFL and not league president Bert Bell. These gentlemen didn’t want to slice their pie (profits) into smaller portions by expansion. Halas presided as head of the NFL expansion committee, that met interested parties to ensure that the league wasn’t in violation of the Serman-Anti Trust Act (this legislation had been passed in 1890 to prevent a monopoly of an industry by one entity).
Professional football came to Dallas in the fall of 1952, when the NFL bankrupt New York Yanks relocated to Texas. A consortium of Dallas businessmen led by Giles and Connell Miller purchased the Yanks assets and honoured the players’ contracts and moved the team (although it was considered a new team) to Dallas. The first Dallas Texans game against the New York Giants drew an approximate attendance 10,000. The NFL had come to Dallas, but the locals were not impressed with the professional game in comparison to the 55-60,000 fans that attended SMU games. After seven games and having failed to record a win, Giles Miller informed NFL Commissioner Bert Bell that he could no longer afford to continue operating the team. As of November 13, the league took over and operated the Texans for the remainder of the year. Bell moved the remainder of the Texans home games out of Dallas to Hershey, Pennsylvania. At season’s end the Texans were folded and the players were shifted over to Baltimore which operated as a new team starting in 1953.
Lamar Hunt was the son of H.L. Hunt, an oil baron that was the richest man in America. Lamar had no interest in the family business and wanted to be a sports entrepreneur. Failure of the 1952 Dallas Texans didn’t dissuade Hunt in his pursuit for an NFL expansion franchise. He met with an uninterested George Halas who waived off the son of a multi-millionaire.
Commissioner Bert Bell informed Hunt to contact Walter Wolfner whose family owned the Chicago Cardinals, to see if they were interested in selling their franchise. The Cardinals had become the black sheep of the NFL with the other owners wanted the team out of Chicago. For years the Cardinals had operated at a loss, while the cross-town Halas owned Bears prospered. Wolfner offered a twenty percent stake in the Cardinals, which made Hunt only a minority shareholder. The Texan twice rejected the proposal offered by Cardinals ownership, wanting instead total control of the franchise.
In parting Walter Wolfner mentioned in passing that another Texas millionaire Kenneth S. “Bud” Adams had made an offer to purchase his team. Adams wanted to relocate the Cardinals to Houston, but Wolfner also had turned him down. Bud Adams was the son of the multi-millionaire who owned Phillips Petroleum. Wolfner went on to mention that a group of investors from Denver and Minneapolis had also approached him on purchasing the Cardinals.
It suddenly occurred to Hunt that there were other wealthy people out there that were interested in buying a football team. The demand for professional football was greater than the supply. This made for a ripe condition for the creation of a new competitive league. Hunt scurried across the country to secure investors in a new six team association, that developed into the American Football League.
Failing to Meet Demand: The NHL
The National Hockey League (NHL) was the most under serviced entity in sports with only six teams until 1967. It successfully doubled in membership with the addition of six American franchises joining for the 1967-1968 season. Buffalo and Vancouver entered as expansion teams in 1970, but the market still failed to meet the demand. This led to the creation of the competitive World Hockey Association’s twelve clubs began play in the fall of 1972. In the span of five years hockey had changed from 6 operations to 26, it had gone from underdeveloped to being excessive.
Like the NBA, the NHL pushed a reset adopting the strongest members of the WHA and having the competitive league fold operations. Today, the NHL is the most aggressive organization of the four in regards to expansion. Hockey proprietors favor expansion because a large portion of the entrance fee is spread among them.
Slow and Steady: The MLB
Major League Baseball has primarily expanded to fill in market voids or to avert losing their exemption from the Sherman Anti-Trust Laws. The Washington Senators relocated to Minnesota and were renamed the Twins for the 1961 campaign. Concerned with a vacancy in the national capital may lead to politicians revisiting the exemption from the Anti-Trust Laws, Washington was awarded an expansion franchise to appease those concerned in the Federal Government. Joining the new Washington team was the Anaheim Angles filling in the American League’s lack of representation in California. The departure of the Dodgers and Giants left the National League with a void in the country’s largest market, which was filled by the Mets in 1962. In conjunction with the Mets the Houston Colt 45s joined the National League which provided Texas with MLB representation. Departure of the Athletics from Kansas City to Oakland, led to potential lawsuits with the question of baseball’s exemption again drawn to the forefront. In turn for withdrawing the litigation Kansas City was awarded an expansion franchise along with Seattle which filled the vacancy in the Pacific Northwest. That same year (1969) Montreal and San Diego joined the National League.
Major League Baseball is slow and methodical in its expansion, which ensures the demand exceeds the supply. Baseball Commissioner Robert Manfred with no time line established has projected the expansion fee to be $ 2 billion for the next entrants.