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March 8, 2011

The Payoff Pitch

Contraction-traction, What's Your Traction?

by Neil deMause

This time, it seems, it started with Ken Rosenthal. Two days after Hank Steinbrenner let fly with an attack on baseball's revenue-sharing plan that concluded, "if you don’t want to worry about teams in minor markets, don’t put teams in minor markets, or don’t leave teams in minor markets if they’re truly minor," Rosenthal penned a Fox Sports Exclusive that significantly upped the ante: "Don't be surprised if the “C” word—contraction—returns to the baseball lexicon soon," he wrote, noting that he'd been "hearing rumblings" that "certain big-market teams" wanted to whack the Rays and A's. In one scenario, wrote Rosenthal, Rays owner Stuart Sternberg would end up buying the Mets from the troubled Wilpons, while A's owner Lew Wolff did the same with the McCourt-wracked Dodgers, before watching their old teams go poof.

From there, it was off to the races, as every sportswriter with a slow news day grabbed Rosenthal's unsourced speculation and ran with it. In the St. Petersburg Times, John Romano wrote a column headlined "Threat to contract Tampa Bay Rays may be gaining credibility," in which he concluded that while the Rays probably wouldn't disappear overnight, "whether you want to acknowledge it or not, Tampa Bay is now on the clock"—one that he insisted could strike midnight in 2017, when Tropicana Field is paid off. CBS Sports' Ray Ratto fired back that contraction was not just a terrible idea, but a sign of America's cultural decline. (So far as I can understand it, this has something to do with bar fights and the CalTech basketball team.) The New York Daily News' Bill Madden, citing "one high-level baseball source," wrote that both A's owner Lew Wolff and Rays owner Stuart Sternberg "told Selig they are not prepared to continue operating under the present circumstances. Translation: 'If we can't get new stadiums, buy us out.'"

Ultimately, even MLBPA director Michael Weiner took note, musing that he wasn't taking baseball's relative labor peace for granted, given that "Just this week I’ve seen a general manager talking about a salary cap and I’ve seen a national baseball writer talking about rumblings of contraction." On Saturday, Weiner broached the C-word again, saying after a meeting with Rays players, "Do I think it's likely that the owners are going to try to contract? I don't. Do I think there's a legitimate reason to contract? I don't think there is. All I would say is if that changes, if contraction becomes a goal of the owners in this negotiation, the tenor of the talks would change quickly and dramatically."

This turn of events is, frankly, baffling to those of us who thought that the notion of buying out and folding MLB teams had a stake put through its heart ten years ago. It was way back in 1999 that then-Rockies owner Jerry McMorris suggested what sounded like the crazy idea of dissolving teams as a cure-all for baseball's revenue problems—remember that baseball had just expanded by two teams the year before—a proposal that unexpectedly got traction during baseball's 2001 labor battle when team owners voted to authorize Bud Selig to buy out two teams (widely expected to be the Expos and Twins) and dissolve them. I covered all the reasons why contraction was unlikely at the time for the Village Voice sports section (R.I.P.); you can read the article for yourself, but these were the two main points:

  • Sure, if you buy out teams you no longer have to send revenue-sharing checks to their owners. But you do have to cut the checks to buy them out, not to mention any other obligations they may have. "Whatever long-term leases these two have, even just with popcorn vendors, those are all going to have to be bought out," sports economist Rod Fort said then. "So the cost mounts, and the cost mounts."
  • Not only would the players' union declare war, but so would elected officials in locales targeted for contraction: both the Minnesota and Florida attorneys general—the Marlins were considered the likely Twins backup on the contraction short list—announced they'd file antitrust suits if MLB tried to fold their teams. (Florida in particular has case law that makes it easy to file antitrust suits, one of the reasons that Tampa Bay got the Rays in the first place after MLB blocked the Giants from moving there in the early '90s.) And then there's Congress, which only ever starts questioning its decades-long détente with MLB over its antitrust exemption when constituents are in danger of losing a team (or losing faith in the sanctity of players only using the muscles that God and Bowflex have given them).

Ten years later, neither of these dynamics has changed. Romano notes that revenue sharing has increased since 2001, with the Rays now raking in more than $60 million a year from the combination of revenue sharing and MLB's central fund, which disperses such things as national TV money. But the cost of buying out teams has soared as well: where Carl Pohlad was looking to score about $200 million for contracting the Twins back in the day, and MLB took the Expos off Jeffrey Loria's hands for a mere $120 million in 2002, Forbes now pegs the value of the A's and Rays at around $300 million apiece.

Still, spending $600 million to get back $120 million a year would be a nifty return on investment, right? I called Fort, now at the University of Michigan, last week to ask whether he's changed his thinking on contraction. "For me it's impossible to imagine that you abandon something that's worth three or four million dollars," he replied. "The idea that someone wouldn't buy that franchise—whether it stays in Tampa Bay or stays in Oakland or whatever happens to it—seems crazy."

Besides, there's a far simpler, and cheaper, solution to the problems of increased revenue-sharing than contracting teams: just change the revenue-sharing formula. Yes, it might piss off fans of small-market teams and muck with that "hope and faith" thing that Selig is always going on about. But at least it's unlikely the Florida attorney general will sue you for it.

So why are we hearing renewed contraction talk now, not just from bored sports columnists but, apparently, from "high-level sources"? (Assuming they exist, that is. As shocking as this may be for you to believe, it's not unknown for professional journalists to say they're "hearing rumblings" when they just mean "me and the guy at the next desk talked about this over lunch.")

The upcoming union negotiations are one part of it, obviously. Even though talks this time are by all accounts way more friendly than they were in the bad old days of 2001, it still never hurts to, as Jerry Reinsdorf likes to say, create leverage. Or as Fort put it: "I can see it making sense as one way of running to the far end of the room as the players' association does the same in the other direction, to try to set the widest possible end points you can for negotiation."

The other is that, as in 2001, much of this is likely being driven by stadium games. Back then, it was the Expos and the Twins that were in the midst of multi-year, till-then-fruitless campaigns to get public money for new stadiums in their home cities; the only reason the Twins were on the contraction list in the first place, despite being in the nation's 14th-largest media market and having a reasonable record of on-field success (they'd go on to win a division title in 2002), was that Pohlad was looking to either scare Minnesota taxpayers into coughing up stadium cash, or get a quick payoff to make his years-long stadium fight into somebody else's headache.

Likewise, on many levels contracting the A's and Rays makes no sense at all. The two Bay Areas are 6th and 14th nationwide in TV market size (Tampa-St. Pete snuck past Minneapolis-St. Paul in 2005); even if you split the S.F.-Oakland-San Jose 7.4-million-person megalopolis in two and grant the A's the smaller slice, that's still a bigger market than most teams have to play with. Both teams have been successful on the field; the Rays weren't that far below league-average in attendance last year, and even the A's routinely drew 2 million fans a year before Wolff decided to artificially reduce capacity by tarping off the Coliseum's entire upper deck. If Kang and Kodos were to land on earth with a mission of wiping a major-league baseball team off the map, they could make a far better case for, say, the Pirates, who play in the 24th-largest TV market (and shrinking), have only drawn 2 million fans once in the last 19 years (2001, when PNC Park opened), haven't smelled October baseball in just as long, and are likewise getting $60 million a year in combined revenue-sharing and central fund money.

The difference, of course, is that the Pirates already have a new stadium, while the A's and Rays are still in the hunt for them. The A's endless waiting game with Bud Selig's blue-ribbon relocation committee I covered here a few weeks back. As for Tampa Bay, ever since plans for a waterfront stadium in St. Petersburg fell through a couple of years back (some locals have theorized that it was always a red herring), Sternberg has been locked in an endless stadium cold war, wanting to move across the bay to wealthier Tampa but unable to even start talks there because the Rays' lease with St. Pete allows the city to sue anybody who even talks about moving the team before 2027. Instead, the Rays owner has resigned himself to lobbing occasional oblique move threats, all the while waiting and hoping that someone, anyone, will ride to the rescue.

And here's where Rosenthal's speculation about Sternberg's interest in buying the Mets—something also reported by the New York Post last week—could make some sense, and could help explain why we're hearing renewed contraction talk. So far the Wilpons say they only want to sell a small cut of the team, something that would rule out Sternberg, who would only want majority control. But if Bernie Madoff trustee Irving Picard has his way, they'll have to cough up more than $1 billion in damages, something they can't handle without selling off the entire team (and, it's likely, the SNY cable network as well).

If MLB were to arrange the kind of deal that it did with John Henry and Jeffrey Loria and the Expos, Marlins, and Red Sox in 2002, depositing the Mets with Sternberg while taking the Rays into league receivership, it would kill several birds with one stone: Sternberg would be freed from the small-market spending restraints that he's chafed at, and MLB could attempt to shake down Tampa and St. Pete for stadium money without having to worry so much about lawsuits or being burned in effigy like Sternberg would. In fact, even the threat of an Expos redux could be enough to accomplish the latter: just look at how successful the NFL  was at getting taxpayer-financed renovations to Lambeau Field by alluding to contraction of the Packers—and that's a team that's owned by its fans.

Plus, there's another side benefit to talk of a Sternberg shift: if he even heard that his arch-nemesis might be put in charge of the Mets, Hank Steinbrenner's head would a splode. Now that's an image that should bring a smile to the face of any high-level source.

Neil deMause is an author of Baseball Prospectus. 
Click here to see Neil's other articles. You can contact Neil by clicking here

Related Content:  Tampa Bay Rays,  Rays,  The Who,  Tampa Bay

63 comments have been left for this article. (Click to hide comments)

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mikebuetow

It's all so silly. I mean, if the Rays or Twins or A's contracted, what would the Red Sox and Yankees do for a farm system?

Kidding (sort of) aside, let's say you pare the league to the 10 or so teams willing to invest at least somewhat comparable amounts. In such a world, would Steinbrenner (and there's nothing that says greed quite like a guy who inherited everything, then complains that no one else can appreciate what he's sacrificing) settle for the Yankees not making the playoffs every year? Because when so much of one's success is tied to simply outspending the rest of the world, you level the playing field and that success is bound to regress.

Fact is, the Yankees (or Red Sox, for that matter) don't want a level playing field. And that's coming from a Red Sox fan.

Mar 08, 2011 04:52 AM
rating: 2
 
Cortyrone

Baseball should contract the Yankees and Red Sox (must contract 2 and might as well just let those two play 162 games against themselves) and put in revenue sharing that allows the players to receive +-60% of the revenue and a salary cap. Yo players the salary cap is not about repressing salaries - it is about spreading your share equally across all the teams. Which then would allow you to earn real money for any team.

Mar 08, 2011 05:20 AM
rating: 0
 
Mountainhawk

I know this site's writers are generally united against a salary cap (or at a minimum, the ones that are pro-cap never write about it), but a salary cap is pretty much a necessity in pro sports now-a-days, and MLB will join the real world on this sooner or later.

Spare me the claims of communism too. The Yankees and Red Sox are no more competitors than Sales and Finance are competitors in any large corporation.

Mar 08, 2011 05:30 AM
rating: -3
 
CRP13

And yet the Red Sox finished 3rd last season and only have 2 world series wins in the last 90 years.

And yet the Yankees have won 1 world series in the past 11 years and 5 in the past 30. And 4 of those were with majority home-grown players, not high-dollar signees.

The facts argue your point. In that same 30 years, we've seen champions from Oakland, Kansas City, Arizona, Minnesota, Florida, Cincinnati, Toronto, etc with appearances by Tampa, Cleveland and so on. Player salaries aren't preventing small markets from competing. Mismanagement is.

Mar 08, 2011 09:21 AM
rating: 2
 
evo34

Way to find the outliers... The relatively high variance in baseball does not make it a fair sport. If I wanted to root for giant corporations to put up better numbers year after year over smaller firms, I would join a stock market fantasy league and wear an IBM jersey.

Sports is about creating an even playing field and measuring athletic and strategic skill. The only way to do this -- and most other sports understand this fact -- is to strip away money from the equation as much as possible. I can't imagine anything less satisfying than being a "fervent" Red Sox or Yankees fan. If you lose, you did so while having 4x the salary of many other teams; if you win, you did what a team with a massively unfair advantage should have done. To me, that's not what sports is about. It's about creating a structure that measures true skill.

Mar 08, 2011 09:44 AM
rating: 1
 
Drew Miller

Normally I'd agree, but the Red Sox and the Yankees compete against each other. As a Red Sox fan, it is compelling to watch them have to deal with a team with an even bigger payroll all year.

If the Yankees weren't in the division, I agree that watching the Red Sox, the way they're spending now, would be a lot less compelling. But I also believe that if every team in the division (and to a lesser extent MLB) had, say, $80M payrolls, the Red Sox wouldn't massively overspend that number. They wouldn't need to, in order to field a strong club.

Mar 08, 2011 11:39 AM
rating: 2
 
mikebuetow

You are changing the parameters of the question. The revenue mismatch is really more a byproduct of the free agent era, although club financial woes date to the launch of the professional leagues (perhaps most pronounced by the Athletics' famous selloffs during the Connie Mack years).

I would argue that the ability to re-sign your own free agents at market value, rather than trading them or seeing them walk because you can't afford them, is a huge advantage.

Furthermore, the richest clubs have s the inherent advantage of being able to eat their expensive mistakes. The margin for error just isn't the same with all clubs.


Mar 08, 2011 10:17 AM
rating: 3
 
Drew Miller

"Rich" has little do with payroll disparities in baseball. The payroll disparities are the result of what an owner is WILLING to spend...not how much the owner can afford. When he was alive, Carl Pohlad was noted by Forbes as being the richest owner in MLB. His Twins routinely were middle of the pack or worse in payroll.

Mar 08, 2011 13:04 PM
rating: 3
 
mikebuetow

You assume that because an owner is wealthy separate of baseball -- and they all are, else they wouldn't have been able to buy the team in the first place -- they naturally will be willing to spend that outside wealth on their baseball teams. While history shows that's what some did (with notable disasters, in fact, the current generation of owners does exactly the opposite. Most businesses (in baseball or outside) are run as independent units, with completely independent P/Ls. It's bad business to plow profits from one unit to beef up another.

So...that leaves us with at least a handful of baseball teams that, in terms of cash from operations, are really weak. The revenue sharing subsidy lessens that disparity. But we can't just look at the revenue and the player salaries and assume that's all that needs to match up. You have the front office operations, the SGA, the debt financing, etc. And after all of that -- and this is my point above -- I can't think of a single lower class team that has the excess cash to make up for a series of bad signings. Boston, Philly, the NY teams, and LA have no such problem. Therein lies the advantage.

Mar 09, 2011 04:52 AM
rating: 1
 
bisanders
(329)

A salary cap is to professional sports what tenure is to educators. It's no necessity at all. What it is, is a guarantee of a livelihood/profit without regard for competence/ability. Every team has a self-imposed salary cap already; it's called a budget.

Before a salary cap is even seriously considered, IMO, MLB teams should be required to open their books. Not gonna happen.

For those who feels it's important to do so, the best way to address the disparity between markets is to eliminate the newfangled notion of "territorial rights." Put a team in New Jersey and a second team in Boston, and the raw market advantage can be reduced.

Mar 08, 2011 11:25 AM
rating: 1
 
T. Kiefer

Tenure is not the same as a salary cap. Tenure, at least at the university level, is there to protect teachers' First Amendment rights, and so is a necessity. This means that someone can teach Karl Marx or Fredrick Hayek, or can be pro-life or pro-choice, for example, without fear of being fired. Adjuncts, who can never get tenure, are now the majority of university teachers. They live in constant fear of being fired, and have to be very careful in what they say in class. Experto crede.

Mar 08, 2011 12:45 PM
rating: 6
 
Drew Miller

So, without tenure, they'd be like...any other at-will employee. Every other at-will employee has to watch what they say or do, in all ways, lest they get fired for "no reason".

Mar 08, 2011 13:02 PM
rating: 0
 
ostrowj1

The point is that they can get fired for doing the job that they were hired to do, and doing it well. Without tenure, it would be very easy for a right-wing governor to fire a world-class Marx scholar because he must be a communist. Similarly, a left-wing politician may use his/her influence to get rid of someone teaching a class on Reagan, just because the professor may be influencing the impressionable- and typically liberal- youth. Not that this has anything to do with baseball and contraction...

Mar 08, 2011 13:41 PM
rating: 5
 
Mountainhawk

You mean like Oregon State working on expelling three PhD candidates because their father ran for office as a Republican? Oh, wait, no, we should protect those people because they have tenure.

Mar 08, 2011 16:21 PM
rating: 0
 
ostrowj1

As your story confirms, mixing politics with education can be dangerous. More often than not, though, I think it is the universities that need protection from the politicians. Is the tenure system perfect? Of course not. Some people are able to exploit it, but it isn't easy. I do think that something is necessary to protect education (not to mention research) from the whims of politicians. Until something better comes along, I do think that it is "necessary for educators". I do think, however, that universities should not be so afraid to fire tenured profs when there is justifiable cause.

Mar 08, 2011 18:45 PM
rating: 3
 
evo34

A salary cap is not even remotely similar to tenure. Tenure is an agreement educators make with their employers to protect their jobs/benefits indefinitely without regard to job skill/performance.

A salary cap is an agreement between organizations to limit spending in order to make a sport measure skill instead of wealth.

Think of it in terms of a fantasy league. Tenure would be guaranteeing each owner the right to continue to participate in the league no matter how much his/her effort or skill level dropped. A salary cap would be limiting how much each fantasy owner spent in the draft each season. They are totally different concepts.

Plenty of franchises in salary-capped leagues have gone under, as they should. Putting a cap in place does not mean granting each city with a current team the right to have a team indefinitely.

Mar 08, 2011 20:04 PM
rating: -3
 
fawcettb

This would all make sense if the world just kept going on as it has recently, and if the global economy wasn't hacking so vigorously at the ankles of the American economy. But that's what's happening, folks, and if the U.S. economy doesn't start producing something other than skanky bankers and tax exemptions, there's going to be a lot less disposable income around in five years to support MLB. And baseball is, after all is said and done, based on just that:disposable income.

Mar 08, 2011 05:59 AM
rating: 1
 
Johnson Magic

Baseball desperately needs a salary cap and floor.

The annual rising of one not-predetermined team that happens to have a modest payroll, but - importantly - has had good luck and good prospects all align in one given year is the smoke that obscures the fact that spending determines the playoff possibles in baseball.

The Yankees and Red Sox have an annual near-certain probability of being in the playoff hunt to the end. The other 12 AL teams have far, far lower chances of being in the mix.

The fact that one lower payroll team happens to pop up out of the mix each season (only, inevitably, to regress w/in a year or two) proves the rule.

Cap and floor - tighten the spending band from both the top *and* the bottom.

Mar 08, 2011 06:45 AM
rating: -2
 
Mountainhawk

As soon as they introduced revenue sharing, there should have been a salary floor.

Mar 08, 2011 07:02 AM
rating: -1
 
mikebuetow

This is an idea that gets precious little discussion. Not sure why.

Mar 08, 2011 07:40 AM
rating: -2
 
BP staff member Mike Petriello
BP staff

If you were going to add a salary floor, it'd have to account for more than just MLB salary, and that's difficult. Take, for example, a team like the Royals, which has a bright future but absolutely no shot in 2011 and isn't spending much to try to change that. Should they really be forced to go drop $10m (or whatever it'd be) on the Bruce Chens and Garret Atkinses of the world just to get up to that floor? If I'm a Royals fan, I'd much rather that money be put into Latin American signing, or player development, or improved facilities, etc.

Mar 08, 2011 09:25 AM
 
mikebuetow

They wouldn't necessarily have to preclude the spend on the minor leagues from any floor. (Or ceiling, for that matter. In a way, the draft slot salaries artificially set a ceiling on some, though not all, non-MLB players.)

Mar 08, 2011 10:20 AM
rating: 0
 
BP staff member Neil deMause
BP staff

Logistical issues like this aside, the problem with a salary cap is that by keeping the Red Sox and Yankees (and Phillies and Angels and Mets, if you're going to do it right - note that Jeff Easton recently reported that the Phillies will pass the Red Sox in payroll this year) from being able to bid as much for free agents, you massively depress the free-agent market, lowering salaries. The players union knows this, which is why they don't want anything to do with a cap, even if it comes with a floor.

The only leagues that have a cap and floor are the ones where they're tied to a percentage of revenues, and then you end up with giant battles over what the percentage should be every time it's contract season. (See: Current NBA and NFL lockout threats.) And it's still no guarantee of parity - how many teams have genuinely competed for an NBA title the last 20 years, compared to MLB?

Mar 08, 2011 10:46 AM
 
Mountainhawk
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"The only leagues"?


Is the a even remotely major league that doesn't have a cap other than MLB? NHL, NBA, NFL, MLS, Arena Football, NLL, MLL. I bet even Team Tennis has a cap if I felt like looking into it.

Mar 08, 2011 10:58 AM
rating: -4
 
mikebuetow

He said "cap and floor."

Mar 08, 2011 11:29 AM
rating: 1
 
BP staff member Neil deMause
BP staff

That's Jeff *Euston*, of course. Sorry, Jeff.

Mar 08, 2011 12:31 PM
 
Mountainhawk

Also, the NBA has a soft cap, so it's hard to compared that to a real cap, which sounds like is coming to the NBA real soon.


I'm not sure the evidence is there that a cap/floor depresses the free agent market. It didn't stop Ilya Kovalchuk from signing for $100M this offseason in the NHL, or players like Sidney Crosby and Alex Ovechkin from getting large deals as well. It hasn't stopped QBs in the NFL from making $15M+ annually.


Personally, I think you have to give credit to the NHL for getting it close to right in their last lockout.

1) The salary cap and salary floor are pretty close together. ($16M)

2) The players are guaranteed an exact percentage of revenue every season. (The NHL holds some of the salary in escrow, and trues up with the owners/players after the season when revenues are finalized).

3) The teams have a pretty short timeframe in which they control a players rights (1 ELC for no more than 3 years, then usually 3-4 of restricted free agency, which requires draft picks to sign from another team). This would have to be longer in MLB, just because of the time it takes to develop a player.

4) Teams get significant revenue sharing based on their revenue, but they must also show revenue growth at least equal to the overall league growth or they will forfeit some of the revenue sharing.

Mar 08, 2011 13:05 PM
rating: 1
 
evo34

Well, it's pretty obvious that the players would be against a cap on their total income pool. But that's not really the point (employees don't usually get everything they want). The question is what is in the best interests of the fans and the best interests of the long-term health of the sport. Right now, the players are clearly winning. The majority of fans and the long-term interest level in the sport are losing. This can, should and will change eventually.

As for "parity," the goal is not to create parity. *If* it's an equal playing field, and a single team dominates for a long period of time, that is an amazing and highly respected accomplishment. If, on the other hand, a baseball team dips into its owner's pockets as much as it wants and uses its geographical fourtune to its advantage year after year...well, then you have no idea how much skill vs. situational advantage was involved, and the accomplishment is diminished.

Baseball is the only sport in America where a GM who has not even sniffed a championship series in his 13-year career is considered a genius. I'm not even saying Beane is or is not a great a GM. I'm saying that the current structure of baseball makes it difficult to to know how good he or any other GM is; and any time a sport is failing to measure/reward skill accurately, it's a bad thing...

Mar 08, 2011 19:45 PM
rating: 1
 
nberlove

Baseball does have a salary floor. In 2010, it was $10M per team.

Mar 09, 2011 10:58 AM
rating: 1
 
Eddie

As alluded to in the article, this is 100% about creating leverage for the inevitable "We need taxpayers to fund a new stadium".

Mar 08, 2011 07:52 AM
rating: 10
 
T. Kiefer

Steinbrenner's comments just reflect the attitude currently dominant in our ruling class at the moment: "Anything thing that constrains me in the least (like paying higher taxes for the financial bailout and our two (maybe now three) wars; revenue sharing) in doing whatever I want is socialism or communism and needs to be crushed+it's the little guy who's screwing everything up and needs to be put in his place."

Hence Ratto's comment cited above is on the right track.

Mar 08, 2011 08:06 AM
rating: 11
 
hitmannls

Moutainhawk - A salary cap won't help make the Rays profitable. It doesnt address the problem at all.

Salary caps are just a wealth transfer from owners to players. Both the Rays and Twins are proof you don't need one to be successful.

Mar 08, 2011 08:47 AM
rating: 1
 
evo34

No one is arguing that a salary cap would make any specific team profitable. People in favor of a cap generally simply that the sport become much more interesting once you start separating baseball skill from the geographical monopoly/duopoly a team happens to have been given.

Mar 08, 2011 10:07 AM
rating: -1
 
hitmannls

I don't remember the source, but I have read speculation that expansion in the last two decades amounted to a equity sale in MLB to players when the game was struggling economically and faced the prospect of litigation over collusion.

Whether or not that was the motivation it makes sense for MLB to seek contraction now that they are well capitalized and profitable, in the same way any other business would buy back stock in itself to raise the value for share holders.

Mar 08, 2011 08:50 AM
rating: 0
 
evo34
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Either reduce baseball to ~8 remaining teams, or put in salary cap. No other solution creates a reasonable sport.

Mar 08, 2011 09:48 AM
rating: -6
 
BP staff member Neil deMause
BP staff

One thing that came up for me when writing this article was "What's the optimum number of MLB teams?" And I have to say, 30 looks just about right, judging from the franchise values - there's really nothing separating the Rays, A's, Pirates, Reds and a bunch of other teams from a revenue or market size perspective, so might as well keep them all.

I mean, really the ideal would be to add two more teams in New York City to slice that market into more appropriate sizes and deal with Yankees dominance in spending that way. But we all know that ain't happening unless the other MLB owners declare civil war against Hank. (More on that next column.)

Mar 08, 2011 10:31 AM
 
singledigit

Steinbrenners comment was interesting. I had a thought about it, that I haven't read anywhere.

He said if a market is truly minor, there shouldn't be a team there. I agree.

Ya know what market is "major"? The market that 50 years ago used to support THREE teams, and the area has only grown since then? Yup..............NYC.

MLB shouldn't contract. It should move two or three more teams into New York. Plenty of revenue there to support it. None of the three more teams in the city would be "minor".

I say give Steinbrenner his wish!

Mar 08, 2011 09:42 AM
rating: 11
 
BP staff member Neil deMause
BP staff

Whoops, posted the reply above before seeing this. Great minds...

Mar 08, 2011 10:32 AM
 
emillion

I'm not convinced that any team needs to move right now. The A's and Rays do need new stadiums though. As mentioned in the article, those markets are plenty big enough for a team. I think every other team has a recently built, planned, or renovated stadium, so there are no other feasible options for moving teams into NY.

Instead of moving teams into NY, what about expanding by 2 teams? NY, Boston, and Philly all used to support one more team in their markets. We could put two new teams in two of Brooklyn, New Jersey, Philly and Boston. In the next 50 years, each probably needs a new team. Los Angeles could also support another team probably. 32 teams gives 16 to each league, which is more balanced.

Mar 08, 2011 11:36 AM
rating: 2
 
Manprin

Neil - what are your thoughts on the A's looking East at Sacramento should the Kings leave?

My guess is that despite having a large market in central California to themselves (no other MLB teams or professional sports) Wolff would still balk at the notion.

Mar 08, 2011 09:47 AM
rating: 0
 
BP staff member Neil deMause
BP staff

Sacramento is a smallish market (20th), doesn't have a strong corporate presence, and isn't that easy a drive for anyone south of, say, El Cerrito. Oh, and there's no stadium there. I think they'd be better off staying put at the Coliseum, frankly.

Mar 08, 2011 10:40 AM
 
Manprin

Kind of the point - the A's ownership complain they need a new stadium. Sacramento has downtown spots available as well A's next to what was called Arco Arena. The site was originally developed for NBA, NFL and MLB franchises to relocate (Kings did - Radiers and A's did not though Al Davis kept a huge multi-million dollar retainer just to be asked the question about moving).

Mar 08, 2011 11:54 AM
rating: 0
 
BP staff member Neil deMause
BP staff

Wolff wants a new stadium in the Bay Area, with all the privileges that would come with that. No point in having luxury boxes if there's no one to sell them to.

Mar 08, 2011 12:36 PM
 
Richie

I'm a Wisconsin boy, and I do not remember any Packers contraction talk at all. Not one bit.

Maybe it was 'mentioned', and no one here took it the least bit seriously. Understood it was just posturing so as to justify spending taxpayer money. I guarantee no one here was the least bit worried about the Packers being contracted out of existence.

Mar 08, 2011 10:11 AM
rating: 2
 
Llarry

And whatever the taxpayer bill end up as, the Pack were able to kick in a pretty penny from the sale of 400,000 new shares of stock (I got mine...).

Mar 08, 2011 17:02 PM
rating: 0
 
tonyfranco

I don't get why people think a salary cap is a solution. If a cap is put on player's salaries, all that really means is that the owners get a bigger piece of the pie.

Mismanagement is the biggest reason for teams failing to be competitive. That and just pocketing the money they receive in revenue sharing rather than spending it on the team or farm.

Mar 08, 2011 10:53 AM
rating: 2
 
Mountainhawk

It doesn't mean that at all. I don't know what % of MLB revenues players get now, but there is no reason the % couldn't go up at the same time a cap was put into place.

Mar 08, 2011 12:33 PM
rating: 0
 
Drew Miller

Wasn't there a study run here at one point that said that team payroll didn't corrolate to winning all that well?

Mar 08, 2011 11:47 AM
rating: 1
 
mikebuetow

Yeah, but there's the problem of statistical noise. The issue isn't just whether spending correlates to winning percentage. Knowing that gives us just a piece of the picture. What we also need to know is whether spending *compensates* for mismanagement, and if so, to what extent?

I would argue that the Yankees' greatest asset isn't their ability to outbid the rest of the market for a player, but then to jettison that same player without it impacting the the franchise on the field or off.

Being able to compensate for major mistakes without taking a hit on the field is a competitive advantage only a few teams have. It's not that the Rays, Pirates, etc. have to be managed *well*; it's that they have to be managed several degrees *better* than the competition. The Yankees et al don't face that problem.

Mar 08, 2011 12:01 PM
rating: 1
 
Mountainhawk

I'm not sure how you get that from the data.

If you look at the rank of the teams by the last 10 years of opening day payroll and the rank of the teams by wins in the last 10 years, the rank correlation is .652.

If you exclude the hapless Mets (3rd in payroll at 1.13B, just 17th in wins at 800), the correlation is .689.

That seems like a pretty high correlation to me.



If you run a regression on payroll index (either one just for MLB a whole, or one weighted with division, league, and MLB indexes to approximate the schedule) vs wins, you get p-values on the order of 3 * 10^-15, so it's clearly significant. There is a lot of noise, of course ... the R-squared is just 20%, which means 80% of the variance is still unexplained.

Looking at the regression a bit more, it shows having 1.00 payroll index being worth 81 wins (pretty much by definition), and then each increase of 10% above that being worth 1.4wins. However, the standard error of the estimate is on the order of 10 wins, so for teams that are relatively close in payroll, it doesn't overcome the noise in a single season.


Top 7 Spending Teams in Baseball, 2001-2010:

1. NYY 1,778.4M - 973 wins (1st)
2. BOS 1,246.4M - 924 wins (2nd)
3. NYM 1,133.0M - 800 wins (17th)
4. LAD 1,001.3M - 856 wins (9th)
5. CHC 992.2M - 817 wins (13th)
6. LAA 934.1M - 898 wins (4th)
7. ATL 926.2M - 888 wins (5th)

Bottom 7 Spending Teams in Baseball, 2001-2010:

30. FLA 388.8M - 812 wins (14th)
29. TBY 407.0M - 721 wins (26th)
28. PIT 437.8M - 669 wins (29th)
27. WSH 493.4M - 713 wins (27th)
26. KCY 523.7M - 662 wins (30th)
25. SDO 527.5M - 783 wins (21st)
24. OAK 543.0M - 880 wins (8th)


I just don't see how anyone can claim spending doesn't matter.

Mar 08, 2011 12:21 PM
rating: 2
 
BP staff member Neil deMause
BP staff

You want payroll to correlate with wins - otherwise it'd mean that terrible players were paid as much as good ones, which I don't think anyone wants.

It's possible Drew is referring to a study I did for Baseball Between the Numbers, where I found that *market size* doesn't correlate well with winning percentage. That was a few years ago, and clearly the continued Yanks-Sox success may skew the numbers a bit. On the other hand, there's the Mets.

Mar 08, 2011 12:41 PM
 
Mountainhawk

Certainly you want payroll to correlate with wins. However, when the correlation is approaching 70% and you don't have a salary cap/floor mechanism to keep the spending close enough so that fans don't feel hopeless at the start of the season, you run the risk of having a product that is not as compelling to the entire nation, which ultimately will hurt the product.

Not everyone is Yankees or Red Sox fans (or I guess Phillies now, with them at #2 for 2011). If what just happened with the Rays (2 out of 3 playoff appearance after a decade of building) is the BEST any other team can hope for, MLB has no hope of regaining lost ground to the NFL, and could ultimate slip behind other sports as well.

Mar 08, 2011 12:52 PM
rating: 1
 
Drew Miller

This might be it. I do have the book!

Mar 08, 2011 13:05 PM
rating: 0
 
Pat Folz

How much correlation is there between salary and quality for individual players? I did a little googling and didn't find anything.

We can all think of many glaring salary/quality discrepancies. Jon Lester was a much better pitcher than Oliver Perez last year. Buster Posey was better than Todd Helton despite making like 1/30 the salary. I think that, between strong rookie performances and old players playing out huge contracts and the low-per-annum/long-term deals for young stars, it might not be as strong as one might think at first. I'm sure it's positive, but I'm very curious what the number is.

Not really a response to your post, but to avoid a double: regarding team payroll/winning correlation, I think the correlation-causation problem must be considered as well. I remember off the top of my head that the Angels and the Rockies both increased payroll dramatically after their World Series trips, mostly be resigning their own players.

Mar 09, 2011 01:53 AM
rating: 0
 
hitmannls

Salary cap will just make the Yankees more profitable. Won't do anything to fill the seats at the Trop.

I'm not sure how much more competitive you could expect the A's to be either.

The only way I see salary cap even enters the conversation is if it is also associated with greater revenue sharing - but that would probably result in a labor stopage.

Plus the bottom line is that 20+ owners plus the MLBPL is mostly happy with the status quo - so what is the incentive to act unless its obvious that it would make the league more profitable.

***unrelately I'm having problems replying to posters. I seem to only be able to post new comments. Any ideas on how i can change that?

Mar 08, 2011 11:53 AM
rating: 1
 
Dave Scott

More revenue sharing without a salary cap (except ticket sales like the NFL) makes a lot more sense, especially from a players' standpoint. But Steinbrenner would go nuts because he thinks World Series titles are his birthright. The only reason his dad didn't win more is stupidity in some of his player choices. The Yanks did best after his second suspension when he had to leave the team in the good hands of Gene Michael. If Georgie had wound up with the Indians, as he once intended, he would have ended up with mediocrity at best and more likely an abomination of bad player decisions and fired managers.

Mar 08, 2011 12:30 PM
rating: 1
 
Squirrelmetrix

Can we just contract the McCourts?

Mar 08, 2011 15:20 PM
rating: 0
 
thegeneral13

I don't think market size appropriately reflects the attractivenes of Tampa/St. Pete as a baseball market. There are myriad problems. For one, like any new team, there is no history, so attendance, merch sales, etc. are completely reliant on the team winning enough to rise to national significance, which is tough to do in the AL East. Second, the local population is transient - very few people in the area have any innate pride in local sports teams b/c most people didn't grow up in the area. On a related note, many residents moved down from other prominent baseball markets and bring their loyalties with them (Yankees fans, most notably), which limits the team's ability to build a core fan base. Third, a significant portion of the population is migratory and isn't around in the summer months. Fourth, the population is old in general, which I suspect is not good for attendance (the 80 year old duffer is more than offset by the lack of a family of 4 at the ballpark). Then, on top of all that, you have the stadium, which is both crappy (least character of any park I've been to - might as well be watching at home on the big screen) and in a bad location. The point is, even with a new stadium, and even though it's a decent size market on the surface, I don't really see a team thriving in the St. Pete area.

Mar 08, 2011 15:25 PM
rating: 2
 
BurrRutledge

Great point! Yes, it would be interesting to look at demographics of population vs. demographics of game-attendance (& game-watchers on television). I doubt that latter information is publicly available, however.

Mar 08, 2011 16:26 PM
rating: 0
 
ScottyB

Excuse me, but just where would we put another baseball team in/near NYC? It would cost a new owner/MLB/taxpayers at least $750M to build a stadium in or around NYC, and where could it go without a decade-long eminent-domain battle (see Brooklyn Nets).

I think we forget how the fixed costs of operating a franchise in NYC or other worldlevel cities when we think about team expenses and ease of ownership.

Mar 08, 2011 19:54 PM
rating: 0
 
Richie

Yes, territorial rights are BS. Absolute BS. But as ScottyB alludes to, starting up a 3rd team in NYC, or a 2nd team in Philly or New England, would not be an easy thing. They'd have to penetrate the fan base of an established team, always a very difficult thing to do.

Splitting cable and all other local revenue would both be very simple and go a long, long way to evening up resources.

Mar 08, 2011 20:24 PM
rating: 0
 
Isaac Lin

If a salary cap is put in place, I'm confident that the Steinbrenners and Cashmans of the world will find another way to make use of their revenue advantage. For example, let's say a team has followed up on Matt Swartz's research on the home field advantage and determines that travel fatigue is a significant factor. It could use its financial surplus to maintain luxury apartments in every city and use spacious private jets to fly the team between cities. Or say a team decides it wants to become the healthiest team in MLB. It could hire a slew of trainers and medical personnel to keep its players in tip-top condition. Or a team could expand its scouting staff, or (heaven forbid) its sabermetric analysis team. Limiting salary costs will not put teams on an equal footing.

Mar 08, 2011 23:44 PM
rating: 2
 
ScottyB

Certain NFL and NBA teams build amazing training complexes, hire double the coaching and training staffs of other teams- all in an effort to "spend" above the salary cap, for example.

Mar 09, 2011 09:35 AM
rating: 1
 
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