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March 6, 2002

The Daily Prospectus

MLB v. NFL

by Joe Sheehan

Many of the arguments for changing baseball's economic structure refer to the NFL as the model for a new one. The NFL has a payroll cap and appears to lack the revenue disparities of MLB, and is quite successful and popular, so why shouldn't MLB implement the tools that they use?

I've long argued that the differences between the NFL and MLB are so vast that comparing the two, and using the success of one as the basis for changes in the other is invalid. Today, I'll try and spell out why.

  • MLB is a local product, the NFL is a national one.

    Most of the differences stem from this one point. The NFL takes over one day a week for 17 weeks, commanding the stage across the land. MLB runs every day for six months, with 15 games a night in 15 different cities.

    The NFL, by showing the league's showcase game in almost all of its markets each week, encourages fans to care about the league as a whole. On the other hand, even MLB's national telecasts are regionalized, and its best regular-season games are often not televised outside of the competitor's cities.

  • MLB generates the bulk of its revenue locally. The NFL generates the bulk of its revenue nationally.

    The NFL and MLB actually have similar revenue-sharing structures. They split their national-media contracts equally among all league members, and share local revenues less equally. (The NFL pools ticket money--but not luxury-box revenue--and splits it all 60/40 between home teams and visiting teams. MLB has a less generous split.)

    There are no local-television contracts in the NFL. Each team is simply getting a chunk of the huge deal with CBS, Fox, ABC, and ESPN. This type of structure doesn't work for MLB, because you can't sell the rights to 2,400 games in nearly 30 markets in a centralized fashion. Teams have to be able to negotiate their own deals, and the differences among the markets are going to lead to local-revenue disparity.

    The NFL has revenue disparity, too, although they don't spend a lot of time yelling about it. One of the reasons for the spate of franchise relocations in the 1990s was the desire of owners to play in new stadiums with lots of luxury boxes, the revenue from which does not have to be shared. The gaps aren't as great as the one between the Yankees and the rest of MLB, but they do compare to, say, the gap between the Red Sox and the Royals.

    When people call for MLB to institute NFL-style revenue sharing, they ignore the fact that such a system is essentially already in place. The two leagues do basically the same thing with the money that comes in; the difference is that MLB has a revenue stream that the NFL doesn't. Changing the way baseball distributes local-television revenues is actually not something that will bring it in line with the NFL.

  • There is no such thing as a "small market" in football.

    One of the vox populi arguments for the NFL is that teams in its smallest cities--Green Bay, Jacksonville, Minneapolis--are competitive. It's a nice thought, but the fact is, where an NFL team plays is essentially irrelevant. With the national-TV contract bringing in so much money, all that's left is to fill a stadium eight days a year. The population base required to sustain an NFL team is probably one-tenth that needed to sustain an MLB franchise, when you consider the limited number of home dates and the greater percentage of seats sold via season tickets.

    If anything, the NFL's system has led to some real absurdities. One Los Angeles team moved to Oakland, another to St. Louis. The team in Houston moved to Memphis. If "markets" mattered, these things would never happen. Essentially, NFL games are studio events, and where the studios happen to be located isn't important, as long as there are 80,000 interested parties within an hour's drive.

  • The 16-game schedule, and 12-team playoffs, enhance the perception of competitive balance in the NFL.

    An MLB team that is 60-80 after 87.5% of the schedule is completed is playing the kids and looking towards next year. An NFL team that is 6-8 after 87.5% of the schedule is completed is often a two-game winning streak from the wild card.

    This is perhaps the biggest factor in the way the two sports are perceived. People think of the NFL as having great races in which everyone has a chance, but there's simply a limit as to how much separation you can create in 15 weeks. If MLB played a 16-game season, you'd not only have tremendous races, but a lot more turnover. Add in six playoff spots per league, which lowers the bar for success, and you have a huge pileup between 9-7 and 7-9 that looks like a "great race," but is actually just a function of structure.

    I can't emphasize this enough: NFL competitive balance is as much perception as it is reality. Expecting MLB, with 162 games and one wild-card spot, to shape itself to meet the perception of another league is a bad idea.

  • MLB spends its time trashing its product. The NFL doesn't.

    If you've read this column for any length of time, you've seen the term "anti-marketing." It's what MLB does when it tells fans in cities around the country that their team has no chance, when it goes before Congress and cries poor despite a legal monopoly, when it spends time, money, and energy telling the media that the product--the players--is the problem.

    The NFL doesn't do any of those things, in part because the league and its owners have it made. There are a ton of things wrong with the NFL--there's no team in the country's second-biggest city; teams have moved all over the map in the last decade; the gap in stadium deals creates a competitive advantage for well-capitalized teams; the hard salary cap creates a tremendous amount of roster turnover; veteran players are often threatened with unemployment unless they restructure their contracts--but the coverage of the league is almost uniformly positive, even fawning.

    If MLB wants to be like the NFL, the first thing it needs to do is start acting like the NFL. That means not bitching and moaning about the way in which one of its franchises creates revenue and invests in its product, or the fact that teams have to pay players in a competitive market. It means putting out a consistent, positive message, instead of pretending that we should care that someone worth nine figures lost less than 1% of their capital for the privilege of owning a baseball team.

  • The MLBPA is the strongest such group in sports. The NFLPA is a joke.

    The NFL has the deal it has today--one overwhelmingly favorable to ownership--because it beat the players handily in the league's biggest labor war, the 1987 strike. The NFL tried replacement players and ended the last player's strike in under a month. MLB tried replacement players and couldn't get anyone to take them seriously.

    As much as the NFL likes to position its relationship with the league's players as a partnership, it just isn't so, unless your definition of "partnership" includes one party leaning on the other's back in an effort to help him grab his ankles.

    The MLB wants to get the kind of deal via negotiation the that the NFL got by forcing a total surrender. That's simply not going to happen, not when you're dealing with the MLBPA. What MLB needs to do is focus less on plans that lower labor costs and more on plans that redistribute revenue and grow the game. If they'd stop treating each CBA battle as an effort to catch the NFL, and start negotiating with a realistic expectation of what can be done in their own game, they'd actually get somewhere.

The NFL and MLB are different in so many basic ways that comparing the two, and expecting one to ape the other, is a mistake. The surface comparisons between the two that drive so much of the economic discussion mislead by hiding the structural differences between the leagues. While the NFL is unquestionably successful, it has its share of problems, and had benefited considerably from its ability to keep fans and the media focused on anything but them.

MLB doesn't need to be like the NFL to succeed. It just needs to stop trying to be like the NFL.

Joe Sheehan is an author of Baseball Prospectus. You can contact him by clicking here.

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

Related Content:  MLB,  Revenue,  NFL

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