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April 1, 2002

The Daily Prospectus

Solving Competitive Imbalance

by Derek Zumsteg

My recent articles about competitive balance generated a ton of e-mail in which many people made reasoned, passionate, and most of all intelligent arguments about why competitive balance is so important to them as fans of baseball.

I've been convinced. Baseball is entertainment, and what's more entertaining than parity?

So I solicited the other authors and with their help (particularly Keith Woolner's), I've assembled this list of sweeping reforms that will guarantee the competitive balance I think we all can agree would be best for the game. Now, some of them run into each other a little, but we're putting these out in the hopes that they'll generate new ideas and elevate the level of discussion.

Revenue Sharing

  • All teams pool all revenues. Then all teams deduct their operating expenses. What's left is split between players and owners 50-50. Everybody wins, and everyone has an incentive to grow revenues. I'd expect to see much greater player involvement in bettering the game, and who knows--with that kind of profit sharing, maybe they'd agree to payroll caps.

Contracts, Drafting, Recruiting

  • Abolish separate scouting and recruitment programs in Latin America. MLB will establish baseball boarding schools that provide free room, board, and training to promising youngsters. Parents can sign their child over to a club at any age, and he is contractually obligated to accept a minor-league contract if offered when he turns 16. Teams bid on graduates, with the proceeds going to the family and local community to promote economic growth in poorer countries.

  • Instead of giving up a draft pick, teams signing free agents are required to pay a 10% free-agent tax on the total current value of a player's salary (including option years and deferred money) to the franchise he leaves. For example, when the Rangers signed Alex Rodriguez, they would have been required to make a $25 million payment to the Mariners as compensation. This would be a huge boon to franchises that find themselves developing players, only to lose them to more successful franchises. Also, it gives the developing franchise an incentive to hold on to a player for the final year of their contract, rather than having to dump him for some magic beans.

Off-Season

  • Because of the obvious barriers to a European soccer-style relegation/promotion scheme, we looked for other ways to use divisional standings to promote competition. How about yearly realignment such that the top 14 teams in attendance form one league, and the bottom 16 form the other?

  • There would be a reallocation draft after each season where the worst eight teams can select one unprotected player from a team that played in the postseason. Teams can protect up to 15 players per organization, and can only lose one player each.

    Or, even more drastically, the competitive-balance draft could be made more progressive to help increase parity, so teams that win between 78-84 games can't draft or be drafted from, but teams that win more games can protect fewer players, all the way up to a 110-win team, which would only get to protect two players--total. Meanwhile, a 110-loss team could draft up to 10 players for the following season. This makes the draft a much more powerful rebuilding tool, like it is in the NFL and NBA.

  • We've been kicking this one around, but it's too huge to ever have a chance: as MLB has integrated all teams' Web sites, allow MLB to take over all team operations. At the end of every season, they could re-assign players as needed to ensure that the next year would be more competitive, for instance, while working towards the most efficient allocation of resources.

In-Season

  • Small-market teams get two extra roster spots on both the 25-man and 40-man rosters, and are subjected to relaxed rules regarding DL and waiver transactions.

  • Handicapping: for every 10 games in the standings a team leads their opponent, the underdog is spotted a run. This will help to rein in runaway teams like the 2001 Mariners and the 1998 Yankees, but it'll also make matches more interesting--can the Royals beat the Red Sox if they're spotted two runs every game? How about three? And as the teams get close, the advantage goes away! It's a great way to make sure that no team gets too far ahead or falls too far behind.

  • When a team in the bottom quartile in payroll plays team in the upper quartile, they can replace one player on the opposing team's starting lineup with a player on their team.

  • One of the reasons baseball lacks competitive balance now is because the games are so high scoring that the effect of having good pitching or hitting is magnified. Think of it this way: if the best team in baseball scores just four runs a game, and the worst only scores three, that means the lower teams can win more games (it also increases the payoffs of small ball, and that means more excitement for the fans). So while we advocate all the current reforms proposed to even up the balance--from moving the batter's box off the plate to enforcing the rules regarding standing in the batter's box--we also would like to see some more fundamental rules changes: change to five balls for a walk, and two strikes for an strikeout to lower offense.

    That low scoring improves the ability of bad teams to compete has been proven in other sports: NBA teams have played clock-bleeding strategies to keep the game close (and didn't the Cavaliers make a decent living off that for a while?).

  • When a team with a lower payroll beats one with a higher payroll, the players on the losing team have to pay a 10% fee to the winners based on a percentage of the per-game difference in payrolls (e.g., if a $40MM team beats a $100MM team, the players on the loser have to pay $60MM / 162 * 10% = $37,000 to the winners).

Post-Season

  • Three words: more wild cards. The more teams get into the playoffs, the more short series teams have to win to get to the World Series, the better. Shorten the season by a week and add one additional five-game series to the postseason.

    Here's how you do it: each division sends a winner and a runner-up. Then we have two spots for either (depending on your taste) the two teams with the best records still excluded or two teams selected at random from those teams excluded. It's like a lottery, but this one would give every fan hope and faith in the pre-season, knowing that no matter how badly run their team is, regardless of how much their team sucks, they still have a chance to make the playoffs.

    Division winners would play the lotto picks, with the rest of the seedings determined by win-loss records (or heck, why not current payroll, 1 vs 2, 3 vs 4, and so on?).

In the coming weeks, we're going to explore each of these areas in more detail, including staff roundtables on how to best implement each set of solutions and how to work out the drawbacks some of these plans carry.

I should also offer my sincere apologies for railing for so long on the competitive balance issue. As Mayor Quimby once said, "If that is the way the wind is blowing, let no-one say that I do not also blow."

Derek Zumsteg is an author of Baseball Prospectus. You can contact him by clicking here.

Related Content:  Team Expenses,  Balance

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