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December 22, 2009

Prospectus Today

The Braves' New World

by Joe Sheehan

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I miss Ted Turner. Turner was controversial, brash, difficult, prone to mistakes of commission, prone to getting himself suspended, prone to making people really, really dislike him. Turner, however, had one trait that you had to respect: he wanted to win. Perhaps I value that too highly-I'm hypercompetitive myself, perhaps my worst trait-but I can forgive a lot of things if they're done in a sincere effort to succeed.

I'm thinking about Turner today as I watch his Braves, owned by something called "Liberty Media," actively lessen their chance at success in an effort to ensure that they have positive cashflow in 2010. Last week, the team gave away reliever Rafael Soriano, who has been dominant when healthy and would have been available to them on a one-year deal for about $8 million, for a lesser reliever, Jesse Chavez, with a 3.91 career ERA at Triple-A. It's 4.48 in the majors, in 82 innings, and he just turned 26 last season. We can baseball-talk all we want about Chavez' K/BB ratio last year or Soriano's injury history, but the trade was a salary dump. Liberty Media didn't want to pay the money, and forced the Braves and Frank Wren to make the deal, and if it wasn't quite that explicit, it didn't need to be.

Today, we get the latest example of why Liberty's ownership of the Braves is starting to make Jeffrey Loria's stewardship of the Marlins look inspired. With six starting pitchers after the healthy return of and contract agreement with Tim Hudson, the Braves have been looking to strike a deal all winter that would swap a starter for a hitter. With little outside interest in Derek Lowe, however, the Braves instead executed another salary dump, trading their best pitcher last season, Javier Vazquez, also with one year left on his deal, to the Yankees for Melky Cabrera. There are prospects involved on both sides, but the lesson is the same: the Braves made themselves worse entirely so that Liberty Media wouldn't possibly have to use the red font in its spreadsheets. Vazquez makes $11.5 million in 2010, Cabrera will make about $4 million, maybe a little less (I'm guessing here, because of Cabrera's arbitration eligibility). That's $7.5 million in Liberty's pockets, on top of the $7.5 million they saved on Soriano, for $15 million saved in two trades that make the team worse by maybe four games, maybe more, in 2010. Not that four wins is pretty much the difference in making the playoffs and not in the NL just about every season, and not that Liberty Media cares. They care that the Braves have positive cashflow, and everything else is irrelevant.

This stinks, and it doesn't stink because the Yankees just added an expensive player. It stinks because there's no reason why the Braves had to make either trade other than that Liberty Media wants this division of its billon-dollar conglomerate to spend a certain amount of money, and no more than that. It doesn't matter that the $15 million these deals saved may, perhaps will, be used to pay a Jason Bay or a Matt Holliday next year; that's a pretty good use of the money by a team that missed the playoffs in 2009 because it went cheap in left field. The Braves could well have made both the investment in a left fielder and kept its best starting pitcher and best reliever, counting on on-field success to produce returns at the gate that pay for those investments or even return a profit on them.

This is the way you run a baseball team: you make investments in the on-field product that are to some extent speculative, and you do so knowing that the only thing that brings people to a park, eyeballs to a screen, is winning. When you win, you collect the return on the investment you make. This has been true for decades in baseball, and it remans so today, as the Phillies could no doubt explain if you could hear them over the ringing of the cash registers. Hell, it's been true in business for centuries, but for some reason we hear talk about "budgets" and decide that Major League Baseball teams are exempt from the normal practices of business. You make investments with an eye towards maximizing returns, and everything else-pointing to the Yankees, whining about the arbitration process, demonizing Scott Boras, lying about revenues-is just a distraction from that central point.

A corporate owner with no ties to baseball doesn't want that kind of risk, however. A corporate owner with no ties to baseball looks at last year's revenues, last year's expenses, sets a budget that locks in a certain amount of profit, and runs away. For years, men and women owned baseball teams and ran them as businesses, but they also acted in a way that acknowledged the truth about the job, that owning the team carried intangible benefits that owning a factory or a grocery store or a car dealership didn't. Owning the team provided a level of attention that had value, and owning a winning team made that all the better. Liberty Media, however, isn't going to bask in the glow of ownership or success, so there are no intangible benefits. Liberty Media doesn't even own the Braves because it wanted to add a baseball team to its portfolio; it owns them because there was a tax advantage to taking them in exchange for their Time Warner stock. I think A. Bartlett Giamatti wrote a poem about this back in the 1980s.

It's not that we should be surprised by Liberty's behavior. It's that we should be shaming Bud Selig for allowing this to happen on his watch. Time and again, Selig has made it clear that he doesn't want owners he cannot control, owners who will put winning above adhering to an industry-wide effort to tamp down labor costs. Just to name one example, he has repeatedly worked to keep Mark Cuban from owning a team, while blithely allowing a Liberty Media into the fold. Can there be any question but that Cuban would be a better owner, for both the fans of a given team and the industry as a whole than Liberty has been? Selig prefers the latter, which tells you so very much about how he views baseball.

This, the ongoing creep of bad ownership situations, is the industry's biggest problem. The effects of ownership disconnected from the on-field success of the team permeate deeper and have longer-lasting negative effects than anything else within the game. The PED "problem" is a hangnail compared to the tumor that is Liberty Media, owning a team solely because there was a tax advantage for doing so, running that team like a corner grocery, passing on the opportunity for success because that opportunity comes with the risk of a loss along the lines of 10 percent of team revenue, or maybe a tenth of a percent of Liberty Media's bottom line. Selig's eagerness to see this kind of ownership in the game, moving the owners further along the path from competitors to partners, has been a huge negative for fans. It's been particularly bad for fans of the Braves, essentially a ward under Liberty; or the Astros, with Drayton McLane signed on to the idea of draft slots; or the Marlins, who spent 15 years operating with one goal: get a half-billion dollars of your tax dollars into their pockets.

The difference between the Yankees and the Braves isn't revenue. The difference between the Yankees and the Braves is ownership priorities. If MLB had 30 owners like the Steinbrenners or Arte Moreno or Mike Ilitch, the game wouldn't be perfect, but it would be a damn sight better than it is now, because an ownership group that wants to win is a fan's best friend. Liberty Media, which had $10 billion in revenue (warning: PDF) in 2008, decided that the Braves could only spend so much money in 2010, no matter how close the team might be to a championship. For that decision, Frank Wren has had to make two trades that will cost them three to five wins, wins that, given their team and the competition, could well be the difference between making the playoffs and not. Even replacing those wins by signing Bay or Holliday just leaves them where they were, instead of making a real charge at a winnable division.

The Braves' decision is even more frustrating when you consider that the Phillies made a huge blunder in valuing $9 million instead of Cliff Lee's services, a ridiculous decision that will cost them about five to six wins in 2010 (the approximate gap between Lee's value and that of Jamie Moyer). The Phillies managed to turn acquiring Roy Halladay into a marginal upgrade, leaving the door open for the Braves to steal the division by making smart moves. Instead, the Braves dumped a pitcher well worth his contract for an outfielder who doesn't have the bat to be an everyday left fielder, and doesn't solve the Braves' biggest problem, which is the need for an impact hitter. I'm starting to think that the new market inefficiency is having the phone numbers of general managers in the NL East.

Baseball is in trouble, but not for the reasons you think. It's not in trouble because a handful of teams make and spend a lot of money. It's in trouble because a handful of teams are run by people or entitites who really couldn't care less about baseball. You want to tell me that the Pirates or Nationals or Royals should have a $40 million payroll, well I'm right here with you. Bad teams with no hope of being good in the short term should hoard cash until such time as spending it will make a difference. There are haves and have-nots, but what some "have" are owners motivated by the prospect of on-field success. Every fan deserves that, but until Bud Selig agrees, we're going to be stuck with some teams trying harder than others to win, some trying less, and everyone getting what they deserve.

Joe Sheehan is an author of Baseball Prospectus. 
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