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.
Thank you for reading
This is a free article. If you enjoyed it, consider subscribing to Baseball Prospectus. Subscriptions support ongoing public baseball research and analysis in an increasingly proprietary environment.Subscribe now
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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.
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.
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...
Hence Ratto's comment cited above is on the right track.
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.
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.
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.)
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!
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.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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.
Splitting cable and all other local revenue would both be very simple and go a long, long way to evening up resources.