Some people don’t like the fact that the Prospectus has focused so strongly on
the economics of baseball this year.
I don’t blame them.
Personally, I don’t really care about how much money players and owners make.
When I see newspaper articles that focus on what players make what money, I turn
the page. I care about the game, not the financials of the game. Unfortunately,
the financial side of baseball has a significant impact on the game on the
field. The negotiations between the players association (the press and fans have
labeled them a union; they have never asked for that description) and the owners
will have a massive impact on the future of the game, more than anything that
happens on the field this year. It’s something we can’t ignore.
A small number of readers have made assumptions about the political affiliations
of the BP staff based on our heavy criticism of baseball ownership. The reality
is that the staff here is extremely politically diversified, featuring multiple
representatives of the left, center and right and several people who are
uncategorizable. The only presidential candidates who wouldn’t get any support
from the BP staff are Al Sharpton and Pat Robertson.
It is really therefore quite amazing that virtually everyone on the staff takes
remarkably similar positions on baseball’s labor negotiations. Our views clearly
do not arrive from any one political bent. They come from analyzing the issues
the same way we analyze baseball games.
We’re no longer particularly unique in our disbelief of Bud Selig. Yes, there
have been many articles in the mainstream press saluting the players
association’s gains of yesteryear, often while arguing that the players now
should make concessions in order to help baseball prosper. But despite this
common refrain, the mainstream media has been far more skeptical of the owners
this year than in any previous labor-management dispute in baseball. Bud Selig’s
buffoonery has cost the owners more public support than the immoral reserve
clause or illegal collusion ever did.
None of us believe that major league baseball is in real trouble. It’s certainly
possible that some franchises are losing money, but not to the extent that
ownership would have us believe. In every industry in the world, some companies
lose money from year to year. If hiring a Cam Bonifay or Chuck LaMar to run
Baseball Ops or missing the most basic points of Marketing 101 as the Angels
have done since their birth–leaving them with less fans than any other American
team but the Devil Rays, according to a Sports Business Journal poll last
year–has no financial downside, where is the incentive to improve? This year,
no doubt, has been the hardest for baseball since 1994 due to a rough economy,
Bud Selig’s continued devaluing of his product, and the storm clouds hanging
over the season. But unless Selig travels to every city and talks every season
ticket holder out of his seat forever, baseball is not doomed.
The question of disparity within the game is a more serious one. I suspect there
are more differences among my colleagues on this issue than have shown up on
this website. I believe that disparity is now an actual problem in baseball. Oh,
it’s not any worse than it was in the 1950s, the supposed golden age of
baseball. But the reality is that baseball suffered substantial losses in
popularity during the fifties and sixties, and disparity may have been one of
the reasons why. And the potential exists for a similar decline today–a decline
that may have already started.
The owners have been crying wolf about disparity for years. There’s every reason
to be skeptical of their claims. But we may really be in danger of seeing new
versions of the always hapless St. Louis Browns. It didn’t happen earlier
because the owners were making huge amounts of money thanks to the ever growing
nature of the national television deals. Player salaries simply couldn’t keep up
with the owners’ revenues. Now, however, the national television gravy train has
slowed down for virtually all the major sports. Even the NFL has had to deal
with smaller increases in revenues. NASCAR and men’s golf stand out as having
developed their audiences to an extent where revenue growth is still explosive.
The way revenue is earned by teams in baseball today, primarily through local
television deals, results in an unfair distribution of baseball revenue. The
Yankees do need opponents. Baseball’s antitrust exemption, which allows the
major leagues to limit franchise movement, has prevented ownership from coming
to any real consensus even among themselves on how they would ideally share
revenue. The NFL, meanwhile, stumbled into a revenue system that maintains
parity because most of the league’s revenue comes from a national TV deal and is
shared equally. That system is far from perfect: the incentive for teams such as
the Cardinals to spend to win–or the Bengals to stop their managerial
drooling–is limited since owners make money on their teams whether they’re
successful or not.
But the owners’ proposals for revenue sharing and a luxury tax are clearly not
designed to significantly increase competitive balance. Instead, they are
designed specifically to drag down overall player salaries. Indeed, rumor has it
that the owners want to end the practice of awarding amateur draft picks as free
agent compensation, a practice that has been among the strongest contributors to
maintaining competitive balance in the 17 years since its implementation.
If I was running baseball, I would institute an entirely different method of
revenue distribution. Teams would get to sell television rights to only their
home games. That has always seemed like the fair thing to do anyway; why should
the Red Sox or Dodgers get to sell television rights to games they don’t host?
This distribution would give smaller markets the ability to sell their home
games to larger markets. This would divide local TV revenues more equitably,
while maintaining a strong incentive for teams to improve.
A change of this sort is obviously not going to happen. Whether there is an
labor agreement reached this week or next year, the players will eventually make
some concessions to the owners that will have some small downward effect on
overall salaries without doing anything to solve any competitive balance issues.
It’s quite possible that revenue sharing will hurt competitive balance, since in
many cases it will reward teams such as the Phillies for their incompetence.
Worst of all, the ratio of talk about baseball economics to talk about actual
baseball will remain uncomfortably high.
Greg Spira is an author of Baseball Prospectus. You can contact him by