(Peter Schoenke, President of
RotoNewsDirect.com, provides a guest
column this week that serves as a rebuttal to Keith Law’s two recent
articles on revenue sharing.)
We’re one week into the NFL season and football fans everywhere can get
excited. Just about every fan at this point thinks their team can make the
So your team went 6-10 last season? A few free-agent signings, a few good
draft picks and you could be playoff-bound. Ask Bears fans! Heck, even the
lowliest of teams can look at the Rams for inspiration after going their
rise from 4-12 in 1998 to 1999 Super Bowl champs. The only teams that don’t
have hope are teams on the rise who need some more seasoning (Cleveland),
those on the downside of a good run (Pittsburgh, San Francisco) or those
who have totally inept management (Cincinnati).
Even for those who don’t think their team has a chance to win this year,
it’s not crazy to think a little progress from the rookies this season and
some good work from the general manager in the offseason could get your
team back in the hunt.
Contrast this opening day with that of baseball. How many fans think their
team has a shot at winning? How many think a year of getting the rookies
ready will make any impact the following year? Face it, if you are a
small-revenue team (notice I didn’t say small "market") you
rightfully believe your team has no shot. Even if the White Sox or A’s or
some other team not in a "big market" makes the playoff, the
record since baseball screwed up its infrastructure after the 1994 strike
Since 1994, every team that has made it to the World Series has been in the
top ten in payroll. None of the bottom ten in payroll has made the
playoffs. Maybe the White Sox make the Series this year and end this run.
That doesn’t exactly inspire confidence. I’d like my team to have a shot at
the finals more than once per decade. And if you are a bottom-revenue team,
you’re still waiting for your "White Sox" breakout season to give
Let’s face it: many of us think baseball is the better sport, but football
has the better system.
So why can’t baseball switch to this system? The reasons against it usually
focus on how it would be unfair and unjust for George Steinbrenner to give
his money to those "small market" clubs that simply mismanage
their operations. But what if baseball had the foresight long ago to
realize that local television revenue would distort the competitive
balance? What if they realized that not splitting local media revenue would
hurt a team’s chances to win? Would people be worrying about the money
Steinbrenner was losing? Does anyone have sympathy for the millions Dallas
Cowboys owner Jerry Jones isn’t making?
The salary cap and competitive balance have helped both the NFL and NBA
surpass baseball by many measures of popularity. The reason is simple: your
team has hope.
In a recent column, Keith Law argues that
the salary cap in the NBA doesn’t do this
because a few teams have dominated the league for the past few
decades. This is true, but it’s not because the salary cap wasn’t working.
With only five starters, it’s easier for one dominant player to make a
difference in basketball. Michael Jordan, Larry Bird and Magic Johnson come
to mind. Every NBA final since 1979 has had at least one member of the 1992
"Dream Team", for example. The cap can’t compensate for that. Nor
should it. That’s the nature and the excitement of the game.
The Clippers are the Clippers because they have the dumbest owner and
general manager in history. Vancouver has no chance because it blew so many
drafts. No one says their team can’t win because they don’t have the
"means". A good GM and a good draft and you could be right back
Baseball Economics 101
"Here’s a dirty little secret, wrapped up for Messrs. Steinbrenner and
Angelos: revenue sharing is nothing but a euphemism for the other 28 teams
coming after your money" — Keith Law, August 17, 2000
"If George Steinbrenner would rather spend his money on Derek
Jeter than shove it into his Cayman Islands IRA, isn’t that good?"
— Ray Ratto, ESPN, August 26,2000
Statements like these infuriate me. They have a fundamental flaw: baseball
is not a regular business. Baseball is a quasi-public confederation of
private businesses. It gets a special clause from the government to be a
limited monopoly. Baseball needs its other members to survive for everyone
Contrast this with the real business world. I like a lot of my competitors.
They often offer me synergies and many have nice people. But the goal of my
company, RotoNewsDirect, is to gain 100% market share and make as much
money as possible. If we could come up with the überproduct that would
leave ESPN and Sportsline totally bankrupt, don’t you think we’d do it?
However, in baseball the goal of the New York Yankees is not to crush the
Minnesota Twins into financial submission. They need the Twins to be a
healthy organization in order for them to make money as well. I seriously
doubt George Steinbrenner is going to make a lot of money if he makes his
team the Harlem Globetrotters of baseball. He needs the rich history,
tradition and infrastructure the rest of the teams provide. It’s why we
care about the game. Kill off the Twins, Pirates and Padres and you hurt
that 150-year brand equity. Maybe moving a few teams from cities where
things just are not working out (Montreal) is OK, but the point is that the
other teams are needed for much more than just the opposition on the field.
Law does have a point when he says that George Stienbrenner shouldn’t have
to pay for mismanagement of other teams. If some owner uses his
revenue-sharing funds to pay big salaries to his cronies in the front
office or builds a big yacht–that’s always a risk. But that’s the point.
Baseball and all professional sports are basically a kind of cartel. If
Saudi Arabia opens the floodgates on oil production, OPEC sinks. If Tampa
Bay absconds of their revenue-sharing funds, the system dies and all are
I’m certainly not arguing for 100% revenue sharing. Steinbrenner can have a
break. He can have 50% more revenue that the smallest team. Fine with me.
If the lowest-market team can have a chance at the playoffs every three to
five years, that will work. That’s enough margin of error that the
development and judgment of talent may cover the difference. But at the
current 10-to-1 difference or more, that team has no chance, even if they
are the best at judging and developing talent.
There are plenty of ways to do this, whether it’s in combination with a
salary cap or straight revenue sharing. The details are not the issue here.
The point is that equal distribution of resources to spend on talent needs
to take place for baseball to thrive. It’s helped the NBA. It’s got me
psyched for my NFL team this season. I can’t say the same about opening day
for my favorite baseball team next spring.
Peter Schoenke can be reached at email@example.com.
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