The wider view on the draft and economics
There’s been a lot of good discussion around here about the economic and competitive implications of the draft, and what it means for baseball. Arguing against the draft, it’s seemed at times, creates the perception you’re arguing that small-market teams should wither up and die.
So I’ve given a long-simmering article I’ve been working on a quick polish and pushed it out. This is where I am on the baseball economics issues, so that my arguments against the draft can have a little context.
I support revenue sharing done well.
I oppose public funding of stadiums.
I support allowing teams to build their teams any way they wish.
I support a free market for baseball talent in general (so no drafts) and understand that’s not going to happen.
Teams should work without a net.
From the top:
Unless baseball allows teams to move freely, it needs to do revenue sharing, because its messed up territorial rules means some teams have massive economic advantages that are for all intents unsurmountable for even the best owners of other teams.
Take the Mariners. They’ve done an amazing job marketing and building a fan base in Seattle in the last ten years, helped of course by the new stadium. But no matter how well they do, they’re never going to have the media contract the Yankees will get, because the Yankees are one of only two teams in the largest metro area in the country.
That said, I favor revenue sharing done right: there are some really good plans out there (Keith Woolner, mine), but it’s clear that today’s plan does a lot to discourage some teams from working towards being competitive. Any plan that hurts the Indians and Mariners for doing a great job while giving money to bad teams in large markets is hurting the game.
Funding stadiums –this has been hashed out before, I’ll gloss over this.
To the big point, then: if the economics of baseball are leveled, I’d like to see teams run off in all different directions. If they want to spend on Dominican baseball academies, great. Free agents? Good for them. Domestic talent? Knock yourself out.
Right now, the weird way talent acquisition works means that American players are hugely underpaid compared to foreign players of comparable ability, for reasons that are pretty clear if you think about the economics of the whole thing. That’s unfair to domestic players, and I’m baffled why this never gets mentioned.
What you’d see would be a lot like what you see in international scouting now, only on a much larger scale. For the top prospects, there’d be open competition and (quite likely) it would look crazy (see the Travis Lee incident). But smart teams could build their farm systems however they liked, and given the risk/reward ratio of the draft, it’s quite likely that you’d see guys like Andrew Miller get their $8m, but other interesting non-star prep players teams like and that fit well into their system would get modest, rational deals.
It also means that teams in need would compete equally. If the Royals were bought out tomorrow by a new ownership group and wanted to revitalize the farm system, they could do it – they wouldn’t be limited to getting one top domestic prospect in the draft, a pretty good one in the 2nd round, and so on. They could go after everyone they thought might help, all at once.
Teams could look for value across markets – anyway, I’m digressing.
When teams are able to compete fairly in the marketplace, we’d see an explosion in the ability of teams to do cool and interesting things, and to rise and fall on their own abilities, rather than being supported in failure by badly-implemented revenue sharing and a draft that hurts competition for domestic prep athletes. There’d be no reason to have a draft at all.
To me, these issues go hand in hand, and this is why I oppose more revenue sharing as it’s currently done and putting ever-greater pressure to restrain draftee salaries, which together are sold as part of a plan to achieve greater competitiveness: it’s further down a road that we know already doesn’t help the game.
I hope that makes things a little clearer. Level the field, let ‘em play.
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So would revenue-sharing in this scheme be such that a Yankees-level financial advantage wouldn’t exist? Because there would be nothing to prevent a team with such an advantage from simply outbidding every other team for the top picks, year after year.
The saving grace in baseball is that top picks probably have the least chance of making the big club of those in any major sport. So even if the richest team got five of the top ten players (at a big premium) it’s entirely possible only one or two of those would pan out. It would be a very expensive game to play.
The problem, of course, is that revenue-sharing isn’t designed to put teams on equal footing. Revenue-sharing, as it’s currently implemented, is a tool intended to drive down labour costs. Bud doesn’t care about competitive balance, and he never has. Because there’s never really been a competitive balance problem – it was just a nifty diversion so he could drive down labour costs.
So would revenue-sharing in this scheme be such that a Yankees-level financial advantage wouldn’t exist? Because there would be nothing to prevent a team with such an advantage from simply outbidding every other team for the top picks, year after year.
You can only put so many players on your roster at any one time.
So would revenue-sharing in this scheme be such that a Yankees-level financial advantage wouldn’t exist?
No. I would just mean that a Yankees-level financial advantage had to be earned, rather than inherited from having an huge market beneath you.
Eeeeeeeeeeeeyup.
As to the first question: go check out the linked plans, see how it turns out. It ends up working pretty well to give everyone a chance at players they want.
Incidentally, I love the Zumsteg revenue-sharing plan. I once tried to adapt it for hockey (before they imposed a salary cap), but the differences in fan avidity between US and Canadian markets were too severe (and hard to get good info on).
I think this is an excellent exposition, whether or not one agrees with it. However, it takes for granted the existence of farm systems, which I’m not sure is consistent with the rest of your philosophy. Taken to its ultimate conclusion – not that I think you’re necessarily obligated to follow principled positions to every possible extreme – it would seem that your philosophy would tend to reject these as well. I’d be interested to see how you explore that issue, compared with other possibilities like truly independent minor leagues, or even soccer-style promotion/relegation.
It seems like a lot of why we have a draft is to stop a team from stockpiling talent in their minor league system like the Yankees of yore. Would a good revenue sharing system be enough to stop that from happening?
Bill James did an article on farm systems somewhere, sometime. As I recall, he thought that the ownership of the minors by the major league clubs was very bad for minor league baseball in that it guarantees that the clubs are designed to develop baseball players, not to strive to develop the best possible (and/or most entertaining) team.
I don’t believe he stated it quite this way, but the ultimate consequence was a vampire/vampee relationship.
Another result of the acquisition of the minors by the majors was an immense loss of attendance (even when considering the development of tv and other media outlets that allowed people anywhere to watch major league baseball). In a way, when you go to a minor league game, you’re watching people practice to become major leaguers, not win minor league pennants. People don’t generally like to pay to watch other people practice.
So, yes, #7, I also read it as an implication of Zumwalt’s philosophy–and it’s one that I agree with. I’d be much more likely to go watch the Tacoma play if they had a 35 year old career minor league guy that was trying to hit 50 home runs, but who could never make it in the majors. If the Tacoma team wasn’t owned by the Mariners, he’d be playing and the stands would likely be packed at the end of the year to see if he made it.
If he was on that team now, he wouldn’t play as much no matter how he was doing because the Mariners understandably would want Jones or somebody out there even if he was only hitting .275 with 15 home runs.
So, yes, #7, I also read it as an implication of Zumwalt’s philosophy–and it’s one that I agree with…
Zumwalt? Wasn’t his philosophy to stockpile submariners?
Admiral Elmo R. Zumwalt Jr.
http://en.wikipedia.org/wiki/Elmo_R._Zumwalt%2C_Jr.
The wikipedia link didn’t work for me, but here’s another:
http://www.history.navy.mil/faqs/faq93-1.htm
This is why revenue sharing as it exists now is massively broken.
http://tinyurl.com/b2j9r (2005 MLB operating income rankings)
http://www.forbes.com/lists/2006/33/Income_1.html (2006)
The Tampa Bay Devil Rays made 47 million dollars in operating income the last two years. Pittsburgh made 33 million. KC made 23 million. St. Louis, a well-run franchise, made about 4 million.
Basically, MLB will subsidize you for being a horrible franchise- just slash your payroll and watch the revenue sharing checks + national TV revenues + licensing revenue roll in, and even while you’re drawing 14,000 to weekday games with the Royals or Brewers, you’ll still get those Yankee/Red Sox/Dodger weekends and get SOME revenue from gate. It’s a horrible disincentive to actually provide a good product- because the fact is the way to make 10-20 million a year is to become a AAAA farm team playing in MLB.
This is why I have issues with the Zumsteg plan because there’s a great deal of shared revenue already in MLB (everybody gets money from MLB.com, the national TV contract, and so on), and sharing MORE revenue while letting there be tremendous variability in payroll means you end up with an even bigger “free rider” effect. Granted, every now and then, your small-market franchises will come up with a Billy Beane or Terry Ryan who can creatively work around low payroll- but you’ll also have historically bad franchises like the Phillies in the 30s or the As for about 30 years from the mid 30s to the mid 60s, who show up to collect checks and promptly eliminate themselves in April. I don’t see why you should guarantee a profit to a team that doesn’t really care about their on-field performance…
There is the interesting dichotomy of the generally lemming-like behavior of the owners, and their willingness (aside from the annual bitching by George) to ignore the guys who pocket the revenue sharing.
I am curious to see what things like the Urban Youth Academy and Torii Hunter’s project might do to affect the number of home-grown players….
Working Wikipedia link
The difference with Zumsteg’s plan, though, ec, is that it doesn’t penalise teams for spending money. It penalises them for playing in a big market, and that’s all. So you don’t get more just by spending less, which was what the current system encourages (see: Kansas City). The only way you earn more money for your team is by developing your team’s revenue streams or attracting more fans (and fans are attracted to winning baseball).
And my Zumwalt URL failed because it ends in a period.
When teams are able to compete fairly in the marketplace, we’d see an explosion in the ability of teams to do cool and interesting things, and to rise and fall on their own abilities, rather than being supported in failure by badly-implemented revenue sharing and a draft that hurts competition for domestic prep athletes. There’d be no reason to have a draft at all.
Except that money doesn’t abhor a vacuum, but instead likes to pool together. That is, teams without money wouldn’t get money; teams with money will just keep adding on. The Royals won’t be able to afford the gilded baseball academies in Venezuela that the Yankees can just on market share. While the Royals may become a small, nimble, efficient organization, in the end they won’t be able to compete with the Yankees’ market share. The only way to avoid that is to institute a strict central control of revenue and spending. And that won’t fly because it’s too “Communist” and restricts teams’ ability to make indiscriminate amounts of cash.
The problem, of course, is that revenue-sharing isn’t designed to put teams on equal footing. Revenue-sharing, as it’s currently implemented, is a tool intended to drive down labour costs.
Exactly. The NFL’s revenue-sharing system has worked well, though. Every team is profitable, the players get their high-end unguaranteed contracts, and everyone gets a handful of cash. Of course, it really could be better for the players if the NFLPA hadn’t become so toothless in the face of the 1987 replacement player season.
Bill James did an article on farm systems somewhere, sometime. As I recall, he thought that the ownership of the minors by the major league clubs was very bad for minor league baseball in that it guarantees that the clubs are designed to develop baseball players, not to strive to develop the best possible (and/or most entertaining) team.
What James (and others) have looked to over the years is a system similar to the way English football works. Premiership teams have the talent, and they acquire the talent themselves, from overseas, or by buying it from League teams. League teams make their money by fielding decent football sides and selling their local acquisitions to the Premiership teams. It’s a free market; Leyton Orient can transfer Joe Bob Fishmonger to the highest bidder, and they do it whenever they need to pay the bills.
There are drawbacks to this system, though. Most of these league teams will never get promoted to the Premiership, and even if they get there they will eventually have to sell their players to keep the lights on. You might end up with an owner willing to buy their way into the Premiership (Fayed with Fulham) or build their way into it (Madjeski with Reading), but in general teams will spend years bouncing between the divisions waiting for the next great superstar to show. However, if we were to have this system in the US, there wouldn’t be promotion or relegation, which means that a Class A team will be a Class A team forever, doing nothing but turning over talent and trying to keep 3,000 paying for tickets each night. Sounds kind of depressing to me.
Also, the reserve clause would never truly go away. A player’s rights would have to be owned by a team, because just buying out a contract won’t generate nearly the same level of revenue. Why would Tri-Cities pay the money to train a high school pitcher to be their starter when they’re only going to get $25K for the contract when they sell him to Sacramento or Seattle? $25K versus $0 (when he walks in a free agent year) is significant, but it’s nothing like the 500K-1M pounds Division One teams make selling talent up to the Premiership. And if you don’t have revenue sharing, you can have 5-6 teams hogging the talent, only loaning them out to lower level teams just so their players get some at-bats in. In effect, every team is now a minor league affiliate.
These issues are probably solvable, but I think they need to be brought up. Divesting the minor leagues is not a panacea for the problems with the revenue structure. It’s taken us nearly 75 years to reach this point where the minors are dependent on the majors; dropping that can’t happen overnight and without reasonable thought put into it.
So you don’t get more just by spending less, which was what the current system encourages (see: Kansas City).
Except you DO get more, because under current rules, everyone gets a basic amount of revenue. Look at Montreal in Derek’s illustration- they had no local media revenue and 8-10K attendance, and they STILL ended up with 60 million in revenue.
Or, to put it another way- Milwaukee hadn’t fielded a competitive team since the mid-90’s. Ditto KC…but in Derek’s example, they were doing great on revenues per capita. I’d argue it’s because they have a floor of 80 million in revenue they weren’t going to fall under. So if you skimp on your payroll and minors, and put a 60-75 win team out there…why shouldn’t you?
But, dw, revenue-sharing plans like Woolner’s and Zumsteg’s correct for market-size, so the Yankees don’t get that advantage right out of the blocks. Using Derek’s numbers (from 2002), the Yankees would be paying $70 million into the plan, and so would the Mets (because they share the same advantage). Suddenly the net revenue differences between the Yankees ($144 million) and the Royals ($128 million) don’t look that big.
And, EC, Montreal’s would have been the second lowest revenue in baseball, caused by years of neglect. There would have been huge potential for revenue growth given this new economic parity.
Though, I suppose, the plan does create a theoretical mininum revenue for each team that is well below $0 for large-market teams and well above $0 for small-market teams.
re: your revenue sharing plan; Maybe you could work regional worth per capita… I know not every city is equally wealthy. Also, Metropolitan area is not necessarily the only indicator. Mariners get fans from all throughout the Pacific NW and BC. Granted, not the same amount because it’s much harder for them to come to games… it would be too hard to calculate how much a team should be making. In principle, though I like it.
But don’t the M’s desrve to be rewarded for expanding their fanbase beyond their immediate metropolitan area? If the M’s get their games on TV in Hawaii, why should they be penalised for that?
Is no one going ask the burning question:
How long did it take Derek to devise a plan that puts the M’s at the top of the “Revenue After Sharing” list?
But seriously, given these numbers, are you suggesting that the Mariners did the best job of (how best to put this?) managing revenue (developing and successfully marketing a team)?
Exactly.
Basically, small-market teams have realized that you can run a year-in, year-out operating profit by slashing payroll and expenditures below what you’d get from revenue-sharing subsidies + nationally shared revenue + whatever attendance and local media revenue you get.
If you’re lucky and your GM is Billy Beane or Terry Ryan, you can get wins as well. If your GM is Allard Baird, you still get checks.
Why on earth should Tampa Bay be making MORE money the last two years than St. Louis, for putting out an inferior product? The answer’s simple- they’ve gamed the system. The system as it stands now rewards poor performance- as long as you don’t spend on payroll, you’ll still get some basic revenue locally from people who’ll even watch BAD baseball, and the national revenue will help keep you afloat. What’s to stop someone from a small market town who gets MORE money under the Zumsteg plan to keep from doing exactly that?
Though, I suppose, the plan does create a theoretical mininum revenue for each team that is well below $0 for large-market teams and well above $0 for small-market teams.
Exactly.
Basically, small-market teams have realized that you can run a year-in, year-out operating profit by slashing payroll and expenditures below what you’d get from revenue-sharing subsidies + nationally shared revenue + whatever attendance and local media revenue you get.
If you’re lucky and your GM is Billy Beane or Terry Ryan, you can get wins as well. If your GM is Allard Baird, you still get checks.
Why on earth should Tampa Bay be making MORE money the last two years than St. Louis, for putting out an inferior product? The answer’s simple- they’ve gamed the system. The system as it stands now rewards poor performance- as long as you don’t spend on payroll, you’ll still get some basic revenue locally from people who’ll even watch BAD baseball, and the national revenue will help keep you afloat. What’s to stop someone from a small market town who gets MORE money under the Zumsteg plan to keep from doing exactly that?
Good point.
You need to find a way to offer revenue sharing as a multiple of earned revenues for the recipients. Or even marginal earned revenue (above a theoretical pre-sharing minimum).
And there is an issue of determining what counts as the metropolitan area for border cities.
Is Vancouver, BC part of metro Seattle for the purposes of the Zumsteg Plan (it isn’t in the article, but should it be)? How about Windsor, Ontario? Is that metro Toronto, or metro Detroit?
Windsor is only 300,000 people, so it’s not a huge deal, but Vancouver is 2 million.
So in the Zumsteg Plan, if you’re in KC and you suck, you do get paid a big chunk of money (essentially because you can’t move into New York etc). But that’s okay. The incentive to build your revenue streams is now much larger for those teams, whereas right now, making more money doesn’t make them much more money – sucking and being lazy’s easy and quite profitable. There’s an enterprise award.
Woolner’s plan has a quite clever solution to the “losing and making money” problem.
Revenue sharing is good, but there needs to be some control over it. Its ridiculous to think that the owners can pocket the money from the revenue sharing and do whatever the hell they want with it. It should be mandatory that they use it in payroll. The reason behind revenue sharing is to make the game more competitive, and its obvious that in its present form its not working too well.
Funny thing about MLB is “revenue sharing” means owners sharing revenue, wheras in the NBA/NFL/NHL revenue sharing also means owners sharing revenue with players.
By tying player salaries to revenue via some form of a salary cap system, you smooth out the big variances on both the revenue and expense sides of the equation, eventually resulting in NFL-style parity. MLB won’t be successful with revenue sharing until they can bring MLBPA into the equation.
Payroll floors (or any particular form of mandated spending) have unintended consequences that hurt competitiveness more than they might possibly help it.
On revenue sharing – that’s an oversimplification at best.
The most basic issue in revenue sharing between teams/players in baseball, though, is that baseball hasn’t ever gone through the kind of industry-wide crisis those sports have that force a confrontation like breaking the players union (in the NFL) or some of the joint concessions on both sides to save the industry (the NBA, for instance, way back when).
It wasn’t that long ago that the guy who now leads baseball led the owners in collusion against the players in an attempt to roll back free agency. Baseball has been quite profitable for both sides even as they have fought bitterly over more money.
I would say that Baseball’s big strikes probably would have been great enough crises to force dramatic change if MLB had strong leadership. Selig is not the guy to shepard MLB through a true knock-down drag-out war with the MLBPA.
Instead of “revenue sharing” think of “profit sharing” in conjunction with a cap system, i.e., you don’t get to keep your money (profit) if you didn’t at least try to compete (see Tampa Bay).
There’s no way MLB can sustain itself long term with such wide disparities on both sides of the equation. This isn’t 1935, 1965 or even 1985 any more.
Selig banked on new stadiums having a lasting effect, but that bubble burst pretty quickly.
DMZ, could you expand on how payroll floors negatively impact competitiveness? Or is there an article somewhere on said subject I should look to?
Okay, but that’s not true on a number of levels. The strikes proved that the owners could not win a labor war: in every labor dispute, the players prevailed on every major issue at stake. The owners tried, it didn’t work, under different commissioners and everything.
And as to the true knock-down drag-out war, I don’t know what you know about collusion, but that’s as low and dirty as you can be, and Selig and Reisdorf led that conspiracy for years. Years! He already has sheparded MLB through a war, and he conducted it illegally and got nailed for it.
Profit sharing encourages teams to hide their profits. See: the Marlins. It doesn’t work.
Also, the argument that baseball can’t sustain itself long term — there’s no reason to believe that.
Selig did not bank on stadiums having a lasting effect on competitive balance. He banked on them making more money. For the teams, it worked.
I like the Zumwalt plan (e.g. blast cheap-skate owners out of a torpedo tube somewhere off the coast of Ecuador).
I also like a combination Zumsteg-Woolner plan that requires teams to pay for the privilige of having large, protected markets, and distributes that money to small market teams based on how competitive those small market teams are. I’d simplify Woolner’s share system some (e.g. 1 share per game improvement over last year + 1 share per game over .500 + 1 share per game out of last place) and maybe pro-rate the shares based on market-size. I think that preserves the main positives of both plans (Zumsteg: reward teams for convincing people in their market to spend money on Major League Baseball, while setting expectations that large-market teams do the heavy lifting bringing money into the game. Woolney: Reward teams receiving the sharing for being competitive, not just for showing up).
Of course, one obvious objection some folks (probably Yankee fans) might have it that it’s going to be harder for the Yankees to extract cash from jaded Noo Yawkers if every podunk franchise in flyover country is willing and able to match their bids on A-Rod, The Big Unit, Sheffield, etc. Why, a situation like that, it might almost make weep for the Yankees…
OK, here’s an idea I’ve been kicking around for a while now, and this seems like an appropriate time to get feedback on it. I apologize in advance for the length of this post.
Let’s start with some basic assumptions. There are three parties involved, and they all want different things:
• The Owners, who want to make as much revenue (and profit) as possible;
• The Players, who want as high a payroll as possible;
• The Fans, who want winning teams and general qualitative parity (yes, those are somewhat mutually exclusive).
Note that the first two are financial requirements; the last is not. To make it a financial requirement, we need to make another (arguable) assumption:
• The only financial factor that has a significant impact on winning (all else being equal) is payroll
So: the Owners want either low payroll or high revenue (or preferably both) to maximize profit; the players want high payroll and don’t care about revenue (unless they get a cut); and the fans don’t care about revenue but want equal payroll.
So how to reconcile this and get everyone to sign on? It seems obvious to me that the focus should be on payroll, not revenue. My suggestion:
1. Forget revenue sharing. Let the owners earn as much as they want. If the Yankees can find a way to sell Jeter jerseys to kids in Omaha, more power to them; if the Mariners get a cut of co-branded Ichiro/Hello Kitty curling irons in Japan, more power to them. Let the owners do whatever they want to maximize their revenue streams. Of course the Yankees and the Sox and the Cubs will have more revenue than everyone else: so what? That only really matters to the other owners, when they’ve got the measuring sticks out while they’re all vacationing at St Kitts, or wherever they go to look down on one another. Fans don’t (or shouldn’t) care, and neither do the players.
2. Impose a Payroll Tax (it can’t technically be a tax, of course, so let’s call it Payroll Equalization Payments, or PEP). Take the average payroll across MLB for the preceding year (sum of the Net Present Value of the contracts for all players on the 25 man rosters, divided by the 30 teams). That’s the baseline payroll for this year. Any team whose aggregate payroll this year exceeds last year’s baseline has to pay an additional amount – the PEP – which is divided amongst all the other teams whose payroll (before PEP) is below the baseline. The baseline for next year is the average for this year not including any PEPs.
3. PEP income must – MUST – be used for payroll. The owners can’t pocket it, use it to pay for stadium improvements, or anything else. They can only use it for player salaries.
Eliminating revenue sharing is the carrot to get the owners on board (yeah, small market teams will bitch, but really they just have to get creative with their marketing and anyway, there are enough large-medium market teams to override them – and hey, if you’re an owner in small market your cost of living is lower too). Requiring PEPs to go to payroll is the carrot to get the players to go along. Also, because the baseline for this year is based on last year’s average payroll (not including PEPs), salaries can still climb: if enough teams decide to increase payroll despite the added cost of the PEPs they will incur, next year’s baseline will be higher. The annual rate of growth is likely lower than the current situation, of course, which is another carrot for the owners. And because the money is going to payroll, we fans can hope to see more parity in the teams and we’ll be spared atrocities like a Kansas City team that is one of the most profitable despite not fielding a competitive roster in over a decade. The best thing about a system like this is that because it is based on payrolls, which are public numbers, it’s easy to audit; moreover, the player’s union has a vested interest in doing the auditing to keep the owners honest. It should be self-policing.
Of course there are a million details that would have to be worked out: what is the right ratio of PEP dollar to payroll overpayment dollar (I’d like to see the Yankees stuck with paying 50 cents for every dollar they go over the league average payroll, but I’m a vindictive SOB); how to calculate the value of multi-year contracts, non-financial incentives, etc., so teams don’t game the system with deferred or hidden payments; and so on. But still it seems like it could work.
Or am I just way out in some Pollyanna weedfarm somewhere?
Also, when it comes to public funding of stadiums, I’d love to see cities/states grow a backbone and say:
Sure, we’ll pony up. Of course that means you’re making us shareholders. Got a $500 Million dollar team and you want $200 Million in public money for a new stadium? Congratulations, you just got yourself a 40% minority-partner owner. The government entity would be a non-voting owner, of course, and wouldn’t have anything to do with running the team (or sharing in profits/losses). In fact, the stake would only become relevant if the team was sold and/or moved: at that point, the government could agree to have their percentage bought out at the new value of the team (as they presumbaly would if the team was being moved) or hang onto their stake as partners with the new owners.
Owners want to maximize profits, not either/or/and.
A payroll tax discourages spending on payroll, which is why players fight it.
Payroll requirements have all kinds of messy side effects on competitiveness.
Owners don’t want to get rid of revenue sharing, because it acts as a brake on salary escalation.
.. and so on.
So yeah, you’re kinda out in some weedfarm.
MLB won’t let cities or governmental agencies own or be significant shareholders of any franchise. The Krocs tried to give the Padres to San Diego and MLB blocked it.
#40: What was MLB’s reasoning for doing so?
And remind me: How was Peter Angelos appeased re terrotorial rights when it came time to formally relocate the Expos to D.C.?
What needs to be done is for the owners to do what they should have done in 1995.
They should not have cracked and instead went ahead with replacement players or just not playing at all.
Yes they would have lost alot of money but the players were losing alot too and they have a much shorter lifespan to make their money. The union would have cracked eventually.
It may have taken no MLB all the way through 1995 but the owners could have won and gotten true payroll controls.
The NHL did it and they broke their union and the league will be better for it.
MLB owners are too shortsighted and in fight too much to ever make this happen. And Selig is not the leader for it.
Now the league has become all about the Red Sox vs. Yankee rivalry and than everyone else. (Don’t believe me just look at All Star balloting).
MLB is a 2 team league nationally.
The sad thing is that a salary floor and soft cap along with revenue sharing would be good for most players but the MLBPA only represents the big contracts and not the little guys making the minimum.
It is the same reason that when there was talk of eliminating the DH and in exchange the teams would each add a man to the roster (ie, 30 more jobs) the union balked. Most unions would make that deal and should.
The MLBPA does not give a damn about the good of the game or more importantly its rank and file, it only cares about the richest players and protecting them.
The problem with mandating spending (I forget who asked) is: what happens when a team has more to spend to reach its minimum but there’s no one worth spending it on? They would have to do something crazy like give 4.5 mil to Carl Everett… oh.
Do you think that you have a better idea of whether the owners could and should have continued the lockout in 1995 than the owners who made the decision?
If so, why?
On the DH, no union would have accepted that job. “Hi, we’re going to eliminate 2% of the most highly-paid jobs in the industry but in compensation, we’re happy to add twice that number of jobs that pay the minimum amount.”
There’s no way any union rank and file accepts that.
I’d have to go look up what they said at the time.
Angelos got all kinds of stuff. Revenue guarantees, a massive (and possibly Nationals-crippling) chunk of DC media contracts, his or not… it’s ugly.
The NFL and NBA both have salary floors and I have never heard of a team complaining that they do not have anyone to spenf the money on.
If I were throwing out random numbers I would set a minimum somewhere around 60 million with a soft cap at 110 million.
Teams would be allowed to spend more than 110 million if it is to resign their own players. It would be more of an NBA style cap instead of a NFL cap and I do not think teams would have too much trouble reaching the 60 million dollar floor.
This would create a more competitive league and force many of the top free agents onto some of the have nots because the Yankees would not be able to add free agents as long as they are spending over 110 million.
This creates a better distribution of talent around the league.
Hell, the NFL won’t even do it (allow public ownership of franchises) anymore. The Green Bay Packers model/organization (is awesome, and…) is just grandfathered in. Though there are a few ‘major league’ teams that do sell shares, i.e. are traded publicly. I believe you can still buy stock in the Cleveland Indians as well as a basketball team (Carolina or Jacksonville, I want to say). Not that they offer enough shares in quantity such that shareholders could, in effect, revolt if their teams weren’t managed the way they wanted…and if fans became shareholders, who is to say their motivation wouldn’t become exactly the same as that of the owners, unless of course you’re modeling it all after something similar to a socially conscious mutual fund, wherein other non-monetary values (like winning) play into the equation somehow.
Of course there are a few minor league teams (like the Memphis Redhawks) that are operated as a non-profit, churning money back into the community, which is some sort of model to follow as well. (At first, they did well, the last few years I think the shine has worn off that particular rose with allegations of mismanagement etc.)
MLB doesn’t really, when compared to other professional sports leagues, have much of a competitive balance problem, but for a couple-three perennially bad teams like the Royals. Teams like MN and Oakland throw it off because though they operate on shoestring budgets, they’re still able to compete each year. Which sort of directly challenges the assumption that more payroll automatically = more wins. It doesn’t, and never will. What it does do is leave more room for error (sort of like having an emergency fund from which to pay for sudden car repairs).
“Teams would be allowed to spend more than 110 million if it is to resign their own players.”
That just leads to sign and trade loopholes.
DMZ on number 44,
The union would trade some high paying jobs but the money would still get spent. Teams would spend more on a pitcher or another bat that plays the field. The union as a whole would not have lost any money on the deal.
Plus if I remember correctly at the time the union even said that they would not make the deal for the 30 extra spots plus 2 more teams or 52 more spots.
That is crazy and if I am a player just fighting to stay in the bigs I am pretty pissed off that my union would turn down 82 more jobs to protect 14 high paying jobs that ussually go to old players that have already made a ton of money.
On the lockout do I have a better idea?
Maybe not but I believe that if they stuck together and did not cave to the players that they players would have caved.
Do I know that for sure?
No
But it worked in 3 of the 4 major sports in America so I would say that precedent is on my side. And I felt the same way back than and that was when I actually sided with the players in the dispute.
48.
Sign and trade loopholes can be closed if MLB chose too (its easy actually just say that no player can be traded for at least 120 days after signing a new deal), but even if they did not a sign and trade benefits a team more than losing the player outright.
Sign and trades are not a bad thing IMO.
Re: San Diego when Joan Kroc tried to give them the team and MLB prohibited it…. I think the text went something like… because of the unique elements of this type of business (a league is composed of separate entities competing against one another but also dependent upon each other’s success), any kind of municipal/public ownership is likely to be too bureaucratic (too slow to make decisions that often need to be made quickly) and more importantly, incapable of having the kind of monetary freedom to be able to pursue those decisions (like signing an expensive draft pick, if that’s what the decision is).
Basically, MLB didn’t want to DEAL with municipalities since some of the ownership issues would necessarily become open to public disclosure, and didn’t figure taxpayers would vote to give those same municipalities a big enough bank o’ money o a recurring basis to play. Working in government for 20 years, I’m inclined to agree with the latter.
Incidentally, somebody way up top said something about the MLB being different than other leagues in the hiding of finances. Not true, just read up on Paul Allen’s hiding of Seahawks’ financials and exploiting a very small legal loophole to do so (in a case he would most likely lose if the state had the $ to legally fight his lawyers…). At least the Ms didn’t fight THAT, which was also a part of their deal they cut for public stadium funding.
Okay, so here’re the big problems with salary floors.
Right now, in any season salary growth is led by a couple of teams who that offseason have money to spend (new media deal, whatever) paying for top free agents. That makes it a lot easier for everyone else to argue for raises (whether it’s rational or not) – if I’m 70% of Alex Rodriguez, my starting point for negotiations is 70% of his salary. That’s why the MLBPA (and agents) are so huge on precedent-setting deals. In a salary-cap world, they can’t get that. To a lesser extent, revenue sharing hurts this, too.
However, what really happens is that there’s only one Alex Rodriguez, and a lot of Juan Castros. The middle class in baseball is really, really thin. If you suck, your career looks like this if you’re lucky:
cheap-cheap-cheap-cheap-released-cheap-traded-cheap-retire
And if you’re awesome, it’s
cheap-cheap-cheap-cheap-woohoo! I’m rich!
So. Let’s say there’s a salary floor implemented next year for the Marlins, who have a roster of cheap, fairly crappy players. The Marlins are going to want to come in at exactly the salary floor to ensure maximum profitability, so they’ve got $6m to burn or Selig takes away their revenue sharing (potentially).
That $6m won’t buy them a good free agent. They don’t want to spend it on a multi-year deal, either, especially when they’ve got all these young players and don’t know what they’ll be doing in a year.
So they’ll throw that $6m somewhere. But the free agent willing to take a one-year, $6m deal isn’t the kind of free agent that’ll help the Marlins compete in any substantial way. He may be taking away development time from a good player.
The Marlins now have a league-minimum payroll, aren’t improved, still have no incentive to improve. Competitiveness isn’t helped at all.
Further, the effect of pumping all the new money into the market is going to drive player salaries up. The Marlins, along with the other n teams who have to throw in more money, are all going to be competing for the same kind of player, and suddenly it’s the draft and the league-minimum teams are taking whoever’ll get them to the floor and not above, while average payroll rises and they lose ground because they’re spending on horrible guys to meet an artificial obligation.
#49: trying to compare the 4 (really, you’re counting hockey as major?) sports in America is tough to do. MLB is the hardest sport to excel at, takes the longest development time (players cannot go straight from either high school OR college and be MLB level, they really DO require seasoning in a farm system) – which, right there, makes a dramatic difference between MLB and NFL/NBA. NFL/NBA don’t have to pay for development of these players – high schools and colleges do.
NHL does have a farm system, but it’s not oeprated all that much like that of MLB.
The farm system does make MLB pretty unique among pro leagues. As a fan of the minors, I find myself torn between ‘yeah, I love watching the Rainiers because those players ARE likely to show up on my major league team one day’ and ‘yeah, I want to watch them because they play good baseball and it’s a better purer baseball atmosphere’. I could get that 2nd motivation if all the minors were independent leagues, and MLB ultimately only got to draft from the minors (AAA or AA) OR they just purchased players from the leagues (like they do from independents often).
DMZ
First off any salary floor would be phased in and the Marlins would not have to go from a 20 million dollar payroll to 60 million in 1 offseason.
And second both the NFL and NBA have salary floors and the teams in those leagues are not throwing money at lousy players just to reach the floor. They throw money at lousy players because they are dumb.
If done correctly the teams all naturally come up in payroll and eventually (if the other sports are and indication and I see no reason for them not to be) most teams are having more trouble staying under the cap than they are staying over the floor.
And I have no idea what you are talking about with the corn analogy.
#53
I understand all that about minors but do not know what it has to do with revenue sharing and salary caps and floors.
You just figure out how you will define major league salary and go from there. I would base it on the 40 man roster so minor leaguers on big league contracts would count but minor league contract bonuses would not for instance.
Everything else happening in the minors would not count.
I will admit the implementation of a cap and floor is a little more difficult than in the other sports but not impossible.
And yes I count the NHL because the players are making millions and the owners are actually doing quite well now too. Record attendance (which is where hockey teams make their money) all over the league this year.
DMZ
I think where we disagree is that I think that if a team is forced to spend a certain amount of money they are going to do their best to spend it the bast possible way in order to win as much as possible even if they are right at the minimum.
Why wouldn’t they?
A winning team will make them more money than a losing team on the same payroll.
All I’m trying to say is that you can’t look at the ‘perceived’ solution for 1 type of business (in this case, NFL and NBA) and apply it to a very different larger business (MLB) without taking the uniqueness of the larger business into account. MLB not only produces the end-product (the pro team) but they also manufacture the pieces and parts that go INTO producing that product, whereas NFL and NBA just go buy those pieces and parts off a shelf from another, completely separate supplier. That makes MLB a very different kind of beast, as the revenue needs to go into much more than just the big teams’ payroll. Arguably, if you were to define a salary floor, you’d have to include the entire player development budget (both farm team operations and domestic and international scouting) in it, since that’s such a critical part of the entire thing.
Salary caps and floors are often brought into these discussions because they seem so easy to understand, so easy to implement. But all they really do is transfer the money to the owners, away from the players. The money generated is still the same. The cable TV contracts don’t suddenly generate LESS money. I totally ‘get’ that people get p*ssed about players making so much money, but that money does not/will not just disappear if you institute a cap and/or floor. The players will still be paid what seems to us like an obscene amount, but all that they’re not getting paid is then going to the owners. And given the choice between whose pockets I’d RATHER see that money go into, I’ll take the players every time.
Actually I have absolutely no problem with the salaries that the players make in any sport. I say go for it. I am not pissed about it at all.
And I do not believe a salary cap/ floor combo. takes money away from the players it just redestributes it so that it is spread out over the entire league. This is especially true with a soft cap. I truly believe that in the long run a salary cap means more money for the players and owners and a better game for the fans.
On the topic of having to include the entire minor league operation.
I disagree, for the purposes of a cap or salary floor all you would need to inlcude are major league contracts.
Let the teams spend whatever they want on the farm system. Those costs are very small relative to the big league operation anyway.
I would also like to add that the NBA does now have a minor league (which is brand new) in which teams send their players and the NHL does the same. Granted neither are as extensive as MLB but they do exist and the caps work in those leagues.
Derek,
You say that domestic players are vastly underpaid compared with foreign players of comparable ability. Having done a fair amount of research into the matter, I see one major issue with this: foreign players don’t sign for near as much money as domestic players.
The record bonus for a Latin-American amateur free agent is $2.25 million (Joel Guzman), or a shade less than the league’s recommended slot money for the 5th pick in the domestic amateur draft. At least 6 players this year will receive bonuses larger than the largest one ever handed out to a Latin-American player. I’m not aware of a single Latin-American pitcher who’s ever received a bonus of $1 million+ (last year’s consensus top dominican talent received $710K), though I don’t know for sure that this has never occurred.
Seven-figure bonuses happen 1-2 times per year in the Latin-American market, and upwards of 30 domestically. Average signing bonuses are higher for drafted players than for players acquired via the international free market, and representation is far, far better. Talent agents receive 3-5% of their American-born players’ signing bonuses. For Latin-American players the agent’s cut typically runs from 30-40% (this info comes straight from an agent who represents several Latin-American players).
I don’t see the free market better benefitting international signees than their American counterparts. Perhaps you have some different or more complete information, but I’d like to hear you expand on why you believe this to be the case.
JH
Does your info. include Cubans because I know several Cuban players have gotten monster bonuses.
Another thing to consider is that most top Latin American talents sign at 16 or 17 a full 2-5 years before their American counterparts which often leads to them reaching free agency sooner.
I am guessing that if American kids were signing at 16 the money would be much lower.