Pirates' Books Show Baseball Needs A Salary Cap
by Charlie Wilmoth on Aug 27, 2010 1:37 AM EDT
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PrintI had to chuckle at this note on the Pirates in the Kansas City Business Journal:
In 2008, the Pirates made more than $39 million from revenue sharing alone. They cashed $30.3 million in revenue sharing in 2007. If you add up other revenue sources, the Pirates are bringing in $88.5 million before they sell one ticket. Add in more than $40 million in home game receipts and concession sales, then back out expenses, and the Pirates’ net income is in the black to the tune of $14.4 million in 2008 and $15 million in 2007.
That has led various sportswriters to conclude that small-market teams, particularly losing small-market teams like the Pirates, have owners who are pocketing big windfalls, regardless of whether they’re putting a winning team on the field.
That's such cowardly language. If it's true that the Pirates' owners are "pocketing big windfalls," say so. Don't blame it all on "various sportswriters," who everyone knows don't tend to be the sharpest tools in the shed. You're the business reporter, not me - so are they right? From everything I've seen about the Pirates' financial documents, those documents indicate that the Pirates' owners are not, in fact, pocketing big windfalls. Far from it. As far as anyone knows, the only money to come out of the franchise's profits was used to allow ownership to pay down taxes on those profits, and to pay off loans. Other than that, nothing has come out; the ownership is not paying itself.
I don't know anything about finance, and I'll be the first to admit that my eyes glaze over at the sight of a balance sheet, but as far as I can tell, this is not a story about anything the Pirates' ownership has done wrong. It's a story about how ridiculously hard it is to be a small-market club. Again, read this. The Pirates appear to have a mountain of debt. And they're not the only team struggling to make money. The Marlins, Rays and Angels aren't making money either. This is not about the Pirates' villainous ownership, unless you believe the owner's role is actually to donate tens of millions of dollars of his or her personal fortune, sort of like the Joker in Batman, but without the poison gas.
It's no surprise that non-Pittsburgh writers would get this wrong, but it's a shame that a lot of Pirates fans are getting this wrong too, because we really do have something to legitimately complain about. As far as I can tell, the numbers suggest that the Pirates simply can't afford to spend $80 million a year on player salaries. Even with revenue sharing, it's not possible with the current system. So they're doomed to a system in which they have low payrolls, then suddenly have a burst of good play with younger players, have increased attendance as a result, and only then are able to bump payroll into the $80 million range for a couple of years, at which point they'll probably have to tear things down and start again. We've seen this basic pattern with the Marlins, and we're about to see it with the Rays, who are poised to drop a lot of payroll after this season, when Carlos Pena, Carl Crawford, Pat Burrell and Rafael Soriano will all likely be off the books.
This means that the idea that the Pirates should simply bump payroll into the $70-$80 million range now, when there isn't the attendance base to do it, just isn't tenable. The Pirates have to wait until they have enough young talent to increase fan interest and attendance, and then bump up payroll - but again, probably only for a couple of years.
We basically already knew all this, but as far as I can tell, this glance into the Pirates' books just confirms that in the current system, there's a class of teams that are destined to struggle to scrape by, and the Pirates are one of those. If Major League Baseball took itself seriously as a competitive sports league, they wouldn't allow that - or at least they'd allow teams to get out of markets like Pittsburgh and Kansas City and set up shop in New Jersey (not that I'd want them to do this, obviously). The Pirates' books don't prove that the owners are evil. They prove that baseball needs a salary cap. This is what we should be screaming about. But, for some reason, it's so much easier to complain about what a jerk Bob Nutting is.
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In a nutshell
My conclusion was the same. The Pirates can do everything right, and win a World Series maybe. Once the core of any given team hits the open market, there isn’t a whole lot that can be done except start over without the sort of revenue stream that permits a team to compete with franchises that are willing to break the bank on a bet. Each may not win its bet every time, but each can afford the odd mistake. What they do, collectively, is strip your roster and leave you the draft picks to start over with. You get to compete one year of every half dozen, if you’re lucky. They get to compete every year. A salary cap evens the odds and forces all thirty teams to make the same hard choices. Revenue sharing isn’t going to fix any of this because the disparity in payrolls can’t be bridged with even the most generous agreement. By scaling the distribution of major league payroll, you eliminate the guarantee of a big payday and the chance to compete for a ring every year that makes the choice of Yankees or Pirates a no brainer for any player fortunate enough to have a choice. It is a system that guarantees a permanent underclass of the same teams, some of which may rise out for a year or two. With a cap, bad choices can turn the Yankees into a bottom feeder for a few years. My favorite epoch is and always will be the period from 1965 to 1975. No Yankees anywhere to be found. Nothing against them per se, but the brew that the owners’ greed and stupidity, combined with Marvin Miller’s brilliance and the advent of George Steinbrenner left the Pirates in a deep well for several decades, with only brief glimpses of the outside world. The only way this gets fixed is with a cap.
by RichieHebner on Aug 27, 2010 2:05 AM EDT via mobile reply actions
My favorite epoch is and always will be the period from 1965 to 1975. No Yankees anywhere to be found.
What was the salary cap in those years?
I’m not sure why the players should bear the brunt of creating “competitive balance”.
Notable that you picked an epoch ending in 1975 . . . when the reserve clause was struck down. The reserve clause was the salary cap; it enabled the owners to set and control salaries.
I’m sympathetic with your point that the players shouldn’t bear the brunt of “competitive balance”; that said, the players benefit from having a league big enough to support 30 major league franchises, and all of the attendant minor league affiliates below them. We don’t have enough huge media markets in this country to let every team look like the Phillies, much less the Yankees. The top 10 metropolitan areas in the US have a combined population of almost 81 million people; those areas account for 13 of the 30 franchises. The next 20 combined have a total population of about 57 million, and account for the other 17 franchises. There’s a big difference between Pittsburgh (no. 22, with 2.36 million people) and Philadelphia (no. 5, with 5.97 million), but they both provide the Major League Players Association with the same number of card-carrying union members. Unless and until that disparity is addressed through a salary cap – in addition to revenue sharing — the fundamental point made in the post above will remain correct.
It doesn't make sense.
Premise A) Some teams earn more revenue than other teams.
Premise B) This makes it difficult for lower revenue teams to win championships.
Therefore we conclude that the solution is to take money away from the players? I think it makes more sense to take money away from the larger revenue teams.
True, but...
…even taking away money from the larger revenue teams, which they are currently doing with revenue sharing, doesn’t have an impact. The Yankees basically print their own money due to the size of their market, television network and the fact that douchey teenagers from every non-MLB market from Bangor, Maine to Billings, Montana that wear a cap of a MLB team own a Yankees’ hat.
A salary cap does take money away from the players, but only the mid-range ones. The stars are still going to get paid tons, the solid players will still find coin in their pockets, but it will keep Randy Wolf and his career 101 ERA+ from getting $10MM per year, and that isn’t a bad thing.
the Yankees market...
is actually worldwide, not just the new york area. they are iconic, and their logo is recognized everywhere. its not just because theyre the yankees, its also because its New York. how many Pirates caps do you see in the far east??? just sayin.
I have seen
exactly one other person wearing a Pirates hat in the last 5 years or so. And even then he was walking on the footpath as I drove by at ~70kph. In that time I’ve seen countless people with yankees and dodgers paraphernalia.
It’s a style thing instead of fandom.
Also, it seems that Marlins execs got caught with their hands in the proverbial cookie jar.tsk tsk (sorry if it’s old news)
by BlindSquirrel on Aug 29, 2010 9:23 PM EDT up reply actions
It is
if you’re Randy Wolf, dues-paying MLBPA member.
You’ll have to break the union first. Good luck.
I’m not sure you have to break the union, so much as break the big-market owners. Right now, they have the best of everything: tons of revenue, lots of profit, enormous appreciation in the equity value of thier assets, the very best players . . . and a bunch of small-market chump owners who let them skim the cream off the top of the industry.
If the 17 franchises in markets below the top 10 MSAs (i.e., below Boston) banded together and threatened either to break off into a separate league with different economics, or liquidate, then we’d get the right answer across the board. The big market owners would have to restructure the entire industry, and the union would have to come to the table.
If the 17 franchises ... banded together ...
There’s your problem, right there.
My understanding of the CBA ...
is that 75 percent of owners have to approve it.
I’ve always thought it was crazy that the mid- and small-market teams approve a CBA that makes it nearly impossible to compete.
My favorite kind
The glare of the spotlight is harsh, and the pressure that success breeds immense. We revere our heroes, but expect much. And criticism can come as easily as praise.
Bishop
I’d disagree. I think the NHL and NFL salary caps show that the high-end and mid-level guys do quite well under a salary cap.
I think it’s the last few guys on the roster who get hammered.
And that’s going to happen no matter what the system.
Funny ...
But the NHL salary cap has generated revenue and increased salaries.
Baseball is the only union that buys into this falsity that a salary cap takes money away from players.
It evens the playing field so that you don’t have a Teix making $25 million and most other 1b making half or a third of that.
You need a floor to go with that ceiling.
And a little home TV money revenue sharing as well. Let the home team keep 60% of their television dollars and put 40% in a pool to be divided up among the other 29 franchises. This would by no means level the field completely, but big market teams would have less of an advantage.
"Never mistake motion for action." - Ernest Hemingway
Definitely agree on the floor
That’s why I like the NHL approach. You have a minimum that must be committed to players. At the same time, the large markets bought it because they truly are making enormous profits.
NBA also has a floor
and a soft cap, where you can go over to re-sign your best players, but if you go over the luxury tax, it’s much like the luxury that MLB now has.
I’m not aware of how the NHL is structured, but we could steal from the NBA and have something like $100m soft cap, $55m floor?, $120 hard cap? Any payroll between $100-120 is pooled up and divided equally amongst the teams under the cap. This would help those teams to pay for the floor payroll. The problem would be having decent enough players on every team to make it worthwhile to be spending $60m. You don’t want to be at $48 and have to give Joe Randa $12m just to meet the floor. I think one way to fix that is adjust how much rookies make. Bumping the minimum up to $1m or more should help.
The National Hockey League
has a hard cap and hard floor which are tied to revenue. Accordingly they can rise, but also can fall on a year-to-year basis. Therefore, you have to plan for the future and be careful to not over-commit yourself. Otherwise you end up with a situation like the Blackhawks just had to deal with — dumping a bunch of players from a championship team in order to remain cap legal. In sum, the system commits a fixed percentage of total revenue to the players. I think it is something like 55%.
That NBA system would certainly be an improvement over what we have now, even though I doubt that it would reign in the Yankees and their ilk much.
"Never mistake motion for action." - Ernest Hemingway
TV money is already technically included in revenue
I think it is 35% that is shared among all teams, not 40% as in your example.
But, the big problem is that the largest market teams own their own cable networks, and therefore can “sell” the team’s media rights for whatever price they wish to. The team then shows smaller revenue from that than should be due, but the team owners actually make the huge profit through the cable network as they keep all of the ad and subscription revenue, and that money is shielded from the revenue sharing plan.
That way, the Yankees and the Red Sox can post losses on the balance sheet. If anyone actually thinks the Yankees and Red Sox have lost money recently, I’ve got a bridge I’d like to sell you.
by MarkInDallas on Aug 27, 2010 11:51 AM EDT up reply actions
MLB already has a payroll floor.
The minimum salary times 25.
If you think that floor should be raised, that’s fine, of course. But it’s a separate issue.
Surprised Nutting fan ...
hasn’t suggested that as the Bucs’ future.
Vlad ...
Actually, I’m not sure you are mandated to have 25 players. I haven’t looked over the CBA in a long time.
But I remember MLB went with 24 players for a while.
I couldn't remember
I think that was the 1980s when they had the 24-man roster for a while.
But now that you say it, I remember that it was in the CBA talks.
I think what we need
is an approach that will compress salaries in the middle along the lines of the NHL, provided that the total player pool is fair (60%). If the union is truly fulfilling the mission of a labor collective, then they should want that to.
"Never mistake motion for action." - Ernest Hemingway
The year the draft started to the year the reserve clause ended.
The Yankees were on a level playing field with everyone else. Good times.
by IAPiratesFan on Aug 27, 2010 8:44 AM EDT up reply actions
Yes ...
but you leave out key factors:
1. There wasn’t a YES network paying the Yankees $100 million per year in the 1970s. The gate disparities between franchises made modest differences in payrolls. But a well-run franchise could overcome those issues in 1975.
2. You didn’t have salary arbitration.
3. You didn’t have free agency in 1965.
4. There is little evidence that the NHL “salary cap” is done on the back of players. In fact, a few guys at the top make less. The guys in the middle do much better. Ask players on the small market teams how a lack of salary cap is working out for them.
My favorite epoch is and always will be the period from 1965 to 1975. No Yankees anywhere to be found.
… what about 1982-1993… yankees missed the playoffs that whole decade as well… what’s more, take a look at who was winning the world series in that time: minnesota, kansas city, cincinnati, oakland, toronto… plenty of small market teams… and this was after the dawn of free agency!
by Captain Easychord on Aug 27, 2010 11:42 PM EDT up reply actions
A cap would not accomplish anything....
Go read Fangraphs for the full explanation, but all that would do is kill the international league market for acquiring players, as the Yankees and other big market teams would simply blanket and control the market for those players.
The way to cut into the Yankees huge advantage (and if you look at revenue and luxury tax and payroll, the yanks are true problem) is to put another team in new york.
Salary cap isnt the solution. It is a misguided notion said out of frustration by fans of smaller market teams.
by CabreraKilledMyChildhood on Aug 27, 2010 6:33 AM EDT reply actions
International market...
…would not be killed, but it would be changed. Every player, from every country, would be subject to the draft, not just the select group that is now. American, Canadian, or Puerto Rican kid? Draftable. Venezuelan, Mexican, Japanese or Dominican kid? Free Agent from day one. That makes the kind of sense that, you know, doesn’t. Why are some players forced into a situation where their bonuses are going to be hard-slotted (it’s going to happen), but others, wholly dependent on their country of origin, are going to reap larger bonuses and at younger ages?
And even more than a salary cap, MLB needs non-guaranteed contracts. That way, if the Pirates go out and sign a mid-range starting pitcher (think Randy Wolf, my personal favorite whipping boy) to a four-year deal and he either sucks or blows out his elbow, they can dump the remainder of his contract and only owe him his signing bonus. The large revenue teams would still have the advantage (barring a salary cap) of being able to pay larger bonuses than other teams, but the smaller teams could recover from mistakes and injuries that today cripple their payroll and rosters for years after.
And that is what makes the Yankees different than other teams; not that they have tons more money to spend (although that doesn’t hurt), but that mistakes and injuries don’t affect them in the same way that they do other teams. Nick Johnson not working out as DH? Trade crap fringe prospects to Houston for Lance Berkman to give the Astros salary relief. Andy Pettite has a wonky groin? Make a play for Cliff Lee. Sign Carl Pavano to a 4-year, $38MM dollar deal, during which he has a record of 9-8 with a 5.00 ERA and ERA + of 87 (and misses one full season with injury)? Still make the playoffs in three of those four years. They simply can cope with not having every decision they make turn out exactly as planned.
The NFL learned long ago that what was best for the league is 32 economically-healthy teams that could compete with one another on any given Sunday. Sure, the league has some perpetual dogs (Detroit, St. Louis, Cleveland), but even St. Louis was in the Super Bowl within the last decade or so, giving fans “The Greatest Show on Turf.” There are no “large revenue” teams from large markets dominating the league; the Jets were last in the Super Bowl with Joe Namath as QB and Los Angeles doesn’t even have a team. The NFL has surpassed MLB as “America’s National pastime” because fans in Jacksonville and Tampa and Cincinnati can go to training camp every summer with hope that this might be the year for their team.
And New Orleans
The NFL was able to do this because its owners stood unified to the point they were willing to put semipro teams on the field, and because it’s all football to football fans, and because the NFLPA was and still is a weak union that capitulated after a three-week lockout. The MLBPA has made some concessions but has generally outfought and outsmarted the owners at every turn, thanks to the brilliance of Marvin Miller, who showed the players just how much money suckers in a disjoined and disunified ownership were willing to throw at them.
Baseball will have to break the MLBPA to get anywhere near the relief we’re talking about, and I doubt you could get the owners to find the spine and the organization to pick a place for lunch.
You have two problems ...
You have the large market v. small market issue. And so far the smaller markets have been unwilling to stand up for themselves.
This has to change. They need to vote down the next CBA until you get more revenue sharing and a small minimum and maximum. It only takes, I think eight votes.
Second, you need to stand up to the players. The owners have largely given away everything in every CBA battle.
Look at the NFL and NHL. If they have to shut down the game, they do it. If they have to use replacement players, they do it.
But eventually the players will give in and take an NHL agreement.
The problem is that the owners don’t have to stomach for it.
Slightly OT ...
did the NHL teams have to pay the players already under contract during the lockout, or did they see the lockout coming far enough in advance that they didn’t deal in longterm contracts in the runup, or did they somehow get around paying existing contracts?
Just wondering at MLB owners’ willingness to pay, for instance, A-Rod $25 million to ride his exercise bike at home for a year.
Eh, no, I’m not really wondering.
Not a labor lawyer
But I don’t think the guaranteed contracts come into play during a labor shutdown.
Now if you use replacement players … you have to pay if the person has a guaranteed contract and crosses the picket line.
But I don’t think a lockout applies.
NASCAR is, at best, a sport-like substance.
In the same category as things like ballroom dancing and no-limit poker.
I can't watch no-limit poker
The guys from New York and LA always win. I prefer the North American Poker League, which has revenue sharing and a cap on bets.
NASCAR
is basically a traveling circus, and the circus is ALWAYS the big deal in a little town for the week it’s there. And the rest of the time it’s a big deal that everyone looks forward to.
NASCAR and all auto races bore me to tears, but I don’t make fun of NASCAR. That’s a cash machine. For generations it was pretty much the only big-league sport south of the Mason-Dixon line. It is Southerners’ sport, and they are damn loyal to it.
No small part of it is the drivers mostly return the loyalty. NASCAR is probably the most PR-driven major sport, probably moreso than the NFL. When the top drivers aren’t at the track they’re probably making an appearance at some car dealer or beer distributor, signing autographs and shaking hands and posing for pictures.. They’re the closest a well-paid … um, I’ll say athlete gets to being a regular guy anymore. They’re not freakish-sized human beings, like NBA and NFL players (and more and more, MLB). They’re close to NHL players in this regard. Imagine if your entire sport was run PR-wise like the Penguins. That’s NASCAR.
Interestingly
Country music has very much the same ethos – very driven by first-hand PR, if you will. Nashville has gotten better at creating megastars, but the slightest whiff of arrogance or self-regard by a country star is death.
Dolly Parton wears a wig to perform; she also wears a wig when she’s working in her garden, because you can see her garden from the street, and she wouldn’t want a fan driving by, hoping for a peek, to be disappointed.
“There are only three sports: bullfighting, motor racing, and mountaineering; all the rest are merely games.” – Ernest Hemingway
by twinpirate326 on Sep 4, 2010 7:27 PM EDT up reply actions
Disagree ...
See the NHL for how a salary cap can increase revenues and player salaries on nearly every team.
You don’t have such disparities between haves and have nots.
And the international market idea, I believe, has been discredited. How are the Yanks going to protect all these guys on their 40-man roster? Also, the Yankes have only eight position players. Why would top international talent keep signing if they have an all-star team?
I don't know that I'd credit that to the salary cap
The rules changes that came with it that really opened up the game probably made a big difference too
The glare of the spotlight is harsh, and the pressure that success breeds immense. We revere our heroes, but expect much. And criticism can come as easily as praise.
Rule changes would have been made regardless
Have they helped? Yes. Good point. But I don’t know of a study that has ever shown a rule change generating hundreds of millions more in revenue.
The NHL is in much better shape because of the CBA.
The rule changes didn’t lead the Pens to bring another Cup home. It was a CBA that allowed them to compete and generate more revenue.
The Yanks
could just deal 3 or 4 of those guys each year if they’re out of options. Thus, consolidating talent to have an even better team. Also, the players would sign because of $$$. When you’re 16,17,18, who cares that you’re a 3B and 34year old Alex Rodriguez is blocking you? It will work itself out by the time you are 23 and ready to come up… or you’ll get dealt away for Roy Halladay.
I don’t see how a worldwide draft doesn’t fix that problem.
Not sure what Fangraphs post you’re talking about.
by Charlie Wilmoth on Aug 27, 2010 5:47 PM EDT up reply actions
Baseball's business model is broken
Thank you Charlie, Richie, Bishop, et al. As the old saying goes, “If something can’t go on, it will stop.” And baseball can’t go on like this. I’m sure the Union and agents like Boras and Plummer will fight a salary cap tooth and nail. It may not be feasible, or even the best or only answer, though it seems to have worked for other sports. Given past history, even some of the deep-pocket owners may not get on board.
And why should players bear the brunt? Because taxpayers are paying to build baseball’s places of business — places that used to be, and should again be paid for by the club owners — except they can’t pay for them because they’ve got too much money tied up in player salaries.
Lino Donoso
Thanks for the thanks, but...
… I disagree with your assertion that the owners can’t pay for ballparks because they have too much money tied up in player salaries. Carl Pohlad, former owner of the Twins, was a billionaire a number of times over, but he was tighter than the paint on the walls with his money; only since his passing has the Twins’ payroll increased to average levels, and they still got a new field on the public dime. Jeffrey Loria, owner of the Marlins, has recently been outed as having deliberately lied to the municipal officials in Florida about the state of the team’s and his personal finances in order to get a new ballpark built at taxpayer expense. The Steinbrenners could have paid for the new Yankees’ ballpark with the change they shook out of their couch cushions, but they got the public to pay for it.
This happens because cities are afraid the teams will leave if they don’t give them a new park, and the owners know it. There is great pride in being a “major league” city and great shame in losing a team; cities that lose teams rarely get a replacement in the future, and there is a definitive impact on the public good when a team leaves. Think how many nights the restaurants and bars around Pittsburgh’s Uptown section would be empty if the new Consol Energy Center had not been built and the Penguins had left town; I read a fascinating article during the NHL strike about the tremendous impact it was having on the city of Buffalo, already struggling but exacerbated by a loss of 40 nights of activity.
Funny thing is, there aren’t many, if any, viable options for owners to move a team to. Portland, Las Vegas, Charlotte? Pros and cons with each, none of which have a MLB-ready park, so the public teat would need to be suckled there just as much as in the current city those teams reside in.
Fact is, the owners could, in most cases, bear either a greater portion or the entire brunt of the new ballpark costs. They just choose not to and push the public to support it, because there is much more to be lost from a team leaving town than just civic pride.
Yeah, baseball teams could absoltuely build their own parks. Part of the reason athletic stadiums seem so expensive is because they’re being built with Other People’s Money. The incentive to build what you need instead of some grand palace to wow everybody with isn’t really there unless your business is the one writing the check.
However, study after study has shown that the local impact of athletics is minimal. All sports do is shift entertainment spending from one thing to another. If there were no Pittsburgh Penguins, people would just take the dollars they would have spent there and go to more Pirates games, or movies, or bars, or restaurants, or whatever.
The entertainment dollars would be shifted, but not the way the City of Pittsburgh wants. Without the Penguins, folks would have no incentive to come to or stay after work Downtown on a Tuesday night in January, so they would either remain in or return to the suburbs. They will eat at the Olive Garden on Route 22 in Monroeville instead of at the Steelhead, and they will go to the movie theater on Route 30 in North Versailles; there will also be no incremental parking revenue for the city, taxes on the team or taxes on the eating and drinking establishments. The total amount of dollars spent on entertainment may not change all that much, but Pittsburgh does not benefit in that scenario, only the suburbs.
As for going to more Pirates’ games, that may be true, but that still leaves a lot of empty restaurants and bars in Downtown from October through March, and that industry relies on sales 12 months a year, not just when the Pirates are playing. It would definitely have an impact on the overall financial health of those establishments throughout the course of the year.
I don’t disagree with your post at all, although I would point out that what it’s really revealing is the structural defect in the Pittsburgh region, namely its fragmentation into separate taxing jurisdictions. If the City of Pittsburgh were coextensive with the County of Allegheny, or better yet with most or all of the entire seven-county Pittsburgh MSA, then there would be little or no leakage in displaced entertainment spending, and we’d have more of an apples-to-apples comparison.
And this is largely a function of the old-time mentality of the Pittsburgh area. You see it when the Pittsburgh Public School district wants to close a neighborhood school that has dwindling attendance and can no longer justify the expense of staff, utilities, etc., but the parents of students and alumni of the school still in the neighborhood (often one in the same) come out and howl about what a tragedy it would be if the school closed and how damaging it would be to the identity of the neighborhood if their kids had to bus a few extra miles to another area.
Don’t get me wrong, it’s not just wthin the city limits. Look at the court-ordered creation of the Woodland Hills School District, when the haves in Wilkins and Churchill were forced to merge with the have-nots in Turtle Creek and Braddock because their individual districts could no longer survive due to changing demographics.
Other areas, particularly in the Bible Belt and out west, have embraced the concept of consolidation, realizing that by banding together and eliminating duplication of civil services, more money can go to benefit the entire community at large. Here in Pittsburgh, everyone wants to cling to the notion that their little corner of the world is special and God forbid someone tell them it’s not.
You come up with that on your own
or read Brian O’Neill three times a week? ;-) He beats that drum a lot.
I can't think of the last time I read O'Neill...
…so I will take credit for the above screed.
I have family that lives in Nashville and we’ve discussed this on occasion. They can’t believe how antiquated Pittsburgh is and how much we cling to our old ethnic neighborhood identities. I tell them they don’t have that problem because everyone south of the Mason-Dixon line falls into one identity category, that being “redneck.”
They don’t like that much, which is probably why I don’t get birthday or Christmas cards.
+1
Actually, though, the strength of City neighborhoods gives the lie to the idea that, unless Homestead, West Homestead, and Munhall all maintain separate mayors, then they will lose their distinct identities. It’s completely understandable human nature, but it’s woefully mistaken.
Actually, I just remembered – the Pens briefly threatened to decamp to Southpointe (before KC or OKC or wherever it was became their bargaining chip) in order to put pressure on the city. It’s a fucked-up dynamic.
I don't know how they solved this problem
when they consolidated places like Phoenix, but the hold-up in Pittsburgh has to be the fact that when you start consolidating, lots of city council people and police chiefs and other small-time power brokers lose influence, not to mention their jobs. Who willingly gives up power for the greater good anymore?
Not that the populace of those tiny townships is without blame. They may like their neighbors across the street who live in another microtownship, but they don’t want anyone “over there” determinign what their tax rates are going to be.
It's driven by state law
After the “Rape of Allegheny” (when Pgh absorbed the half-sized City of Allegheny – North Side, that is – by a straight majority vote), state law was changed to make it much, much harder to consolidate munis, with the result that it basically doesn’t happen even when most people want it to (aside from other roadblocks, there are hoops to jump through like the votes have to be at the exact same time, with the exact same wording, and the least discrepancy voids the vote; since you’re talking 2 separate munis, perfect coordination can be difficult).
There’s also the self-interest concerns you raise, but that’s traditionally been balanced by the self-interest gains by the winners – IOW, Onorato’s ambition to rule the County and City together matches Ravenstahl’s desire not to lose his job. If the presumptive winners have enough juice to win the vote anyway, then the presumptive losers don’t get much say. But the bottom line is that, in the SunBelt, the places being absorbed usually have undersized gov’ts and services anyways (after all, 30 years ago they were just farms), and so there’s a lot less inertia and incumbent power.
What I don’t understand is why places that are losing their police departments aren’t begging for consolidation.
A lot of the time...
…they can mooch off of neighboring areas for essential services, without having to pay their own freight.
Look at Plum.
Not to mention
That the “growing” cities of the Sunbelt were growing the old fashioned way – by annexing land. Every time you heard someone compare Pittsburgh’s population losses with the gains of Sprawlville, CSA, they were comparing a city that hasn’t expanded its boundaries in over 100 years with a city that’s grown (literally) 50X in the past 50. If Pittsburgh had grown in the way that Atlanta, Houston, and Phoenix have, Cranberry and McMurray would be within city limits, and we’d be the #10 city in the country, right behind Dallas.
The region would still be #20 or so, but it would be much more competitive (no more Westinghouse playing Monroeville against Cranberry to get the sweetest deal).
Of course, "Dallas" actually extends beyond its borders, too.
Richardson, Garland, Plano, Irving, Arlington, Fort Worth etc are either large Dallas suburbs or cities well within the geographical distance of Cranberry. The DFW area holds 6.5 M people.
by MarkInDallas on Aug 27, 2010 12:03 PM EDT up reply actions
Right
That’s why I said the region would still be small (by MLB standards). But the city size is depressed relative to cities that are allowed (by state law) to expand their boundaries. Pittsburgh’s not even in the top 50 municipalities* by population, but the MSA (or, relevant to this discussion, TV market) is up around #20.
Civic pride
Yes, but does it make it worth the cost of paying for the stadium for those who have other uses for their money. Unquestionably, the case for public investment has been and will continue to be made. I just have the feeling that things are changing and that taxpayers are about to say — to paraphrase that great political economist Barack Hussein Obama — “at some point you’ve made enough public investments.”
And personally, I don’t think relocation is a viable option. I’m thinking more of contraction. The next CBA negotiations are going to be a doozy.
Good luck, my friend, and thanks for your comments.
Lino Donoso
The public HAS said that.
IIRC, through the years in places like Seattle and Minnesota and Pittsburgh, voters given the chance to express what they want said either they did not want to pay for new stadia or the votes were extremely close in favor. And in all cases the politicians went over their heads. And I wouldn’t bother to check on this, but I’m guessing the voters, as voters tend to do, sent those same politicians back into office at the next election.
Pretty much
Although it’s worth remembering that the 1997 RRI passed in Allegheny County – it was the outlying counties, with their inbred resistance to any kind of association with the Big Scary City, that refused to chip in, even as 75% of the revenues would stay at home (and 25% of County revenues would also be sent outward).
portland and san antonio
but not charlotte. they finish last in AAA attendance almost every year. thats ACC basketball and nascar town, buddy… yeeeeeeeeeeehaaaaaaaaaaaaaahhhhhhhhh!!!!!!!!!
what are the last 4 words of the national anthem to a redneck?
gentlemen, start your engines…
thank you, thank you… I’ll be here all week. Don’t forget to tip your waitresses and bartenders…
You do realize that those types of jokes are racist, right?
I can’t understand why those types of 50-year-old sterotypes are considered acceptable.
Hmmm...
You may be thinking of Native Americans? Don’t think that’s what redneck means.
by MarkInDallas on Aug 27, 2010 4:58 PM EDT up reply actions
Baseball's business model is not broken
… not when the game saw record revenues of $6.6 billion last season… and even if the current state of the finances means that some teams can compete every year while others can only strive for a championship once or twice a decade, even THAT may not be bad for business… we can all imagine sellouts at pnc park should the pirates field a playoff team… how much does the losing make us appreciate a winning team? do the cycles drive the interest? new york may have enough population to fill the seats at yankee stadium no matter what, but down in atlanta, I guess they got tired of winning divisions annually… and when that happened, the braves stopped selling out their playoff games…
by Captain Easychord on Aug 27, 2010 8:45 AM EDT up reply actions
Well ...
a few problems.
1. Baseball revenues are at high levels. Does that mean they couldn’t be higher if the sport were run better? I’d argue that a strong commish and real CBA would generate more $s.
2. Baseball’s demographics are horrible. They are like they local newspaper. Older people. You don’t have nearly as many kids playing baseball. You don’t have nearly as many young people going to games.
Baseball better change fast or revenues are going to fall. Dramatically.
1) baseball revenues could also be higher if the yankees, red sox, cubs and dodgers were in the world series every year… one man’s “run better” is another’s “run worse”… besides, that’s all speculative anyway… point is, revenues are higher now than they’ve ever been… that has to be a sign that mlb is run at least close to as well as it ever has been…
2) I’m not sure what baseball’s demographics are… I really have no idea, so if there’s actually numbers out there to back that up, I’d be happy to take a look… but from my experience, kids are turned off of baseball because baseball is boring… they’d rather be playing exciting, action-packed sports like lacrosse (which was much more popular than baseball at the new jersey school that I briefly attended)… my younger brothers haven’t played baseball in years for the same reason…
by Captain Easychord on Aug 27, 2010 11:23 PM EDT up reply actions
Well ...
you can look at other league’s revenues and make projects. Are they exact? No.
But clearly only about 10 teams do well under the current economic system. That’s not true in the NFL, for example.
Just my perspective, but I’d say using revenue to judge MLB management (and Selig) would be a mistake.
Also, here’s some research on baseball demographics: http://www.sportsbusinessdaily.com/article/119720.
Go to a game, though, and look around at how many 50-year-olds there are.
Hence the reason that MLB does poorly in national TV contracts.
Yes it is
What is baseball selling? I maintain it’s the competition between and among teams; the opportunity for fans to see well-played games, and their favorite players.
Ideally, baseball would be funding its operations from all sources of revenue without taxpayer subsidies (see discussion of publicly financed stadiums above). I understand this is not the case for some reasons also discussed above. As the link provided by Charlie indicates, The Pirates and other small revenue teams do not have the financial resources to consistently field competitive teams. They can’t control the most talented players they develop. I understand also that other factors play a part: poor management (read Pirates under McClatchy), bad luck (injuries), sources of revenue available to some but not others, etc. Some people may be willing to pay to see the Washington Generals take on the Harlem Globetrotters but what they’re paying for is entertainment, not a competition.
Under the current business model the risk/reward balance has swung in favor of the players and the deep-pocket teams, just as it favored the owners under the Reserve Clause. I understand that the Players Union, agents and even some owners may resist changes. They have a fiduciary duty to do so.
But in the end, it all boils down to what the customers — the fans (even sponsors) — are willing to pay for. In the end, baseball is a business, even of a unique kind in which the customers have an emotional investment in the product, brand or team, as well as a financial one.
To my mind, all parties have an interest in the long-term health of baseball. In my opinion, baseball’s long term health is based on genuine, arms-length competition among the franchises. It’s been stated above that the Union won’t stand for a pay cap or different rules about player control. It’s also been said that if something can’t go on any longer it will stop. Let’s see what hard negotiations among creative minds will bring.
Lino Donoso
by Lino Donoso on Aug 27, 2010 11:11 AM EDT up reply actions
the pirates have been losing like it’s their job all the time for the last 18 years… during the majority of this time, everybody has ‘known’ that the yankees have been the one team to beat… the team with all the advantages… yet people still come out… clearly, the customers continue to be willing to pay for the product… how long does this status have to continue for the effects to take hold and affect revenues? so far, it hasn’t…
by Captain Easychord on Aug 27, 2010 11:31 PM EDT up reply actions
Revenues
You could argue by looking at the Pirates’ books that the effect has already occurred.
Just because a few large market teams are thriving does not mean the industry is.
In fact, look at how many teams have cut payroll dramatically over the past five years.
Why would the players union accept these changes? The current system guarantees leverage to high performing veteran players. The only way I could see them agreeing to make any concessions, is if the owners agree to lower the years of control teams have over the players (ex. from 6 to 4), which could also hurt the small market teams.
by Danatural08 on Aug 27, 2010 7:32 AM EDT via mobile reply actions
Yeah
The next CBA will likely be about the MLBPA and small revenue teams battling the large revenue teams to try and redistribute a larger piece of the pie to the latter (and , therefore, to the former). There won’t be a salary cap as long as the MLBPA is around.
This is part of why teams like the Pirates need to show that they are willing to spend money on players, if only they had the money to spend. The players won’t really go to bat for the small revenue owners if they believe they’re all going to pull a Loria and pocket what the CBA wins them.
Well ...
there are only a handful of jobs on the high-revenue teams.
The union represents all players, not just those in large cities.
Don’t you think that the Pirate players, for example, can see how they’d be much better served by an NHL style CBA?
Don’t you think that the Pirate players, for example, can see how they’d be much better served by an NHL style CBA?
No, I don’t think they can. The NHL players couldn’t see it either, they had to be locked out for a year in order to accept the salary cap. For historical reasons, the player’s union is not going to trust the owners to deliver a certain percentage of revenues to the players. They believe, not without justification, that the owners will cook the books to screw the players out of their fair share under such an arrangement. The MLBPA trusts the market, and only the market, to give the players their due.
Maguro
I don’t disagree with your comments.
But if you look at the comments from players on small market teams, you can see a lot of frustration with the CBA.
But your posting on trust is a big one. It’s terrible and with good reason. Large markets don’t trust small markets. The agents don’t trust the owners and vice versa. The commish is a former owner and not more of a mediator.
Those are enormous issues to overcome. But an NHL style agreement would help most players, I think.
Looking...
more and more like…the Pirates losing streak will stop at 19 seasons…temporarily. I agree with a few bloggers that the release of the financials of 5 or 6 teams is setting things up for no baseball for the 2012 season.
Disagree
There is no incentive for the owners to lock out the players, they’re all making some money and the franchises are appreciating in value even if the playing field isn’t perfectly level. Everyone remembers 1994 and the big-market owners, who already dislike writing welfare checks to the Pirates, Padres, etc., are not going to damage their very profitable businesses in order to achieve better competitive balance.
Agreed
Everybody’s making money….no one’s turning off that faucet.
Santa Roberto Clemente
Ora Pro Nobis
FireRickReilly
Lockout
I’d hate to see a lockout. The last time MLB bungled it by ignoring basic labor law.
But if you want to be taken seriously by the union, as in the NFL and NHL, you have to do it.
It makes no sense to me why the small- and mid-market teams would continue to sign onto a system that makes it difficult at best to compete.
Because last time, the big revenue teams were able to successfully frame the issue as “owners vs. players”. This time, the battle needs to be “small revenue et vs. large revenue”. The issue here is not at all player salaries, and whoever tries to frame it that way will lose the CBA because they will lose the players. The issue is that a handful of teams rake in tons more $$$ than the other teams do.
In addition ...
it’s becoming only a handful of players who truly thrive under the CBA.
You only have so many Yankees out there throwing around $100 million contracts.
It’s great if you are a guy getting that Yankee deal.
But you have lots of guys, equally talented on mid-market teams, waiting until March or April to sign for much less.
This just shows why you really do need trust and a partnership. Otherwise, you have an agreement that serves the large market players and owners well.
And everybody else … tough luck.
This
We’ve seen more and more decent (3-4 WAR) position players getting essentially frozen out of big contracts, and it’s in large part because the “market” is defined by a relative handful of big contracts, but there aren’t enough of those to go around (pitchers are in a different circumstance, due to the perpetual shortage). Adam LaRoche is better served by a world in which 30 teams are spending between $60M and $120M than the current one, where only ~10 teams can afford a big salary for a guy who will be helpful, but not a difference-maker.
That said, the players (with justification) suspect collusion rather than simple imbalance, and so their ire is directed at all owners, and not the ~10 that thrive under the current system.
This whole discussion
makes me sick. I love baseball and try hard to just focus on the Pirates path to contention. When I look at the bigger picture I wish I could abandon this sport forever. In reality, we a rooting for a doomed franchise. Not because of the Nuttings, but because of our market and the disparity of revenue in the sport.
As Bishop said earlier, the high revenue teams can make multiple mistakes and afford to get high priced replacements when they need to.
The pirates have to perfect year after year when selecting (through the draft and trades for prospects) largely unknown commodities. High revenue teams can wait until free agency to make their decision if someone is good enough to join the squad. And after arbitration is finished, the players we worked so hard to select and train leave for the silly saleries in New Your and Boston. Or, they never developed, and we waited years someone to develop while others were taking free agents to fill holes where developmental players now rest.
Best case scenario is the Marlins mold. Build from scratch, win the World Series and dismantle the team. Wash, rinse repeat.
I want to have players I can be attached to dammit!! If the Yanks can keep Jeter for 25 friggin years, why can’t we keep someone around for 10?
Not a salary cap proponent
I have a lot of trouble with the whole salary cap thing. (Of course, “salary cap” is the wrong term. What people really want is a payroll cap, but I’ll leave that aside.) To begin with, looking at that as the solution to MLB’s competitive balance problem is about like counting on aliens landing and giving us an inexhaustible clean fuel supply to solve our problems with dependence on fossil fuels. But I also don’t think it’s workable in MLB.
The biggest problem is the colossal revenue disparity. The NBA and NFL have mostly centralized broadcast revenues, MLB doesn’t. The problem comes in with the question of where to set the cap. To set it low enough to level the playing field even very approximately, you’re going to have to set it a little over $100M. That means you’re requiring the Yankees to take an extra $100M or so in profit, forbidding them from spending it on their product. Without launching into a paean to capitalism or anything, I’ll just ask, Can anybody really see that as a healthy thing? Can anybody see manageable labor relations existing in a system that basically enforces a collective pay cut of that size (much larger, of course, when you add in forced profits for the Red Sox, Mets, et al.) on the players? I don’t see how a cap is workable unless MLB first addresses its revenue disparity.
There’s also a fundamental difference between baseball and the other sports because of the fact that baseball is primarily a game of skill and not athleticism. Baseball players have a longer “lead time” before they reach the top of their games. Some of that occurs in the minors, some in the majors. Even if you get rid of the current rebuilding model of complete teardown, rebuild, etc., there’s still more lead time in fixing a struggling team due to the longer time it takes for young players to get acclimated. During that period, a rebuilding team naturally will have a low payroll. I just don’t think a cap system will work well unless all teams stay relatively near the cap. The volatility on the labor front will be too great if you not only prevent teams from spending large portions of their profits on improving themselves, but also allow some teams to spend well under the maximum. And if you have a floor that’s up close to the cap, you’ll prevent rebuilding teams from doing what they need to do from a baseball standpoint. The end result will be very much in line with the people who (without being honest enough to put it in these terms) are demanding that the Pirates waste lots of money on second- and third-tier veterans who’ll hamper their efforts to improve, just for the sake of spending money. In the end, the cap will drive baseball decisions as much as the revenue disparity does now.
by WTM on Aug 27, 2010 11:32 AM EDT reply actions 1 recs
Never thought about it that way.
It would seem liek a mulit year cap and floor would be needed to facilitate the necessary rebuilding through the minors. I feel like that sort of system would become so complex and filled with holes that it wouldn’t be worth the trouble.
by Wizard of Woz on Aug 27, 2010 11:44 AM EDT up reply actions
I think you could do a cap of sorts, but I think it would have to be combined with a pretty complex system of revenue sharing and payments into some sort of central fund that would go directly to player compensation independently of individual player contracts. The focus couldn’t be simply on limiting salaries, which means MLB would have no interest in it.
Either that or get rid of YES, NESN, etc., and centralize all broadcast revenues, which is even less likely than the alien scenario.
You are right
I didn’t have time to do my post justice, so it ended up a bit reductionist. A cap would have to be part of a broader package of reforms, and pooling revenues is a big part of it. My broader frustration is that the owners’ greed and stupidity for decades has led to a pendulum swing that has damaged the game for a broad swath of the game’s fan base. To make all if this worthwhile for the fans of 30 teams, you have to find a way to rebalance the economics of the sport. How it is done us of less moment to me than that it be done.
by RichieHebner on Aug 27, 2010 11:41 PM EDT via mobile up reply actions
Baseball stewards
I said about a decade ago that baseball had the worst owners, the worst commish, the worst players union and the worse umpires union.
Except for the change in the leadership of the umpires union, I’m not sure much has gotten better.
They have hampered a great sport.
Why not launch into a paean for capitalism?
Maybe the problem is all the welfare itself, which creates a kind of negative incentive for improved performance. The Bucs desperately wanted a new stadium, and got it by proving that they couldn’t compete without it.
They wanted revenue sharing, and got it by proving that they can’t compete without it.
In 2008, they got $40-45 million in non-naming rights stadium revenue (gate receipts plus concessions plus sponsorships/ads and luxury suites) and around $18 million from local broadcasting. Those numbers are not fixed. The broadcasting ratings will be heavily, hugely dependent on performance, but will only move over time, since I assume they have long-term deals in place. The stadium revenues will move up or done more quickly, but they will also reflect performance over time.
If, on the other hand, the ownership feels like it can generate X many millions of dollars worth of public sympathy (increased revenue sharing, increased public financing) for every year of continued sucking, then we, as fans, are doomed.
I’d say let them sink or swim in the harsh world of capitalism. If they can’t make money, then they’ll need to sale the team.
by RafaelBelliup on Aug 27, 2010 11:47 AM EDT up reply actions
I don't think that the capitalism works here
It is not 30 teams competing like 30 businesses compete. Apple would love to be able to drive Microsoft out of business. The Yankees would not like to drive the Orioles into contraction. This is based on giving the fans an opportunity to have thier team compete, every once in a while, for a championship.
by Wizard of Woz on Aug 27, 2010 11:52 AM EDT up reply actions
it's much more socialist than capitalist
they “are spreading the wealth around” Mr. Joe the plumber.
by hilltoppeer on Aug 27, 2010 11:54 AM EDT up reply actions
Well, Joe Sheehan’s (and others’) idea is to base revenue sharing on market potential, not actual revenue. That seems so obvious to me that I can’t even imagine an argument against it, if you’re going to do revenue sharing. Clearly, incentive needs to be a central tenet, but MLB has no interest in that. In fact, it’s ironic that McClatchy was on the labor relations committee and made a big deal about how he was going to use that to lobby for a “fairer” deal for the Pirates, but he was probably the first to sign on the dotted line as soon as the prospect of a check was presented.
WTM
I think building trust with players and working together to build and share revenue would be a terrific start.
We differ on the salary cap issue. I think an NHL style system would work fine in baseball.
But you make a terrific point on KM. I remember him popping off on how the small market teams weren’t going to sign off on any deal that didn’t level the playing field.
Well, maybe not.
Edit
This: “The stadium revenues will move up or done more quickly, but they will also reflect performance over time.”
Should be: “The stadium revenues will move up or down more quickly, but they will also reflect long-term performance over the long haul.”
by RafaelBelliup on Aug 27, 2010 12:00 PM EDT up reply actions
"I’d say let them sink or swim in the harsh world of capitalism."
If you really want to do this, the first step is to get rid of the antitrust exemption, so that teams can relocate wherever and whenever they want. That’d probably put three or four more teams in the metro area of large cities like NY, LA, and Chicago, cutting into the revenue advantages of the clubs already there and bolstering the revenues of the relocating teams.
Of course, under that scenario, we’d probably be one of the teams moving. So it’s maybe not the ideal solution from our perspective.
Not sure about that. Wouldn’t the current teams have to agree to allow another team in their market. I seem to recall that Angelos had to be appeased to allow the Expos to move to Washington. I’m too lazy to google it at the moment.
Not what the antitrust exemption does
Vlad, I don’t think the antitrust exemption prohibits MLB teams from MOVING from one city to another. MLB does that. By removing the antitrust exemption, you could allow a new LEAGUE to form and establish additional teams in cities such as NY, Boston, LA, and Chicago.
I think additional teams in NY would only make matters worse for the Pirates. You would create an even greater arms race with the Yankees than you see today between NYY, NYM and Boston.
The antitrust exemption doesn't prohibit relocation, as such.
But it does allow MLB to determine whether or not its teams are allowed to relocate to any given market. Or that’s MLB’s position on the issue, anyway – it’s never actually been tested in court.
[More here<?a>.]
Interesting read
That’s a cool story, and worth a read.
So antitrust exemption gives MLB iron clad protection to enforce whatever it wants to do with the owners. But as this paragraph points out, teams still wouldn’t necessarily be able to move anyway. Regardless, I do think that more teams in NY would actually hurt the Buccos rather than help them.
…..MLB’s presumed exemption may shield it from owner antitrust challenges and make it more difficult for teams to move. It should be noted, however, that where such moves are not in the public interest, team relocations could be prevented under a rule-of-reason defense even without an exemption.
If anyone who wanted to could put a team in New York
Then there would be 3 to 5 teams between New York and New Jersey. And that would be a good thing for the Pirates, because that would dilute the dollars being spent on any one team.
It would also be a good thing for New Yorkers, because then they would have much more choices, cheaper ticket prices, and actually be more apt to see one of the New York teams in the playoffs or World Series.
It would be a good thing for MLB as well because as a whole, New Yorkers would actually spend more money on MLB than before.
The only thing is that it would be worse for the Yankees and Mets.
But, that right there is where the whole free market argument of allowing teams in small markets to operate with only their own revenues.
The MLB economic market is skewed so strongly towards the large cities because of territorial rights that it makes the argument that every team should fend for itself completely worthless. If you are going to have territorial rights, then you are going to have haves and have-nots based on the inherent possibilities of those territories.
Because the large market teams have an inherent advantage from receiving these monopoly rights, they should also be forced to pay reparations to those teams inherently hurt by monopoly rights.
by MarkInDallas on Aug 27, 2010 5:13 PM EDT up reply actions
I don't know whether you understand this or not
But anti-trust regulation is trade regulation. In pure laissez faire capitalism, there is no trade regulation. So the fact that baseball is free from this impingement on capitalism does not mean that in a pure capitalist state it would not be free from it.
Just a technical point, but you seem to like those kinds of points.
My point was that it would be better for us if they were forced to work their market — albeit one allocated to them by a cartel — for better or worse, and not receive subsidies and give-aways based on their poor performance on the field and in generating revenue from their market (two closely related things).
by RafaelBelliup on Aug 27, 2010 4:25 PM EDT up reply actions
OK, how about this?
Just throwing some things out: good, bad or completely ridiculous. Others have mentioned some of these.
The objective is to even the competition and re-balance finances among big, medium and small market teams. (See below)
No payroll cap; no arbitration as presently constituted (amateurs deciding between high-ball and low-ball offers); no revenue sharing, and no contraction of small-market teams.
All players amateur or pro subject to a single international draft for negotiating rights. Draft slots tradeable as in other sports. Clubs get one additional year of player control.
Upon free-agency, any team can sign any player for any amount but signing club must pay a “development fee” of 50% of the total of signing bonus and total contract salary (see below) to the player’s former club. Replaces revenue sharing. There’s an incentive to find and develop talent, and value it properly, but some compensation if another team outbids you.
Major league contracts to be divided between irrevocable signing bonuses and revocable performance contracts. If a player wants injury protection, let him buy insurance (hard, I know). If a player quits on his team ala Manny or Derek Bell, tough. If, as above, the signing club has already paid a bonus based on let’s say three years of salary and he quits after one year, tough, both the player and the signing club lose. A smart operator would likely not be offering more than say a three-year contract
Unless all sources of revenue (and costs) are going to be thrown into a single pot and divided equally among the teams (I know): Realignment into Large, Medium and Small-market teams.
Large Market: All six New York, Chicago and Los Angeles teams plus Boston, Philadelphia and St. Louis. Total 9
Medium: Minnesota, San Francisco, Milwaukee, Colorado, Detroit, Atlanta, Texas, Houston, San Diego and Seattle. Total 10
Small: Cincinnati, Arizona, Washington, Tampa Bay, Baltimore, Kansas City, Toronto, Pittsburgh, Oakland, Florida and Cleveland. Total 11
Teams in the same class play each other all season. It’s unbalanced; we have unbalanced divisions and leagues now. It destroys the traditional NL/AL setup. Yes, and so did interleague play and the moves of the Browns, Braves, A’s, Senators and Brewers. We still have traditional rivalries and more important, these teams would be competing with each other on a more level playing field. Scheduling problems I know.
The playoffs: One team from each class plus the best overall winning percentage from any non-division winning team. Anything can happen in a playoff.
I’m going back in my hole now.
Lino Donoso
by Lino Donoso on Aug 27, 2010 12:44 PM EDT up reply actions
MLBPA's never going to agree to it.
The union would kill the league before letting something like that happen.
Also, I hate the idea of breaking down divisions by market size.
MLBPA's never going to agree to it
Yes, and after they kill the league (MLB) then what? The realignment would be radical, for sure. How about this: Instead of the owners sitting back on their heels, wondering how the players union/agents are going to screw them this time; and being forced into the bad guy position of threatening a lockout. . .Attack! Make the economic case that is becoming all too obvious; that things can’t go on this way. Propose solutions and let the union be the one defending the status quo.
Lino Donoso
Yes, and after they kill the league (MLB) then what?
A new league forms in order to take advantage of the nation’s demand for baseball-based entertainment, and business goes on as usual?
I think a soft salary cap system, with a floor could work.
You would raise the minimum contract to make up for the salary floor situation you suggested. You would also need some sort of hybrid of NBA/NFL rules for free agency to allow teams to keep their homegrown talent more often. Whether that is restricted free agents, allowing the home team to offer more $ and years, or the ability to “franchise” a player, I’m not sure. An international draft is a given, with slotted bonuses, compensation picks for players lost in free agency and the ability to trade draft picks as well. I’m not sure how it would all work out but I know someone smarter than I could work it all out.
There are some problems with the premise of many posts
First, there isn’t a “permanent underclass of a few teams.” There is a permanent underclass of one or two teams — the Pirates and maybe the Royals.
Second, it isn’t at all clear from any of the books that the Pirates current stadium-based revenue reflects a permanent state of affairs, or even a permanent state of affairs for a team with one or two bad seasons strung together, rather than 18 bad seasons.
Third, it might not be so bad for fans of the Pirates to endure several rebuilding years for every one or two competitive years. There is the pleasure-pain principle to account for, which basically means that Yankees’ fans’ suffering from missing the playoffs in one season roughly equals two years of cellar-dwelling for Pirates’ fans. Consider, on the upside, how much excitement some are experiencing simply by looking at the roster of minor league pitchers in the Pirates’ system and imagining the possibilities. The wretched feeling we’re experiencing may be being misattributed to the fear that the Pirates will have to dismantle and start over after they become good, and may actually stem from the fear that they will continue to suck and never be good.
Fourth, related also to the pleasure-pain principle, even if there is great disparity, that does not encessarily make a bad business model. There is huge disparity in college sports, yet college sports thrives and fans of teams that are giving it their best but still can’t recruit MacDonald’s All-Americans every season still find something to cheer about.
Baseball in Pittsburgh isn’t “doomed.” It’s thriving. The Pirates aren’t doomed to forever suck. Other small-market teams have proven this. They will continue to “suck” — by which I mean never threaten the playoffs — only so long as we continue to make excuses for their sucking.
I am ambivalent about salary caps. They only seem to work when they form positive pressure on teams to spend up to or near the salary cap. The only kind of cap that the small-market teams would accept would be a very low one. The only kind of cap that the union and teams like the Yankees would accept would be a relatively high one. It seems very unlikely.
The owners in Pittsburgh have always wanted us to think is that there is no way for them to compete and to give them a pass for sucking. This is why they spend $17 million on administration, marketing and public relations to generate only about $50m of their own revenues — much of that attributable to the City’s gifting of the stadium — while collecting a ton of revenue — around $80 million — from baseball.
It is much easier and less risky for them to spend all that money on marketing and public relations to get more welfare and generate more welfare sentiment while taking profits than it is to try to make the team competitive. Maybe they are trying to make the team competitive. Time will tell, but they have no incentive to do so if we keep making excuses for them.
You make some good points
But I really don’t think all of this hinges on “making excuses.” The problem with simply jumping to an $80 million payroll or something is that you still have a subpar product.
In the market, a win provided by a free agent is worth in the neighborhood of $5. Sure, you can get some steals and maximize that investment, but you’ll also have some misses where you’re paying more for each win. So, let’s say that the Pirates add $55 mil in payroll this offseason, you gain (give or take) 11 wins. That still puts them near the bottom of the league.
Which means, gate and concession revenues stay low, but the increased payroll makes it less likely that the team can spend on the draft and international signings.
Conversely, spending a few years collecting young talent and then having them perform at a high level for a steep discount for a few years is beneficial in that you’re getting wins a much lower dollar rate, the young players start performing, build up more fan interest and then you can go and add the $30-$40 mil in payroll on free agents. Perhaps you can raise ticket prices a bit then, and can afford to pay for a couple of more “free agent wins.”
But the reality for the Pirates is that they can’t just add payroll.
Finally, I think the above also speaks to the salary cap issue as well. Let’s say all teams are constrained to a $100 payroll, well, the Bucs are still in the same predicament. It’s just the reality that the Pirates have to operate this way.
I don’t think anyone’s making excuses, but I do think (and I think the facts stand with me) that the current Pirates plan is really the only plan that makes sense if we want anything close to long-term competiveness in the MLB.
Santa Roberto Clemente
Ora Pro Nobis
FireRickReilly
*A win is worth something in the neighborhood of $5 mil., not $5....if only
Santa Roberto Clemente
Ora Pro Nobis
FireRickReilly
If that $5 million figure is true, that should show what a foolish investment
free agency would be for the Pirates. I also believe it is approximately correct, but I would like to know the source- what is it?
I've read a bunch of stuff about market value
in various different places. I think BP has some extensive stuff about it (behind pay wall though). Here’s something I found from FanGraphs Dave Cameron. http://www.fangraphs.com/blogs/index.php/win-values-explained-part-six
2008 is the last year for his calculations, but if you project, we’re around $5 mil.
It’s an inexact science, obviously, but it’s fairly accurate on a general level.
Santa Roberto Clemente
Ora Pro Nobis
FireRickReilly
The pirates could actually soend 80 million now
but only if those players would cause them to threaten wining. I’m sure an MLB organization could get a loan of however big they wanted, but I would doubt that the loan interest plus extra revenues minus other expenses incurred with extra revenue would satisfy an IRR that pirates would find suitable as a return on investment. So, the way they are doing it now is the best way for the Organization as a business to do it (maybe). I could see some sort of goals I could really tell you what would be, but if I had to guess, I would say the pirates expect a real rate of return at like 8% so with a short-term loan at about 7% they would have to get 15% on their money meaning higher ticket and concession prices. So, I’m fine with the current plan.
For what it's worth ...
in grad school I did a study on payroll and wins.
In a regression, payroll accounted for 50 percent of the wins.
Luck, injuries, good management make up the other 50 percent.
I just think you need a better CBA and revenue sharing to reward good management.
At the same time, the reason the Pirates have lost so much over the past two decades goes far beyond the CBA.
Here's how I'd like to see things repaired in MLB
As much as we Americans like to think laisez-faire capitalism is the American Way, the truth is that there are some companies or products for which it makes no sense to depend on it.
A pro sports league is one such entity.
First, as I and many have stated, the crux of the inequalities in sports leagues are based in the fact that the creation of new teams and territorial rights are completely controlled by the league. This provides an institutionalized unfair advantage to a certain subset of teams.
However, it is impossible to have those issues based on free market principles without causing severe distress in the system.
It takes two teams to play a game. If teams were to open and fold as easily as your corner 7 Eleven, that would cause enormous difficulties and hardships for the entire league. It is simply not feasible.
So, right off the bat, we have to accept the fact that there are legitimate and unavoidable reasons that a sports league should skew the invisible hand of the free market, and the best the league can do is to remain true to the spirit of free markets, which means that there should be reasonable incentives to all parties involved, and that excellence should be rewarded, etc.
My suggestions:
1) Place at least one more team in New York
2) Institute a salary cap
3) Star players would be hurt by the salary cap, and so there should be supplemental payments by MLB itself to selected players that have a high perceived value to MLB apart from their value in Ws and Ls.
This could be done for even stars making the minimum in their first 3 years. For the Strasburgs, Heywards, etc. In this way, the league could reward stars all over MLB, and those stars would not have to wait until free agency to cash in on their status and feel they need to leave their initial teams.
As always, good post Mark.
Star players may be hurt by the cap, but I don’t think supplemental payments would be necessary. Keeping in mind that any player of that level gets paid significant scratch in endorsements – I say that they make more than enough.
For example, why does Mark Teixiera make the money that he makes? I don’t think it’s a mathematical formula that results in his salary. In fact it is simply what the market will bear. Let’s just say that the top players get a 40% reduction in salary. 8 years at $180Million goes to 8 at $108Million. You can look at it two ways – its a $72Million reduction or he is getting paid over $10Million/season before endorsements. His family for generations will be well taken care of. He’ll have plenty of money for charity. I can’t think of anything that he’s be missing by the 40% reduction in pay. And if he doesn’t like it, he can go try playing in Japan. Or even better he can go into another profession.
NBA/NHL/NFL players don’t have any supplemental income due to salary caps, and MLB should not have them either.
The salary cap that could be used with this system would be different than the other sports.
It would be be more of a maximum salary the team could pay any one player.
Of course, any player playing in New York has more endorsement opps than another comparable player. But, somehow I think Joe Mauer and Stephen Strasburg and Sidney Crosby and LeBron James do OK on endorsements.
The point is not, however, that a certain player be paid enough for his family to be taken care of. The question is whether they have been materially harmed by a salary cap. This would make a system unfair, and therefore unacceptable.
by MarkInDallas on Aug 28, 2010 10:49 AM EDT up reply actions
Mark
I’d add one more thing: Address the sharing of local revenues.
In particular, as you note above, it’s a joke that the Yanks can claim a modest profit on YES when we know that it’s a way to shield revenue.
Charlie your wrong about the profits
Charlie I don’t know too much about business finances myself, but I do know that there is always the Boss Hoge trick in business that still lives on in shady businesses. There is no doubt that Bob Nutting is making something on this team and he is most likely have two financial books to make sure that MLB and Players Union is happy. If there isn’t a second book then no doubt Bob Nutting is Money laundrying the Pirates profits through the Pirates Charity organization. How would he make money on this? All he has to do is prove that the money was donated to a good cause to the federal government and claim the money on his own income tax and he gets all the money back next year. While in the mean time he continues to cover up the pirates’ windfall to make sure that everyone believes that he is spending it on the team. That is one reason why Bob Nutting has been spending so much money in Puerto Rico where the new off brand pirates minor league program is at. Puerto Rico is being used to show proof that Bob Nutting is in the long hall to build a winning team, while he continues to sucker the big time ball team such as the Yankees and Redsox and sucker the Pirates fan in believing he is spending the money for a good cause for the team. I’ll gurrantee that if MLB really wants to know the truth they will follow the flow of all the money and they’ll find out where the money is really going. There is a reason why Bob Nutting owns multiple Casinos and a newspaper company. He isn’t stupid he is in business for a reason and he has an agenda for the Pirates which is to keep his money flow going into his pocket. If that wasn’t the case then why doesn’t he sell the team. He has been part owner for a very long time, ever since the city had majority ownership of the team. There is a reason he is keeping the Pirates and it isn’t for the best interest of the team or the organization. Its out of the best interest of his pocket and multiple businesses that he holds other than the Pirates organization. As long as he keeps pocketing money the Pirates will continue to lose and he’ll keep getting richer for it whether anyone shows up to games or not.
Boss Hoge
He must mean Merrill Hoge
Lino Donoso
Well, the first sentence is pretty spot on
after that it kind of runs off the rails.
Santa Roberto Clemente
Ora Pro Nobis
FireRickReilly
Holy Shit!
You have cast Bob Nutting as Carlo Gambino at the head of a criminal enterprise. This needs to be fleshed out into a screen play.
"Never mistake motion for action." - Ernest Hemingway
PTVN
Pirate’s Television Network…
No Matter where I go, I see someone wearing a Pirate’s hat. Start a network, get revenue, and increase payroll. The fanbase will join in, because even with 18 losing seasons behind them, people are still flying the colors.
Or just move to New Orleans. That way they can also keep the Pirate name.
There is also NO FREAKING way that Bucs ownership cares if they win or lose. You could take a team of softball players and they would have had at least one winning season.
"NO FREAKING way that Bucs ownership cares if they win or lose"
Current ownership, or past ownership? The two aren’t the same, you know – Nutting only took over in 2007.
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