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Pirates' Books Show Baseball Needs A Salary Cap

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I 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.