Pirates' Business Model

Dejan Kovacevic has a brief item in the daily links post in his blog (subscription only), based on a short article at iSportsWeb:

The Pirates' business model is assailed by iSportsWeb. I've long felt that this line of criticism of ownership is much fairer and founded than the whole these-guys-are-pocketing-the-money theories. Asking the fans to come out first, then payroll goes up, then the team gets better ... that is a backward way to go about things.

The article itself takes issue with Frank Coonelly's recent statement that the Pirates are relying on increased attendance to fund the payroll they need to retain their young talent as they become more expensive. The writer compares this to an auto company telling its customers it'll start to make quality cars only if they first buy enough inferior cars.

The problem with this criticism is that it misstates the business model. Both the article and Kovacevic himself - who has often argued that the Pirates won't improve until they spend significantly more money - ignore the reality that successfully rebuilt teams typically start winning while their payrolls are still low. The Twins are one example for which the model worked. Their run of good teams began in 2001-02, when they had baseball's lowest and fourth-lowest payrolls, respectively. Tampa Bay has tried to follow the model, too. The Rays went to the World Series in 2008 with baseball's second lowest payroll. Unfortunately, the anticipated attendance increase didn't materialize, due to various factors, and they've gone through a partial tear-down this offseason.

The business model isn't to wait for attendance to pick up before the team becomes good. It's for the team to become good while its talent is still inexpensive, then for attendance to pick up. This model is consistently misinterpreted by people who incorrectly equate payroll with winning. Spending is necessary for long-term success, as the Twins are showing, but the notion that a rebuilding team can't win without spending money first is demonstrably false. The real issue with the Pirates, and it's a very real one, is whether they're implementing their business model properly by accumulating enough young talent to win.

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