Friday, December 26, 2008

How To Cap America's Team (The Evil Empire)

Hey, Santa and his reindeer made their annual visit yesterday, but in MLB, he only made one stop. Hal Steinbrenner must have been very nice last year - or maybe the rest of the league was very naughty - but the jolly old elf took care of him like he was his own.

While he found CC Sabathia, AJ Burnett, and Tex under his tree, the rest of baseball woke up to a stocking full of coal. Bah humbug!

OK, so the Yankees are the team everyone loves to hate. But the question this season begs is are they good or bad for baseball? Does the sport need a cap to stop them?

For starters, the New York Yankees are the top US brand name out-of-market for all sports teams, according to an annual report by Turnkey Sports & Entertainment, and for the second year running. No other MLB team is in the top ten, so there's no question they are America's baseball team, at least by name recognition.

Next, they are in the media and financial capital of the world, operate their own TV package, and rake in loot like it's autumn leaves. They wallow in revenue streams that leave other suits agape, and their market bears ticket prices that stun most fans. Heck, they had the werewithal to sign their big three this year from the money they saved by having the City build their new playpen.

That's a credit to their organization and the consistently excellent quality of the teams they put on the field; just being located in NYC guarantees you nothing - just ask the Mets, Jets, Giants, Knicks, Rangers or Devils.

And hey, give the Yankees their due. They make money and plow it back into their product instead of their pocket, unlike certain other teams we're familiar with here in Pittsburgh.

That's the one point that causes GW to gnash his teeth. Some of the guys were worth the gelt, like A-Rod and Derek Jeter. But there's too many signings of average talents like Carl Pavano, Mike Mussina, Jason Giambi, yada, yada, that skew the whole structure of the sport.

Not only does it play into the hands of agents like Scott Boras who wring every dollar they can out teams for their clients (after all, it's their job) and then use the deal as a baseline for future signings, but it filters all the way down to arbitration awards.

We're concerned not only with the big money, but also the length of the contracts, which unlike the NFL, are guaranteed for their duration. The Yankees can afford to wait out bad contracts and patch over the holes; for the majority of the league, a Barry Zito or Mike Hampton signing is a competitive crippler for years.

Does this create a competitive imbalance? Well, yes and no. One has to go back to 1993 to find an AL post-season without the Yankees, Red Sox (the mini-me empire), or both participating. The NL, without an 800 pound gorilla or three in its ranks, has had a much more motley collection of teams reach the playoffs.

Baseball has had eight different champions in nine years, and 18 of MLB's 30 franchises have made the playoffs at least once the past three years. So much for the "everyone has a shot at the brass ring" rap espoused by the hard-capped NFL. MLB has plenty of rags-to-riches stories, too.

The reason is that many teams, most recently our PBC, have adapted their business model to grow their own, sign them through arbitration, and then watch them either march away to the golden land when they hit free agency or deal them in advance for a few pups.

This leads most clubs to budget for "boom or bust" cycles, where teams have to plan for a window of success (think Florida Marlins) while they still control their talent. It also shows its face in the surge of backloaded contracts with team options, much like the ones Ian Snell and Ryan Doumit signed.

The odds are that Pittsburgh will never exercise the options when they get pricey, but will be able to dump the remaining dollars on a big bucks team if the players perform up to expectations in return for a handful of hopefuls. And so the circle remains unbroken.

It's a frustrating methodology for fans to suffer through, and makes selling a team without a face to the hometown that much harder for the office gang. It's a system that ensures the rich get richer.

GW's humble suggestion? Don't fight for a hard cap, like the NFL. Create a unique, flexible range for teams to fit into, with a ceiling and floor like the NHL. Base it on MLB revenues, so that every team has to spend something between $125,000,000 and $60,000,000 in payroll (We just came up with those figures by knocking off the top and bottom four teams in the 2008 salary rankings; we're sure Billy Beane and gang can crunch some workable numbers.)

Guess what? Suddenly there will be a crowd for free agents, contracts will be structured more realistically, and the teams will be on a somewhat level playing field, depending on their operational competence. GW doesn't think this route will cause as much of a stir from the player's camp as it will from the owners. There are still a lot of them that make a dollar by skimping on talent.

The agents aren't the biggest problem in MLB. It's the owners. As long as some of them play with mad money and others prefer penny-ante, baseball will suffer competitively. The game and its fans deserve better.


WilliamJPellas said...

Great article as always, Ron, but I don't quite concur with your analysis. First, while it is true that there is currently no "800 pound gorilla" in the NL, is there any legitimate reason why someone from among LA-AZ-CHI-PHI-ATL is NOT an 800 pound gorilla, themselves? Isn't Phoenix one of the richest and largest cities in the world? I believe it's in the top 5 among US metropolitan areas. I dunno if you've ever been there, Ron---I almost married a Phoenix girl---but the city is SO big, there are two separate "downtowns". Seriously.

How 'bout Chicago? Does Chicago lose much, if anything, in comparison with Noo Yawk when it comes to market size, wealth, and superstation capabilities? Doesn't WGN go all across the fruited plain?

And Atlanta is definitely a weird bird in some respects---I'll spare you the sociological analysis---but the city is gigantic, and of course we saw what the Braves did for more than a decade straight. Further, Atlanta is the original "superstation" city.

I could go on, but I'm sure you see where I'm going with this. Now, I will say you're right about one thing, and that is that even if most or all of the other clubs tell the Yankees to go blow their bucks all they want, it IS true that the Yankees' outrageous salaries DO cause salaries throughout the rest of baseball to go artificially higher than they would otherwise go. That IS problematic. However, even with that phenomenon, there are two safety valves.

One: the Yankees DO pay millions of dollars in luxury tax every year. Some of that money ends up in Pittsburgh's coffers. While it may be relative drops in the bucket in the big scheme of things, it DOES help to give small market teams more money to spend on their own internal player development. Which once again is an issue of good or bad management, NOT merely revenue disparity per se.

Two: even if the system continues indefinitely as it is currently constructed, so what? There are 30 starting major league first basemen, not 1. So Mark Texeira broke the bank. Big deal. Only a handful of other teams could possibly pay him or Albert Pujols or anyone else anything like the money Texeira got. Meaning, only one guy at a given position can break the bank in Noo Yawk at any one time. Or if you like: sure, there is one team skewing payrolls artificially higher. But there are 29---or at least 25 or so---other teams that are skewing payrolls lower. Are we really to believe that the Yankees are singlehandedly ruining baseball's salary structure? I'm not so sure about that.

And as you pointed out, Ron, merely being in Noo Yawk is no guarantee of bottomless coffers and endless winning ways. The Knicks are the laughingstock of pro basketball. The Rangers haven't won anything since Whatsisface, Wayne Gretzky's old teammate, retired. The Islanders have sucked since the 80s. The Mets have choked two years in a row. The Devils and the Nets---ostensibly New Jersey teams but really additional New York teams---were very strong in the late 90s, but are each approaching a decade of futility, themselves.

I think we have enough centralization and big government-style micromanagement in the other sports, especially football. I say the current revenue sharing baseball has in place, is enough. I'd rather see hands off from here on out.

Ron Ieraci said...

Hey Will - a free market guy, hey? Actually, the reason I suggest a hi-lo cap is to try to make the owners somewhat more responsible for on field product.

My reasoning for the upper limit is to slow the artificial inflation of contracts, and with the lower, to keep guys that stuff the luxury tax and revenue sharing in their pockets to instead use some of it on players.

And yah, there are some big markets in the NL, but none of them seem to be in the spending realm of the Yankees, Red Sox, and Angels. That may be because of ownership, or perhaps because they're not involved in a constant high stakes game with the Steinbrenners for players.

Still, whatever mechanism (soft caps, taxes, etc.) allows for the salary range to tighten up - and we're really only talking about a handful of high rollers and low ballers deviating far outside the norm - the better off the game will be, I think.

WilliamJPellas said...

Yes indeed, I am a free market guy! That said, I quite agree with you that from a product-on-the-field standpoint, it would obviously be better if there were some kind of mechanism in place that would help guard against owners pocketing cash at the expense of good baseball. Surely there ought to be some sort of middle ground where a given owner can realize profit while still spending wisely to put a good team on the field.