Baseball Economics

If this off-season’s happenings have shown us anything, it’s that baseball’s economic status is a mess. When one team has the four highest contracts in the history of the sport, there’s something askew. Even the most biased Yankee fan has to admit that they can afford to do things that other teams cannot. As it stands right now, the revenue stream in NY dwarfs the stream coming into Kansas City. Is it fair? Probably not. Is it the Yankees fault? Absolutely not. Can the Yankees be blamed for using every advantage they have to win baseball games? Not really. Is it something that Bud Selig should be concerned with? Without a doubt.

Like I said, it’s not the Yankees fault. And, the only reason I could say they are being irresponsible is if I look big picture. I believe that the Yankees could afford to have the best player at every position on their payroll. If they did that, interest in other markets could drop to the point that there would be no teams left for the Yankees to play. That might concern them a bit, although I doubt it does. Other than that, they’re free to spend as much money as the rules allow…which is as much as they want. That is exactly why lots of people think baseball needs some form of a salary cap. But, I’m not sure it’s that simple.

One problem with the economy of baseball is that you have 30 different owners. If baseball were owned by one person, whose lone goal was to set up interesting baseball games all over the country, it would be one thing. But, the 30 baseball owners all have different ideas of what it means to own a franchise. Apparently, the Steinbrenners think the goal is to win championships. I’m pretty sure John Henry has a similar goal. Some owners might like to turn a nice profit. They might just like having a team. A corporation may like the idea of having brand recognition, or a venture creating a loss for tax purposes. Spending money to put a winning team together might not be on top of everyone’s list. Plus, all the owners aren’t as good as the others. Take the Red Sox for example. The previous ownership group did a pretty good job. The teams performed pretty well, made some playoff appearances. But, the new group has made it even better. They thought of places to put new seats the old group hadn’t considered. They marketed the team to the point where they’ve sold out every game for years. They deserve to be rewarded for the effort they put into running the franchise. The effectiveness of any salary cap or revenue sharing is going to depend on how each of those owner types is addressed. I also agree with the complaints about the current form of revenue sharing. The Marlins keep getting revenue sharing money, and they keep dumping players to have a low payroll. I don’t think it’s fair for the Marlins owner to line his pockets with the Yankees’ money.

So, any system with a ceiling absolutely has to have a floor. Any sort of revenue sharing has to be put directly into player salaries. A team should be rewarded for doing things well, and punished for doing them poorly. And, most important, the Players Association has to be convinced that it’s a good idea. Does such a system exist? I have an idea or two floating around my head.

But, I’ll save that for another time.