Kristi Dosh uses the Pirates financial statements to talk sense about revenue sharing, competitive balance, and salary caps and floors. She makes a great point about why teams can make money by losing, the fans:
I’ve thought about it, and here’s an analogy that illustrates the problem. If your favorite grocery store in town wasn’t giving you what you wanted in terms of stocking your favorite items or keeping the prices competitive, you would simply start shopping in another grocery store. You could abandon the one you originally preferred with little thought or remorse. You can’t do that in baseball though.
I’ll use myself as an example. I’m a Braves fan. If the Braves were a club who spent less on payroll than they received in revenue sharing, I would be irritated. But would I stop going to games or stop being a Braves fan? Probably not. See, there’s not another team in town, so I can’t just go watch another MLB team play on Saturday. And even if there was, I have an emotional attachment to the Braves. I remember going to games in the late 80s with my dad when the Braves were bottom-dwellers and no one was in the stands. Then I remember the worst-to-first miracle and all of the postseason games I went to for 14 straight years. I’ve lived all over the country, and I’ve rooted for several teams, but I’ve never felt about a team like I do about the Braves, because I don’t have the history with the others. So, even if the Braves owners were spending less on payroll than they received in revenue sharing, I’d probably still be a Braves fan. That’s why clubs like the Royals still have fans and can still increase in value every year.
Teams have two markets, the fans and other clubs. The Pirates are selling competition to teams in the league, and getting paid for that through revenue sharing. Even if Pirates fans don’t want to see them, as long as other clubs are happy to beat them up, they’ll make money. They need to just keep one of their markets alive to keep sucking money from the system.
if MLB wants to operate with the harlem globetrotters/washington generals or WWE business model, that is their right. However, they should not expect to remain covered by an antitrust exemption and receive support from taxpayers.
This is an example from professional basketball -no major league baseball team has been this bad for ninety years- but the New York Knicks eventually became so embarassing that I was embarassed myself just thinking about them. And I didn’t switch to the Russian mafia owned Nets, which are almost as bad. Nor did I pick some team playing in another city across the country. I just lost interest in the NBA, and started pretending that New York just didn’t have a NBA team.
Now the MLB is in better shape than the NBA, but the point is that a team could get to the point where it permanently alienates its fan base. And since the result will be fans in that city turning from the MLB entirely, there is a point where it is in the League’s interest to intervene if a team is sufficiently mismanaged.
@Ed: You summed it up well.
@Ed
I don’t know about “permanently”. I’d bet that one winning season would get the Knicks back on top with the NY fans – you included.
Not many Pirate fans were surprised by this “news.” We know they’re getting substantial revenue sharing. We know they’re slashing payroll. We figured they’ve operating in the black. Most fans have been mad about this for quite some time.
Me . . . I’m still willing to give Huntington and Co. the benefit of the doubt. They have a plan that they’re executing. They’ve been in the top 5 in draft expenditures for a couple of years. Dumping players served the dual purpose of replenishing their horrible farm system and not paying for the likes of McLouth, Nady, Snell, Morgan, Wilson, Paulino etc. (even Bay is horrible, particularly given his salary)–which of those would you want on your roster right now.
Two questions that will have to be answered: (1) do the Pirates know how to evaluate talent and develop it; and (2) will they spend when they’re “ready to compete.”
If they can’t do (1) well–then the plan is dead in the water. If they don’t do (2), they’ve been lying to the fans. But this plan, such as it is, is better than the alternative–using revenue sharing to keep mediocre players and to sign C and D level free agents. I’m not sure who that benefits, other than the C and D level players.
The Knicks are so badly run as an organization -think of some mixture of the Mets and Dodgers, and the late 1980s Yankees, and double it- that they are not going to have a winning season until the League starts fixing games for them. Which could happen.
Thanks for discussing my article! I wrote more on it for The Hardball Times: http://www.hardballtimes.com/main/article/about-those-leaked-financial-statements/.