In this winter of discontent in Major League Baseball – by the players for the soft free agent market and by the owners for the financial meltdown in the economy – the “C” word has once again reared its ugly head. Make that two “C” words.
For the players and the union, the “C” word that gets their blood boiling is collusion.
The union has been vigilant in monitoring the free agent market ever since the owners paid $280 million to settle collusion claims stemming from the 1985-87 seasons.
But this year, the union’s concern seems to be much ado about nothing. Precious few clubs have sufficient revenue streams to ignore the economic realities around them. Although the Yankees guaranteed almost half-a-billion dollars to three free agents, the other 29 clubs were understandably exercising caution.
But it’s the other “C” word – contraction - that has created the biggest stir, if for no other reason than it was raised by respected columnist Bill Madden of the New York Daily News. Madden has sources throughout baseball and although no one is quoted in his column on contraction, the mere fact he mentioned the word suggests that some baseball executive(s) wanted the concept out in the open. Madden identifies the Oakland A’s and Florida Marlins as prime candidates for contraction, due to their current stadium issues and mounting losses.
It’s true that neither the A’s nor the Marlins play in a suitable baseball facility. And both clubs have experienced recent setbacks in their ongoing attempts to secure new facilities. The A‘s explored building their own ballpark in Freemont, but that idea was abandoned, a victim of poor location and the faltering economy. In south Florida, the umpteenth attempt to approve a stadium funding package is on life support due to political instability (this is, after all, south Florida), the spiraling cost of taxpayer support, and - no surprise - the uncertain economy.
But neither team is suffering “mounting losses.” According to Forbes, the A’s made $15 million and the Marlins $36 million – the second highest profit in MLB – in 2007, the last year for which figures were computed. Neither team is required to provide public financial statements, meaning the Forbes figures are estimates, not fact. But enough time, effort and expertise is invested in compiling the Forbes figures to give them credibility.
Madden also notes that MLB has “...run out of places to move struggling franchises…” Not only is Madden wrong on the struggling, he’s wrong on the places as well. For the A’s, the most logical place to move is San Jose, which has expressed interest in the team. The major obstacle is the San Francisco Giants, who control the San Jose territory and are reluctant to give it up. But MLB can buy the Giants’ support, as they did with the Orioles when the Expos were moved to Washington D.C.
The Marlins are more problematic. How long they can go on milking the revenue sharing system is unknown. If the economy continues in free fall, revenue sharing contributions from teams such as the Yankees, the cash cow of revenue sharing, may not continue at the present rate. If that happens, the “mounting losses” mentioned by Madden may become a reality. But there are places to move the team.
Portland, Oregon expressed interest in the Expos. So did Las Vegas. San Antonio is the seventh largest market in the country and is home to only one Major League sport. And the best location is the greater New York area. That move would involve dealing with two teams – the Yankees and the Mets – on territorial rights. But the fact remains that given its population base and financial resources, the greater New York market could support three MLB teams better than the south Florida market has supported one.
All the options have stadium issues, not unlike Oakland and south Florida, but all are better markets.
Even if MLB is seriously thinking about contraction, it won’t happen without the consent of the union, which is as likely to happen as Commissioner Bud Selig accepting any responsibility for the steroid era in baseball. Contraction is as much a fairy tale today as it was when the owners first proposed it in 2001. That’s one “C” word we won’t have to worry about.
Jordan Kobritz is a regular contributor to the Business of Sports Network. He is a former attorney, CPA, and Minor League Baseball team owner. He is an Assistant Professor of Sport Management at Eastern New Mexico University and teaches the Business of Sports at the University of Wyoming. Jordan can be reached at