For the new year, some thoughts on competitive balance in baseball, given the idea that’s been floating around that the Sox with their $130 million payroll aren’t that different from the Yankees in terms of spending a lot on payroll. (Ignoring the obvious point that the difference between the Yankees and the Sox dwarfs the difference between the Sox and the Angels, the Mets, and other big spenders in baseball.)
How far does one need a level playing field?
I agree that some fairness is necessary, but you don’t necessarily want to reward teams that are badly run, which is my key gripe about revenue sharing - it takes only payroll as a proxy for which teams are “small-market” and “big-market”, which leads to ridiculous situations such as Philly being a small market team in the past and a potential recipient of revenue sharing, even when the Phillies play in the largest single-team city in all of baseball. Even now Detroit spends more like a mid-market team. It’s nice for roto leagues, that everyone starts with equal amounts of cash to spend on players, but in the actual business of baseball should “equal” be defined from payroll?
So I believe that teams should have equality of opportunity, but not necessarily equality of outcomes. Yet the way the luxury tax and revenue sharing are currently constituted are outcome-focused. Thus we have perverse outcomes such as Carl Pohlad of the Twins, the richest owner in baseball, trying to plead poverty and get public funding for a new stadium. Minnesota residents, smartly enough, seem to be resisting. But really, perhaps the solution to any perceived imbalance might be a payroll floor, rather than a salary cap.
At the crux of my thinking is that the Sox may have more money, but they play in a city that’s hardly the second-largest AL town, going by population. Indeed, the Sox play in a city smaller than Philly, Dallas, Miami, Houston, and half of Chicago or half of LA. So for reasons historical (1967 and all that - Rob Neyer has observed that the Sox and the Cubs are the only two teams which seem to always draw fans regardless of winning percentage) or economic, they’re extracting more money per person in the region and/or channelling more of their revenues into payroll. Is it fair to punish teams for being better at generating revenues than similar counterparts?
How much of an imbalance is there?
In the first place, there’s not that much of an imbalance in baseball. Firstly, one effect of the current 3-division alignment is that it’s created divisions such as the AL Central, which are comprised of teams whose home city may not have the income base that teams in other divisions such as the AL East do. This arguably gives teams like Kansas City a much better shot of making the playoffs. Even as recently as 2003 KC looked like it had a shot.
Let’s look at the American League. For the 2000s in the AL, the teams that’ve made the playoffs are: the Sox, the Yankees, Minnesota, the ChiSox, Cleveland, Oakland, Seattle, and Anaheim. 8 out of 14 teams (57%) actually made the playoffs. Of the rest, KC looked like it had a chance in 2003, and Texas in 2004.
Thus of the 14 AL teams, only Toronto, Baltimore, Tampa Bay, and Detroit had no hope in the 2000s. Given Toronto and Baltimore’s success in the 90s and Tampa Bay and Detroit’s obvious mismanagement I think I need more convincing before I would say that that’s a function of natural revenues.
Incidentally, I also think that the existence of some dynasties (rather than total parity) is what sports fans like to see - despite what they might say in surveys about wanting fairness, people still flocked to the NBA when the Bulls were dominant, for instance. Given the natural ebb and flow of good management, luck, and circumstances, it would be unusual, actually, if one team wasn’t dominant at any one time - the Big Red Machine of the 70s, Oakland in the late 80s, Toronto in the early 90s. The only issue is if some teams forever have a dynastic advantage. Which is where I come to the next part:
Is the imbalance permanent?
I will admit that there may be a permanent revenue imbalance in one glaring example, New York. This is because there’s a vast difference in the population base the Mets and Yankees can draw on.
Personally, I think that it’s so hard to disaggregate how much a revenue stream is due to a market’s inherent “health”, which fluctuates from year to year, from how well a team is run that perhaps the easiest fair way is just to try to get teams competing for roughly the same number of heads.
Most MLB teams play in one-team cities with Metropolitan Statistical Area populations of 1.84 million (KC) to 5.6 million (Philly). (2000 Census data - admittedly this does not count Toronto or Montreal. Incidentally, the data also show why DC is glaringly in need of a baseball team - it’s the only city in the largest 25 that doesn’t have a team.) Chicago has 2 teams in an MSA of 9.1 million. L.A. has 2 teams in an MSA of 12.4 million (including Orange County).
By contrast, New York has 2 teams in an MSA of 18.3 million. That’s a full 5.9 million more people than L.A. - i.e. enough to support at least a mid-market team. So the more I think about balance, the more I think the fairest solution is a new New York or New Jersey baseball team - bring us back to the halcyon days of Yankees-Dodgers-Giants. Not that Steinbrenner or the Wilpons would ever accede to that.