posted
Welcome to another edition of Baseball's Biggest Secrets FINALLY Revealed. This is the third, and most likely, the final installment on the salary cap issue that has the average fan all caught up in hysteria.
Those who have read the first two parts know where I stand. Unlike the last two parts, I will not provide any complicated charts to prove my point. Instead, I am going to describe this complex issue using words and terms that someone without professional training in this subject can understand, so that he can comprehend the issue to some degree.
I even made argument for those who are in wishing for a cap. I have made VERY strong arguments for you so that you get the idea that I can see your side of the issue. But, as before, you will see how I counter those arguments.
Let's get started with the show!
----
Commissioner Bud Selig's ultimate utopia is an alternative universe in which, with revenues shared and luxury taxed, small-market teams would have a good chance to sign free agents and reach the World Series as the Yankees.
It's always been a bit disconcerting to watch Selig and his fellow small-market team owners (millionaires all) embrace baseball's version of socialism. Still, it's not just a few owners complaining about rich teams taking their pick of the best players. By signing Hideki Matsui and Jose Contreras, George Steinbrenner signaled he considered the whole planet to be a part of the Yankee farm system. Well before that, plenty of fans (including some people on this forum), writers, and economists worried that teams from the smaller markets could no longer hold on to their best players, let alone sign other's free agents (poor babies!)
----
In 1999, Selig appointed a blue-ribbon panel to study the problem. Its members consisted of former senator George Mitchell, Yale president Richard Levin, columnist George Will, and former Federal Reserve chairman Paul Volker. They concluded that the game was INDEED in dire straits.
The 2000 report read: "The growing gap between the 'have' and 'have not' clubs is a serious and imminent threat to the popularity, health, stability, and growth of the game."
A year later, testifying before the senate, Selig said the situation had worsened since the panel's report. In 2001, he said that baseball teams had lost $519 million. I'm going to repeat that because I really want you to grasp onto what is going on here. He said baseball teams had lost 519 MILLION dollars. Twenty-five of thirty teams lost money. You might think, "You just incriminated yourself, National. You just made my argument better than I can make it myself. Let's see you get out of this one." I want you to keep that $519 million figure in the back of your head because I will get back to it before you're done reading this article.
So the question is: How could these teams, whose very survival was in doubt, hope to compete with the Yankees?
----
Money, of course, had always mattered, even before Harry Frazee pocketed $100,000 for shipping Babe Ruth to New York. In the 1950s, the Yankees routinely and notoriously acquired the best the Kansas City Athletics had to offer, including Roger Maris, Clete Boyer, Ryne Duren, and Ralph Terry. In the midst of pennant races, the Yankees grabbed Johnny Mize in 1949, Johnny Sain in 1951, Enos Slaughter in 1954. Other teams did the same. Calm down, people, I'll give you an example. Let's see ... in 1947, the Frazee-less Red Sox were accused of trying to buy the pennant when they paid the St.Louis Browns $400,000 for pitchers Jack Kramer, Ellis Kinder, and shortstop Vern Stephens.
Ever heard of Branch Rickey? If not, shame on you. He's the guy whose farm system was renowned for growing St.Louis Cardinals instead of buying them. Well, he needed money to buy minor league teams. When the Cardinals, who had to share a comparatively small market with the Browns, were strapped for cash, Rickey was willing to sell off the products of his farm system.
None of this changed when Catfish Hunter became a free agent in 1974. Free agency did not mean that rich teams would suddenly be able to buy the best players on the roster of their poorer rivals. It merely meant that to buy the players they wanted, rich teams would have to pay the players rather than their owners. So instead of paying the A's (who, by that time, moved to Oakland) owner Charley Finley, Steinbrenner paid Hunter Himself.
In fact, contrary to owner's claim at the time, free agency brought with it an *increase* in competitive balance. You're probably thinking to yourself, "Yeah, right." Must I give examples AGAIN? Let me school you on a little baseball history lesson:
Here's what happened in the 1980s, the first full decade WITHOUT the reserve clause.
Table 1 Teams Worth Noting that Made the World Series 1980s
Here's the best part: They were all SMALL-market teams. The Yankees, after 1981, were NOOOOOOwhere to be found. It would be another fifteen years before they were back to the World Series, a longer stretch even than their post 1964 collapse. Yes, I KNOW Steinbrenner continued to spend his money, but it was all on the likes of Steve Kemp, Ken Griffey Sr., and Omar Moreno, players well past their prime. In other words, the 1984 Yankees had an all-star line-up, but it was that of 1979.
If anyone still doubted that baseball was more balanced than ever, the 1991 season drove home that point. The Minnesota Twins met the Atlanta Braves in the World Series. Why bring this up? Because in 1990, both teams had finished last in their divisions. The have-nots have become the haves in a single year.
Other measures proved much the same thing. Economist Andrew Zimbalist calculated standard deviation of win percentage from 1903 into the mid-1990s. The deviation, if you insist on doing it yourself, is equal to the square root of the difference between each team's winning percentage and the average winning percentage squared, divided by the number of teams. Zimbalist found a steady improvement in competitive balance. Since you have an above-average baseball fan doing all this baseball research for the well-being of the readers on this forum, here's another stat I fell is worth mentioning:
In the 1970s ... Twenty divisional champions successfully defended their tiles.
In the 1980s ... only THREE did so.
Am I good, or am I good? Pick one.
Statistician and baseball historian Bill James: "The 1980s ... were by far the most competitive years in baseball history up to that point, and also the decade in which the small-city markets enjoyed their most success ever."
There were varying explanations. Zimbalist argued that free agency made it too expensive to hold together a dynasty, and easier to improve a team quickly. James noted that a lot of teams, not just the rich ones, turned out to be able to pay the players' new going rates. A lot of teams were making a lot of money, as attendance steadily rose and television revenue jumped almost fourteen times between 1975 and 1991.
Bill James in his 1992 Baseball Abstract: "What we didn't realize is that major league teams in 1975 had the potential to earn so much money that the salaries they paid players at the time relatively trivial. We thought ... that teams in small markets would lose their best players because they couldn't afford to double their salaries, when in fact they COULD (my capitalization). They could afford to double them, triple them, and even quadruple them and keep going."
----
You're probably thinking, "How do you know all this stuff?", and/or "Stop sticking to the past and let's talk about something more present. What about the Yankees? Why do the Yankees get all the hottest girls and have their way with them? Why do they get all the foot action? How come us guys from small-market cities keep getting stuck with girls like Margret from Dennis the Menace, while guys who represent places like NY and LA get the Crème De La Crème?"
I'm not a big believer in religion, but Jesus Christ. There goes THOSE question again. You people just don't quit, do you? Didn't I answer the "What-about-the-Yankees" question in Part II of this conversation? You guys wanted me to go there, I went there and won. So let me not talk about the Yankees of the past (because I've proven my point there), but of the updated version because that's what you people like.
In the mid-1990s, all that changed because the Yankees were back in the mix, making the playoffs every year from 1995-2007. In that span, they made the World Series six times, winning four of them. In 2003 the Onion, a satirical newspaper, ran this headline: "Yankees ensure pennant by signing very player in baseball."
A range of statistical measures, from standard deviations to championship concentrations, confirmed this trend. Increasingly, the teams playing in the postseason were (who would've guessed?) BIG-market teams.
What changed?
Well, the rich really did get richer, and the poor poorer. Big-city teams continued to rake in television money, while revenue from baseball's national television contract -- on which the smaller-market teams depended -- dropped (especially in the strike-shortened season in 1994 by 60 percent). Meanwhile, salaries continued to soar.
Bill James: "The error of the 1970s was that we thought that the anti-competitive aspects of free agency would arrive immediately. The error of the 1980s was that we thought that since anti-competitive aspects of free agency had not arrived immediately, they were not going to arrive at all."
Andrew Zimbalist: "Perhaps more troubling than the increase in the statistical measure of unequal performance is the clear evidence that relationship between team performance and team payroll has grown stronger."
I'm not going to sit here and say they're lying. As a matter of fact, I even said numerous things in the last two parts of this topic that supports those statements. Like Bill and Andrew, I'm also baseball-sage, which means I can easily come up with exceptions. The Rangers, Orioles, Dodgers, and those cocksuckers in Queens (Mets) all spent fortunes to NO avail. The Twins and A's, with comparatively tiny payrolls, were *consistent* winners. When Micheal Lewis's Moneyball became a best-seller in 2003, A's general manager Billy Beane became a poster child for low-budget success. Lewis calculated that the A's spent about $500,000 per win, the Twins $675,000. The Orioles and Rangers spent nearly $3 million for each game won.
Micheal Lewis: "At the bottom of the Oakland experiment was a willingness to rethink baseball: how it is managed, how it is played, who is best suited to play it, and why. In what amounted to a systematic scientific investigation of the sport, the Oakland front office had reexamined everything from the market price of foot speed to the inherent difference between the average major league player and the superior Triple-A one. That's how they found their bargains."
Did you read that (especially the first sentence)? 'Cause I did.
Let me tell you, right off the bat, what he did and what other small-market GMs DIDN'T: Beane rejected his scouts' traditional measures of player potential, along with many of the stats other general managers prized. Drawing from the work of Bill James and others, he decided, for example, that saves were vastly overrated and walks vastly underrated. At one point, the A's front office played with a system that replaced all traditional batting statistics as a matrix of points on the diamond. Instead of a double, the system merely recorded that a ball hit with certain force landed at a certain point. Then you checked how often such a hit went for an out or a hit, and what percentage of a run it meant for the team. It made no difference whether, in any particular case, that hit had been caught by the center fielder or fallen for a double. This was, as Lewis put it, less a hit than a Platonic idea of a hit. Yet it still led the A's to value players very differently than other teams did.
Beane's aid Paul DePodesta: "We don't get the guys who are perfect. There has to be something wrong with them to get to us."
Don't you just love my unorthodox way of looking at baseball? You have got to like Beane's atypical way of managing. Those methods got his A's to the playoffs every year from 2000-2003, each time taking their opponents to a *deciding* game. Even when they lost Giambi to the Yankees, the A's replaced him with Scott Hatteberg, a CAST-OFF Red Sox catcher with a surprisingly high on-base percentage. And went right on winning.
Yes, people, I KNOW they were eliminated each time, but so did six other teams. But since we're on the A's I'll further explain their mishaps. Back to the article.
Beane's method came under fire each October, when the A's consistently fell short.
Here's the San Francisco Chronicle in 2003: "With just enough to prove something -- five games -- the real teams stand up and the second-raters go home."
That was published after the A's lost their ninth straight potential series-ending game and were eliminated by the Red Sox (who, incidentally, had embraced a philosophy similar to Beane's and had hired none other than Bill James himself as "senior baseball operations adviser"). Others have argued that Beane's success had nothing to do with his statistical analysis and instead depended on starting pitching trio of Barry Zito, Tim Hudson, and Mark Mulder.
Beane angrily responded to critics of the A's postseason failures. "I'll tell you one thing, if you want to give me $50 million more, I'll promise you we won't blow the 2-0 lead."
Perhaps. But Beane would have seemed less churlish if he'd also explained that five games weren't a statistically valid sample for judging his statistical system. If you read my other topic asking "What Makes a Team Most Successful in the Playoffs?" you would know that I offered a better defense of the A's collapse.
I'm going to summarize what I said in that topic: Over a long season the luck evens out, and the skill shines through. But in a series of three out of five, or even four out of seven, ANYTHING can happen. Baseball science may still give a team a slight edge, but that edge is overwhelmed by CHANCE.
The A's success over the long run demonstrated -- as did the Yankees' failure between 1982 and 1995 -- that good management (or bad) mattered at least as much as money. As a matter of fact, that's pretty much what I said back in Part II of this argument. But it did NOT mean that money didn't matter (which is another thing I also mentioned from time to time in the last two parts). The A's surely could've used an extra $50 million; Scott Hatteberg's walks, however undervalued, were not nearly as useful as Jason Giambi's walks and homeruns. And the A's were clearly the exception to the rule, or at least the rule from 1995 on: the teams that make the playoffs were increasingly the teams with the highest revenues and payrolls.
----
RETURNING TO THAT $519 MILLION FIGURE
To Selig, the solutions were obvious: cut payroll and other costs (by having cities, not teams, pay for new stadiums) and share revenues (through a luxury tax on big-spending teams or by directly passing money from richer to poorer teams). Given Selig's 2001 figure of $519 million, it would be hard to argue with any of this. But that figure did not withstand upon close scrutiny.
**NOTE: I want to see the look on your face when you get a load of what I'm about to tell you. Because if you can understand what you're about to read, it will change your life FOREVER. **
Are you ready? Have you taken a few deep breaths? Okay, let's go!
You see, I don't take things at face value. When it comes to baseball, I have the resources to uncover what the numbers are not telling you. Here is what I found upon closer inspection:
Most teams, being privately held, did not have to make their finances public. But a few were public, or chose to release financial information to attract investors or buyers. I was able to compare some teams' figures with what Selig provided congress. There were numerous discrepancies.
- In 1998, for example, the Indians declared revenues of $140 million for 1997 and $145 million for 1998. That was $45 million LESS than what Selig reported to Congress. *I'll discuss the Indians' revenue in greater detail in another topic concerning Alex Rodriguez.*
- The White Sox, according to Selig, made $30 million from local television, radio, and cable, while the Cubs earned $24 million. Yet the Cubs had MUCH higher ratings, and WGN carried their their games nationwide. Why, then, did WGN pay so little to televise Cub games? Because WGN and the Cubs were both owned by the Tribune Corporation, which chose to inflate revenues at the former at the expense of the latter. This allowed the Cubs to claim poverty when it came time to share revenues with poorer teams or to negotiate contracts with players or government agencies. Other owners were also delighted to sacrifice baseball profits for the sake of other companies that did business with the team (and that happened to have the same owner as the team).
- In 2002, Forbes estimated a $75 million PROFIT for the sport, compared to the $232 million LOSS Selig claimed. Perhaps the truest indication that Selig was grossly undervaluing the value of major league teams was what it costs to buy one. In 2001, the Red Sox went for more than $700 million. You read that right. It's no typo. $700 million. This wasn't even the highest bid for a team that, according the commissioner, was losing money.
Clearly, Selig CLEARLY exaggerated the financial plight of the sport in an effort to wring concessions from players and municipalities. There is NO NEED, as Selig once suggested, to eliminate two teams. There is PLENTY of money to go around. This money actually goes around, but there are some degree of revenue sharing and luxury taxes that would reverse the trend toward competitive imbalance. This is what the owners and players agreed to several years ago. Should this get out of hand, then I would say that the system needs further tweaking. But from where I sit right now, I don't see a problem.
Such moderate proposals would give poorer teams a better chance of making a statement. Okay, they would not have quite the same chances as the Yankees, but fairness has its limits, and even its drawbacks. Yankee dynasties, after all, are a great part of baseball history. You have to admit that to root for -- or against -- the Yankees is one of your greatest pleasures. It's no coincidence that television ratings plummet when the Diamondbacks play the Pirates.
Bill James: "There is such a thing as too much competitive balance. If all the teams are about the same, if every team becomes as good as the next one, a sport becomes formless and indistinct, a shapeless lump of games."
FINAL WORDS:
There will ALWAYS be favorites and always be underdogs. That is part of baseball's appeal. The goal should not be to level the field completely, merely to insure that it isn't over until it's over.
--National
P.S. Join us next time for a new episode of Baseball Biggest Secrets FINALLY Revealed.
UBBFriend: Email this page to someone!
Printer-friendly view of this topic
