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Blog Entry

The Real Moneyball

Posted on: August 3, 2009 11:09 am
 

The trade deadline has passed, effectively ending the hopes of many teams for another year as they come to the realization that they are better off dumping their players than trying to compete.  The Pirates, as usual, traded anyone of any value.  The Orioles, Indians, and A’s were also again on the seller’s side of the ledger.  The rich continued to get richer, with the Dodgers acquiring George Sherill, the Phillies dealing for Cliff Lee, and the White Sox getting Jake Peavy.

It is obviously frustrating for fans of teams like the Pirates, who continually give away their players year after year, but it is also frustrating for fans of teams competing with the trade deadline gluttons.  If you are a fan of a mid or small market team that is in the division race but not necessarily a buyer, and a rival team gets an impact player at the deadline, it is very deflating.  Especially when they seem to do it every year, as is the case for the Red Sox and Dodgers.

In the AL Central the Twins are only two games behind the Tigers, who just obtained Jarrod Washburn, a great addition to their rotation.  Meanwhile teams like the Rockies, Rangers, and Twins are forced to stand pat and try and wedge their way into the playoffs with what they have.  They compete every night and battle all season only to have the teams around them get a giant shot in the arm with two months to go.

It is fortuitous that baseball has the wild card though, because it does give teams in secondary markets an opportunity to make the playoffs.  Right now there are no division leaders that are in mid or small markets, and no division leaders with a payroll below $100 million.  In 2008 there was only one smaller market team that won their division, the Tampa Rays; the other division winners were representing Chicago, Philadelphia, and LA. 

In addition to every division being led by a $100 million team, there is only one $100 million dollar that is even under .500, the Mets.  The $100 million dollar teams include the Yankees, Cubs, Red Sox, Tigers, Mariners, Angels, Phillies, Astros, White Sox, and Dodgers.  The statement the rich got richer definitely rings true, as six of those teams made major acquisitions

If you don’t think that money equates to winning consider this.  Four of the past five World Series have been won by teams in the $100 million club.  It doesn’t mean that the team who has the highest payroll always wins, but it does mean that to win you do have to pay.

Comments

Since: Jul 10, 2009
Posted on: August 3, 2009 4:55 pm
 

The Real Moneyball

There is an inequity in baseball that will only solved by a salary cap, of course the players union is opposed to a salary cap for obvious reasons.  Namely a large percentage of their members would no longer have jobs or would have jobs at a lower dollar value than they do now.  Of course for the cap to work an upper and lower limit would have to be established and this is where the owners get involved in opposing a cap.  Some of those teams mentioned would find an upper limit salary cap limiting to the roster they are accustom to fielding and a lower limit cap may very well be above the spending level of others.

One of the "fixes" to the problem has been in place for over 20 years and that is Revenue Sharing.  this requires each team to contribute 31% of it's revenues to a pool which is then equally divided among the 30 clubs.  The intent is to level the playing field between the big and smaller market teams.  The following numbers are from the 2002-2007 periods, but I have no reason to belive that much has changed in the past 2 years.  In 2005 the Yankees paid into Revenue Sharing 76 million dollars more than they received back from the pool.  That same year Tampa Bay,Toronto, Florida, and KC each received > 30 million more than their contribution.  This would seem to indicate that the field was indeed being leveled, but not necessarily the playing field. During the 2002-2006 period the revenue sharing dollars for KC doubled to 32 million dollars in 06, a 100 % increase over 4 years.  Player costs for KC increased by 6%.  The 2006-07 Florida Marlins received a total of 60 million dollars in revenue sharing, and over the same 2 years had a combined player salary of < 46 million dollars.

Another element of field leveling is the luxury tax. In 2008 with the upper limit for Luxury Tax intent was set at a payroll amount of 155 million dollars, that resulted in only the NY Yankees (26.9 M) and the Detroit Tigers (1.3 M) being assessed a"tax penalty".  the Luxury Tax is assessed by MLB at a 22.5 % penalty for the first time exceeding the threshold, 30% for the second trip into the "outer limits" and 40% thereafter.  It is the 40% penalty that the Yankees have become intimate with and are annually invoiced for.  In 2009 the threshold is 162.5 million dollars and the NYY will be the only team over the limit. 2010 the ceiling rises to 170 million.

My view, there will always be large and small markets, the problem is those teams whose owners are in over their heads and cannot keep up with increasing salaries or will not increase spending, some teams the Indians and the Pirates do not have the financial wherewithall to compete. 
Location, location, location is often cited a formula for business success, what do you do with a location that will not support a winning team.  Both Tampa Bay and the Florida Marlins regularly have higher attendance on the road than at home. They are not alone.

The fix might very well be requiring that Revenue Sharing be reflected in the increased budgets of the receiving teams major league team or its minor league teams.  Any shortfall of spending of those dollars as designated would result in a 2 for 1 penalty in the following year, this would prevent owners from pocketing the revenue sharing funds rather than using them to improve the product.
Secondly, lower the Luxury Tax threshold to capture more of the high spending teams.

The numerical data was gathered from various internet sites, the balance is my own personal view .


The views expressed in this blog are solely those of the author and do not reflect the views of CBS Sports or CBSSports.com