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Yanks Losing Money?
Posted by Peter Schoenke at 4/12/2006 10:29:00 PM
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The baseball labor agreement expires at the end of the year and the media coverage is ramping up. Now I'm very big pro-salary cap, pro-revenue sharing guy, but this article by Jeff Passan adds a lot of bad analysis to the debate and seems to fall for the ownership sales pitch.

Passan uses the Royals as the example of revenue disparity in baseball vs. the Yankees? I'm sorry but the Royals could have had a $100 million payroll the last 10 years and they would still stink. It's not the lack of money that caused them to trade for Nefi Perez without checking out that new-school baseball stat called "park affect." It wasn't lack of payroll that had them sign a bunch of medicore, overpaid veterans this offseason that are not helping them rebuild.

Passan also falls for the company line that the revenue sharring and luxury tax are causing the Yankees to lose money. If the Yankees are losing money then Bill Gates must somehow be poor. Since they own their own television network, the Yankees can manipulate the books however they want on the revenue side. Please.

Passan and the media need to dig deeper on their analysis of baseball's competitive balance problem to see beyond the spin of the two sides. I think there's enough revenue disparity between the biggest and smallest clubs that the margin for error for good GMs in small revenue clubs is too small. But articles like this do a dis-service for those trying to make a legitimate case.


If it's bad management and not a lack of money, as you correctly point out, that causes teams to field bad teams, then why punish players with a salary cap? If revenue disparity indeed creates a margin for error that is too small for small-market teams, meaning unfair (though I'm not sure evidence supports this), why not just share total media revenues, including local TV revenue?

This whole issue has become so convoluted. The terms "small market" and "big market" are utterly ridiculous. Oakland is supposedly a small-market team, yet it resides in the sixth-biggest media market in the nation. St. Louis competes year after year, yet its market is smaller than that of 22 teams. See:

If owners share local revenue, then small market vs. big market becomes irrelevant. Of course, that means owners also would lose their fall-back excuse for not fielding competitive teams.
Posted by Jason Thornbury at 4/13/2006 1:40:00 PM
The market disparity is real, and it has a significant effect - the Yankees payroll and hence their lineup of ARod, Sheffield, Giambi, Matsui, Jeter, Posada and Damon, virtually guarantees them 85 wins. If they get ANY pitching, they'll make the playoffs yet again. The difference in the small market teams is that some like Oakland and the Twins try to putting a winning product on the field, and others like Royals sign Mark Grudzielanek and Doug Mientkiewicz and mail it in. But the revenue disparity IS unfair to the small market teams. That some make a good go of it, and some mail it in obscures the issue a bit, but it doesn't change the fact that the playing isn't anywhere close to level.
Posted by cliss at 4/13/2006 6:31:00 PM
I'd be all for revenue sharing as the solution and no need for a salary capy. Not sure that would fly, but it would have the same effect.

A lot of this debate comes down to the theoretical vs. the practical. If we invented a new game and were going to create a pro league ... we'd start out with a salary cap and revenue sharing. It's the best way to ensure competitive balance, which usually makes for a better product. (I know some argue that dynasties increase ratings, but the Patriots in the NFL show you can have both).

The anti-cap crowd is against it on terms because a) the owners are greedy and they're pro player b) Some GMs are always going to be dumb and so really money doesn't matter that much. Ie. why have a salary cap when Oakland and Minnesota show you can do it with smaller revenues.

But I think as a fan, you don't care about the 2 issues above. You just want a good product. So ensuring there isn't any big disparity is best.
Posted by schoenke at 4/14/2006 9:53:00 AM

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