Thursday, October 22, 2009

A Note on Baseball: A Comparison That is Favorable to the Yankees

I am a Yankee fan. I freely admit this, and have for a long enough time, even since before they had Jeter and Big Mo and were winning World Series' in the late 90s.


I'd always felt that while, yes, the ownership style of Boss Steinbrenner was weakening at best, or destroying at worst, the financial fabric of the game, that he was acting in a way--spending the most money--that was in the interest of the fans of the New York Yankees: trying to put a perennial winner out on the field. Yes, the Yankees spend the most, and yes, they make the most money through licensing a brand that has come to signify more than a baseball team. But they pour it back into the team, trying to create a winner.


Other teams have created winners with less resources; this is obviously true since the last eight champions have not been the Yankees. One can see how that works in Tom Verducci and Joe Torre's book, about exploiting inefficiencies in the market, about learning the lessons from Billy Beane's MoneyBall, and about how the Yankees failed miserably at that science during the times from 2004 to 2008.


One highlight from that book is the Central Fund. The Central Fund is a trough of money that is filled by joint business ventures like MLB.com, and doled out in equal proportions to the teams. Teams like the Yankees, Dodgers, Red Sox, and Cubs still (and probably always will) have a competitive advantage in terms of resources from television deals and licensing, but they each receive the same proportion of money from the Central Fund that smaller-market teams get. But, for the smaller-market teams, the money from the Central Fund helps them lock up their younger players to contracts, avoiding arbitration-eligible years and the start of free-agency, making it harder for teams like the Yankees or Cubs to just go out and buy the best young players. Each team, before a television or radio deal is signed, before they sell a single ticket or beer at their stadium, starts off a season with a nut of something like $35 million from the Central Fund. For the Yankees and Red Sox, this probably helps put nice cushions on their expensive seats; for the Rays and Indians (before this past season), this helped them lock up their good young rookies...then you have the Pittsburgh Pirates.


The Pirates have one of the oldest and most storied franchises in baseball. They've won World Series', fielded teams that included Honus Wagner, Bill Madlock, Willie Stargell, the Waner brothers, and of course the first Latino Hall of Famer, Roberto Clemente. Now? At least ten years of losing ball and the appearance of selling off their good young players just as they reach a point of being able to command a decent (by baseball standards) pay. They built a new stadium, hosted the All Star Game, drummed up some recognition for Pittsburgh as a new center for tech-commerce and industry, all the while still selling off their best players and staffing the team like a JV squad, and just hoping for fifty victories a year...and pocketing the Central Fund money. They don't lock up their good young talent, even though you never have to pay as much as you would later when they're a free agent, they don't pour that money into winning baseball...they pour it into their pockets. That's what it looks like anyway. The old cliche phrase 'Wait 'til next year' in Pittsburgh is now 'Wait 'til the Steelers' season starts'...


On the one hand, you've got a team that spends the most money, even while expecting things no team in any sport should be allowed to expect, and on the other, a team ownership that to whom baseball is a business and nothing else, lining their accounts, and selling off their best players once they get good enough to be worth something.

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