Meet the Street: Is Baseball Taking Its Eye Off the Ball?

Economics professor Andrew Zimbalist argues the proposed contraction will cost the sport more in the long run.
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If baseball is truly America's pastime, then would doing away with some of its teams be considered, well, un-American?


Andrew Zimbalist
Professor of Economics,
Smith College

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That is what Bud Selig, baseball's commissioner, has suggested as a solution to the league's economic woes. Despite a magical baseball season that included a thrilling

World Series matchup and slugger Barry Bonds breaking the single-season home run record, two major league teams could end up on the chopping block.

The disparity among major league franchises has grown significantly in the last 10 years, resulting in the inability of small-market teams to compete with large-market teams. As a result, the owners made an almost unanimous decision this week, approving a potential plan to eliminate two of its teams prior to next season.

Although they did not specify which teams would be cut, the likely candidates appear to be the Montreal Expos and the Minnesota Twins. The Florida Marlins and Tampa Bay Devil Rays also have been mentioned in contraction talks. According to Selig, the teams being targeted for elimination have not generated enough revenue to operate a viable major league franchise, and contraction is in the best interests of the game.

But Andrew Zimbalist strongly disagrees. Zimbalist, a respected economics professor at Smith College and author of the book, Baseball and Billions argues that contraction will not solve the league's fiscal troubles, but will only perpetuate them and hinder the growth of the game. Zimbalist weighs in on the negative implications of the proposed contraction and what baseball can do to right the ship.

TSC: In broad terms, what led to the owners' decision to approve a potential plan for contraction?

Zimbalist:

The owners have been unable to figure out any other way to develop a consensus about dealing with some of the economic problems of the game.

TSC: What is the cost of contraction? Does it make sense financially?

Zimbalist:

The owners are misperceiving the cost of contraction. And they're looking at this as a short-term fix. The reason it's a short-term fix is that if you lop off the bottom two teams, then there's less revenue ... that you have to give to those teams, and the tax on the top teams is lower. If you lop off two teams, you don't have to give them roughly $18 million to $20 million a year

for the next six years in central fund revenues that come from the national media and licensing contracts, international media contracts and Internet contracts. So you see, by not having to give $18 million to $20 million a year on average to the Minnesota Twins and the Montreal Expos, you save $36 million to $40 million a year.

They are hoping they could have a dispersal draft in reverse order which would give preferential access to good players from the Expos and Twins to the teams on the bottom. But I don't think the players association would go along with that. So that's what they're looking at. That is what they see as the perceived benefits.

But the other side of the ledger, however, is a lot heavier, the cost side of the ledger. First they have to buy out the Expos and the Twins and all their minor league franchises. And any long-term commercial contracts that any of those major or minor league teams have. So I think that's quite expensive and might well run $500 million to $600 million or more.

It's more expensive to put down that money than it is going to be remunerative to get the savings from not having to give $18 million to $20 million to the teams that are contracted. If you put those two things together, there's a net loss there. And then there's the antitrust question.

TSC: Right. What are the legal implications?

Zimbalist:

I think baseball is going to be sued by everybody and their grandmother about this. And the suits are going to be protracted and expensive and they will generate bad public relations for the game. And at the end of it all, baseball might lose its antitrust exemption

this was granted to baseball in 1922 and allows owners to block the sale of franchises without being subject to unfair trade laws, which would prove very costly to the game.

TSC: What about exploring other options such as relocation?

Zimbalist:

The statement that Commissioner Selig made was almost a non sequitur. He said relocation won't solve the problem; it will just relocate the problem if we let the team move. But that's quite silly.

I mean, the Washington, D.C./Northern Virginia market has nothing in common with the Montreal market. Moreover, Washington is able to build a new stadium for baseball. So not only is the market the sixth-largest media market in the U.S. and the nation's capital, a place where they have a large number of employers who can buy the luxury boxes, box seats and buy sponsorship arrangements, but they will have a new stadium to play with. So in what possible, conceivable way does Selig's statement make any sense whatsoever? It doesn't make sense. To say that if

you relocate the Expos to Washington it would just relocate the problem, that's just silly. The market is completely different.

TSC: Sounds like you think the office of the commissioner has mishandled the situation.

Zimbalist:

The leadership in baseball right now is pitiful. Selig is not providing leadership in any important way. And baseball has been living a period of 10 years in mistake because they have the owner of a baseball team serving as commissioner. There are conflicts of interest all the time.

Eliminating the Twins franchise happens to give Milwaukee a larger area of the region to which it can give a baseball team

the Selig family owns the Milwaukee Brewers. Even if somehow we could accept Selig and he says to us, "Trust me, I have pure motives here" and even if we all believed him, it's still the appearance of impropriety and the appearance of conflict that shouldn't be there. I think there's a failure of leadership in baseball, and this announcement of a potential decision is indicative of that.

TSC: I don't see how this plan could be put into action by the time spring training rolls around. Do you?

Zimbalist:

I don't, either. And in the meantime, since they haven't announced the teams

that will be eliminated, four teams are potentially affected. All four teams are frozen in terms of making any off-season moves, signing players or advertising for season ticket sales and so on. So it's almost a self-fulfilling prophecy in that this is going to end up killing four teams even though they're only shooting for two.

TSC: Are the Twins and Expos being targeted based on sheer revenue and attendance numbers, or are there other issues involved?

Zimbalist:

It all has to do with these clubs not building a new ballpark and being slammed in the face and punished because they didn't put up public money to build a ballpark for baseball. That's what this is all about. It's also an effort to derive leverage from the Players Association. But I don't think it will because I think the players will handle themselves quite adequately.

TSC: The number of teams has increased from 16 to 30 in the last 40 years. Do you think the league grew too big too fast?

Zimbalist:

No. Their problem is not their size. I think they could be two, four or six teams larger. The problem is the economic structure. They need to do more revenue sharing, they need to have appropriate incentives within their revenue-sharing system, which they don't have right now. They need to internationalize the draft. They could use a reinstitution of a luxury tax on high payrolls. With those things, I think baseball does quite well. Baseball is not in a deep malaise right now; it just needs some tweaking.

TSC: What impact do you think contraction will have on the game's appeal?

Zimbalist:

Baseball is going to lose a dimension that has been very exciting for the last three years, and that dimension is the assault on historical records, like the home run record. One of the reasons why Barry Bonds, Sammy Sosa and Mark McGwire have been so successful is because the major league has added pitchers. Each time you add a team, you add 11 pitchers. Those pitchers are on the bottom of the quality ladder, which dilutes the pitching and enables the top batters to perform that much better. So I think you're going to lose that dimension to the game if you contract. Even though it's a dilution, and dilution is a pejorative word, it's not something that is perceptible to the human eye.

People don't notice that a fastball is traveling at 88 mph instead of 89 mph or that it has a little bit more or a little bit less movement on it. People don't notice that a second baseman has a diminished range by 6 inches or whatever it's going to be. They don't perceive those things when they're watching the game; the game isn't less enjoyable to watch because of this talent dilution. Indeed, even though there is relative talent dilution compared to previous years if you compare it to 1960, 1940, or 1910, the quality level is so much higher today.

It's not dilution relative to any absolute standard of where baseball should be talentwise. It's just dilution relative to where it's been and it gives the strong batters that little bit of an edge.

An edge that enables them to hit three, four, five, six, seven, or eight more home runs a year, others to hit for a higher average and drive in more runs. And it enables the pitchers to do a little bit better since there are some weaker batters. It adds a very exciting dimension to the game. And baseball will lose that.

TSC: Baseball, a game so closely identified with American culture, seems to have taken a back seat to other sports in recent years. What needs to be done to recapture its former glory?

Zimbalist:

Well, baseball has reasserted itself; it's the second-most popular sport in the U.S. right now. But it needs to grow. The model of success is a model of growth, not contraction. It needs to get new markets, not only for its immediate health but also for the long-run health of the game. The long-run health of the game is predicated on the youth of America. You need to start with things like energizing participation in Little League, which has fallen in the last five years.

The best way to get the American youth involved in Little League is to bring major league baseball close to them. And you do that by adding teams to places like Washington, Portland, Sacramento, Las Vegas, New Orleans and the Charlotte area. You add teams, you don't subtract teams. It's when the youth of Washington, D.C., has a chance to go the ballpark and see Barry Bonds play, then they're going to get excited.

TSC: What do you think will be the end result of all this?

Zimbalist:

Well, hopefully they will find some way out of it. I don't know what is going to happen. I do think there are going to be a lot of challenges to baseball and it's going to look pretty ugly. I don't think baseball is going to be able to contract, but we still don't know how the collective bargaining issue is going to play itself out.

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