Wednesday, December 24, 2008

Zen Dayley: Teixeira signing brings out everyone's inner Mark-sist

Feel free to call the Yankees signing Mark Teixeira the first shot in baseball's War of 2012.

That is alarmist and hacky, using the war metaphor, granted. The Yankees now have the four highest-paid players in the history of baseball -- two heavy-hitting corner infielders, a lights-out left-handed starter, and a singles-hitting shortstop with limited fielding range. Will Leitch has dubbed them the "Fantastically Overpaid Four."

Milwaukee Brewers owner Mark Attanasio is calling for a salary cap. One wonders why Red Sox owner John Henry would resist jumping on the populist bandwagon, if only for show. The Sox have reached their ceiling in revenues, have no plans to replace Fenway Park and are have said they will not raise their sky-high ticket prices. They have three teams in their market -- the conference-leading Bruins in the NHL, the NBA-leading Celtics and the Super Bowl runner-up Patriots -- who are flourishing in leagues with salary caps. The optics are irresistible; so's the money.

One has to think, with the doom and gloom shrouding the U.S. economy, and the knowledge that the three biggest general strikes the game has seen -- 1972, '81 and '94 -- each came during recessionary periods in the U.S., that there will be some fireworks after the current CBA runs out after the 2011 season.

No one can predict how it might shake out. The 1994-95 strike, which ultimately drove a huge nail in the Montreal Expos' coffin and killed off a lot of fan interest in the Blue Jays, was not players vs. owners. It was owners vs. owners -- Milwaukee, Minnesota and Kansas City vs. New York. Since then, the Yankees have made the playoffs in 13 of 14 seasons and have spent more money in the past two weeks than some teams are worth. How does it not come to a head, unless there are Jeffrey Loria types who like taking money from revenue sharing every year?

It is important to separate an informed view from a personal opinion. It says here that baseball needs the three R's -- revenue sharing, a revised schedule (i.e., balanced) and realignment, where the most profitable teams are grouped together in the same division. Salary caps are too simplistic by half, but what we've seen in the past two weeks is out of whack.

It probably will come down to whether the less profitable teams band together and if the McMansion teams -- Phillies, Mets, Cubs, Angels -- realize, as their front offices have, that they're not going to beat the Yankees by being more like the Yankees. The Red Sox have taken that to heart -- they're all about plowing their massive revenues back into player development, or using it to sign players from the Pacific Rim.

Those franchises might have to lead the way on any restructuring that will hold the Yankees' checkbook in check. It is amusing that everyone was cool with all of this up until yesterday and then turned into Linda McQuaig, but it seems like something has to give.

Here's a collection of thoughts on the signing:

Maury Brown, The Biz of Baseball: "The biggest catalyst for the spending involves how the latest CBA is structured as it pertains to new stadium development. Clubs may write off a portion of their revenue-sharing obligation by deducting bond payments and maintenance costs. By cutting those costs, at a 31 percent rate that is assigned the Yankees as part of the CBA, they are sheltering a sizable chunk of change.

"... the biggest loophole for the Yankees involves the tax-exempt bonds issued to build new Yankee Stadium. Nearly all of the $967 million in bonds that have been issued are tax exempt. To add more salt to the taxpayers’ wounds, the club is looking for an additional $259 million in bonds, all tax-exempt, as well."

Neil deMause, author of Field of Schemes, in an interview published Monday, had more to say on the Yankees' billion-dollar boondoggle: "I guess if the Yanks take their boodle and plow it into enough player salaries, the other teams might see a bit of money trickling down via the luxury tax. I can’t see that that will make up for the effect of giving the Yanks even more financial firepower to sign free agents, though. Add in that the other 29 teams are themselves kicking in more than $200 million toward the New York stadiums -- by allowing the Mets and Yanks to deduct stadium costs from revenue sharing -- and it's hard to see how this benefits anyone but the Steinbrenners and Wilpons.

"... I don’t think anyone in MLB seriously thinks they can bring the Yankees down to earth. Several years ago (commissioner Bud) Selig threatened to audit the Yankees for underpaying themselves for TV rights - which they’re almost certainly doing, to avoid revenue-sharing payments - but so far as anyone knows he never followed through.

"From a financial perspective, it's good for all the teams when one of them gets richer, even the Yankees. On the field, it’s not so hot -- though given recent history, being richer hasn't exactly made the Yanks world-beaters."

Roy Firestone of HDNet raised some similar points on MLB Home Plate's Inside Pitch this afternoon. The gist of it was:
  • "People having opt-outs, that should be illegal. It's not fair to the fans, first and foremost."
  • There is the spectre of three to four teams facing bankruptcy within the next few years.
  • The "one story no one seems to be looking at" is the loss of advertising revenue from the auto industry, which far and away is baseball's No. 1 advertiser. The Yankees just lost a sponsorship deal with General Motors.
  • "I'm telling you that ad revenue for television is going to reduced dramatically in the next 6-8 months ... I think that we're looking at a collision course, a kind of baseball armageddon."
  • Firestone noted it's come to the point where some franchises, such as Baltimore and Kansas City can't even have one marketable star. Think back to the American League in the late 1980s. Cal Ripken Jr. played in Baltimore. Kirby Puckett was in Minnesota. Ken Griffey Jr. was in Seattle. Kansas City had George Brett. Milwaukee had Robin Yount and Paul Molitor -- people you looked forward to visits to your team's city. That isn't there for the casual fan so much anymore.
  • "I believe there should be a salary cap, I believe people should push for it and I'm a pro-union guy ... the money's not the issues, it's the players having the entitlements, the opt-outs, and by the time you look up, you have four players on one team making $88 million, which is more than most teams."
Phil Sheridan, Philadelphia Inquirer: "Baseball economics always have been bad for competitive balance, but this Yankees spree is the worst ever because of real-world economics. It just smells bad. New York signed arguably the top two pitchers and the best slugger on the market. The Yanks, bidding against no other team, simply threw tens of millions of extra dollars at Sabathia."

Wallace Matthews, Newsday: "... no one could have imagined the kind of shameless shopping spree the Yankees have been on this month — $167 million for CC Sabathia, $82.5 million A.J. Burnett and now, a reported $180 million for Teixeira — at a time when more than 10 million Americans are out of work and another 4 million might join them in 2009.

"But no matter. Those 4 million out of work will be offset by another 4 million, the ones who can still afford to pay their way into the new Yankee Stadium. And the luxury boxes, averaging a half-million dollars a pop, are at 100-percent capacity, scarfed up by those corporations who can still afford such luxuries, even if they have to use your tax money and mine to pay for them."

Roch Kubatko, Mid-Atlantic Sports Network (which covers the Orioles): "The teams that worked the hardest in terms of changing their proposals and pressing agent Scott Boras -- the Red Sox, Nationals and Angels -- ended up with nothing."

Washington Times: "After 2011, the players union and team owners must hash out a new collective bargaining agreement. And it could get ugly, as we're already hearing some owners, including the Brewers' Mark Attanasio, push for a salary cap. League officials and the player' union will probably point to the current system as creating good competitive balance and strong revenue sharing, despite the Yankees free-spending ways."

(Aren't symposiums just a way of masking one's lack of original insight on a topic? Bingo.)

Brewers Owner Suggests Salary Cap After Yankees Spree (Bloomberg News)


Pete Toms said...

Don't if Henry will be calling for a cap. He and Werner have been quite public about wanting control of their local digital rights ( which BAM controls ) to boost Red Sox revenues. They also told MLB to stick their league wide StubHub partnership. The Red Sox didn't participate in the deal last year. Again, this is about maximizing Red Sox revenues, as opposed to sharing.

Henry was all for increased revenue sharing when he was the Marlins owner though.

Anonymous said...

Time for a "divisional" system (like soccer) where teams can rebuild, be competitive in a "lower division" while still having a shot at the World Series. The Kansas Cities (and Montreals) hell, most of the teams need to show fans there SOME hope, or they're all just glorified triple-A. That's nothing new (KC A's served as a Yanks farm team for years) but compared to those other sports, they're going to start losing fans.

Pete Toms said...


Promotion / relegation leagues? Is that the right term? This is a subject I need to bone up on...I know some folks think it is superior to what we have in North American pro sports....I honestly don't know, I have never followed soccer...

And you're also right that KC was de facto a Yankee farm team during many seasons of Yankee dynasty....

Anonymous said...

I'm not sure if I do think it's superior, however it may be the only way that cities could keep their teams as they rebuilt teams. Take a situation like Montreal. As the chance of competing waned along with attendance, that team could have been competitive in a slightly lower division, paying lower salaries and maybe drawing more fans as they became competitive in the lower bracket. This would allow all non NY, Chicago, LA markets to ebb and flow and not lose their team.

I don't think the North American fan would go for a complete demotion, and so "interleague" might become "interdivision", and a "demoted Montreal" would have to have a faint hope of the World Series by first winning in "AAA" and in doing so, gaining a "wildcard" berth in World Series Playoffs.

I don't expect this to ever happen of course. Should the mighty Yankees be allowed to slaughter hapless AAA opponents in my scenario above? Well, they're doing it now to half or more of the league. And this is baseball, better teams usually prevail, but generally the games are close. I would love to see a day where cities were not threatened with relocation and leagues weren't propped up by expansion fees. I'd like to see a proper financial structure. The relegation system is not a panacea, I'm sure teams struggle there too, but the "reverse pennant races" make for meaningful late-season games and the idea of a Cinderella 2nd or 3rd division team challenging the big boys once in a while seems fun. I can see it now: Ottawa Rapids to play Yankees in one-game playoff for right to advance to Divisional Series. Think there's enough parking on Coventry Road for that?

Ooops, forgot, FANS might like that......

Anonymous said...

I personally think that when the CBA expires and baseball has to initiate a salary cap, I say so be it. If this involves major labour unrest and a 1994-like strike, I say do it.

Enough is enough. If a strike and major labour turmoil means someone, somewhere, finally gets it and sees that baseball is going to self-destruct on its current economic course, I'm all in favour of it.

Draconian? Perhaps. But it seems like the owners don't respond to anything but extreme measures, so I say do it. I have no fear over a lost season.

Things have to change.

Duane Rollins said...

The pro/rel system you are referring to is called a pyramid system.

In many ways I will argue that it's an ideal system for fans, but there is no way in hell that you'll ever see it in North America -- even in soccer, where logic would suggest it would most make sense.

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