Sunday, November 8, 2009

Why Baseball Needs More Competitive Balance

This last Wednesday, the New York Yankees won their record 27th World Series championship. For a franchise that has been in existence for 108 years, this means that they have won the World Series, on average once every 4 years. Just as impressive is their total of 40 World Series appearances which averages out to appearing in the World Series on average, 3 out of every 8 years.

Since I didn’t have a rooting interest, I watched the Yankees’ celebration seeing the look of ecstasy on the players’ faces along with their adoring fans. It was living vicariously since I knew that my hometown Pittsburgh Pirates would never likely get to the World Series in my lifetime ever again — certainly not under the present system used in baseball that mostly rewards the teams that are willing and able to spend the most for players. In Pittsburgh, a successful baseball season is now defined as finishing over .500 — which the Pirates have now failed to do over the last 17 seasons with no apparent end in sight.

In any one season, only one team can win it all. But there was always that hope for the losers who say “Wait Till Next Year” when the season starts anew and offers a fresh chance for everybody.

But especially for fans in smaller markets, that hope has vanished. They know that occasionally teams from small markets can get lucky and make the post-season playoffs. But even if they do, that means that the best emerging players will soon be attracted to the teams with the most money to spend so the joy will be short-lived. This happened twice after a pair of improbable World Series victories by the Florida Marlins which were followed by the dismantling of the teams for financial reasons. In effect, we have a system where the small market teams function as a farm team for the larger market teams with deeper pockets.

The Yankees have been notorious for their payrolls that dwarf those of most other teams. So after their victory, there is always the question of whether they won because of things like “character” or whether they are just simply
The best team money could buy.

The Yankees are not a big-market team. They DWARF big-market teams. They are quantitatively different from every other team in baseball and every other team in American sports. They don't just spend more money than every other team. They spend A LOT more money than every other team. The Boston Red Sox spend $50 million more than the Kansas City Royals? Who cares? The Yankees spend $80 million more than the Boston Red Sox.

Because of the more unpredictable nature of baseball games and their short playoff series, the teams with the largest payrolls don’t always win championships. But even so, the fans of smaller market teams know that the best stars will be playing elsewhere since that is where the money is.

In the National Football League which has a salary cap to equalize payrolls, teams succeed because they have better coaching and talent evaluation. And with more competitive balance, more fans in more cities stay interested in their teams throughout the season. In comparison, July in Pittsburgh is not important for the beginning of the baseball pennant race but rather for the start of Steelers’ training camp.

Baseball is the only major sport in America not to have a salary cap and if the powerful Major League Baseball Players Association has their way, there will NEVER be one. They obviously do not want to compromise the earning power of their marquee players. But in taking this stance, the union may well be doing a disservice to the players who play on the smaller market teams. Just like the fans who want to win a championship, these players would also like to have a chance to win a championship one day. There isn’t room for everybody to play for the Yankees and other large market teams.

The larger question is whether this has caused overall interest in the sport to decline. Several generations ago, baseball certainly earned its title in America as The National Pastime and the World Series was one of the most watched TV events of the year. Examining World Series television ratings over the last 25 years however, the percentage share of households watching TV who are tuned in has declined from in the 40s in the 1980s down to the 20s in the 1990s and in this decade mostly in the high teens. In contrast, National Football League Super Bowl television ratings through the years boast share ratings of at least 60% and sometimes 70%. In addition, NBC who presented the latest Super Bowl was able to command a cool $3 million for a 30 second ad.

The MLB All-Star Game has suffered a similar decline over the years and has now has to resort to the pathetic gimmick that the league that wins the All-Star Game gets home field advantage in the upcoming World Series to try and make it compelling enough to watch.

We have seen real life examples of what benefits those on the top of the food chain, e.g. Wall Street, doesn’t do much to benefit those on Main Street who are struggling. A similar case can be made that what benefits the top of the food chain in Major League Baseball, e.g. the Yankees, doesn’t do much to benefit the smaller market franchises that are struggling — which is hurting the overall popularity and health of the game. Of course, there are other issues such as steroid scandals that are turning off fans.

But if Major League Baseball wants to try and recapture the popularity it has lost in recent decades to football, they have to show that if they indeed want to operate 30 franchises, they need to work on offering a quality product with much more competitive balance. It is competitive balance that creates compelling interest in the games. The NFL knows this and has used it to expand its popularity over the years. In many cities, come September, it means the difference between baseball fans following a hot pennant race with their favorite teams — or instead turning to football because their team is hopelessly out of it!

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