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Friday, January 27, 2012

Olney: The dire fate of B-list teams (Insider)

Will the Royals be able to retain Kathy Griffin?

The rumblings were there even before the final details of the new labor agreement were finished, and now they are getting louder each time that a team signs a player to an enormous contract. Prince Fielder hasn’t even been introduced by the Detroit Tigers in the wake of his nine-year, $214 million deal, and some rival executives with small-budget and middle-budget teams are privately lamenting what they consider the increasingly untenable position their teams occupy.

“I don’t think the new labor agreement helps small-market teams enough,” said one general manager. “I think it’s really going to hurt us, because it doesn’t address what’s happening.”

And what is happening, in the eyes of many team executives, is that the massive TV contracts that are either already in place or on the horizon for teams like the Texas Rangers, Los Angeles Angels, Los Angeles Dodgers and Seattle Mariners are helping to create two distinct classes of teams.

The A-listers and B-listers, you could call them.

Albert Pujols’ deal with the Angels, valued at $246 million, came within weeks after the Angels negotiated their new TV contract, and the Rangers committed more money to Yu Darvish—$112 million—than has ever been spent on a right-handed pitcher. Earlier this offseason, the Dodgers agreed to terms with outfielder Matt Kemp for $160 million over eight years. Fielder’s contract comes out of the pocket of owner Mike Ilitch, but the deal, like the others, has a direct bearing on the market and whether the B-listers can retain their best young players.

RoyalsRetro (AG#1F) Posted: January 27, 2012 at 07:16 AM | 42 comment(s) | Login to Bookmark
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   1. chris h. is a member of Team Keefe! Posted: January 27, 2012 at 12:11 PM (#4047327)
This just in: large-market teams have more money to spend than small-market teams.

Also, Sun expected to rise in the eastern sky tomorrow, experts predict.
   2. Sam Hutcheson is the 'saur with the rainbow roar Posted: January 27, 2012 at 12:33 PM (#4047358)
I expect this debate to fall along the lines of "fans of large market teams love free markets, yay!" and "fans of mid- and small-market teams might consider a level playing field for the league."
   3. cmd600 Posted: January 27, 2012 at 12:44 PM (#4047374)
Chris h. - but now, more than ever, the split is widening. TV contracts are more likely to be determined by how many people are in your walled-off territory than the ability to put a good product on the field than, say, gate receipts. The Rangers, which have all of Texas, and the Angels can broadcast to over 20 million people. Can teams like the Royals, Indians and Pirates get even half that?
   4. Gamingboy Posted: January 27, 2012 at 12:47 PM (#4047378)
Agreed, it's nothing really new.

It's just that there are more teams now that seem to be able to throw money around. Of course, throwing money around is no guarantee for success. I mean, look at how the Twins have gotten worse as they've gotten richer, or how bad the Angelos-era Orioles botch things when they try to do a spending spree ("Let's get Miguel Tejada, Javy Lopez, Rafael Palmeiro, BJ Surhoff and Sidney Ponson-after-his-one-good-season!")

   5. John Northey Posted: January 27, 2012 at 01:27 PM (#4047455)
Yet the Blue Jays, who have exclusive control of a market well over 30 million, still act like a small market club.

Sigh.
   6. Cris E Posted: January 27, 2012 at 01:27 PM (#4047457)
This does sort of fit in with the discussion from earlier in the week on the de facto salary cap. While it's not clear what the new rules are exactly, it appears the huge luxury tax and the retooling of rev sharing money is going to lead to huge profits for the rich teams. But what if the goal is to make reinvesting all your money in the team a less attractive option? If Bud can get the rich teams to pocket more money it'll level the payrolls across baseball and reduce the effect of this disparity. If Mike Illitch wants to be an *sshole and continue to spend money on his team, he still can but it'll be really expensive, but as BOS and NYY have already shown, quite a few of the Haves are going to tighten the budget.

In the short term it might just slow some teams from leaping up to BOS/NYY salary levels, but in the long run this will be bad for baseball. Players will miss the huge checks and the usual 50% of revenues, and small money teams will carp about fairness just like the good old days of 1993.
   7. Crispix Attacks Posted: January 27, 2012 at 01:34 PM (#4047470)
Yet the Blue Jays, who have exclusive control of a market well over 30 million, still act like a small market club.


Hey, if you assume British Columbia is Mariners territory the rest of Canada is only 29 million people.
   8. RJ not in TO Posted: January 27, 2012 at 01:43 PM (#4047479)
The Rangers, which have all of Texas, and the Angels can broadcast to over 20 million people. Can teams like the Royals, Indians and Pirates get even half that?


The Cardinals seem to manage ok. Also, I know the Astros have sucked recently, but that's a little harsh.
   9. cmd600 Posted: January 27, 2012 at 02:22 PM (#4047534)
The Cardinals seem to manage ok. Also, I know the Astros have sucked recently, but that's a little harsh.


It's harder to eyeball the population numbers from a map for St. Louis' market size, but I was under the impression that in the early days, the Cardinals expanded their radio market pretty wide, and as a result have territorial rights in about 10 states. No, they don't have the market size of a Texas or Los Angeles, but they're still bigger than the typical small market. And they're one of the few small market teams that can be counted on to fill the stadium even if they only win 70-75 games. They're an exception when it comes to being a 'small market' and I'm not seeing what other small market teams could do to reconstruct the Cardinals revenue model.
   10. RoyalsRetro (AG#1F) Posted: January 27, 2012 at 02:32 PM (#4047543)
#9 is right. Saying the Cards have a small market is like saying the Red Sox are the fifteenth largest market in baseball because Boston isn't that big.
   11. RJ not in TO Posted: January 27, 2012 at 02:42 PM (#4047549)
Large market and small market is mostly ######## used to fuel the owners bargaining strategies as they try to take more money from the players. Remember when Philly was a "small" market team and collecting revenue sharing even though they are the fifth largest MSA in the country? Or how about when Bud wanted to contract the Twins because they couldn't compete financially? In the eleven years since they have won their division 6 times and only had 2 seasons with a losing record. They also managed to sign their homegrown star player to a massive long-term contract(whether or not it turns out well).
   12. LionoftheSenate (is done roaring!) Posted: January 27, 2012 at 02:47 PM (#4047553)
Didn't the Rangers, Brewers, Rays all make impressive playoff runs in recent years with payroll's in the bottom half of the league?
   13. LionoftheSenate (is done roaring!) Posted: January 27, 2012 at 02:48 PM (#4047556)
The Cardinals do have a smaller (not small) market. But their brand is massive. It's still not a big market. But the Cardinals and no one else is responsible for such a powerful brand which allows the team to play way above its market.
   14. TerpNats Posted: January 27, 2012 at 02:48 PM (#4047557)
Washington is finally growing into its large-market status. Remember, the last time D.C. had a consistent MLB contender (1924 to '33), it was among the smallest markets in the majors.
   15. escabeche Posted: January 27, 2012 at 03:21 PM (#4047584)
or how bad the Angelos-era Orioles botch things when they try to do a spending spree ("Let's get Miguel Tejada, Javy Lopez, Rafael Palmeiro, BJ Surhoff and Sidney Ponson-after-his-one-good-season!")

When the Orioles were big spenders, about 15 years ago, they were good, and in 1997 were the best team in baseball. For the last ten years, the Orioles have not been a high-payroll team. You can criticize Angelos for spending like a mid-market owner, or you can criticize him for buying three mediocre players for the price of one good one, but "spending spree" is not really how I'd describe his approach. Also, Tejada and Palmeiro provided a lot of value for a lot of money, and Surhoff provided a lot of value for not very much money. There's lots to dislike about the Angelos era, but not those three guys.

Of course, it's true that throwing money around is no guarantee of success. It just substantially increases the probability of success.

   16. cmd600 Posted: January 27, 2012 at 03:38 PM (#4047599)
Remember when Philly was a "small" market team and collecting revenue sharing


The revenue sharing model was completely screwed up. Not only the Phillies, but the Mets and Angels have collected revenue sharing as well. And yes, the owners do use it to take money from the players. But that doesn't make the advantage of being in a large market ########.

But the Cardinals and no one else is responsible for such a powerful brand


I'll give them plenty of credit for this, but there are other factors at work. Again, they gathered up unclaimed territory like it was the Wild West (and I'll take nothing away from how brilliant a strategy that worked out to be), and the brand doesn't really take much of a hit locally if they have a below-average team. If no one else is responsible then there has to be a business model that true small market teams can follow to build up their brand. What is it?
   17. NJ loves his Super Lintendo Posted: January 27, 2012 at 03:43 PM (#4047604)
I think those B-list teams should try spending more money on amateurs since they seem to have trouble competing for established talent. Wait...what?
   18. snapper (history's 42nd greatest monster) Posted: January 27, 2012 at 03:44 PM (#4047606)
I'll give them plenty of credit for this, but there are other factors at work. Again, they gathered up unclaimed territory like it was the Wild West (and I'll take nothing away from how brilliant a strategy that worked out to be), and the brand doesn't really take much of a hit locally if they have a below-average team. If no one else is responsible then there has to be a business model that true small market teams can follow to build up their brand. What is it?

Concur. You really can't give the Cardinals all that much credit for being the western and southernmost team until 1955.
   19. RMc's grumbling has gone far enough Posted: January 27, 2012 at 03:49 PM (#4047611)
Yet the Blue Jays, who have exclusive control of a market well over 30 million, still act like a small market club.

Yes, but how many Canadians are Blue Jays (or for that matter, baseball) fans? It's like the Atlanta Thrashers couldn't draw flies but are selling out in Winnipeg, even tho ATL is seven times the size of WPG.
   20. RoyalsRetro (AG#1F) Posted: January 27, 2012 at 04:13 PM (#4047641)

I'll give them plenty of credit for this, but there are other factors at work. Again, they gathered up unclaimed territory like it was the Wild West (and I'll take nothing away from how brilliant a strategy that worked out to be), and the brand doesn't really take much of a hit locally if they have a below-average team. If no one else is responsible then there has to be a business model that true small market teams can follow to build up their brand. What is it?


What's remarkable is how successful the team has been on the field over a long period of time. 36 of their last 52 seasons have been winning seasons. They've only had back-to-back losing seasons once over that time (1994-'95). They've had a 90-loss season just three times in half a century. They've won five championships over that time. Its no surprise they have such a strong fanbase.
   21. Matthew E Posted: January 27, 2012 at 04:29 PM (#4047663)
Yes, but how many Canadians are Blue Jays (or for that matter, baseball) fans?


Some. Maybe not as many as if you were looking at fans of some US-based team among an American population of similar size and presumed loyalty, but still enough to make the territory worth something to you.
   22. Flynn Posted: January 27, 2012 at 04:36 PM (#4047672)
If the Jays win 95 games they'll be coming out of the woodwork all over Canada.
   23. cpass Posted: January 27, 2012 at 05:02 PM (#4047702)
The Rangers, which have all of Texas...

What about Houston?
   24. Gamingboy Posted: January 27, 2012 at 05:03 PM (#4047705)
15: 1998. Larger payroll even than the Yankees. 79-83.
   25. jingoist Posted: January 27, 2012 at 05:29 PM (#4047741)
I read all these comments about St Louis being a "small market" team.
Here's a couple of thoughts:

As a kid in the 50's I remember the Pirates taking their train-based road trips through Chicago then to St Louis. St Louis was as far west as baseball went in its first 90 years.

St louis had fans all the way to california, texas, colorado, etc back in the days before West Coast expansion.

St Louis also supported two teams as late as the early 1950's - remember those lovable losers, the St Louis Browns, who became the Orioles back in 53 or 54.

Pittsburgh, the city, now has less than 400,000 inhabitants.
Allegheny County has about 1.1 to 1.2M citizens to draw from; Butler, Beaver, Washington and Westmoreland counties that are located nearby should add another 500,000 potential fans.

The Angels can now broadcast to and draw from 15M to 20M fans; the Bucs are lucky to reach the aforementioned 1/10th that sized community.

   26. Fernigal McGunnigle Posted: January 27, 2012 at 05:48 PM (#4047763)
#9 is right. Saying the Cards have a small market is like saying the Red Sox are the fifteenth largest market in baseball because Boston isn't that big.


Just to nit pick, this isn't a good comparison. The Boston-Worcester-Manchester Combined Statistical Area is the fifth-largest in the country, and the only one of the top 6 without two teams. The Boston CSA covers an area that's roughly the far reach of commuting distance from Boston, maybe a 75-minute drive from Fenway. I used to work about a mile from Fenway and had a coworker who lived in Providence and one who lived outside of Manchester, so these places really are within Boston's everyday orbit. A huge part of the Red Sox financial success comes simply from having 7.5 million people who live close enough to Fenway that they can go to a game without having to get a hotel room. That's not at all the same thing as the Cardinals building up a fanbase in Arkansas or wherever to supplement their fairly paltry commuting-distance market (of ~2.9 million).

I guess my point is that most people don't realize how big Boston's market actually is, just because Boston itself is so tiny. It's not at all comparable with St Louis.
   27. DL from MN Posted: January 27, 2012 at 05:52 PM (#4047774)
112M people in Mexico and no major league baseball. The economics of adding a team in Monterrey are unbelievably positive.
   28. cmd600 Posted: January 27, 2012 at 07:12 PM (#4047827)
112M people in Mexico and no major league baseball. The economics of adding a team in Monterrey are unbelievably positive.


Except the average salary in the wealthiest Mexican cities are about one-third of that in the poorest cities that currently have MLB teams. There's nowhere near enough disposable income to support a team.
   29. RoyalsRetro (AG#1F) Posted: January 27, 2012 at 07:45 PM (#4047845)

Just to nit pick, this isn't a good comparison.


I was trying to riff of John Henry's statement when he tried to assert the Red Sox played in the fifteenth or whatever it was largest market. Yea, Boston is still pretty big. Even so, if you didn't know anything about baseball, you probably wouldn't guess it could support the second largest payroll in baseball based on the MSA of Boston/Worcester/Manchester alone.
   30. escabeche Posted: January 27, 2012 at 08:02 PM (#4047853)
15: 1998. Larger payroll even than the Yankees. 79-83.


Which is a better record than they've had in all the years since, when they didn't have a big payroll. Also, the 1998 Orioles outscored their opponents and had a 84-78 Pythag record. Not a bad team, certainly not when compared with the tighter-pursestring teams of the last decade. Big spending substantially increases likelihood of success.



   31. snapper (history's 42nd greatest monster) Posted: January 27, 2012 at 08:36 PM (#4047869)
112M people in Mexico and no major league baseball. The economics of adding a team in Monterrey are unbelievably positive.

I think this headline describes the problem with that.

Gunmen burst into a casino in Monterrey, Mexico Thursday and doused the premises with a flammable liquid, starting a fire that killed at least 53 people.


   32. Crispix Attacks Posted: January 27, 2012 at 09:24 PM (#4047905)
Gunmen burst into a casino in Monterrey, Mexico Thursday and doused the premises with a flammable liquid, starting a fire that killed at least 53 people.

Hey, that's nothing. Back when things like this were going on all the time in Chicago, both the Cubs and White Sox made the World Series regularly.
   33. a bebop a rebop Posted: January 27, 2012 at 11:04 PM (#4047962)
Haven't read the comments, so I don't know if it's been mentioned, but the Rangers' TV deal ($1.6B over 20 years) and the Angels' ($3B over 20 years) aren't exactly comparable. It's less accurate than the standard ploy of lumping the Yankees and the Red Sox together.
   34. Something Other Posted: January 28, 2012 at 12:37 AM (#4048009)

Except the average salary in the wealthiest Mexican cities are about one-third of that in the poorest cities that currently have MLB teams. There's nowhere near enough disposable income to support a team.
I feel pretty strongly otherwise. You're still going to have a decent number of luxury boxes, and you can make up some for having lower ticket prices by having a larger stadium than we're accustomed to. 65,000 seats strikes me as doable. TV revenue will also be pretty tasty, given the undivided audience.
   35. Joe Kehoskie Posted: January 28, 2012 at 01:01 AM (#4048024)
I feel pretty strongly otherwise. You're still going to have a decent number of luxury boxes, and you can make up some for having lower ticket prices by having a larger stadium than we're accustomed to. 65,000 seats strikes me as doable. TV revenue will also be pretty tasty, given the undivided audience.

If you look at a team as being Mexico's rather than Monterrey's or Mexico City's, it looks a little more viable. But there's no way Monterrey would routinely draw 65,000 people, and national TV rights would be adversely affected by the fact that huge parts of Mexico don't care much about baseball.

As recently as a couple years ago, I thought Monterrey was increasingly viable, but the growing violence there makes it a non-starter. There's simply no way MLB would consider it under the current conditions. Non-Mexican players wouldn't want to sign there, and Mexico doesn't have enough MLB-caliber players from which to build a team.
   36. TerpNats Posted: January 28, 2012 at 01:53 AM (#4048039)
As recently as a couple years ago, I thought Monterrey was increasingly viable, but the growing violence there makes it a non-starter. There's simply no way MLB would consider it under the current conditions. Non-Mexican players wouldn't want to sign there, and Mexico doesn't have enough MLB-caliber players from which to build a team.
You want to expand MLB into Latin America? Wait for a post-Fidel, more open Cuba, see if things stabilize there for a few years, then judge whether the populace would have enough financial resources to support the majors. If not, the Marlins can use Havana for a Triple-A site.
   37. Joe Kehoskie Posted: January 28, 2012 at 02:01 AM (#4048043)
I'd expect Cuba would need at least ten years as a Triple-A city before MLB would be viable. There would be huge foreign investment if Cuba ever opened up, but the starting point is so incredibly low. Right now, the average Cuban's net worth is probably $1,000, if that.
   38. Something Other Posted: January 28, 2012 at 02:28 AM (#4048049)
Mexico City's only another hour or so south by jet. Any reason--other than the air being unbreathable--that MC couldn't host a team?
   39. Joe Kehoskie Posted: January 28, 2012 at 02:55 AM (#4048055)
Mexico City was seen as too violent for an MLB team back when Monterrey was pushing for the Expos, but the two cities might have opposite trend lines now. It's just hard to see MLB considering Mexico until the drug war violence has subsided. If a city as big and relatively wealthy as Monterrey was on the Yucatan, away from the violence, things might be a lot more interesting.
   40. Squash Posted: January 28, 2012 at 05:51 AM (#4048065)
Mexico City's only another hour or so south by jet. Any reason--other than the air being unbreathable--that MC couldn't host a team?

For everything that's great about it, Mexico still isn't really a westernized nation. Moving and administrating a team there now would still be a logistical nightmare, due to tax laws, accounting laws or lack thereof, customs, crime, relative value and stability of the currency, corruption, etc., plus as mentioned above the huge disadvantage the team would have in terms of attracting players. It's not like Canada, where they're essentially "just like us" except they can't buy guns. Try telling an 18-year-old white kid from Georgia he has to go play minor league ball in the boondocks of Mexico (presumably they'd put the team's minor league teams in Mexico as well in the Texas League and whatnot), or that he has to spend the first six years of his career a couple hundred miles south of the border. There would be a riot.
   41. Something Other Posted: January 28, 2012 at 04:23 PM (#4048274)
Got it--scratch Mexico. I do like the idea of their being a team in Cuba one day, and perhaps Puerto Rico.
   42. Joe Kehoskie Posted: January 28, 2012 at 06:40 PM (#4048382)
In some ways, I see Puerto Rico as more of a longshot than Mexico or Cuba. Baseball is trending in the wrong direction in P.R., to the point that the winter league went idle for a year back around 2009.
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