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Friday, March 27, 2020

Will MLB Turn to Expansion After Losing Revenues to COVID-19?

Over the last several decades, revenues for Major League Baseball have soared, nearing $11 billion last season. The league’s unprecedented prosperity has turned MLB franchises into cash cows in ways not seen in prior generations. It will likely take some time to gauge the extent of the revenue teams will lose due to COVID-19-related delays, but given that some or perhaps all of the 2020 season will be lost, baseball isn’t likely to be a great moneymaker for owners this year. And while league expansion has been talked about for quite some time, it’s possible the losses suffered this season due might actually be the precipitating factor in MLB moving beyond 30 teams.

For the last few decades, owners haven’t felt compelled to expand because they were making plenty of money without the need for a cash grab. The dirty truth about expansion is that it isn’t about growing the sport. It’s about injecting cash into ownership pockets now, with those same owners willing to share a slice of their pie with a couple more teams in the future. If the owners don’t feel the need for that expansion money, they aren’t going to welcome more teams to take a share of overall MLB revenues. In addition, the threat of relocation from teams looking for new stadium deals serves to slow expansion; MLB likes to have potential expansion cities available to threaten municipalities into providing new ballparks.

Modern expansion isn’t about the talent levels available or growing to meet the needs of an increasing population. If it were, we would have seen expansion at some point in the last decade. The talent pool has gotten incredibly good, with fastball velocities and strikeout levels rising to the point that diluting the talent pool could have a positive impact on the game, resulting in more action and balls in play. And in terms of population, the number of people per team is approaching levels last seen in 1960 when baseball had just 16 teams.

The sound you are hearing are a bunch of local politicians across North American getting really excited and a bunch of economists sighing in response…..

 

QLE Posted: March 27, 2020 at 01:24 AM | 10 comment(s) Login to Bookmark
  Tags: coronavirus, expansion

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   1. The Yankee Clapper Posted: March 27, 2020 at 02:09 AM (#5933929)
The sound you are hearing are a bunch of local politicians across North American getting really excited and a bunch of economists sighing in response…..
If the Corona Virus causes a big drop in MLB revenue, as seems likely, it will also cause significantly lower tax revenues & higher costs for local government services responding to the crisis, while making voters less likely to tolerate government giveaways to sports teams. That’s not a good climate for building more BDC Domes, and elected officials won’t be sticking their necks out for such efforts.
   2. RoyalsRetro (AG#1F) Posted: March 27, 2020 at 07:46 AM (#5933939)
Oh yea, that makes total sense. It has been a long time since expansion anyway, the talent pool seems to be ripe for it.
   3. Gold Star - just Gold Star Posted: March 27, 2020 at 12:25 PM (#5934043)
Yes, 32 teams! Sixteen in each league, four four-team divisions, postseason berths go to the division winners and two wild cards, with the leagues' top two seeds getting first-round byes!
   4. Gold Star - just Gold Star Posted: March 27, 2020 at 02:10 PM (#5934110)
(Yes, I know this is the NFL model - but, tbh, I like the idea of division championships counting for something. In the NBA, winning your division doesn't mean much.)
   5. DanG Posted: March 27, 2020 at 04:09 PM (#5934187)
In an unpublished article written last year, I came up with the following scheme for expansion, radical realignment, and relegation.

These ideas require two conditions to come about:

1. MLB owners will find new incentives to expand their ranks.
2. The NL will adopt the DH.

MLB will not expand without #1; radical realignment is impossible without #2.

There are a couple things to note. In the early 60’s MLB increased from 16 to 20 teams in two years, a 25% increase. In 1969 MLB increased from 20 to 24 teams, a 20% increase. Initially, what I have in mind is an increase from 30 to 36 teams, a 20% increase. So an increase of six teams is feasible, given the foregoing.

The six cities mentioned most often as expansion candidates are Charlotte, Las Vegas, Montreal, Nashville, Portland, and San Antonio. These six will be placed in their own expansion league, along with the six weakest teams currently in MLB (3 from each league). We’ll call this league “MLB2”.

The remaining top 24 teams in MLB are then geographically arranged in four 6-team divisions. We’ll call this “MLB1”.

Here’s how that might look for 2021:

MLB1
East
Boston
NY Mets
NY Yankees
Philadelphia
Toronto
Washington
Mideast
Atlanta
Chi Cubs
Chi W Sox
Cincinnati
Cleveland
Tampa Bay
Midwest
Colorado
Houston
Milwaukee
Minnesota
St. Louis
Texas
West
Arizona
LA Angels
LA Dodgers
Oakland
San Francisco
Seattle
MLB2
East
Montreal
Baltimore
Charlotte
Pittsburgh
Detroit
Nashville
West
Miami
Kansas City
San Antonio
Las Vegas
San Diego
Portland

If Miami and Nashville seem to be out of proper geographical alignment, that’s because in the first year, there needs to be three expansion teams in each division.

The most radical aspect of this scheme is the elimination of the leagues, NL and AL. However, beyond sentimentality and the DH rule there is no reason today for this distinction.

The schedule is easy to balance. Each team in MLB1 plays three games with each of the 30 teams outside their division, and 14 or 15 games against each division rival. For the 12 teams in MLB2, they play three games with each of the 24 teams in MLB1; 6 games with each team in the other division of MLB2; and 10 or 11 games against their division rivals.

The postseason begins with the division winners in MLB2 playing a game to determine which one will join the top ten teams from MLB1 in the postseason. The division winners in MLB1 get first round byes, as well as the best 2nd-place team. The 6th thru 10th seeds, plus the winner of MLB2 face off in three wild card games. Then the four division winners from MLB1 get home field advantage in the quarterfinal (Division Series) round, with the playoffs proceeding similar to the existing setup.

The division setup will change a bit every year, using a relegation system. After each season, the three worst 6th-place teams in MLB1 are relegated to MLB2; the three top teams from MLB2 will join the top 21 teams in MLB1. Some minor geographical realignment is necessary each year, aiming to minimize travel and time zone crossings.

There are many aspects I like about this scheme:
1. There is no reason to stop at 36 teams. Using this framework, you could gradually expand to as many as 48 teams.
2. Every year your team plays every other team.
3. It gives meaning to the race to be the best 2nd-place team, to avoid the wild-card game.
4. Expansion teams can be competitive quickly, since they’re competing with the weakest teams to start with.
5. The current weakest teams need not spend so many years in the doldrums before they can compete for the playoffs.
6. Teams that can’t or won’t compete are sent to MLB2, away from the teams that want to win.
7. It lessens incentive for teams to tank. MLB2 will be rightfully seen as a lower status division so no team will want to linger there.
8. How to do the all-star game? Play East vs. West. Or USA vs. The World.
9. Institute a lottery for the top draft choices. The nine returning teams in MLB2 are eligible.
   6. The Yankee Clapper Posted: March 27, 2020 at 05:30 PM (#5934237)
The most radical aspect of this scheme is the elimination of the leagues, NL and AL. However, beyond sentimentality and the DH rule there is no reason today for this distinction
The AL & NL are important parts of the MLB brand, and quite valuable. Doesn’t seem likely that MLB will discard them rather than continue any expansion within the current framework. One can certainly make a case that 32 or 36 teams works better than 30, but I doubt that MLB can find 2 viable franchise locations anytime soon, much less 6. As much as they might want the expansion fees, MLB owners don’t want to subsidize any more low revenue teams.
If Miami and Nashville seem to be out of proper geographical alignment, that’s because in the first year, there needs to be three expansion teams in each division.
Good luck getting Miami to agree to that. Same for the alignments that are geographically desirable but put teams at a competitive disadvantage. The MLB 2 concept also seems likely to face strong opposition. Being relegated to a glorified minor league wipes out a lot of franchise value, as well as revenue.
   7. eric Posted: March 27, 2020 at 05:48 PM (#5934241)
MLB2
East
Montreal
Baltimore
Charlotte
Pittsburgh
Detroit
Nashville
West
Miami
Kansas City
San Antonio
Las Vegas
San Diego
Portland


I can't even begin to guess how low the revenue generated by this league would be. Less than the Yankees by themselves?

I mean, I really like your idea in theory; I just can't see it actually occurring in practice. I think this split would be followed within a year with all teams from MLB2 being contracted.

The MLB 2 concept also seems likely to face strong opposition. Being relegated to a glorified minor league wipes out a lot of franchise value, as well as revenue.


I know so little about soccer it's laughable, but one of the about two things I do know is that in (I think it's) the UK their soccer leagues are tiered so teams move up or down to stronger or weaker leagues depending on their performance. How does this affect franchise value and franchise sales? If a team is a powerhouse in the A league, but then slips to B one year, does their franchise value just, say, get cut in half until they're back in the A league? What about revenue year to year?
   8. Walt Davis Posted: March 27, 2020 at 06:28 PM (#5934261)
#1: It depends. On the one hand, govts are pouring tons of stiumulus in right now and they'll want to get away from that as soon as possible. On the other hand, they are going to want to keep boosting the economy as much as possible after this is all over to get things back to "normal" as quickly as possible and that could mean lots of job-generating infrastructure projects. While schools, bridges, roads, parks, dams, wind/solar farms, public housing, museums might all make more sense, I assume a good many of the "municipal" stadiums of old were the result of WPA-style projects.

the talent pool seems to be ripe for it.

No it doesn't. The pool of teenaged Americans is about the same size as it was 40 years ago and no reason to think more of the athletes are going into baseball. Birth rates have been flat and near replacement level in PR (and Cuba) for the last 40 years, have halved down to near replacement in the DR and Venezuela over the last 40 years. Unless MLB is going to decimate the Japanese, Korean and Taiwanese talent pools, there's no obvious source of additional talent. For Venezuela, the population counts by 5-year age groups is now basically flat through age 34; the DR is flat through 29; for the US through about age 64. The population base from which young baseball players is drawn is not growing and has been quite flat for the last 20+ years.** One can always argue that the overall quality of the athletes has gone up (certainly possible) but the number has not.

Wow, PR's population pyramid is pretty whack. I assume that's massive out-migration of young adults to better opportunities in the US. Nevertheless, the number of 15-19 year-olds still in PR is the same as the number of 50-54 year-olds and the number of 10-14 year-olds is only slightly larger.

** From a talent perspective, the 1993 and 98 expansions were a bad idea (and an overly ignored factor in sillyball). But of course it'a about bums in seats not quality of play.
   9. ajnrules Posted: March 27, 2020 at 07:24 PM (#5934274)
You know what? I'm all for a tiered system. There's no better way to eliminate tanking than with the threat of relegation. We can even do what some of European leagues do and put the worst teams from MLB1 and the best teams from MLB2 in tournaments where the teams that come out on top get advanced, giving MLB1 teams some more incentive to avoid tanking completely.
   10. DanG Posted: March 28, 2020 at 12:04 AM (#5934336)
The MLB 2 concept also seems likely to face strong opposition. Being relegated to a glorified minor league wipes out a lot of franchise value, as well as revenue.
I can't even begin to guess how low the revenue generated by this league would be. Less than the Yankees by themselves?

I mean, I really like your idea in theory; I just can't see it actually occurring in practice. I think this split would be followed within a year with all teams from MLB2 being contracted
I have long been interested in the concept of relegation and how that could work for MLB. I believe that the proposed scheme addresses your concerns.

The teams in MLB2 are still part of MLB, it is not a league by itself. They play a series against each of the 24 teams in MLB1. The MLB2 champion is in the playoffs to determine the world champion. Every team in MLB2 is competing to move up to MLB1 next year.

Sure, no team wants to be in MLB2. It's kind of humiliating. But it goes a long way towards solving the problem of tanking, as ajnrules said. (Although as long as the game is lacking financial incentives to compete, the problem will persist.) At the same time, being in MLB2 gives these franchises a chance to compete for the playoffs with teams on their own level. It's a way to keep the fan base interested even as a team is rebuilding. It's also an opportunity for new franchises to be instantly competitive.

The scheme also creates a Cinderella team every postseason, an element that MLB has rarely enjoyed. The team that comes out of the MLB2 playoff to compete with the big boys would be a great human interest story, engendering sympathy for the underdogs.

I should note that to simplify the presentation I used the scenario of MLB expanding by six teams all at once. The scheme works just as well when adding two expansion teams at a time over a period of years.

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