March 8, 2011

The Payoff Pitch

Contraction-traction, What's Your Traction?

by Neil deMause

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This time, it seems, it started with Ken Rosenthal. Two days after Hank Steinbrenner let fly with an attack on baseball's revenue-sharing plan that concluded, "if you don’t want to worry about teams in minor markets, don’t put teams in minor markets, or don’t leave teams in minor markets if they’re truly minor," Rosenthal penned a Fox Sports Exclusive that significantly upped the ante: "Don't be surprised if the “C” word—contraction—returns to the baseball lexicon soon," he wrote, noting that he'd been "hearing rumblings" that "certain big-market teams" wanted to whack the Rays and A's. In one scenario, wrote Rosenthal, Rays owner Stuart Sternberg would end up buying the Mets from the troubled Wilpons, while A's owner Lew Wolff did the same with the McCourt-wracked Dodgers, before watching their old teams go poof.

From there, it was off to the races, as every sportswriter with a slow news day grabbed Rosenthal's unsourced speculation and ran with it. In the St. Petersburg Times, John Romano wrote a column headlined "Threat to contract Tampa Bay Rays may be gaining credibility," in which he concluded that while the Rays probably wouldn't disappear overnight, "whether you want to acknowledge it or not, Tampa Bay is now on the clock"—one that he insisted could strike midnight in 2017, when Tropicana Field is paid off. CBS Sports' Ray Ratto fired back that contraction was not just a terrible idea, but a sign of America's cultural decline. (So far as I can understand it, this has something to do with bar fights and the CalTech basketball team.) The New York Daily News' Bill Madden, citing "one high-level baseball source," wrote that both A's owner Lew Wolff and Rays owner Stuart Sternberg "told Selig they are not prepared to continue operating under the present circumstances. Translation: 'If we can't get new stadiums, buy us out.'"

Ultimately, even MLBPA director Michael Weiner took note, musing that he wasn't taking baseball's relative labor peace for granted, given that "Just this week I’ve seen a general manager talking about a salary cap and I’ve seen a national baseball writer talking about rumblings of contraction." On Saturday, Weiner broached the C-word again, saying after a meeting with Rays players, "Do I think it's likely that the owners are going to try to contract? I don't. Do I think there's a legitimate reason to contract? I don't think there is. All I would say is if that changes, if contraction becomes a goal of the owners in this negotiation, the tenor of the talks would change quickly and dramatically."

This turn of events is, frankly, baffling to those of us who thought that the notion of buying out and folding MLB teams had a stake put through its heart ten years ago. It was way back in 1999 that then-Rockies owner Jerry McMorris suggested what sounded like the crazy idea of dissolving teams as a cure-all for baseball's revenue problems—remember that baseball had just expanded by two teams the year before—a proposal that unexpectedly got traction during baseball's 2001 labor battle when team owners voted to authorize Bud Selig to buy out two teams (widely expected to be the Expos and Twins) and dissolve them. I covered all the reasons why contraction was unlikely at the time for the Village Voice sports section (R.I.P.); you can read the article for yourself, but these were the two main points:

• Sure, if you buy out teams you no longer have to send revenue-sharing checks to their owners. But you do have to cut the checks to buy them out, not to mention any other obligations they may have. "Whatever long-term leases these two have, even just with popcorn vendors, those are all going to have to be bought out," sports economist Rod Fort said then. "So the cost mounts, and the cost mounts."
• Not only would the players' union declare war, but so would elected officials in locales targeted for contraction: both the Minnesota and Florida attorneys general—the Marlins were considered the likely Twins backup on the contraction short list—announced they'd file antitrust suits if MLB tried to fold their teams. (Florida in particular has case law that makes it easy to file antitrust suits, one of the reasons that Tampa Bay got the Rays in the first place after MLB blocked the Giants from moving there in the early '90s.) And then there's Congress, which only ever starts questioning its decades-long détente with MLB over its antitrust exemption when constituents are in danger of losing a team (or losing faith in the sanctity of players only using the muscles that God and Bowflex have given them).

Ten years later, neither of these dynamics has changed. Romano notes that revenue sharing has increased since 2001, with the Rays now raking in more than $60 million a year from the combination of revenue sharing and MLB's central fund, which disperses such things as national TV money. But the cost of buying out teams has soared as well: where Carl Pohlad was looking to score about $200 million for contracting the Twins back in the day, and MLB took the Expos off Jeffrey Loria's hands for a mere $120 million in 2002, Forbes now pegs the value of the A's and Rays at around $300 million apiece.

Still, spending $600 million to get back $120 million a year would be a nifty return on investment, right? I called Fort, now at the University of Michigan, last week to ask whether he's changed his thinking on contraction. "For me it's impossible to imagine that you abandon something that's worth three or four million dollars," he replied. "The idea that someone wouldn't buy that franchise—whether it stays in Tampa Bay or stays in Oakland or whatever happens to it—seems crazy."

Besides, there's a far simpler, and cheaper, solution to the problems of increased revenue-sharing than contracting teams: just change the revenue-sharing formula. Yes, it might piss off fans of small-market teams and muck with that "hope and faith" thing that Selig is always going on about. But at least it's unlikely the Florida attorney general will sue you for it.

So why are we hearing renewed contraction talk now, not just from bored sports columnists but, apparently, from "high-level sources"? (Assuming they exist, that is. As shocking as this may be for you to believe, it's not unknown for professional journalists to say they're "hearing rumblings" when they just mean "me and the guy at the next desk talked about this over lunch.")

The upcoming union negotiations are one part of it, obviously. Even though talks this time are by all accounts way more friendly than they were in the bad old days of 2001, it still never hurts to, as Jerry Reinsdorf likes to say, create leverage. Or as Fort put it: "I can see it making sense as one way of running to the far end of the room as the players' association does the same in the other direction, to try to set the widest possible end points you can for negotiation."

The other is that, as in 2001, much of this is likely being driven by stadium games. Back then, it was the Expos and the Twins that were in the midst of multi-year, till-then-fruitless campaigns to get public money for new stadiums in their home cities; the only reason the Twins were on the contraction list in the first place, despite being in the nation's 14th-largest media market and having a reasonable record of on-field success (they'd go on to win a division title in 2002), was that Pohlad was looking to either scare Minnesota taxpayers into coughing up stadium cash, or get a quick payoff to make his years-long stadium fight into somebody else's headache.

Likewise, on many levels contracting the A's and Rays makes no sense at all. The two Bay Areas are 6th and 14th nationwide in TV market size (Tampa-St. Pete snuck past Minneapolis-St. Paul in 2005); even if you split the S.F.-Oakland-San Jose 7.4-million-person megalopolis in two and grant the A's the smaller slice, that's still a bigger market than most teams have to play with. Both teams have been successful on the field; the Rays weren't that far below league-average in attendance last year, and even the A's routinely drew 2 million fans a year before Wolff decided to artificially reduce capacity by tarping off the Coliseum's entire upper deck. If Kang and Kodos were to land on earth with a mission of wiping a major-league baseball team off the map, they could make a far better case for, say, the Pirates, who play in the 24th-largest TV market (and shrinking), have only drawn 2 million fans once in the last 19 years (2001, when PNC Park opened), haven't smelled October baseball in just as long, and are likewise getting $60 million a year in combined revenue-sharing and central fund money.

The difference, of course, is that the Pirates already have a new stadium, while the A's and Rays are still in the hunt for them. The A's endless waiting game with Bud Selig's blue-ribbon relocation committee I covered here a few weeks back. As for Tampa Bay, ever since plans for a waterfront stadium in St. Petersburg fell through a couple of years back (some locals have theorized that it was always a red herring), Sternberg has been locked in an endless stadium cold war, wanting to move across the bay to wealthier Tampa but unable to even start talks there because the Rays' lease with St. Pete allows the city to sue anybody who even talks about moving the team before 2027. Instead, the Rays owner has resigned himself to lobbing occasional oblique move threats, all the while waiting and hoping that someone, anyone, will ride to the rescue.

And here's where Rosenthal's speculation about Sternberg's interest in buying the Mets—something also reported by the New York Post last week—could make some sense, and could help explain why we're hearing renewed contraction talk. So far the Wilpons say they only want to sell a small cut of the team, something that would rule out Sternberg, who would only want majority control. But if Bernie Madoff trustee Irving Picard has his way, they'll have to cough up more than $1 billion in damages, something they can't handle without selling off the entire team (and, it's likely, the SNY cable network as well).

If MLB were to arrange the kind of deal that it did with John Henry and Jeffrey Loria and the Expos, Marlins, and Red Sox in 2002, depositing the Mets with Sternberg while taking the Rays into league receivership, it would kill several birds with one stone: Sternberg would be freed from the small-market spending restraints that he's chafed at, and MLB could attempt to shake down Tampa and St. Pete for stadium money without having to worry so much about lawsuits or being burned in effigy like Sternberg would. In fact, even the threat of an Expos redux could be enough to accomplish the latter: just look at how successful the NFL  was at getting taxpayer-financed renovations to Lambeau Field by alluding to contraction of the Packers—and that's a team that's owned by its fans.

Plus, there's another side benefit to talk of a Sternberg shift: if he even heard that his arch-nemesis might be put in charge of the Mets, Hank Steinbrenner's head would a splode. Now that's an image that should bring a smile to the face of any high-level source.

Neil deMause is an author of Baseball Prospectus. 
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