FanNation - The Republic of Sport

With the stock market falling faster than a supermodel???s weight, baseball owners need to be especially cautious this free agent season. Players and their agents have champagne dreams and caviar wishes (as always), yet teams ought to keep a watchful eye on fiscal restraints. Baseball has produced enormous ??? and increasing ??? revenue for many years, but this has also corresponded to unparalleled national economic prosperity. Baseball, like the rest of us, hasn???t had to live through a true recession for nearly 30 years. If the current recession proves long-lasting baseball will need to change its fiscal practices. But to what? What alternatives exist? What possible models might insulate baseball from a struggling economy? I suggest the Florida model. While I could never in good conscience ask the nation to imitate the state???s election practices, its baseball formula is surprisingly sound. Florida???s teams ??? the Tampa Bay Rays and Florida Marlins ??? are sometimes considered the baseball equivalent of a tasteless joke. Especially before the Rays??? World Series run this season, these low-income, low-spending and low-attendance franchises embodied, for many, baseball ownership at its worst. In reality, Florida and Tampa Bay were economic miracles in 2008. In terms of dollars per victory (payroll divided by team wins) the Marlins paid $260K per ???w??? last season ??? the best in baseball by a very wide margin. More, although the Marlins were last in attendance, the club only paid $16.34 per fan (payroll divided by attendance), again easily the lowest in Major League Baseball. In a sense, the best fans in baseball are in Florida; although fewer bought tickets they didn???t demand that the team establish a huge payroll to attract them, either. This is very sound business. The Tampa Bay Rays paid $452K per victory ??? the least of any American League team (Minnesota is next at $646K). Tampa Bay fans were drawn to Tropicana for $24.18 each, cheapest in the league. There???s no arguing that this model isn???t perfect ??? the Marlins and Rays happened to have outstanding seasons. If they were losers no one would want to copy them. However, hard economic times might change attitudes. If a team can keep cost per victory and per fan reasonable then even a poor season won???t be financially disastrous. San Francisco and Oakland are examples of teams with low costs per victory and per fan; no, they didn???t win many games but their low cost gives them viability in a battered economy. And every now and then there???s a success story ??? along with Tampa Bay and Florida, Milwaukee ($899K per win, $26.38 per fan), Arizona ($807K, $26.38) and Minnesota ($646K, $24.73) were all competitive in 2008. In the end, some fans attend baseball games even if the team isn???t winning; major league sports franchises always produce some revenue from ticket sales, broadcasting, advertising, etc. ??? so why not keep costs down? The NBA???s Los Angeles Clippers learned this trick a long time ago; a few baseball teams are catching on. Keeping costs down is hardly innovative, but it is nevertheless counter to baseball???s current mentality. Lately, more teams have determined to increase salary to win more games, attract more fans and increase revenue. What we???re learning is that teams cannot win enough games nor attract enough extra fans to make this gamble worthwhile. As we head toward a recession, this trend will likely become more prominent. There are some real fiscal disasters to report. Seattle ??? formerly considered a small market ??? paid a staggering $1.9M per victory and $50.51 per fan in 2008. Even the Yankees ($48.36) paid less per fan than the Mariners. Another small market club trying to ???run with the big dogs??? ??? Detroit ??? paid over $1.8M per win and $42.99 per fan. Toronto has been spending aggressively over the past few seasons; they currently pay $40.75 per fan. Atlanta has the worst spending habits in the National League - $40.42 per fan and over $1.4M per victory. Sometimes high payroll teams win championships and lessen the negative impact of overspending (Red Sox, Angels, Yankees, Dodgers) but they don???t draw enough extra fans to cover the expense. They are also vulnerable to a very dangerous peril: if they lose too many games and draw too few fans then they face a fiscal hit that low payroll teams never do. To survive the current economy teams need to cut spending; as mentioned, an oversized payroll doesn???t pay off enough to justify the risk. This could mean negotiating a salary cap with the players. Baseball doesn???t have a long record of cooperation between teams or between teams and players, but if enough billionaires and millionaires become scared that the golden goose is endangered, they might be willing to talk. Another alternative is for wise teams to simply not spend. The market determines player value and not everyone can play for the Yankees. Let teams like Detroit and Seattle learn from their mistakes and the market will readjust quickly. Tigers owner Mike Ilitch is a smart businessman ??? he???d be wise to take note of what happened in Tampa Bay. Even the New York Yankees (who have a surprisingly small profit margin) might learn to reduce salary. They paid a ridiculous $2.3M per win in 2008; that???s simply not intelligent. Another quick note: baseball should cut the designated hitter. Only four N.L. teams paid more than $34 per fan; 11 A.L. clubs exceeded this amount. It???s not just the Yankees, Red Sox and Angels who are driving up salaries ??? paying for an extra everyday player is proving rather costly. With millions of Americans unemployed, I don???t think anyone would notice if this number increased by 14 designated hitters. Certainly there are other factors to consider. There are other revenue streams besides attendance ??? advertising, cable, concessions, etc. In some cases, these revenue streams may affect which direction a team decides to go. Even if I can???t convince the A.L. to rid us of the DH, perhaps we can point Major League Baseball to the recession-era Promised Land ??? Florida! Since some may be interested??? COST PER WIN COST PER FAN Florida Marlins $259,660 $16.34 Tampa Bay Rays 451,759 24.18 Oakland Athletics 639,562 28.80 Minnesota Twins 646,963 24.73 Pittsburgh Pirates 726,713 30.26 Kansas City Royals 776,607 36.89 Arizona Diamondbacks 807,350 26.38 Texas Rangers 857,118 34.80 Milwaukee Brewers 899,306 26.38 Colorado Rockies 927,777 25.91 Washington Nationals 931,542 23.69 Cleveland Indians 974,939 36.40 Baltimore Orioles 988,180 34.46 Cincinnati Reds 1,001,590 36.00 Houston Astros 1,034,074 32.00 San Francisco Giants 1,063,813 26.75 Philadelphia Phillies 1,063,911 28.60 Toronto Blue Jays 1,137,138 40.75 St. Louis Cardinals 1,158,423 29.02 San Diego Padres 1,169,485 30.35 Los Angeles Angels 1,192,163 35.73 Chicago Cubs 1,220,060 35.86 Chicago White Sox 1,361,678 48.46 Boston Red Sox 1,404,106 43.76 Los Angeles Dodgers 1,411,768 31.79 Atlanta Braves 1,421,746 40.42 New York Mets 1,548,240 34.09 Detroit Tigers 1,860,611 42.99 Seattle Mariners 1,928,959 50.51 New York Yankees 2,335,919 48.36