Baseball's Great Divide

0 Comments | Insight on the News, April 17, 2000 | by Bob Cohn

The Major League Baseball teams that bring in the most money -- from broadcast revenues or luxury suites or the sheer size of their markets -- are dominating those franchises in smaller markets struggling to meet their bottom lines. More than ever, money is the major factor separating winners from losers.

Let the poets rhapsodize about the start of another season. Let them pen their lines about rebirth and renewal, about golden sunshine and green grass. In reality, a giant shadow, cast by Major League Baseball's economic and competitive imbalance, is darkening parks from Florida to Arizona.

"There is no question that with the great renaissance baseball has undergone, we have a disparity problem," says Commissioner Bud Selig, who calls the disparity in resources and success among the 30 clubs "the biggest problem" confronting baseball. "We've had one for years, but it's been exacerbated. With every franchise, there has to be hope and faith. And my job is to restore that hope and faith as much as possible."

It will be a long and arduous task, but Selig might have the means to do it.

Meeting during spring training in Phoenix, club owners unanimously vested the commissioner with powers far broader than those of any of his predecessors. They abolished the offices of the American and National league presidents and increased Selig's authority regarding trades and fines.

They also presented Selig with a mandate to create competition. "I am empowered," he says, "to deal directly with that." He will have help from a so-called blue-ribbon task force comprising luminaries such as George Mitchell, former U.S. senator, and Paul Volcker, former head of the Federal Reserve, which will present findings from its yearlong study this season.

But it's an enormous issue, and solutions will be difficult. The very idea of regulating baseball strikes some as anathema: Is there a game at all when competition is restricted? Yet there's not doubt that game statistics speak plainly on the issue.

Last season, the eight teams that made the playoffs -- the New York Yankees, Texas Rangers, Atlanta Braves, Cleveland Indians, Boston Red Sox, New York Mets, Arizona Diamondbacks and Houston Astros -- all ranked in the top 10 in payroll. (The world-champion Yankees led baseball with a payroll in excess of $88 million.) The teams with the four worst records -- the Kansas City Royals, Minnesota Twins, Montreal Expos and Florida Marlins -- had the four lowest payrolls (all were below $20 million by the end of the season).

Since the strike that prematurely ended the 1994 season (including the World Series) and extended into 1995, only Houston has made the playoffs with a payroll in the bottom half. And the owners of the Astros knew they had to increase spending to stay competitive. They did, and made playoff appearances the next two years -- losing about $100 million in the process. "It's very, very difficult to be profitable these days," says Astros President Tal Smith, whose club moves into a new ballpark this year, a feature he hopes will help him turn a profit.

Then there's the Florida Marlins. Former owner Wayne Huizenga provoked outrage by shedding $20 million worth of talent after his team won the World Series in 1997. But the Marlins aren't alone. San Diego greatly reduced its payroll after winning the National League pennant in 1998.

"Payroll doesn't necessarily equate with winning, but you almost have to have the dollars so you can win," says Marlins general manager Dave Dombrowski. "Economic disparities are growing more ominously every day, and so is the result of that, which is competitive imbalance," adds Padres President Larry Lucchino.

Spending and success are not always partners. The Baltimore Orioles and Los Angeles Dodgers were models of inefficiency last year, ranking fourth and fifth in payroll and finishing a combined 14 games below .500. While it's easy to be jealous of the Yankees' spending, the club has invested wisely and made good decisions.

Nevertheless, the Yankees rake in about $50 million annually in local broadcast revenues alone. (That's expected to double next year after the team merges its business operations with the NBA's New Jersey Nets.) Likewise, the Atlanta Braves have been fueled with cash from owner Ted Turner's broadcasting empire. As the gulf widens, the chorus grows louder.

"You have to have competition in the end," says Jerry McMorris, the Colorado Rockies' president and part-owner. "I keep referring to the Harlem Globetrotters and the Washington Generals. The public wants to see that once a year or once every few years. They don't want to see that over 81 games, where the outcome is decided. Right now, there are only six to 10 teams that have a chance."

Teams in every sport always are looking for new sources of income, but baseball clubs are going to greater lengths than ever. In San Diego, the Sycuan band of Mission Indians paid more than $1.5 million to be the Padres' title sponsor. In Minnesota, a member of the Legislature proposed that the state cough up $2 million so the club can keep its best player, pitcher Brad Radke.