Solving Baseball’s Basic Problem
noncompetitive owners
Baseball is suffering a lockout. Fans of Atlanta’s team, who might have thought the Fates were finally finished toying with us, have suffered yet another rude wakening: we have been robbed of the sublime joy of experiencing Spring Training as fans of the team that won the preceding World Series.
Some people think players and owners should share the blame. I do not. For me, the owners are the sole culprits.
Owners create no value whatsoever, for an individual team or for the sport as a whole. The performances of the players on the field are responsible for 100% of the monetary value accruing to professional baseball. The owners who do try to compete hire and fire managerial personnel until they get lucky enough to hire people who are actually competent.
Yet, owners receive 60% of the revenue MLB generates. They do pay costs other than player’s salaries out of that, but my point is that they are not entitled to even one penny of that money for themselves. They bought a franchise, and they are entitled only to any increase in the value of that franchise — and even that is a product of how good as a form of entertainment MLB is, which, again, is dependent on the players.
Too many owners are ‘free-riders’, content to accept whatever revenue comes their way without trying to put even a reasonably good — therefore entertaining — team on the field. A good team does not have to have a huge payroll. It does require ownership that is seriously interested in having a team that is good.
Currently, there is insufficient incentive among the owners to encourage having a good team. Teams keep 52% of their locally generated revenue and contribute the rest to a common pool that is in turn divided equally among all owners. In addition, the revenue from national T.V. contracts is divided equally among all owners. It is a glowing example of welfare.
To provide owners with a sufficient incentive to put a good team on the field, the share of revenue owners receive should be tied to each team’s record on the field. For example, if the revenue in the common pool would be divided equally between the two leagues and the owner of the team with the worst record in each league received 2% of that money while the owner of each team with a better record got an additional .6%, the owner of the team with the best record in each league would get 10.4% of that money. With 15 teams in each league, that would represent a total of 93% of the money. The rest would be distributed in some fashion among owners of teams that were in the playoffs. Even the owner of a middling team would get a significantly larger payout than the owner of the team with the worst record: the owner of the team with the seventh best record would get 6.8%. The owner of the team with the 10th best record would get 5%. Surely a structure of payouts along that line would provide sufficient incentive to get these supposed titans of competitive capitalism to try, at least, to put competitive teams on the field.