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Thursday, December 05 2019 @ 10:03 pm UTC
Trouble for MLB’s Welfare Queens? February 22, 2006   
by Wilbur Miller

This is just a short piece inspired by some recent developments that may impact the future of revenue sharing in MLB.

Joe Sheehan pointed out today in an article in the subscribers’ area at Prospectus that there are signs the wealthier owners are getting tired of subsidizing teams like the Pirates and Royals. He pointed to an article in which John Henry questions whether the current system provides enough incentive for teams to compete.

http://sports.espn.go.com/mlb/news/story?id=2333455


Henry obviously isn’t going to name names (like, uh, Glass or McClatchy), but he does state:

“Baseball has to address the disincentives created by large-scale transfers of revenue from successful clubs to less successful clubs,” Henry said. “At high enough tax levels, the incentive is to invest somewhere other than in baseball.”

He said the disincentives are just as powerful for lower-revenue clubs as for the higher-revenue clubs.

“The Red Sox have taken an aggressive stance in investing in all aspects of the franchise,” he said. “But one has to wonder how many teams will do so when the financial risks often outweigh the potential financial benefits.”

Sheehan is more blunt, and speculates that owners like Henry and Steinbrenner are tired of being taxed huge amounts (Henry says $50-60M in the Sox’ case), only to see the money go into the pockets of less successful owners. Personally, I think Henry is entirely justified in his comments. What possible motivation is there for McClatchy and Nutting to take the risks necessary to build a winning team when their entire major league payroll is funded by revenue sharing and central fund money?

Sheehan’s main point is that this could lead to trouble in the negotiations for a new CBA, because the wealthier owners will be looking for a reduction in revenue sharing. Henry essentially says it’s a good idea, but that the tax has gotten too high. That’s a point I’ve been trying to make with people who think that McClatchy should hunker down in the bunker and demand a work stoppage until the union agrees to a salary (or, more accurately, payroll) cap. There isn’t even enough support among the owners for this. The ones who are running their ballclubs in a competent fashion are doing too well to want to pursue such a risky course.

In fact, I seriously doubt that even McClatchy and Nutting want a work stoppage, because they’re making money hand over fist thanks to their welfare checks. McClatchy just sounds militant (or I should say he used to sound militant) to divert Pirate fans’ attention away from his own incompetence, which is the real cause of the Pirates’ problems. Lately, he’s found better methods, such as by pretending to increase the payroll to a responsible level. Of course, it doesn’t matter that it’s still far below a competitive level and far below what the Pirates can reasonably afford, because most Pirate fans appear to have been persuaded by the signing of players they’ve heard of that the team is really trying.

I suggested a couple weeks ago that the Pirates’ and Royals’ sudden willingness to spend money was done with an eye on the upcoming labor negotiations. Their intended audience, however, may have been the more competent and successful owners as much as the union. The owners who are legitimately trying to succeed, rather than the union, are the real enemies of scam artists like McClatchy, Nutting and David Glass.

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