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Baseball's Revenue Problem

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Baseball's Revenue Problem
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Bud Selig at it again… This time, floating realignment

 

            Back in December, Bud Selig, commissioner of Major League Baseball proposed a 14-man special committee to handle “On-Field Matters.”

            The committee is made up of field managers, general managers, club owners and presidents, Hall of Famer Frank Robinson and columnist and broadcaster George Will.

            Upon it’s creation, Selig promised that the committee would leave no item unturned and emphasized that nothing was untouchable under the review of this committee.

            This promise held true for the committee, as only four months after its inception, it challenged one of baseball’s mainstays since 1969.

            The committee started discussing the issues of possible ‘floating realignment.’

            Under this proposed change, teams would be able to change divisions year after year based upon geography, payroll and their contention.

            While nothing is finalized, Selig has said he would consider the advice of the special committee for his decisions.

            During his run as commissioner, Selig has not be afraid to change the game. In his 18 year run as commissioner, Selig has seen baseball through the addition of the Wildcard, Interleague Play, revenue sharing, home-field advantage in the World Series, stricter drug testing for players and the World Baseball Classic.

            Selig has often been criticized for his policies and slow reaction to drug testing and enforcement in baseball, and for several fans his legacy will be tarnished just as many of the athletes during this time due to the steroid era.

            While the idea of floating realignment is nothing but a concept at this point, it is certainly a radical one that would entirely change everything we know about baseball. With floating realignment, the division rivalries that fans have known and loved for many years could possibly cease to exist.

            Under the proposition, a team in a rebuilding year that has a reduced payroll could transition to a division that would allow them to play more games against more lucrative teams. This would then allow rebuilding teams to play more games against some of the best in baseball so they can build upon their talent and gain more revenue from ticket sales against these teams.

            To put it more clearly, imagine the Pirates moving to the National League East. This would allow them to play some of the consistently best teams in baseball, including the reigning National League Champion Philadelphia Phillies.

            The idea is that the Pirates would get to develop their young talent while playing some of the best in the league. The Pirates would also get the benefit of ticket sales for home games against some of these superior teams.

            The problem lies in the fact that by moving to another division to rebuild, the team is essentially telling all of baseball and their fan base that they are giving up on the season. Moving to a new division with increased competition will surely cause the rebuilding team to lose a large amount of their games.

            On one side, teams that are in stacked divisions such as the American League East could transfer out to a less competitive division in order to compete for a playoff spot.

            The downside of this is that while they could compete, they would lose out on the high-ticket sales from playing the top teams in baseball, which in turn would cause less revenue for teams that are accustomed to having these high-ticket sale dates frequently.

            Ultimately, once again, this idea comes down to the issue of revenue in baseball. Selig feels that this system will allow for a more fair revenue source and restore competitive balance to the league.

            Just as with revenue sharing, Selig seems to feel as if the idea of floating realignment will help with the idea of competitive balance.

            The point comes to argument however when looking into the spending of these teams with their shared revenue earnings.

            Minnesota just resigned their star catcher and homegrown hero Joe Mauer to an eight year, $184 million contract, being the fourth biggest in baseball history, and only behind contracts signed by Derek Jeter and Alex Rodriguez. The Twins handed out a contract that is unheard of for the catcher position, the next highest being for Mike Piazza for six years, $91 million. In addition to this lucrative contract, the Twins also shelved out approximately $167 million for the new Target Field, opening this season. If the Twins can deal out such money for their players, why is there a need for a new system to help with the revenue of small market teams? What standards rest to define the small-market'?

            Another problem to this idea lies within teams not spending this shared revenue properly. The Kansas City Royals provide a prime example. In a report by Forbes Magazine, the Kansas City Royals received $32 million due to revenue sharing from 2002 to 2006. In that same span of time, the team’s player costs only rose six percent.

            Similarly, the Hardball Times, an Internet baseball magazine, told that the Florida Marlins received nearly $60 million in revenue sharing in 2006 and 2007. The opening day payrolls of these squads were $45.5 million. In the two following years, the Marlins finished the two years with 155 wins and 168 losses.

            The answer to competitive balance lies within a necessary increase of enforcement on the spending of this shared revenue.

            Floating realignment would result in nothing more than an increase of fan disappointment for a man who deserves more. The next move rests in Mr. Selig’s hands.

 

 

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