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MLB: May the Richest Team Win

Michael FitzpatrickFeatured ColumnistFebruary 14, 2008

If you happen to live in New York, Los Angles, or Boston, you are probably a huge baseball fan.  If you live in Tampa, Kansas City, or Pittsburgh, you are probably asking yourself, "What’s the point?"

If you live in New York or Boston, you spend your winters watching closely as your team acquires one all-star after another; if you live in Minnesota or Kansas City, you watch as your superstars leave town one after the other. 

Money rules the game today and if you don’t live in a large, wealthy city, you might as well not even be a baseball fan because your team is NEVER going to be successful.  

Now, I know exactly what some of you are thinking, "Well, what about the Detroit Tigers, Colorado Rockies and Florida Marlins?  They have all made it to the World Series in recent years."

That statement is completely true.  But, only a few years removed from their World Series appearances, do you even place the Tigers, Rockies, or Marlins in your list of current World Series contenders?

According to the NY Times, in the past two decades small market teams with relatively small payrolls have won their divisions less than 10 percent of the time.   

Small market teams, such as the Marlins, Rockies, and Tigers, can catch a bolt of lightening and make it into the postseason, and even win the World Series.  This can be done through extremely intelligent trades and the development of young players. 

But, the reason why teams such as the Marlins, Rockies, and Tigers never become a dynasty is because as soon as their young players become superstars, they can no longer afford them.

In 2007, the Yankees had the highest team payroll at $189 million.  The Devil Rays had the lowest team payroll at $24 million. 

The Yankees payroll was nearly eight times higher than that of the Devil Rays, hence the Yankees made the playoffs and the Devil Rays finished last in the AL East. 

Now, how in the world is a team like the Devil Rays meant to compete with a team like the Yankees if the Yankees are paying a single player (Alex Rodriguez) more money than the entire team? 

Under the current MLB revenue sharing system, the Devil Rays collected $30 million last year.  Even if they put that entire $30 million towards this year's payroll, bringing their total payroll to $54 million, are they supposed to compete with the Yankees $189 million payroll?

The economics of baseball are simple.  Teams in large markets, such as New York and Los Angles, bring in a tremendous amount of money through television, sponsorships, and advertising. 

Why? Because far more people attend games and watch games on television in New York or Los Angles than in Tampa or Kansas City, offering greater value to sponsors and advertisers.  This is solely due to the larger population in cities such as New York and Los Angles. 

In the business world that is just how the market works.  It’s capitalism.  The largest companies are able to offer the best value to consumers and rule the business world.  In professional sports, capitalism does not work; it hinders ALL teams in terms of popularity and revenue

Look at the NFL.  The NFL has a strict salary cap and an extremely successful revenue sharing program. The NFL distributes profits from television contracts, league sponsorship, and licensed NFL apparel equally amongst all teams.  This allows for complete parity in the league, which translates into the game becoming more popular throughout the country, which translates into more money for everyone.

You could look at facts and figures for hours on team revenue, league revenue, correlations between team revenue and success, salaries, the ins and outs of the revenue sharing systems, etc.  But, the most telling evidence as to why the NFL system is more successful then the MLB system can be seen through current team valuations. 

The most valuable NFL franchise is the Dallas Cowboys, valued at $1.5 billion.  The most valuable MLB franchise is, of course, the Yankees, valued at $1.2 billion, $300 million less than the Cowboys. 

The least valuable NFL franchise is the Minnesota Vikings, valued at $782 million.  The least valuable MLB franchise is the Florida Marlins, valued at $244 million, a staggering $538 million less than the Vikings. 

Let’s also remember that, for the most part, there are only 16 NFL games per year versus 162 MLB games per year. 

These team valuations are case in point as to why the NFL revenue sharing system is far more financially beneficial to everyone. 

The more popular the league as a whole becomes, the more money generated for everyone. 

Until Major League baseball can devise a legitimate revenue sharing strategy and salary cap, the league will continue operating in complete disparity. 

           

As we move closer to the start of baseball season, I wish all fans and teams the best of luck, and may the richest team win. 

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