THE PIRATES OF THE CARIBBEAN

With the first official skirmish between Scott Boras and the owners now joined, baseball, now, officially can embark on the 2009 off-season. Let the free-agent signings begin. Of course, unlike the regular season when owners in Miami and Pittsburgh, at the very least, must honor competition’s form and actually field a team before they can profit from it. Nothing, alas, will compel them to compete this off-season. Nothing will induce them to vie for free-agents even though the Commissioner’s stimulus package hands them $40 to $80 million dollars for this very purpose. If history is any guide, they’ll pocket the money instead. “George, Randy, Lonn, thanks, we’re going to Disney. Hell, you guys had such a good year; I may even buy the wife that hotel she’s always wanted.”

Take the Pittsburgh Pirates for example. When Scott Boras dared to question the Commissioner’s recent announcement that six franchises lost money in 2009, the Pirates’ President, Frank Coonelly, protested. More accurately, he protested too much. After all, what middle-American franchise can survive on a measly $75 million dollar stipend to supplement the proceeds from 1.6 million tickets sold at a brand new ballpark and from local broadcast contracts?

• $40 million in central fund monies (shared national TV, marketing, licensing, MLB Network and MLB.Com)
• $35 million in revenue sharing (the redistributed proceeds from a ~34% tax on each team’s revenue + the luxury tax)

I mean, how’s a team supposed to balance its books when it then has to pay those guys in uniform $49 million dollars in salary. (And The Washington Times’ Thom Loverro had the obtuseness to liken the Yankees to AIG?) Perhaps, Uncle Bud, can donate some of his $18 million dollar salary?

The articles linked as follow corroborate the numbers above. The Daily News; ; The Business of Baseball; ; Payroll Figures; ; Revenue Sharing Allocation

In all seriousness, though, how is one to trust, let alone to sympathize with, an industry where the zeal with which the Bosses shroud their balance sheets is surpassed only by the Mob’s? And to keep them confidential, there is no mendacity they will forgo. The script typically goes as follows. The owners cry poverty. From the ESPN pulpit, baseball’s clerisy decries “competitive imbalance” and warns us ominously “about the future of the game. Talk of salary caps ensues, lockouts threaten, and baseball joins Alice in Wonderland where a Pirates’ greed is noble, a Yankees’ largesse is an evil, and the object of the Game is to profit rather than to win.

The irony is that of the fourteen league pennants won since 2003, teams with payrolls well under $100 million have accumulated six of them. Take the 2008 Tampa Rays ($43 million); the 2003 Marlins ($49 million); the 2007 Rockies ($54 million), each ranked 25th or lower in aggregate payroll. Or one echelon above them, the ’04 and ‘06 Cardinals and the ‘05 White Sox all ranked 11th and 13th respectively. As a composite, they suggest that not only are an owner’s means and munificence not the primary index of his franchise’s win total, they don’t even consist of necessary conditions for the seven October victories required for a World Series.

The outcry for a salary cap only deepens the irony. The balance of power in sports no less than in international politics is subject to the rule of unintended consequences. By binding teams’ spending and encumbering players’ mobility, salary caps yield dynasties their constituent glue by cementing their hold on talent. Take the NBA, for instance. The league has convened 10 championship finals since 2000. Two teams, the Lakers and the Spurs, have represented the Western Conference in 9 of those 10 series, and between them, they’ve won 7 of the 10. Contrast the NBA’s socialized oligarchy with the MLB’s liberal free market system. Professional baseball likewise has totaled ten World Series this decade. Yet 8 different teams have represented the National League; 6 teams, the American League. All total, the Fall Classic has crowned 8 distinct champions. During the same period, only the Pistons in 2004 and the Heat in 2006, managed to break the Spurs-Lakers’ stranglehold on the title.

Of course, the system of Tory capitalism Major League Baseball has chosen over a salary cap doesn’t alone account for the more competitive landscape it creates than the NBA and the greater comparative opportunity it offers teams for upward mobility. Basketball, for example, lends itself to dynasties for discrete, albeit related, reasons. With the acquisition of a single, preeminently talented superstar talent like Kobe, Duncan, Jordan or Bird, one team can dominate the league and monopolize its championship for as long he plays plays. (Nonetheless, the salary cap then accentuates the imbalance because it inhibits the superstar’s rivals from remaking their roster and assembling enough intermediate talent through trades, free-agency, or waivers to neutralize him.) Too many other quirks and caveats distinguish the NBA from MLB for me to gauge whether the salary cap causes, or merely contributes, to King Kobe and his serfs or to quantify its influence—not in this post anyway.

Still, I hardly wish to romanticize baseball’s paternalistic free market either. The six years of vassalage under which a player serves his teams before granted free-agency smacks of a feudal order more than any parallel NBA institution. Apart from its basic injustice, it also distorts the free-agent market. Players rarely reach free-agency before their late 20s at an age well into their career’s prime. The distortion this causes is two fold. On the one hand, the team that drafts him receives two to four seasons when his talent and productivity have peaked at a marked discount. Arbitration rarely awards him his market price. On the other, the team that signs him to a long-term free agent contract pays a surcharge on those seasons later in his career when talent and productivity have started to regress.

Okay, but what does this have to do with my beloved Yankees, you ask? Well, consider its implications. First of all, it means that the signing team pays the drafting team a de facto subsidy. When the Yankees expend $23 million dollars on CC Sabathia for 2010, they, in effect, are compensating him retroactively for 2007 and 2008 seasons when the Indians paid one of the game’s best pitchers $9 and $11 million respectively. Secondly, a market that inflates free-agent salaries illustrates that a $200 million dollar payroll isn’t quite the competitive advantage one might imagine. Far from indicating a team that has plundered a championship by assembling the most prolific roster money could buy, a team with salary obligations 40% higher than its nearest equal likely evidences a surfeit of long-term contracts for veteran players that pays the player well above his worth. It’s no accident then that the Yankees’ payroll has exceeded $100 million every season since 2001 and surpassed $200 million every season since 2005 and yet through those nine seasons, they’ve won ONE World Series. Nor is it a related coincidence that measured by average age, the Yankees, during that same period, have ranked as the 1 or 2 oldest teams in the American League every year save 2002.

The Yankees' 2009 further illustrates the point. This year, the Yankees won 14 more games than in 2008. Yet contrary to the popular canard, the improvement owed less to the $60 million dollars they paid their three new free-agents than to the recuperation and rejuvenation of long tenured veterans. In my next post, I will devote my annual valedictory of the Yankee's season to analyzing the statistics that bear this out.