On Franchise Values, Revenue Sharing and "Fans' Rights"

Sorry, no opinions on the proposed New Fenway in this column. I’ve got other recent irritations to write about.

First among these is the article accompanying Forbes’ annual table of franchise values. The new table, which appeared in the May 31 issue, values the Sox at $256 million. This represents a 12% appreciation in one year, as they remain the ninth most valuable of the 30 major league teams.

From this table, Forbes constructs a diatribe against revenue sharing. Under a headline which proclaims, “Revenue sharing has struck out,” the article begins, “Planned economies sound great in theory but don’t work very well in practice,” and concludes that baseball’s problems won’t be solved by “more revenue socialism.”

Did you know that MLB’s revenue sharing was the first step on the road to socialism? Me neither. But with the Soviet Union gone, a magazine run by right-wing twits must take its enemies where they can be found, and the dreaded “revenue socialism” permeates pro sports. I can’t wait for Steve Forbes’ presidential campaign to condemn MLB owners like Disney, Time Warner, the Tribune Company and Rupert Murdoch’s News Corporation as links in a “socialist media conspiracy.”

While it may be too much to expect knee-jerk reactionaries to understand sports economics, the fact is that there’s no “right” way to split the money generated by a contest between two teams. A league is free to adopt the laissez-faire, every-club-for-itself policy Forbes favors. Or it can split all revenues 50-50, give the lion’s share to the winner of each game, or choose among dozens of other formulas. MLB’s owners have, quite reasonably, concluded that they’re collectively better off with a more even split, even though a few wealthy teams would earn more under a different formula. While Forbes’ motto may be “Capitalist Tool,” sometimes “Capitalist Fool” is more appropriate.

Meanwhile, press coverage of the Forbes survey mostly took the usual sky-is-falling line. “FOURTEEN TEAMS LOST MONEY IN 1998!” screamed the headlines, completely ignoring that (1) revenue sharing skewed the results, (2) clubs have found dozens of ways to hide income and inflate expenses to appear less profitable than they actually are, and (3) the true measure of MLB’s economic health is not estimated income, but the value of its franchises.

In fact, Forbes reported that the average franchise appreciated by 12% last year. Only six of the 28 non-expansion clubs lost value. The losers included the Mariners, White Sox, Marlins, Royals, Twins and Expos -- bad teams and major disappointments which should have be worth less. And all that nasty revenue sharing didn’t stop recipients like the Royals, Twins and Expos from losing value, or stop the Yankees, Orioles, Rockies and Mets from appreciating by 29% or more.

One of the silliest comments about the Forbes survey came from an outfit called United Sports Fans of America (“USFANS”). After lamenting that “If 1998 signified progress, baseball is in big trouble,” this “fan advocacy” group’s analyst concluded: “The Dodgers lost money despite drawing three million fans. This should send a message that the economic makeup of baseball needs adjusting.”

The day before, the same USFANS writer had praised the Dodgers for keeping ticket prices down. General admission at Dodger Stadium still runs just $6 for adults, $3 for children. Upper-deck reserved seats sell for $8. According to the article, these prices have been frozen since 1992 -- yet the author never thought to ask why, if the Dodgers were really losing money, the new ownership still charged patrons half the price of similar seats at Fenway.

Rupert Murdoch, philanthropist? I think not. And I doubt this is the “adjustment” USFANS has in mind.

USFANS is one of many “fans’ rights” organizations which periodically surface. Another such group recently sent me its mission statement. Its founder, a well-meaning man, proclaims, “Baseball Is In Crisis!” and threatens a fan boycott if his proposed solutions aren’t adopted. His key demand – fan representation on MLB’s board of directors – should cause eyes to roll, and Forbes' editors to run for the guns hidden in their fallout shelters.

Yes, MLB depends on baseball fans for its income. No, that doesn’t entitle us to a voice in running MLB, any more than frequent flyers have a right to govern American Airlines. We’re customers, not owners.

Like it or not, Major League Baseball belongs to the thirty owners. Sometimes they do stupid things. Sometimes, as in 1994-95, they do incredibly stupid, frustrating things. When they do stupid things, we fans have every right to get angry. But if we fool ourselves into claiming “rights” we don’t have, we deserve the cold shoulder we will surely receive.

Copyright © 1999 Doug Pappas. All rights reserved.
Originally published in the June 1999 issue of Boston Baseball.

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