On Franchise Values, Revenue Sharing and
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
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
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
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
Copyright © 1999 Doug Pappas. All rights
Originally published in the June 1999 issue of Boston
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