The Annotated Contraction Announcement

From Major League Baseball's November 6, 2001 press release announcing the contraction of two unspecified teams, here's Bud Selig in his own words:

"It makes no sense for major league baseball to be in markets that generate insufficient local revenues to justify the investment in the franchise. The teams to be contracted have a long record of failing to generate enough revenues to operate a viable major league franchise."

Translation: "Hey, taxpayers! If you won't subsidize a new ballpark for the local team, we'll take it away. And it'll be your own fault. Recession, terrorism, whatever -- we don't care. Do our bidding or we'll kill your team."

Minnesota and Montreal, the two front-runners for contraction, are also the two most egregious abusers of the revenue sharing system implemented in the mid-1990s. Revenue sharing was intended to make low-revenue teams more competitive -- but rather than reinvest the revenue-sharing money in their teams, the owners of the Twins and Expos have simply pocketed the money. (In 2000, the Twins' Opening Day payroll was $5 million less than their revenue-sharing payment.) Rather than force these owners to stop misusing the system, MLB would rather reward them with a nine-figure windfall for running their teams into the ground.

The potential demise of the Twins is especially appalling. As the 2000 census shows, metropolitan Minneapolis- St. Paul is larger than Cleveland, St. Louis or Denver. Over the eight-year period 1987-94, the Twins outdrew the New York Yankees, and in 2001 the Twins outdrew the White Sox and the Phillies. But Carl Pohlad, a bitter 86-year-old billionaire banker, wants to stick it to the ungrateful locals, and his good buddy Bud is happy to go along. Carl's children should be happy, too: think of the money they'll save when they can hold Daddy's memorial service in a phone booth with no risk of overcrowding.

"This action, though difficult, should not surprise anyone who is familiar with the economics of the game. Our industry has significant financial problems that we are trying to address in a myriad of ways. Contraction is one step toward addressing the industry's problems."

It should surprise, among others, anyone who took Selig's "Blue Ribbon Economic Panel" report seriously. Just last year, MLB's own hand-picked experts said contraction was unnecessary. The relevant section of the report reads, in full:

"Recently, there has been some speculation about MLB's possible need to contract by two or more franchises. The argument for contraction has two main components. First, some suggest that the industry, from a competitive perspecive, would be better off by eliminating its weakest two franchises. Second, some believe that the purchase price that would have to be paid for the reacquisition of a financially distressed club or clubs would be less costly than the value of all future, shared industry revenues that would otherwise be payable to the reacquired club or clubs. If the recommendations outlined in this report are implemented, there should be no immediate need for contraction." [Emphasis in original.]

These recommendations included:
  • Sharing 40-50% of local revenues
  • 50% "competitive balance tax" on high payrolls
  • A $40 million minimum payroll requirement
  • Unequal distribution of central fund revenues
  • A "competitive balance draft" of minor leaguers
  • Reforms in the amateur draft
  • Franchise relocation.
MLB implemented none of these recommendations. It never even proposed them to the MLBPA. Why? Because each of these proposals risked offending one or more owners. In Seligland, "leadership" means uniting the owners behind a single strategy, even (or especially) if that strategy involves demanding that third parties solve the owners' problems for them.

"The problems facing the potentially affected teams will not be resolved by either changing ownership or changing location. Merely transferring existing problems to another ownership group or another city would only exacerbate the problem, not resolve it."

"No one could possibly run the Minnesota Twins better than Carl Pohlad."

"Washington, DC is a worse baseball market than Montreal."

Yes sirree, MLB already has the best markets, the best owners, and the best management in the whole wide world. All of its problems are someone else's fault. Thinking like this keeps the car dealer from Milwaukee earning the big bucks...

"We will continue to review relocation as a long-term solution as we work to stabilize the industry's economics."

"Washington, Charlotte, Portland and other prospective major league cities: You're not good enough for us now, but if you'll just build a $300 million stadium on spec, we might just find a way to fill it."

Copyright © 2001 Doug Pappas. All rights reserved.

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