Now the Dodgers Have a Chance to Really Be BIG Blue

Roger Noll, a professor of economics at Stanford, studies professional sports

Peter O'Malley's pending sale of the Dodgers represents not only the end of the O'Malley era, but also the end of family-run baseball teams. There are two other kinds of sports franchise ownership, one of which clearly represents the wave of the future.

The Dodgers have been the sports counterpart to the family farm: an organization owned and operated by people for whom the team is their primary business and whose wealth depends on running that team well. Many legendary teams fell into this category--the New York Yankees powerhouses of the 1920s and '30s, Connie Mack's great Philadelphia A's teams of the same era, the archrival New York Giants in the Stoneham era and the entertaining teams in St. Louis and Chicago that were owned by Bill Veeck, he of the exploding scoreboard and the 3-foot-tall pinch hitter.

The family farm sports team is an endangered species. A few remain in football because of National Football League rules that prohibit ownership by publicly traded companies or by companies with any significant business activities outside of football. But in all sports, as in agriculture, the family farm is on the way out.

The most common form of ownership today is that of rich person's toy. These owners are very wealthy people who have acquired their fortunes outside of sports and who buy a team for complex personal reasons that go beyond the desire to please customers. Some seek the personal publicity that goes with being an owner; others have a passionate attachment to winning.

These are the owners who spend too much on free agents, castigate players on a highly successful team for losing a World Series and so receive no player loyalty in return. They fire managers to create scapegoats for bad business practices and pay little attention to the many small amenities that make attending a sports event is a joy for the whole family, rather than an unpleasant rip-off. These are the owners who have given you overlapping playoff games with late-night World Series telecasts after the kids are in bed, a three-year-long self-destructive and brutal process leading to a labor agreement that could have been reached in the first few months of negotiations, recurring conflicts with umpires and the inability to pick a commissioner for five years.

The O'Malley ownership era for baseball ended when control of the sport shifted from teams like the Dodgers to the egocentric hawks. My guess is that--although he would never say so publicly--among the things that Peter O'Malley will not miss are the baseball owners' meetings as conducted in the last 10 years.

The third type of owner is the megacorporation that views a sports franchise as a crucial strategic investment in a grander business plan. The acquisition of the Ducks and the Angels by the Walt Disney Co. is a classic example. A simpler version was the Angels ownership by Gene Autry when he also owned the broadcasting outlets that carried Angels games.

Sports teams are attractive as part of larger businesses because of complementarities--or synergies--between sports and numerous other industries. The Disney Co. illustrates many of these synergies. Disney is in broadcasting (ABC and ESPN), makes movies tied to its teams, markets clothing and other products that use Disney logos and is planning a sports theme park near its Anaheim sports venues.

The wave of the future is the Disney example. These entities bring solid management practices to an industry that is too prone to excessive ego in management decisions. Because their primary motivation is to seek profit from the synergies, these organizations have a strong incentive to maintain a highly positive image with the public--to be the kind of organization and team (including the personalities of its players) that will cause a parent not just to take the kids to the game, but to buy the jackets, attend the related movies and visit the related theme park. In short, broad multifaceted business incentives cause these enterprises to want to be customer friendly--like the Dodgers have been under the O'Malleys.

In addition, the multimedia entertainment company will simply make a lot more money in sports and sports-related activities than the single-purpose team. As a result, it will have both the funds and the incentive to hire good players and managers. These organizations profit from stability in owners and players as a means of maintaining a positive corporate identity that fans will admire (and pay for) and loyalty among employees who will happily not only play ball but also appear in movies and at the theme park.

Because of their superior business practices, the multimedia enterprises are likely to eat the rich owners' toys for lunch, and, we can hope, drive most of them from sports in the next few years.

Dodger fans might wish for O'Malley-like new owners, but it's not likely. The realistic prospect is for a Disney-like ownership, which would have a strong financial reason to retain the spirit and class of the Dodger organization.

Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World