Bare Markets
On the days he is most weary, when the years pushing hope and peddling next year seem most oppressive, Allard Baird tells himself again, “If you do not like to live in the snow, then move to the sunshine.” Mostly, it works.
It is spring in Surprise, Ariz., much of this afternoon spent on the terrace outside the Office of the General Manager, Kansas City Royals. Below and before him, his ballplayers play the final innings of an exhibition baseball game.
In the stands of a facility the Royals share with the Texas Rangers, a few pale and hearty Missourians, having moved to the sunshine for a few days, separate the minor leaguers from the players who will live among them in April. It takes some doing.
In the left-field bleachers, a woman who has allowed the straps of her top to fall to her elbows and has smoldering pink shoulders to show for it nudges the man beside her and points to the back of a player, No. 24.
He shrugs.
It’s Mark Teahen, the starting third baseman.
She gestures again, to No. 30.
He shakes his head.
Ruben Gotay. Opening-day second baseman.
She smiles.
Forty-four big league games between them. Together, they will earn this season what third baseman Alex Rodriguez will make in about five days, or by April 8. Rodriguez plays for the New York Yankees.
It has been 12 years since the Yankees and other wealthy organizations began to foot the bill for the Royals and other so-called low-revenue franchises, a collectively bargained strategy that, in theory, was to bring competitive balance to the economically disparate.
The system gave the Royals about $20 million last year, a few months before Baird traded away their best player, Carlos Beltran, because the Royals could no longer afford him. They lost 104 games, finished in last place in the American League Central, and probably will receive another $20 million in revenue sharing this year, for a season in which they are widely believed to be too young to finish anywhere but last place again.
“I don’t want to sound cavalier about this,” Baird says, “but [Yankee General Manager] Brian Cashman has challenges too that I don’t have in Kansas City. They may be different, but he has challenges.
“Can there be more parity in the game? Sure. Sure there can. Do I think it would be healthy in the big picture of things? Sure, I do.
The system, however, does not always work for the little guys, particularly if the little guys choose a separate course. To some, they are the have-nots. To others, the choose-nots.
The Milwaukee Brewers spent $27.5 million on payroll in 2004, last in the major leagues, and lost 94 games. The Tampa Bay Devil Rays spent $29.5 million and, despite finishing as high as fourth in the five-team AL East for the first time in their history, still lost 91 games. The Pittsburgh Pirates laid out $32.2 million and lost 89 games. Of the three, two -- the Brewers and Pirates -- have new ballparks and once were among the game’s elite teams. Neither has had a winning season since 1992.
The Royals were 22nd in the majors in payroll -- at $47.6 million. Baird expected to pare at least $9 million off that in 2005, more if he could. In fact, his payroll has fallen in three of the last four seasons, despite luxury tax and revenue sharing, and other benefits that pay off with no regard to market size.
Like many of the teams on the lower end of baseball’s economic structure, the Royals have emphasized scouting and development, largely ignored the expensive free agents, and sought merely to hold on in a Yankee world. After determining the risk is too large, they avoid the top-end Latin and Asian prospects who demand large signing bonuses. They hope for further financial relief from a new collective bargaining agreement that will replace the current agreement in 2007, but baseball is booming -- television ratings are up, attendance is up, industry revenues (Internet, XM Radio, licensing) are up, the Yankee payroll topped $200 million -- and there will be strong arguments from the union and the elite franchises to maintain the current arrangement.
In a winter market driven by organizations in New York, Los Angeles and Boston, more than $1 billion was spent on free agents. The Royals contributed $2.5 million (all of it to pitcher Jose Lima), the Pirates signed three players to minor league deals, Tampa Bay paid out $3 million and Milwaukee $9.3 million, including $8.5 million over three seasons to catcher Damian Miller.
And while the downtrodden franchises generally shun expensive, multiyear contracts, the large markets drive baseball’s long-term payroll debt. USA Today calculated this week that the game is floating nearly $3 billion in contracts from 2006 to 2010; the Pirates have only $6.3 million on their books past 2005, Tampa Bay $13 million, the Royals $32 million.
“The only thing I’m optimistic about is that it improved off the last labor agreement,” Baird said. “And I’m optimistic the next one will be improved. What pulls you back is what happened this last winter. The game over the previous couple of years had really changed. There was much more controlled spending. ... Then you look what happened this last winter, things kind of went out of sight again.”
It was about there where Kevin McClatchy, owner of the Pirates, had seen enough. At an event in Pittsburgh in late January, McClatchy railed against payroll inequities and their impact on competitive stability, a system he believes allows the large markets to swamp the small markets.
“I don’t know what happened,” he said of his fellow owners. “Maybe they drank some funny water, but they all decided they were back on the binge.”
He said negotiations for the next collective bargaining agreement must include “constraints, because these guys can’t control themselves.”
Baseball has not come close to adopting a salary cap, which some believe has allowed small markets in the NBA and NFL to succeed. The NHL shut down this winter over the same issue.
As the last of the prized free agents were being swept up, most by the richest owners, McClatchy said, “I’m not sure if they knew it, but they may have created a hawk,” and he suggested he had allies.
Washington National General Manager Jim Bowden told USA Today that divisions could be aligned by revenue, placing Pittsburgh, Kansas City and Tampa Bay together, the Yankees, Mets, Red Sox and the Dodgers together.
“That way,” he said, “every city in the country has a chance at a pennant race. ... Let them all compete together so that one of those teams gets to the postseason. Even if they get eliminated in the first round, let them have pennant races every year. Let the big markets play together.”
Several weeks after his outburst, McClatchy sat at a dining room table at Tampa’s Legends Field, spring home of the Yankees, the heart of the spending beast.
An hour before, in the Yankee clubhouse, Tino Martinez had wondered where all of the revenue-sharing money -- McClatchy got about $14 million -- was going. Between stints with the Yankees, Martinez played for the low-budget Devil Rays.
“In my opinion, there should be a minimum, a bottom scale, where each team has to spend a certain amount of money, maybe $40 million,” Martinez said. “The Devil Rays, they’re making money over there. ... It should be mandatory that the money the Yankees pay the Devil Rays
McClatchy flushed.
“Everybody has their opinions,” he said. “I know what the truth is.”
The small-market truth, he says, is that the current luxury-tax and revenue-sharing systems aren’t enough to drag along the Pittsburghs, the Kansas Citys, the Tampa Bays and the Milwaukees, where good players serve their time, walk after six years and stock franchises in larger markets.
There is evidence, however, that baseball adequately supports its struggling organizations. According to industry insiders, low-revenue clubs receive about $60 million each before the first customers arrive, from revenue sharing, national television and licensing, along with a handful of new deals that could generate as much as $2 billion over the next decade.
Also, franchise values have risen dramatically, even those of teams that claim to be losing money. The Montreal Expos, bought in 2002 by baseball’s other 29 teams for $120 million and moved to Washington this season, are expected to sell for at least $300 million. The Brewers sold this winter for about $180 million, or approximately what Arte Moreno paid for the Angels. Two years later, some estimates place the Angel franchise value at $350 million.
McClatchy, however, claims heavy losses in recent years, and forecasts more of the same.
“I have concerns about the game,” he said. “I tried to just get some things off my chest. It probably got a little more attention than I anticipated. I don’t regret what I said in any sense. ... I stated what I needed to, what I probably needed to for myself. I think we all understand the issues that are facing our game, and there’s a lot of concern by a lot of people that want to improve the system.”
The system appears to work for some, however. In 1985, the Royals played the St. Louis Cardinals in the World Series.
Twenty years later, the Cardinals are one of the game’s exemplary organizations. Their payroll is almost twice that of the Royals, and last season they outdrew the Royals by more than 1.3 million fans. The cities -- Kansas City is larger in population by nearly 100,000 -- are separated by 238 miles.
The Royals, Baird claimed, are doing all they can.
“I’ve seen the books,” he said. “I’ve seen what comes in and goes out. ... It’s not a matter of sitting back and saying, ‘All right, when’s the next [revenue-sharing] check come in?’ ”
Five years ago, the Twins had a payroll of $16.7 million, 30th among 30 teams, and half what the Brewers and Pirates were spending. Three years ago, there was talk that baseball would fold the franchise, along with the Expos, because of the financial drag on the rest of the game.
The Twins survived, have gone to the playoffs in each of the last three seasons, and this year will have a payroll approaching $60 million. They don’t have a new stadium, did not draw 2 million fans, and lost two more starters in the off-season to free agency. With the Oakland A’s, they have come to represent on-field achievement at bargain rates, and they are again favored to win the American League Central title.
Twin General Manager Terry Ryan has seen the team come and go, and come again, the not-unfamiliar life cycle of the small-market organization run well. Ryan cuts corners -- no roving instructors, skeleton front office, smaller minor league staffs -- but has drafted wisely and rebuilt with youngsters and one of the all-time Rule 5 pickups, Cy Young Award winner Johan Santana.
On a breezy spring day in Florida, Ryan considered the plight of like franchises in like markets, particularly the ones whose geography pits them against the Yankees and Red Sox.
“What we’ve got against those guys is we don’t have to worry about that division,” he said. “I’d hate to be Tampa Bay, Toronto and Baltimore. ... The only time I’m worried about Boston or the Yankees or some of the players who are up there is when we have to play them in the postseason.”
Only the White Sox spent more than the Twins in the AL Central last season, and only the White Sox were in the upper half of big-league payrolls, at 15th.
Given the relative payroll similarities and an unbalanced schedule that allows them nearly half their games against division rivals, the Twins have pushed back from 97 losses in 1999, 93 losses in 2000, the brink of paper bankruptcy and contraction, and have become the argument against further revenue distribution.
Last season, Ryan said, after years of heavy financial losses, the Twins nearly broke even, and with another playoff run could make their owner -- Carl Pohlad, a billionaire -- a few dollars.
“As we got better, he allowed us to spend,” Ryan said. “That’s kind of what you’re hoping your owner will do. We struggled for such a long time, and I know you hear a lot of people talk, especially people in ownership, about why we should spend money if we’re just going to be mediocre. I’ve heard that. And there’s something to be said about that. Until you show that you can be competitive, I’m not sure an owner is going to be all that cooperative in giving you a lot to work with.”
Others would argue that with wise financial cooperation comes success, that it leads to wider local revenue streams and better attendance and a product that makes the entire system run more efficiently. In the last decade, Pohlad has fought for and failed to secure public funding for a new stadium, and has said he would be willing to sell the franchise.
In a 2001 interview with Minnesota Public Radio, Pohlad said he was “tired of underwriting all of the losses that we’ve had in baseball and it wasn’t fair to my family or our business.”
Then came the wins, and the division titles, and the promise for more. In his office in Fort Myers, the sounds of batting practice sneaking through an open window, Ryan is less euphoric than he is relieved.
“Being good and having hope are two different things,” he said. “For me, at least you have to have some hope.”
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(BEGIN TEXT OF INFOBOX)
KANSAS CITY ROYALS
2005 payroll:
$38 million
Highest-paid player:
Mike Sweeney,
$11 million
*
MILWAUKEE BREWERS
2005 payroll:
$28 million
Highest-paid player:
Carlos Lee,
$8 million*
PITTSBURGH PIRATES
2005 payroll:
$26 million
Highest-paid player:
Matt Lawton,
$6.75 million
*
TAMPA BAY DEVIL RAYS
2005 payroll:
$30 million
Highest-paid player:
Aubrey Huff,
$4.5 million
*
WASHINGTON NATIONALS
2005 payroll:
$47 million
Highest-paid player:
Livan Hernandez,
$8 million
*
MINNESOTA TWINS
2005 payroll:
$58 million
Highest-paid player:
Johan Santana,
$10 million
*
Money Makers
Major league players with the highest annual salaries in 2004:
*--* Player Position Salary Team MANNY RAMIREZ Outfielder $ 22,500,000 Boston Red Sox ALEX RODRIGUEZ Third baseman $ 22,000,000 New York Yankees CARLOS DELGADO First baseman $ 19,700,000 Toronto Blue Jays DEREK JETER Shortstop $ 18,600,000 New York Yankees BARRY BONDS Outfielder $ 18,000,000 San Francisco Giants
*--*
*
Fields of Green
Major league team payrolls in 2004:
New York Yankees: $184,193,950
Boston Red Sox: $127,298,500
Angels: $100,534,667
New York Mets: $96,660,970
Philadelphia Phillies: $93,219,167
Dodgers: $92,902,001
Chicago Cubs: $90,560,000
Atlanta Braves: $90,182,500
St. Louis Cardinals: $83,228,333
San Francisco Giants: $82,019,166
Seattle Mariners: $81,515,834
Houston Astros: $75,397,000
Arizona Diamondbacks: $69,780,750
Colorado Rockies: $65,445,167
Chicago White Sox: $65,212,500
Oakland Athletics: $59,425,667
San Diego Padres: $55,384,833
Texas Rangers: $55,050,417
Minnesota Twins: $53,585,000
Baltimore Orioles: $51,623,333
Toronto Blue Jays: $50,017,000
Kansas City Royals: $47,609,000
Detroit Tigers: $46,832,000
Cincinnati Reds: $46,615,250
Florida Marlins: $42,143,042
Montreal Expos: $41,197,500
Cleveland Indians: $34,319,300
Pittsburgh Pirates: $32,227,929
Tampa Bay Devil Rays: $29,556,667
Milwaukee Brewers: $27,528,500
Source: USAToday.com