Spread the wealth

The solution to baseball's revenue-sharing "problem" is for the teams to share the revenue.


Allen Barra
June 16, 2000 11:00PM (UTC)

If there is a dramatic resurgence of socialism in the early part of the new millennium, future historians may well trace it to the 2000 Major League Baseball season. Everywhere the talk is of "revenue sharing"; it's likely that at no time in world history have so many multimillionaires been advocating socialism. In the recent words of Florida Marlins owner John Henry, "Revenue sharing is virtually all our commissioner talks about."

Well, at least commissioner Bud Selig is finally getting the message. Now let's see if he can communicate it to Ted Turner, Rupert Murdoch, George Steinbrenner and Jerry Reinsdorf. I think there is a very good chance that he can. I do. I also believe that I'll hear a knock on my door tonight, and that when I open it I'll see Salma Hayek with a bottle of wine in her hand and mischief in her warm brown eyes ...

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But I digress. Everyone agrees that baseball's biggest problem ... well, actually baseball doesn't have a big problem right now. Attendance, both per game and total, is at an all-time high, new marketing techniques have put the game's young stars back on national magazine covers and more people are watching baseball on TV than ever before.

That last item is the one that's causing the problem -- or at least the one that everyone around baseball wants to call a problem. Other major sports make most of their revenue through national TV ratings and distribute it evenly. With baseball, the pyramid is reversed; hardly anybody watches baseball on national TV; on any given night during the season, baseball is a regional sport divided into 30 or so markets, some bigger than others.

Which is the problem: The Yankees get $55 million from local TV, the Royals $5.5 million. And the Royals' contract looks pretty good to the Montreal Expos: They don't get any TV money, in dollars or francs. This has created an enormous disparity in revenue between so-called big-market teams and small-market teams.

Actually, considering the money all these teams are making, it should be "huge market" and "very big market," but let that pass. The important thing is that this is what is supposed to destroy baseball because fans will lose interest when so many teams have so little chance to win. Or as Philadelphia GM Ed Wade says, "Used to be, everybody felt they had a chance in March. Now teams don't even feel they have a chance in January."

Of course, there are several possible comebacks to this. One is that Wade's team, the Phillies, is in the biggest single-team market in baseball and might, if managed properly, be a platinum mine of economic opportunity instead of a small-revenue producing franchise. Another is that if baseball owners want to preserve the game under its current revenue structure they ought to consider that maybe they've expanded too far and drop a couple of the existing franchises. (Would the game suffer that much if Montreal went back to being a Triple A minor league team?) And still another is that it used to be, before TV money became bigger than live gate, that the same couple of big-market teams, mostly the Yankees and Dodgers, won nearly every year, and fans didn't lose interest. But let all of that pass, too. Let's assume for a moment that everyone's right about this revenue-sharing thing.

Selig certainly thinks revenue disparity is an important issue. Last year he appointed a committee to recommend a way of dealing with the issue. The panel included such luminaries as Yale president Richard C. Levin, former Sen. George Mitchell, former Federal Reserve chairman Paul Volcker and columnist George Will. As we go to press, the group has yet to present its recommendations. If the committee finds itself stumped, I'd like to take a crack at it. I think the solution to the revenue-sharing problem is for the teams to share their revenue. This is not a new solution: the Players Association has been suggesting it to the baseball owners since Marvin Miller was the union's executive director. Miller, who held that post from 1966 until 1982, is the man who made the players understand that "revenue sharing" meant that the owners should share their money, not that they should share the players' money by imposing a salary cap.

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In the last negotiation, Don Fehr, the union's current executive director, conceded the owners a "luxury tax," which allows the small-market teams to siphon "sin" money from rich teams that spend beyond a prearranged limit. But he isn't likely to budge on a salary cap. Nor should he; it's not the purpose of a union to cut a deal that brings in less money for its members, particularly when everyone acknowledges that the industry as a whole is booming.

Did I say everyone acknowledges that? In truth everyone doesn't, and that's baseball's real problem. Many don't even acknowledge baseball to be an industry. Here's a quote from Seattle GM Pat Gillick to the St. Louis Post-Dispatch's Mike Eisenbath: "Say you've got that Krispy Kreme [doughnut] franchise, with cars lined up in the drive-through all day. How are you going to feel about giving up some of your profits to the guy with the doughnut shop down the street that's not doing so well? That's just the other guy's bad luck. He didn't have to buy Pittsburgh or Kansas City. And now they want me to devalue my franchise?"

Gillick is talking about Seattle; imagine how GMs and owners in New York, Chicago, Los Angeles and Atlanta feel about their doughnuts.

And that's precisely what baseball's real problem is: When it is convenient for them to do so, executives like to think of their own teams as individual franchises with no connection to the health of the industry. Then when they deal with the Players Association, they say, "You have to get the players to accept a salary cap so we can keep the small-market teams competitive -- it's good for baseball."

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If baseball's small-market teams are in trouble, I have a proposal for them: Meet with each other, band together, approach the big-market teams as a solid unit and demand 50 percent of all revenues. Yes, that's what I said, 50 percent of all revenues. Demand it. You'll win. If you hold together, you can't lose. The Yankees, Braves, Dodgers, White Sox and whoever else make up the big markets can't play without you. Without you, they have no revenue, and there's more of you than there are of them.

One more point to you small-market guys: For years, men like White Sox owner Jerry Reinsdorf have led you astray by telling you that you could increase your profits by forcing the players into accepting a salary cap. Well, it's not going to happen, not in this life, as Marvin Miller used to say, and not in the next. The players are unbeaten -- they have a perfect record. But the big-market owners have lost every time out; you know they can be beaten. Think about that when they ask you to open negotiations for the new basic agreement by locking the players out.


Allen Barra

Allen Barra cowrote Marvin Miller's memoirs, A Whole Different Ballgame. His latest book is Mickey and Willie: The Parallel Lives of Baseball's Golden Age.

MORE FROM Allen Barra

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