There are two big problems for Major League Baseball that have come up over the last few days. The big story in all the national outlets is the most recent steroids scandal. The Miami New Times broke a story this week linking several top players to illegal steroids, including Alex Rodriguez, Gio Gonzalez, and Nelson Cruz. The steroid story has been an issue for the last decade, ranging from speculation to names being released, to the Mitchell Report, and now to this. MLB has taken a hard public stance against steroids, yet the problem obviously still remains, as we’ve seen in the recent news.
The other story hasn’t received as much news lately, even though it is a far bigger story. The Los Angeles Dodgers finalized a 25-year, $7 billion deal for their local TV rights. We’ve known they were going to be getting a huge deal ever since they traded for almost every big contract in the game. This is a huge problem for baseball, definitely bigger than steroids. It’s also a problem that has been public for much longer than the steroid issue. For the last 20 years the gap between big spenders and small market teams has been growing. That’s led to a huge advantage for big spenders. Ever since 1994, only one team has won the World Series with a payroll in the bottom half of the league. That was the Florida Marlins in 2003. Last year that mid-point was $97 M.
The Dodgers will receive $280 M per year, just from their local TV deal. To put that in perspective, if the Pirates had an $80 M per year TV deal, that would be considered huge for their market. That’s $80 M before they receive any ticket sales, revenue sharing, money from national deals (which is usually included in revenue sharing), or any other means. Even if they had a deal like that, the Dodgers would still have $200 M more. The Dodgers won’t get the entire $280 M each year, but that doesn’t change the fact that they’re starting off well beyond every other team.
As we’ve seen with the Yankees, out-spending every other team won’t get you a World Series every year. It will get you to the playoffs almost every year, and make you a favorite for most of that time. The Dodgers are also entering uncharted territory with their deal, going well beyond where the Yankees were spending. What happens if a few more teams make that jump? Then you’d have an even bigger divide between the big spenders and the smaller market teams.
MLB has taken a very public stance against steroids, but has ignored the competitive balance problem. In fact, they’ve made public statements that it isn’t a problem. Every time a small market team becomes an incredible story and makes the playoffs, Bud Selig points to that as a sign that baseball’s competitive balance is working. You never hear anything when that team is eliminated. You also don’t get an explanation of why it’s always a huge story when small market teams have success, yet there’s nothing wrong with the competitive balance. If there was nothing wrong, then it wouldn’t be a story at all if the Pirates or the Athletics or the Rays had breakout seasons. It’s not the story of the year in the NFL when the Steelers, Raiders, or Bucs make the playoffs. MLB only cares about one of these problems, but they both have similar downsides.
Steroids is a black eye for the sport. It tarnishes records, and raises questions about how level the playing field is if some athletes are juicing. At the same time, we already know that the economic playing field is completely unbalanced. It seems silly for MLB to worry about whether some players may have an unfair advantage over others when a third of the teams in the league are at a clear disadvantage.
A concern with steroids is that it could drive fans away. If fans can’t trust the athletes, then why should they follow the sport? But I don’t think many fans would be driven away because their favorite player was busted for steroids. Most fans follow teams, not players. Once again, MLB has a third of the league at a huge disadvantage. That does drive fans away, especially when they know that their team starts with almost no chance of winning it all.
Think about the NFL and the teams that are consistently winners. It’s usually the smartest teams who draft well, have a system, add players into that system, know which players to keep, and know when to move on from an aging player. The NFL is set up so that every team has a fair shot at winning, and the smartest teams are consistently some of the better teams in the league.
Now think about Major League Baseball. The teams that are consistently good are teams who spend money. Not every team that spends a ton of money is good, but teams that spend $100 M or more have an advantage. They can cover up their mistakes with more money. If the Pirates saw Alex Rodriguez go down with a season ending injury, they’re not going out and adding a $12 M a year third baseman like Kevin Youkilis. If they were to just add one $12 M a year player, that would pretty much be the limit for them.
If Major League Baseball was fair, the Rays would have won a World Series by now. Instead the Rays made the World Series once (lost 4-1), and were eliminated in the ALDS twice against the bigger spending Texas Rangers. The fact that they’ve won 90+ games in four of the last five years, all with the limited budget they have, shows how smart they are. The smartest teams in football don’t go through those kinds of stretches where they make the playoffs every year and fail to win a Super Bowl. Unless they’re located in Philadelphia.
Unfortunately this isn’t going to change. MLB isn’t going to do anything about this because there’s no outcry. You don’t hear anything from the owners, other than the token “We’re going to address that” from the small market teams. In reality, it would take a Wellington Mara-type owner from a big market team who would have to lead the way to change for the long-term good of the league. MLB has never been about the long-term though. They’re only about the short-term money. That’s why World Series games start after 9 PM on a school night. Sure, a generation of fans down the line will be gone, but right now you get bigger advertising dollars. The sport just brought in almost $14 billion dollars between the National TV deals and the Dodgers deal. I don’t think anyone is going to be rushing to change things.
There’s also no public outcry, unless you count small market bloggers. This isn’t an issue that impacts the big markets, and the national media usually caters to the big markets. You’d need the national media to create some serious public outcry, and that’s not happening. That’s especially not happening when the national media celebrates it when a small market team has a surprise breakout season, while ignoring that if the league was fair, there would be no reason to celebrate any team having a big year.
There is national attention with steroids, and that’s the only reason MLB does something about it. There were grumblings in the 90s, but MLB was able to look the other way. They only started dealing with things when it became impossible to look the other way. Even then, the problem isn’t solved. There’s no real downside to taking steroids. Just look at Melky Cabrera. Cabrera took steroids, but has made $12.6 M in his career. Even after being busted for steroids, he received a two year, $16 M deal. So what’s the downside? You’re going to get millions of dollars, but if you get busted you’ll have to sit out a portion of the season, only to get millions of dollars when you return.
Even if MLB comes up with a way to void contracts, there’s still no downside. If Alex Rodriguez gets his contract voided by the Yankees, he has still made $325 M in his career. And if the Yankees void his deal, he’s going to get signed by another team. It probably won’t be for $30 M a year, but if Kevin Youkilis can get $12 M, then A-Rod won’t be hurting.
Worst case scenario for steroid users is that they are tested early, before they have the chance to make big dollars. But if you have a drug that could help you make millions of dollars, I’d have to think players would take that risk.
In reality, MLB isn’t really dealing with the steroid issue. They’re giving the appearance that they’re dealing with it, but the punishment doesn’t fit the crime. It’s like giving out $5 tickets for speeding. It’s a slap on the wrist, and I don’t think it’s going to make players think twice about steroids. The only reason they’re taking this approach is because it has become a national story. They’re forced to take action. That’s the biggest difference between the steroids story and the competitive balance story. There’s no national story about how baseball isn’t balanced. Therefore, there’s no reason for MLB to do anything about the issue. You could argue that the lack of competitive balance is a much bigger issue than the steroid issue. Unfortunately, the reaction to steroids is much bigger than the reaction to competitive balance. So don’t expect anything to change until the competitive balance is so broken that MLB is forced to make a change.
Links and Notes
**The 2013 Prospect Guide is now available. The 2013 Annual is also available for pre-sales. Go to the products page of the site and order your 2013 books today!
**Last day to save 20% on the eBook version of The 2013 Prospect Guide! The eBook is also available through our publisher. They also have a discount code during the month of January that allows you to save 20%. Use the code JANBOOKS13 to get the discount. This code is only valid on the eBook on the publisher’s web site, and not the books on the products page of the site.
**Charlie at Bucs Dugout had a good article about giving up draft picks. Too often you see people saying “they can afford to lose a draft pick because they have two of them”. Charlie makes a good argument of why one draft pick shouldn’t have any impact on the value of another draft pick.