Small Market Teams in Baseball: A League of Takers?

One thing I’ve done differently this off-season is to shut it down most weekends and take a few days off. After Thursday night’s First Pitch is done, I know I can go out with my friends that night and the rest of the weekend, along with catching up on all of the TV I missed throughout the week. I’m hoping this will avoid burnout in September, which seems to happen each year. If anything, it does mean that I get to stay current on The Daily Show and The Colbert Report.

Today I was watching Thursday’s episode of The Daily Show, which featured a great segment about the debate between “Makers and Takers”. I’ll start out by saying that I hate discussing politics. There are actually three things I hate to discuss with people: politics, religion, and sports. In my mind, those are the three things where people have concrete opinions that aren’t swayed by any facts you bring up in a debate. Of course I do break one of those rules with my job as a sports writer. I’m about to break another one here.

The “Makers vs Takers” segment discussed a growing problem in America, where the gap between the top income earners and everyone else is growing bigger at a rapid pace. This leads to debates: should minimum wage be increased, should tax cuts be eliminated, should extensions to unemployment end, should the government be involved in health care, and so on. The debate boils down to one side saying that the “Makers” should give up something in exchange for a stronger overall nation, while the other side says that the “Takers” shouldn’t get “free handouts” from the “Makers” at all. I thought Jon Stewart’s segment was a great take on the political side of that, and was also very funny.

But why bring up politics on a sports blog? Well, the answer to that lies back in 1994 at a McDonald’s. That was the year that McDonald’s ran a promotion where you could buy Field of Dreams (on VHS!) for $6.99 with an extra value meal. At the time I had never seen the movie, but I was a big fan of chicken nuggets (I was 11, and didn’t know what real food was yet) and convinced my parents to get the video. It was this speech that stuck with me throughout the years.

That’s an iconic scene, so that speech probably stuck with a lot of people. It’s enough to make you a baseball fan, and if you ever feel like you’re losing interest in the game, it’s enough to bring you back in. The part that interested me the most was the tie between American and baseball history. It’s fascinating how true that key statement is: “But baseball, has marked the time. This field. This game. It’s a part of our past Ray.”

When it comes to baseball and American history being tied together, I don’t think anything has changed. I think the biggest sign of this is the “Makers vs Takers” debate, which is definitely a key debate in the game of baseball. After I finished watching The Daily Show, I logged on Twitter and saw this article by Dejan Kovacevic. The article talked about the Hall of Fame voting controversy in the last week, but then moved on to what Dejan calls the biggest issue in baseball: the financial imbalance between large market and small market teams. If you’ve read my site for any amount of time, you probably know where I stand on this issue. There are times where I feel like I write an article per week discussing how MLB is unfair to small market teams. It might be more accurate to label them “low revenue teams” and include the mid-market teams. There are two reasons for this. First, you avoid the “City X isn’t a small market” debates. An even bigger reason is that the gap between the top income earners and everyone else is growing bigger at a rapid pace.

Wait, where have I heard that before? Oh yeah, four paragraphs ago.

Major League Baseball has the “Makers vs Takers” debate alive and well. There are currently five teams making about $100 M or more per year in local TV revenues, according to FanGraphs (the chart isn’t updated with the new deal for the Phillies, but I counted them). There are three teams making $150 M or more, and then the Dodgers are making more than any two teams combined. Meanwhile in Pittsburgh, the discussion is how the Pirates have a horrible deal at $18 M per year. Or maybe the discussion is that they actually receive more money, but where does that money go? The truth of it is that, even if the Pirates were getting an extra $12 M per year in local TV revenues, putting them on par with the Reds and Cardinals, things wouldn’t really change. They’d never be contenders for the top free agents. They wouldn’t be contenders for Masahiro Tanaka. They might be able to go a little harder after one middle of the pack free agent, and spend a little more to lock him in, but that’s about it.

If you want to see the inequality in baseball, just look at the recent history of $100 M contracts that have been handed out.

2013

Robinson Cano – $240 M by the Mariners ($115 M/year in TV revenue plus 50% equity in the network)

Jacoby Ellsbury – $153 M by the Yankees ($90 M/year plus 34% equity)

Shin-Soo Choo – $130 M by the Rangers ($150 M/year plus 10% equity)

2012

Zack Greinke – $147 M by the Dodgers ($340 M/year)

Josh Hamilton – $123 M by the Angels ($150 M/year plus 25% equity)

2011

Albert Pujols – $250 M by the Angels

Prince Fielder – $214 M by the Tigers ($40 M/year. Fielder was traded after two seasons to reduce salary.)

Jose Reyes – $106 M by the Marlins ($18 M/year. Traded the following off-season.)

2010

Carl Crawford – $142 M by the Red Sox ($60 M/year plus 80% equity)

Jayson Werth – $126 M by the Nationals ($29 M plus 13% equity)

Cliff Lee – $120 M by the Phillies ($35 M/year at the time, but just went up to around $100 M/year)

You have to go back to 2011 to see a $100 M player sign with a team making less than $90 M/year in local TV revenues. Those two teams only kept their big free agent for a year or two. The only team in the above list to keep the player for the long-haul with a smaller payroll was Washington with Jayson Werth. Even in that situation, it will be interesting to see what happens with that situation over the next few years as Washington’s young roster starts reaching arbitration and Werth starts hitting the $20 M/year portion of his contract.

If you follow a team like the Pirates, then the current system leaves very little hope when it comes to seeing Andrew McCutchen in Pittsburgh for his entire career, or even Pedro Alvarez in Pittsburgh beyond 2016. The reality is that there is such a massive gap in revenues between the top earners and everyone else, that it leads to a situation where teams like the Dodgers, Rangers, and Angels can drop $100+ M on a player, and not even bat an eye if that player struggles. The Pirates would have to do some serious budgeting to make that type of financial commitment, and if the commitment pulled a Josh Hamilton, they would be sunk.

The problem with baseball is that the power lies with the “Makers”. Baseball isn’t trying to make the game fair for all 30 teams. In fact, a lot of the moves that baseball has made have hurt small market teams. They restricted the spending in the draft and international markets, which were two areas where small market teams could afford to spend and could use to compete with big market teams over the long-term. They place draft pick compensation on the top free agents, making it so that small market teams can not only struggle to afford the free agent, but also sacrifice a key draft pick in the process. On the flip side, in order to try to get draft compensation, a small market team has to tender an offer that represents a massive percentage of their payroll.

To borrow a page from Jon Stewart, let’s compare the two situations. The Pirates spent almost $50 M over a four year span in the draft, and that spending was considered so out of control that MLB overhauled the entire draft to make sure it never happened again. The Angels have spent over $500 M in the last four years on the free agent market, but that’s not considered out of control at all, and no changes have come to free agency.

The Rays were tendering offers to tons of qualified free agents back when an accepted qualifying offer wouldn’t seriously restrict a small market team. As a result they were getting a lot of compensation picks in the draft, which was seen as an abuse of the system leading to big changes in the process. The new changes now create a system where big market teams see one of two things happening: they either get a draft pick when another big spender signs their qualified free agent, or they see that free agent return to them at a reduced rate thanks to no market. Meanwhile, small market teams have a harder time extending a qualifying offer, and can’t afford to sign guys like Kendrys Morales, even when no other team is going after those types of players. Note: I’m not saying the Pirates should sign Morales. I’m thinking more about AL teams who have a DH where Morales would be a good fit.

Going back to Dejan’s article, he mentions that baseball should have a salary cap, a salary floor, and points to the 50/50 revenue sharing in other leagues. The salary cap is the most popular thing mentioned when this topic comes up, but the truth is that you need all three. You need a cap to reduce spending at the top. You need a floor to make sure teams are actually trying to compete. And you need equal revenue sharing to make sure every team could afford to spend between the cap and the floor.

That’s kind of where the “America vs Baseball” comparison ends on this topic. I wouldn’t suggest that everyone in America should be making the same amount of money, with everyone able to purchase a Lamborghini or whatever luxury car is your preference. The parallel stops with the general idea that in each situation, the few at the top need to give up some of their revenues to make sure that everyone below them can have a shot at success. When it comes to sports, this situation leads to a stronger league overall.

If you want to see the numbers to support that, look no further than the comparison in ratings between the NFL and MLB. The World Series saw one of the biggest markets and one of the most popular teams in baseball win it all this year. The Red Sox and Cardinals drew an average of 14.9 million viewers per game in the World Series, which aired on FOX. That was the fourth worst total in history for a World Series. Meanwhile, the Green Bay Packers and San Francisco 49ers drew 47.1 million viewers in their Wild Card game, which was also aired on FOX.

Think about that for a second. The first round of the NFL playoffs, between a team from San Francisco and a team from Green Bay, drew over three times as many viewers as the average World Series game between the two teams that are supposed to have the best fans in baseball. It wouldn’t work the other way. Can you imagine the low ratings a Giants/Brewers Wild Card game would draw compared to your average NFL regular season game?

The reason the NFL is so successful is because the playing field is even. It doesn’t matter if you’re from Pittsburgh, New York, Tampa Bay, or Los Ang…oh wait, they’re such a strong league that they don’t even need a team in Los Angeles. No matter what city you’re in, you’ve got the same chance to compete as any other team. The only thing stopping teams from competing are bad decisions. The smart teams win, and the stupid teams lose. That’s not the case in baseball. The smartest team in the game would probably be the Rays. Then you’ve got the Dodgers, who spend a ton but have made some stupid moves in the process. Yet the Dodgers have a sizeable advantage over the Rays. If MLB was set up like the NFL, then the Rays would be the New England Patriots, and the Dodgers would be the Washington Redskins. I guess that would mean Yasiel Puig=RG3?

But that’s not going to happen, because change needs to come from the top. The only people that can bring change in baseball are the big earners like the Dodgers, the Yankees, and the Red Sox. That’s just not going to happen. You’ve got the Red Sox owner making “Taker” comments about small market teams receiving revenue sharing and accusing them of big profits. There’s the Yankees trying to stay under $189 M to avoid paying luxury tax, which became much easier after the Alex Rodriguez suspension. And even though the Dodgers received a massive deal that was much higher than any other team, they still worked hard to make sure they were giving up as little as possible of that money to other teams under MLB’s revenue sharing program. These don’t sound like teams willing to split revenue equally across the league

When you’ve got less than half a dozen teams with massive TV deals, it creates a situation where Major League Baseball becomes “A League of Takers”, to borrow the term from the political landscape. The gap between the “Makers and Takers” will only continue to grow, making it harder and harder for low revenue teams to compete with the big spenders — especially with the restrictions on the draft, international market, and free agent compensation.

In the political landscape, there’s a debate about “Makers” and how they got there due to hard work. That argument doesn’t exist in sports. There’s no reason why a sports league should allow teams to benefit or perish based on the fortunes/misfortunes of where that team is located. The Dodgers didn’t work hard to get their TV deal. They were just lucky enough to be located in Los Angeles. The Rays aren’t a low revenue team due to any fault of their own. They’re just unfortunate to be located in St. Pete, where 100 people watch them each night. There’s no reason at all why baseball should mirror America when it comes to the divide between “Makers and Takers”. And it’s not going to be good for the game’s overall long-term health if that divide is allowed to continue to grow.

Unfortunately, it doesn’t look like there’s any end in sight to the current problem.

Tim Williams

Author: Tim Williams

Tim is the owner and editor in chief of Pirates Prospects. He started the site in January 2009, and turned it into his full time job during the 2011 season. Prior to starting Pirates Prospects, Tim worked with AccuScore.com, providing MLB, NHL, and NFL coverage to various national media outlets, including ESPN Insider, USA Today, Yahoo Sports, and the Wall Street Journal. He also writes the annual Prospect Guide, which is sold through the site. Tim lives in Bradenton, where he provides live coverage all year of Spring Training, mini camp, instructs, the Bradenton Marauders, and the GCL Pirates.

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  • weltytowngang

    After 70 years of being a Pirates fan, I’m so tired of huge disparity between the “haves” and the “have nots”, I am thinking about resigning from the MLB fan base. Why put myself through the hopelessness of this situation. The time, money, etc., invested in MLB is “pouring money down a rat’s hole”. The best to be gained is the Pirates make the playoffs. The hope to really compete isn’t ability but money. I think high price to pay for fa’s is intentional so that most teams can’t even think about buying a fa. As much as I love baseball, this is a one way street; I contribute much with little hope. I have been saying for years, I dropping mlb; well, I think this is my last year. Why fool myself into thinking that mlb gives anyone other than the big spenders a chance?

    • piraddict

      welty… my friend, don’t be so despondent. In you 70 year lifetime the Pirates have won3 World Series (1960, 1971, 1979). If all the teams in baseball were evenly balanced competitively you would expect to have a 1/30 chance of winning the Series, or you’d expect to win once every 30 years. So the Pirates haven’t done too badly, even though the same market forces have been at work all along (this way of thinking is affected if you consider the effects of MLB expansion which would increase the number of WS championships that the Pirates would have been expected to win, but the general point is still valid).

  • http://allmyforeparents.blogspot.com Israel P.

    You know, of course, that it’s not the same. Sports is meant to be competitive and if it is competitive and entertaining with all teams at some level of bad, the sport as a whole does OK.

    Society is not like that.

    But if you really want to apply that kind of logic to sports, then ask yourself how fair it is when your team cannot afford to pay the talent because all their salary money is tied up in two-three star players.

    Also keep in mind, that if equality rules, no one would ever aspire to be better because you couldn’t get a raise. A raise based on performance for some would represent inequality. And the world would look like the public schools. Feh!

    I could go on, but I won’t.

    • Cato the Elder

      Yeah, spare us. First off, no one suggested “equality” but rather a salary cap, a salary floor and revenue sharing – not unlike the NFL which you’ll note is “competitive.” So to begin with you’re attacking a strawman. Secondly, the statement “[i]f equality rules no one would aspire to be better cause you couldn’t get a raise…” is demonstrably false. You don’t have to go far back in baseball history to arrive at a time, before free agency, when players were paid whatever owners wanted to pay them. And guess what, players wanted to be good ball players because playing baseball is a pretty nice way to make a living, even if you are making $100 million. No w nobody is suggesting tgat we go back to that exactly, but still, it is worth noting that while money is an incentive, it is not the only incentive. John-Gault-fantasy of “the makers” taking their ball and going home ignores a fundamental truth: the great innovators are motivated by passion at least as much as they are by money. It’s always easier to make money in something than it is to build it from scratch. The most talented and hard working people I know generally earn far less money than the people who got a degree for a lucrative field – I know musicians who essentially live hand to mouth traveling the country, but wouldn’t trade it for 6 figure desk job; I know scientists who work 70 hour weeks for a relative pittance, who are absolutely brilliant by any measure and likely could make a fortune in a more lucrative field, but do research because that is their passion. I could go on, but the point is that if i know anyone who will change the world, i.e. be a true innovator, or “maker” if you will, it will be these individuals, not the middle manager who makes who won’t work overtime unless you show him the money.

      • piraddict

        I think you are conflating too many things Cato. My guess is that the musicians and scientists you cite value the psychic income of performing to the top of their abilities, and the acclaim of their peers, more than they value money. The data on money as a motivator is more mixed than you state. A lot depends on how much of one’s basic needs are being met and whether diminishing marginal returns for cash have set in or not. But the John Gault effect that you “pooh-pooh” is definitely true, at least in how it affects my behavior.

    • https://profiles.google.com/116269181038744632419 Shawn Inlow

      Israel P.

      If I read you right…”If equality rules, no one would ever aspire to be better because you couldn’t get a raise.”…

      I don’t think this holds. If there was a cap and a floor and a 50/50 split you’re saying Andrew McCutchen would just stop trying. Because, you know, “What’s in it for me?” Really.

      I’ve seen people in the sand lot try very hard to be the best simply because it’s there. I’ve seen people compete like hell on fire for the championships of po-dunk leagues where all you get is a T-shirt and maybe a photo in the local daily.

      No incentive. The incentive is to be the best. The incentive is to win. The aspiration to go higher and be the best is a HUMAN trait, not a monetary incentive.

      And while you’re running down the public education system I’d like you to consider that the movement for privatization of schools and cyberschooling and such really damages the public education system and I think this is an intentional end game for some. When a child is cyber schooled or, in many cases, enters, say, a charter school, the public school they’re coming from has to pay that child’s tuition and THEN the district also loses the state subsidy for that student. So the public school gets hit TWICE for a student that isn’t even there any more. This damages public education across the board.

      IN FACT, it is very much like the free agent system the writer talks about that punishes the little guy who can’t afford Morales to begin with, but when you add the punitive of forfeiting a first round draft pick to the big market team, the little guy has to mortgage his very future to try to have a now.

      Kind of like a pay-day lending operation. Keeps a brother down.

      Listen. I know loads of people who have done very well who happened to attend public schools. I know rocket scientists and people who got full rides to the best schools in this country who came from the lousy little school district where I live. The incentive isn’t necessarily just a payday. It is intrinsic to people.

      The Yankees are the baseball problem the same way that the bankers are the societal problem. The writer’s article stands, in my view, as honest and truthful.

      -Wabbit

      • JCora

        Well stated sir.

  • tbaker

    If it’s all about tv money, why don’t the small market teams charge the big market teams 5 or 10 million dollars a game to set up their cameras when they come to town. If the Yankees don’t pay the games aren’t shown on their tv package. If they pay it goes to the small market teams and parity happens. Supply and demand.

  • http://www.facebook.com/lee.young.161 leefoo

    You said it all “That’s just not going to happen.” This will never change.

    As for us spending all that money on the draft and now we can’t: Well, what was ever gonna stop the Yankees, etc, from doing the same thing and blowing us out of the water?

    And, as Israel says, how fair is it in a salary cap world, when most of your cap is tied up in 2 or 3 star players?

    Just about any solution that you can come up with is fraught with loopholes and inconsistencies.

    • Cato the Elder

      Two economic principle that spares low revenue teams: the law of diminishing returns and delay discounting. Free agency (where disparity in revenue has the greatest impact) is an inefficient expedient and pretty clearly suffers from diminishing returns. Moreover, an individual’s first million dollars is more impactful than the 100th million. For example, Marte could play out the arbitration process and hope to hit free agency ASAP to maximize his potential earnings, or he could sign an extension for 10s of millions of dollars with the Pirates sooner rather than later. The choice is his, and if maximum $$$ was the only factor, the choice would be obvious. But other factors like job-security, and of course delayed discounting are incentives for him to sign sooner rather than later.

    • http://www.piratesprospects.com/author/admin Tim Williams

      I’ve said this many times: it didn’t matter in the draft if the Yankees took the same approach. If you draft a player, only you can sign that player. If the Yankees take the same approach, that means they’re getting better young players. That’s not going to stop the Pirates from also landing talent. Tyler Glasnow didn’t get drafted in the 5th round only because the Yankees weren’t spending. Clay Holmes didn’t go in the 9th round only because the Yankees weren’t spending. Nick Kingham wasn’t a fourth rounder only because the Yankees weren’t spending. The Pirates could have still had all of these guys if the Yankees are spending big. The reason is that the Yankees have a limited amount of picks, they can only spend money on their picks, and the Pirates would still have exclusive negotiating rights with all of their own draft picks.

  • RonLoreski

    I haven’t checked the numbers, but didn’t Tampa Bay give Evan Longoria a $100mil extention a couple years ago? Tampa Bay has attendence problems and I’m quite sure they have a crappy TV deal as well. In the end it all comes down to ownership opening up their pockets.

    • http://www.piratesprospects.com/author/admin Tim Williams

      The extension for Longoria starts in 2017. Here are the year by year figures:

      17:$13M, 18:$13.5M, 19:$14.5M, 20:$15M, 21:$18.5M, 22:$19.5M, 23:$13M club option ($5M buyout)

      Even if you include the previous contract, the Rays won’t be paying Longoria more than $15 M until 2021. We’ll have to see if they still have Longoria around during the 2021-2023 seasons for that heavy lifting. Until then, they’re paying Longoria $15 M per year or less, which is the same as what the Pirates are paying McCutchen in his extension.

      It’s actually a very team friendly deal though. They already had Longoria on one team friendly deal. He could have been a free agent after the 2016 season, and would have gotten a lot more than 6/$100 M on the open market. That’s the reality for small market teams. The only way for the Pirates to keep McCutchen is to get him to sign such a deal down the line, which means he’d be passing up on probably about a hundred million dollars.

      • http://www.facebook.com/stephen.brooks.581 Stephen Brooks

        Shoot, the Rays might not even be in Tampa in 2021, let alone Longoria.

        • piraddict

          For those who believe in global warming, there may not even be a Tampa in 2021.

  • glassers

    As you are aware Tim we have debated this subject infinitum over on the PMB over the years . The NFL gets it the NHL gets it while the MLB continues down the road they have fostered for years . I have said that MLB is lucky that they have such a great product to sell ” baseball ” . They better take notice that of the 30 teams that comprise MLB exactly 1/2 had down years in attendance comparing 2012 to 2013 .

    Until revenues drop and MLB as well as the Union feel the pinch , nothing will happen . I agree with you there is no relief in site .

  • http://www.facebook.com/lee.young.161 leefoo

    “One thing I’ve done differently this off-season is to shut it down most weekends and take a few days off”

    And, so where does that leave US, your adoring public? What the he!! are WE supposed to do all weekend?

    24/7!!!!!!!!

    Nothing less!!!!

    Sheesh….days off! Gimme a break!!!!!!

    • http://www.piratesprospects.com/author/admin Tim Williams

      Are you saying you don’t read John’s winter league reports?

  • http://www.facebook.com/richard.yazhynka Richard Ya’Zhynka

    If you’re making $100,000 per year and I’m making $30,000 per year and we both get a 20% raise, our “income inequality” grows from $70,000 to $84,000 – but we are both better off.

  • Ecbucs

    The owners (many of them) don’t want a cap.

    The players like not having a cap. If the players association wanted a cap there would be one.

    Until one side or the other strongly wants a cap there won’t be one.

  • rohabi

    John Stewart was NOT funny in that clip. At least not nearly as funny as the audience thought he was.

  • johndw28

    Tim,

    Great work but you killed me with this article, you really did. Not that there is much I disagree with- I guess I had simply tricked myself into ignoring these harsh realities the past year in the midst of the Pirates wonderful resurgence to relevance. I used to think about these realities quite often and am not proud to admit was someone who had grown so cynical during the Littlefield era to think it was practically impossible for a team such as the Pirates to compete for a championship.

    I was wrong about that but I suppose the better question to ask now is what happens to the Pirates in 3-4 years when Pedro is up and Cutch is near the end of his deal. I would guess your answer would be for the Pirates to emulate the Rays model and to develop their own talent and be stingy with prospects.

    It just seems that it will be hard (though not impossible) to avoid just getting stuck on the treadmill of mediocrity- while the Pirates have clearly benefited from excellent scouting with 4th or 5th round picks in Kingham and Glasnow , etc we can’t deny that a lot of this foundation has been laid from 1st round picks which we got from being the worst or near the worst team in baseball and finally hitting on some of those premium picks in Alvarez, Cole, etc.

    I just wonder how difficult it will be for the Pirates to remain a very good team in 4-5 years and to replace a lot of the core that will inevitably be leaving regardless of how well they scout and develop talent.

    • http://www.piratesprospects.com/author/admin Tim Williams

      “I was wrong about that but I suppose the better question to ask now is what happens to the Pirates in 3-4 years when Pedro is up and Cutch is near the end of his deal. I would guess your answer would be for the Pirates to emulate the Rays model and to develop their own talent and be stingy with prospects.”

      That is my answer. When Cutch leaves, Austin Meadows will be there to replace him. I’m not sure who replaces Alvarez when he leaves.

      • piraddict

        My preference will be to replace Alvarez with one of: Sano, Bryant or Gallo but it would require trading Alvarez with a year or two of control remaining in a complex three corner trade that equalizes exchanged value and would involve the Yankees (who presumably would want him as a hometown hero).

  • Y2JGQ2

    Tim- Its always good to talk about this stuff, it creates debate, and there is a lot of passion and thoughts people have. I’ve always been angry at the system, but quite honestly i’m not so sure its worse now than it was 5 years ago, it may be better.

    Here’s why, as the disparity between the top few teams grows, the middle of the pack grows. Teams that used to be considered large market either aren’t anymore, or have paired back their spending. That being the case, 5 large teams cannot dictate whats going to happen with labor prices in a 30 team league. The reason why is simple- you can’t sign the best player in free agency at every position every year. As these teams lock players up for 7 years and 200 million dollars for a first baseman, what happens is that well……they aren’t going to be in the market for a player at that position for 5-7 years. If those big teams have locked up those big time players, lets say that the five largest teams are all set at 3rd base in 2016. They become irrelevant in the pursuit of pedro alvarez, and with us coming up more towards the middle, we can’t complain that we aren’t able to compete for his services because…….we can. Same thing with Cutch. Now, most large market teams are going to find a way to make room for an outfielder like cutch so that’s less likely to happen, but with catchers, first baseman, second baseman, shortstops, my above statement rings true, they can only have 1 huge contract per position generally, and there are a heck of a lot of very strong players that can’t be eaten by the few at the top. Yes, they have an advantage for top line pitchers and any position they may view as a need for any year, but there are still plenty of opportunities for the other teams in the middle. All things being equal when we are being outbid versus teams in our same “bracket” thats when the larger markets complain about the takers not spending the money they are given. This year, so far, we’ve made more money and spent less. Hopefully that will change as we approach the beginning of the year, but i’m doubting it will

  • Andrew

    Tim I enjoy most everything that you write, but this is my least favorite argument in sports, and intertwining the argument with political analogy only makes its more obtuse.

    There is a small but statistically significant link between payroll and wins in baseball, this identifiable link does not address causality, but there is not a competitive balance problem. The competitive balance of a sports leagues is determined by the underlying size of its talent pool, which for baseball has never been bigger. Salary cap, floor, luxury tax have nothing to do with competitive balance, their purpose is to restrict the growth of players salaries and provide revenue certainty for owners.
    Fairness is the facade that owners use to sell these restrictions to fans.

    The NFL is a red herring, no form of entertainment equals its popularity, comparison to it are specious because all forms of entertainment sports or otherwise will be dwarfed by its appeal. Comparisons of equity or fairness between baseball and the NFL are absurd, everything in the NFL is predicated on small sample size, and the randomness of playoffs. (These factors combined with the scarcity of games, drive its appeal, even as the quality of play is declining, and the game outcomes are becoming increasing reliant upon how pass defense is officiated.)

    I agree that the limits of draft and international spending are troubling but I think it is still uncertain how this will impact smaller market teams, Boston was spending large amounts of money before the draft limits. As long as teams have exclusive control of players for six years, their most productive years, teams that do not utilize free agency to a large degree will have opportunities. This might be even truer in a time when there have been less and less Wins are available on the free agent market.

    Finally if the supposed lack of fairness/balance is hurting baseball why are revenues increasing? I think your argument is salient to Pirates fans because crutch of poverty helps lessen the reality that incompetence/neglect drove 20 years of losing, but I think it is far from proven that baseball is insufficiently fair/balanced.

    Sorry for the length and I hope my tone does not come across as callous I don’t mean to be.

    • johndw28

      Andrew- interesting analysis- one question if I may to make sure I am understanding your position correctly. When you say, “The competitive balance of a sports leagues is determined by the underlying size of its talent pool, which for baseball has never been bigger” do you mean to say that baseball’s talent pool is deeper both at the major league level and also as far as yet to be developed prospects available to be drafted (or signed internationally). Because if that is true(it may be but is there something empirical to point to regarding that statement?) it does make for a rather compelling argument that the lack of competitive balance may not be as bad as the disparity in revenue/payrolls would seem to suggest. Thanks.

      • Andrew

        The measure of competitive balance I am referring to compares the deviation of teams records from .500 compared to ideal deviation which assume all teams are of average talent and measures for schedule length. Compared to say 1920 baseball is more balanced now, the book the Wages of Win has great two chapters that cover it. If you are interested you may be able to view the chapters through google books previews.

        The authors also cover the link between payroll and wins, in baseball it is not as large as some think.

    • http://www.piratesprospects.com/author/admin Tim Williams

      “Salary cap, floor, luxury tax have nothing to do with competitive balance, their purpose is to restrict the growth of players salaries and provide revenue certainty for owners.”

      This isn’t exactly true. If you have a cap and a floor, then teams are spending the same overall. It’s just another scenario where you’re taking from the top and giving more to the bottom. In this case, you would have guys making $18-20 M instead of $23-25 M, while the league minimum guys would be getting a little bit more across the board.

      “The NFL is a red herring, no form of entertainment equals its popularity, comparison to it are specious because all forms of entertainment sports or otherwise will be dwarfed by its appeal. Comparisons of equity or fairness between baseball and the NFL are absurd, everything in the NFL is predicated on small sample size, and the randomness of playoffs.”

      So why is it that the NFL sees teams in Pittsburgh, Green Bay, and Baltimore as regular contenders, while teams in those same markets in baseball are seen as “small market” teams with almost no shot of competing?

      “I agree that the limits of draft and international spending are troubling but I think it is still uncertain how this will impact smaller market teams, Boston was spending large amounts of money before the draft limits.”

      I think we’ll get a good idea of this in 2014. That’s the first year the Pirates will be punished in these areas for being successful.

      “Finally if the supposed lack of fairness/balance is hurting baseball why are revenues increasing? I think your argument is salient to Pirates fans because crutch of poverty helps lessen the reality that incompetence/neglect drove 20 years of losing, but I think it is far from proven that baseball is insufficiently fair/balanced.”

      Baseball has always had the tendency to prioritize short-term revenues over long-term interest in the game. Revenues are increasing, but a lot of the big increases are in big markets. Meanwhile, the ratings for the 2012 World Series were the lowest in history, and the 2013 World Series ratings were the fourth lowest. The game is declining in popularity.

      Baseball has no competition for a bulk of their season, so they’re always going to be in a favorable position as far as TV deals. What else is a sports network going to show daily in June, July, and August? But it’s hard to ignore the fact that baseball’s popularity is largely based on the biggest markets. Compare that to the NFL, where market size doesn’t matter in terms of popularity, and every team has an equal chance to contend. There’s no doubt that baseball isn’t fair. That’s not saying some teams can’t compete in baseball. It’s just saying a team like the Pirates finds it significantly harder to compete than a team like the Yankees.

      • piraddict

        One “structure of baseball” point that isn’t often discussed is that in Football the NFL negotiates a League wide deal with the TV Networks for regular season games, whereas the baseball clubs are free to negotiate their own regular season deals. As a result a significant leverage for revenue sharing is lost. The statistics on viewership you cited were compelling. If there was truly a national deal on broadcast rights the winning bidder would insist on restructuring revenues, which would lead to competitive balance, which might lead to a resurgence in national interest, which would lead to increased viewership and then ad revenues, leading to more money for everyone. Teams like the Dodgers would scream about giving up their local deals though.

      • Andrew

        We could probably go back and forth for awhile, though I do not know how productive it would be. I’ll try to be brief.

        -I agree the new draft restrictions are worrisome, especially since the competitive balance picks meant to compensate smaller market teams are hopelessly flawed.
        -I agree with the point that baseball focuses on the short term, especially when its commissionaire moved a team from Seattle to Milwaukee, but how is this different than any other sport.
        – I maintain that the motivating factor for salary restrictions is to limit compensation to players.
        -I find the NFL comparison unhelpful because the every form of entertain looks poor compared to the NFL, it had 19 of 20 most watched prime time shows, and outside the NFL viewership is down across all sports and television shows.
        -Also, the nature of the NFL playoffs and division structure gives more teams a chance, however the idea that every team has a chance is not true, the NFL contains teams that have be poor for extend periods.

        I think our disagreement centers on how we define fairness in sports and if it is a vitally important goal for sports leagues to achieve. I phrased the statement on fairness poorly, what I mean is that I do not think the current level of revenue disparity is damaging and it only appears that way when individuals compare MLB to the NFL. Plenty of sports succeed and are thriving while being less equitable than baseball, the NBA, college football, every European domestic football league. We accept unfairness in baseball in many areas, playoffs are not fair, unbalanced schedules are not fair, paying Mike Trout at similar wage to Jeff Lock is not fair, I to some degree accept the unfairness that payroll will be tied to revenue, because the link between payroll and wins is not particularly large. (And many of the supposed remedies, salary cap, luxury tax are actually ways of further enriching owners.)

        That said I agree that the restrictions draft and international signing should be removed and free agent compensation abolished.

  • http://www.facebook.com/stephen.brooks.581 Stephen Brooks

    Timely post Tim, considering John Tomase of the Boston Herald is essentially asking “How oh how will the Red Sox spend the 50mil they have coming off the books in 2015?” Poor Sox. All that money and nowhere to spend it.

    I personally don’t like a hard cap, because a hard cap comes with a floor, and that floor takes away a team’s flexibility to trade away vets for prospects in down years. And while we are mentioning the success of the NFL, it’s important to remember the two key unique elements that make their system possible: non-guaranteed contracts and cap shenanigans. The list of players signed to multiyear NFL contracts who have NOT been either cut or forced to restructure is very short.

    Because of the guaranteed nature of MLB contracts, a salary cap in baseball would look more like the NBA, which is a freakin’ mess that I would want no part of.

    The saving grace of baseball, unlike the NBA, is that a player’s cost controlled years are almost always his best years, which makes it possible to compete as long as you scout, draft and develop talent well. It was mentioned above that the free agent market is very inefficient, such that a significant portion of the extra payroll spent by high revenue teams is dead or near dead money. Just look at what the Yankees are paying for their regulars signed before this offseason and what they’re expected to deliver as measured by WAR.

    I think the free agency compensation system needs to be revised so that only first time free agents carry compensation. It compensates for the decade-long investment in time, money and development resources. Second time free agents only cost money.

    The restrictions on international draft spending need to be lifted. No team’s finances are so constrained that it cannot afford to play in the international market.

    The luxury tax level should be recalculated to something like 1.5x median payroll. Right now the 189m tax level is so far out there that only two teams can reach it. It’s actually hard to spend that much money wisely. The Dodgers are spending more on their BULLPEN than the Pirates are for their entire pitching staff. Setting the bar at 150 will either put a drag on the rest of the top 20% or generate more revenue sharing for everyone else.

    • http://www.piratesprospects.com/author/admin Tim Williams

      “I personally don’t like a hard cap, because a hard cap comes with a floor, and that floor takes away a team’s flexibility to trade away vets for prospects in down years.”

      I don’t think that’s true. The NFL has these things, and for years the Steelers were successful because they let their vets walk in favor of younger players. In fact, I’d say a big reason they’ve struggled recently is because they got away from that approach.

      You mention the NBA as a horror story for a league with a cap and guaranteed contracts. What about the NHL? They added a cap/floor and maintained guaranteed contracts.

      • http://www.facebook.com/stephen.brooks.581 Stephen Brooks

        To address the second point first, the NHL’s cap and floor hasn’t come without consequences, first and foremost being the cancellation of an entire season, and even with the cap in place, team finances at the bottom end of the league remained critically unhealthy, leading to a more restrictive cap for the current CBA (preceded by another work stoppage). In the meantime, Phoenix and Dallas declared bankruptcy, New jersey was in jeopardy of doing the same this past summer, and the finances of Columbus, the Islanders and a handful of other franchises have deteriorated despite the cap. And Atlanta relocated.

        Finally, the NHL added an amnesty clause similar to the NBA to allow teams to get out from under their two worst contracts for cap’s sake (though the money still has to be paid to the player). So right off the bat the NHL started taking on one of the more embarrassing work-arounds from the NBA.

        I would say, charitably, it is far too early to deem the NHL cap a success.

        The NFL is a different animal altogether. First, there is far less inequity because the national TV deal – which makes up a majority of every team’s revenues – is shared equally. So you don’t have teams in different markets making $100M more than one another. And because the revenues are much less varied, the cap floor-to-ceiling is extremely narrow – the floor is 90% of the ceiling, meaning teams MUST spend between $108M – $120M (these might have been the 2012 cap year’s figures, but the principle is the same).

        A cap in baseball may be a bit more lenient, but not by much: the NBA is at 85% and the NHL has a $16M fixed range, which works out to about 75% and will decrease over time as league revenues increase. And since all caps are tied to a percentage league revenues (usually in the 50-60% range), the cap and floor would be established at a point tens of millions higher than the Pirates’ current projected payroll. For example, take the team with the median for baseball revenue, Atlanta at $225M (Forbes figures). 60% of that is $135M, and 80% of that is $108M. You could devise a more lenient cap, but the more lenient you make it, the more it resembles what we already have, so what’s the point?

        To boot, NFL teams don’t trade bad contracts for prospects because they don’t have to – they can just cut the player and address the resulting cap hit by restructuring contracts for their other veterans, adding years and bonuses in exchange for lower salaries and a balloon payment that will never be reached.

        And teams are far less worried about the floor than the ceiling because all of the cap loopholes allow teams to cram far more player value under the cap than the nominal cap number. Heaven help us if the Yankees, Dodgers and Red Sox are able to do the same.

        Baseball is a different animal, and I am thankful that it is. The last thing I want to do is make it behave more like football, basketball or hockey.

  • https://www.facebook.com/scott.skink Scott Skink

    Personally I find discussing pizza more fraught with danger than politics or religion, but whatever :-)

    Say what you will about caps, but supporting that argument with TV ratings is nonsensical. I’m a much bigger fan of MLB than any other major sport, but I know WS ratings will never again approach those of an NFL playoff game – any NFL playoff game, even Carolina vs. Jacksonville. Baseball is a distant #2 and won’t ever be #1 again. Some would even argue MLB is #3 behind the NBA.

    What those leagues have that MLB doesn’t is marketable action figures and in-your-face highlight clips. Have you noticed that NFL highlights these days focus more on the end zone dance and less on the actual analysis of the play that led to the TD? Fans eat that up for some stupid reason. An in-your-face dunk? Guaranteed highlight reel stuff. What does baseball or hockey have to compare for the standard American 2-second attention span?

    AND in the NFL’s case, they’ve got much greater ability to plug-and-play subs if/when someone gets nailed on a PED violation, which also helps with parity. Because of the nature of the game, it’s rare to find a case where there’s an equivalent to a Ryan Braun, where one player being suspended throws a team into freefall. And c’mon, whatever testing the NFL does, it’s not enough. When they started testing, entire defensive lines on some teams were caught using. Yet DLs keep getting bigger and faster. Doing it legally? Highly dubious. NFL fans want 320 lb freaks who can run a 4.5 40 and potentially kill or maim an RB/QB/WR with one hit. Those hits also make the highlights.

    So what baseball needs to get more viewers, obviously, is more confrontation and violence. Aroldis Chapman should be on Cheerios boxes!

    (Disclaimer: this post partially in jest. Reader must determine for themselves which parts).

    • http://www.piratesprospects.com/author/admin Tim Williams

      I agree on the pizza discussion.

      I disagree on what makes the NFL marketable. I think what makes the NFL marketable is that every team has a shot at contending. You don’t have apathy towards the game from a third of your fanbases because your team is a perennial loser. If a team does lose consistently in the NFL, it’s the fault of the team and their moves. In baseball, small market teams can do things right and still lose.

      We saw this year how fans in Pittsburgh can cheer for the Pirates just like they cheer for the Steelers. Imagine that every year, then imagine the same in places like Baltimore, Milwaukee, Cincinnati, and other small markets. Baseball’s popularity would see a massive increase if all of these markets had the same interest in baseball as they do with football. That would be possible if these markets had a real chance.

      • https://www.facebook.com/scott.skink Scott Skink

        You also only have a 16 game season. A single relatively minor story line plays out for a week. Scarcity = demand. Physically attending a game used to be an event before seat licensing made it unaffordable to many. Didn’t matter if your team was winning or losing. Heck, I grew up a Jets fan and haven’t seen a championship for 45 years. We still went when we had the opportunity to get tickets. And most people know the Super Bowl has a strong possibility of being a dog game. It’s happened frequently. But it’s always the most viewed program every year. One and done with a party on the side. You know anyone that does Game 7 parties for MLB or NHL? No, because you want to actually WATCH the game instead of socialize or pay attention to commercials. It’s simply a different entertainment product and the result of a different culture than there was 30 years ago. We’re way past “laconic pastime” and well into everything needing to be a video game to capture our limited attention span.

    • piraddict

      The basic underlying problem is that fewer kids are playing baseball. Blame it on soccer, video games, over protective parents.. I don’t know. BUt until the game becomes the passion of more kids the long term health of the sport is at risk.

  • https://www.facebook.com/scott.skink Scott Skink

    As long as we’re talking about the inequity of the Yankees and Pirates, maybe A-Rod’s year off is the perfect opportunity for the Bucs to trade Pedro for all of the Yankees top-10 prospects.

    Sounds good until you look at the Yankees top-10 prospects. After Gary Sanchez, there’s nothing in the upper levels that isn’t damaged goods. Apparently, they don’t even need their minor leagues.

  • Hank

    Let me keep this simple, the people who run baseball do not care about baseball. They only care about $$$’s, and mostly the $$$’s for the big city franchises. It will not change unless the 20 or so “small market” teams revolt.

  • Bill in DC

    Who are the takers? It’s the large market teams.

    Gate revenue is split because no one goes to the stadium to watch the Yankees play the Yankees. So it should be w cable revenue — if not split league wide then split the per game cable revenue at the same rate as gate revenue.

    It’s not perfect but it follows the logic of gate revenue.

    Not a huge help to the Buccos bc we don’t play in a division w teams w huge deals but its a good place to start.

  • piraddict

    re: ” The “Makers vs Takers” segment discussed a growing problem in America, where the gap between the top income earners and everyone else is growing bigger at a rapid pace. This leads to debates: should minimum wage be increased, should tax cuts be eliminated, should extensions to unemployment end, should the government be involved in health care, and so on. The debate boils down to one side saying that the “Makers” should give up something in exchange for a stronger overall nation, while the other side says that the “Takers” shouldn’t get “free handouts” from the “Makers” at all. I thought Jon Stewart’s segment was a great take on the political side of that, and was also very funny.”

    All are serious issues, but as usual Jon Stewart, an other likeminded people, fail to see recognize an important principle and problem. In a free and fair exchange equivalent value must be received by both parties, as perceived from each parties perspective. The “Makers” don’t see fair value in the exchange (they lose dollars for “a stronger overall nation” whereas the Takers see great value (they gain dollars for what exactly?). It is an unstable situation which will eventually lead to a revolution of one sort or another.

    I thought Jon Stewart’s take on the maker/taker debate was completely disingenuous, as is most of his shtick. Most all worthy innovations are made by Makers (entrepreneurs), some of whom make out financially, some don’t (read the Edison/Westinghouse/Tesla story someday, if you haven’t already).

    If we are going to conflate politics and sports then tell us how a team which allocates playing time equally on the basis of being on the roster without any regard to talent or performance will do in a competitive league where the other teams are letting playing their best players? Yet that is what our society is doing by taking resources from the “Makers” and giving it to the “Takers”, diverting funds through the tax system which might have been saved and invested in innovation by the Makers to increased consumption by the Takers. In a competitive international society that is a recipe for ruin, the equivalent of dividing your “playing time” among all the players in the name of “fairness”, taking time from the producers and giving time to the “bench players” leading certainly to losing the game.

    • http://www.piratesprospects.com/author/admin Tim Williams

      I’ve always viewed giving money and programs to “Takers” as an investment. I’m an example of that.

      A few years ago I was just out of college. I started working for a small company as a sports writer, worked there for a little over a year, then the economy went bad and I was one of many people laid off. I lived in an area where you needed 3-5 years of experience for any job. I couldn’t move to a new area for an entry level job either due to financial constraints. As a result, I spent over a year on unemployment, all while getting no call backs for jobs. By the end of it I was applying for stuff that I should have gotten, like shift work at Sheetz, and still didn’t get call backs.

      I’ve mentioned before that this site was meant to maintain my work ethic during that time period. Eventually I grew frustrated and just decided to go all in with the site. I wasn’t getting assistance at this point, but I don’t think the site would have made it to that point without prior assistance.

      The gamble paid off, and now I’m in a position where I pay people to write for the site. It’s not a ton of money, but the alternative is having people write for free, which is what a lot of small papers and internet sites do. In the process I’ve bought a car, rented an apartment, bought furniture, electronics, and basically all of the normal stuff you buy as an adult. Eventually I have a goal of buying a house, although I don’t know where that would be.

      I was a “Taker”. I didn’t have money to spend to buy products from the “Makers”. Unemployment assistance allowed me to get back on my feet. The payoff is that now I can buy basic things, which helps the “Makers”. I also can play the “Maker” role myself by helping others out. That’s just one person. Imagine if you had a lot of other people who eventually got back on their feet. You’re talking about the housing market recovering, more cars being sold, more electronics being sold, more furniture being sold, etc. The “Makers” see that benefit in the long run. It’s not “Makers” and “Takers”. It’s more like “Investors” and “Investments”.

      As it pertains to sports, if you help the smaller teams out, you strengthen the league as a whole. By doing this, you strengthen the long-term success of the league, and you also will see more revenue in the long run.

      • http://www.facebook.com/daryl.restly Daryl Restly

        Hi Tim,

        I don’t disagree that there is great disparity between the haves and the have-nots. But I don’t think it’s fair to compare MLB to the NFL. In the NFL, there are five major entities that broadcast all 32 teams’ regular season games and the playoffs as well as some of the preseason games. Those five entities are CBS, FOX, NBC, ESPN and NFL Network. That leaves only a handful of meaningless games in the pre-season to the local outlet of each of the 32 NFL teams.

        In baseball, you have ESPN, FOX, MLB Network and TBS and a handful of major cable outlets that get picked up outside of their main market such as WGN. Those four entities cover only a fraction of the baseball schedule with the majority of the season picked up by the local television outlet, in the Pirates instance, ROOT Sports.

        Yes, it would be ideal if somehow /some way MLB could adopt a television format similar to how the NFL runs things, but the reality is that MLB has a season that consists of greater than 10 times that of the NFL regular season for any one team. (162 game schedule vs. 16 game schedule). That said, I don’t think it’s just an apples to apples comparision.

        The only way it will ever be evened out is if:

        a.) MLB mandates that all local television revenue generated by all 30 clubs is collected by MLB and then redistributed evenly.

        b.) The national television revenue (FOX, ESPN, MLB Network, TBS) money is distributed so that the teams receiving the least amount of money from their local TV deals receive the most and the teams receiving the most from their local TV deals receive the least.

        c.) MLB institues a policy similar to the NFL whereas all local TV is banned from carrying a game and every game is carried by one of MLB’s national broadcast partners (FOX, ESPN, TBS, MLB Network).

        Personally, I could see a scenario like option c, in which MLB Network branches out into 30 different channels, one for each team. That channel would carry all of that local team’s games. For the markets such as New York, Los Angeles, Chicago, Washington / Baltimore, San Francisco / Oakland, the schedule could be set up to avoid clashes so that both teams are not playing at the same time or there could be separate channels for each team. Example, there would be a MLB Network – Baltimore and a MLB Network – Washington channel. The local teams would still be required to hire the broadcasters and color commentator, etc, they would want for their games.

        That said, all local television revenue would now funnel through the MLB Network namebrand. There would still be national games on ESPN, TBS and FOX and that money would be distributed evenly amongst the 30 teams.

        I’ve never understood why the small-market / low revenue teams haven’t already stood up to the bigger markets (there’s more small-market / low revenue teams that there are bigger market teams) and simply demanded a larger piece of the pie. Could, say, the Kansas City Royals ban the New York Yankees from broadcasting a Royals home game against the Yankees at Kaufmann, if they wanted to. If the Yankees, or for that matter, any other big market team weren’t allowed to broadcast their road games as part of their local television package, that would severely cut the Yankees local television revenue in half (81 games at home versus all 162 games). I doubt MLB would allow the Royals or any other small-market / low revenue team to do it. Even if they did, I would wager that the Yankees wouldn’t allow any of their home games to be broadcast by the road team visiting. That said, I think the Yankees and the bigger market teams would still have more to lose in the end. I would have to think that the bigger market teams would have to concede a redistribution of local television revenues.

        I agree, Tim, that if you help the smaller teams out, you strengthen the league as a whole. The NFL has shown this time and time again. The disparity between the NFL’s worst team this year (the Houston Texans) and the four remaining teams in line for a Lombardi Trophy (Denver Broncos, New England Patriots, Seattle Seahawks, San Francisco 49ers) is not that great. On the other hand, the Houston Astros had the worst record in MLB last year and the Boston Red Sox won it all. Houston has a ways to go before they can even think about catching up to where Boston was in 2013. That’s not to say that they don’t have some of the pieces in place to do that. It’s just that it’s very unlikely to occur within one calendar year.

        I truly believe that if every team has an equal chance of making the post-season and winning a championship, whether it be a World Series or a Super Bowl, you generate interest in that team and the league. This concept the NFL has picked up on and run with is something MLB is still slow to grasp. If teams such as the Pirates, the Brewers, the Royals, the Indians, the Rays or any other small market / low revenue team have just as much chance to make the post-season and win a championship as the Yankees, the Red Sox, the Mets, and the Cubs, more people will take an interest in not just their local team, but in the league as a whole. Fans will keep track of what their team’s competition is doing and debate with co-workers at the water cooler at work or with friends and family what the local team should do or not do. Generating that type of interest is what will strengthen the league and the long-term success associated with the league and generate even more revenue.

        BTW, I don’t know about anyone else, but I simply cannot stand watching the same matchups on ESPN or FOX, which usually consist of the Red Sox, the Mets, the Yankees and possibly some other team. I’m glad to see that the Pirates are getting some love this year from ESPN and FOX.

      • piraddict

        Yours is an inspiring story Tim, and an example of how the social insurance system should work. Unfortunately many if not most stories of people on public assistance are not as heartwarming. I’ll share just one true story of a friend of mine. He is a diesel mechanic in his 50’s who got laid off and because he wanted to cut back his physically demanding workload he started applying for light maintenance jobs and couldn’t find work. He went on unemployment assistance for two years. When that money finally ran out he went looking for diesel mechanic work and found a job within a week. He hadn’t had to look for that more demanding work because of his unemployment benefits. In the meantime his two great kids were attending private colleges, no doubt obtaining significant assistance due to FASFA forms that were made to look attractive because their Dad was on unemployment. That probably saved them $15 to $20,000 a year each while he was unemployed. Now this is a great family, great people, and they broke no rules. But the governmental system permitted them to live at the expense of “Maker” society. A century ago they would have been scorned for living this way. But in today’s Entitlement Society they were only taking what is available to them. We won’t spend any time talking about the multitude of people that game the disability insurance, welfare and unemployment insurance systems. BUt there are presently some 90 million people out of the work force in this country, many of whom simply stopped looking for work, or weren’t willing to be creative and risk taking in starting their own business as you were.

        If there was an endless well of money for “social investment” that would never run out who would care? But at this point in time tax revenue is only covering a little more than half a government expenditures, the rest is being borrowed and the young people in society are going to have to pay it back. Of present tax revenue over 98% percent of tax revenue is paid by the wealthier 50% in the country (the Makers), while (the Takers) are paying for only 2%. It’s patently unfair, and “the Makers” are generally fed up with it. There is a very real Crowding Out Effect where money spent in transfer payments from those who make money to those who don’t eliminates money that would otherwise be available for improvements in technology which would make cheaper more abundant products and services available. Jon Stewart is disingenuous when he implies with all his smirks and mugging that the only reason that the “Makers” aren’t willing to give more money to the “Takers” is that they are cheap bastards. It’s far from true, only stokes the fires of class hatred that will eventually tear this country apart.

        • http://www.piratesprospects.com/author/admin Tim Williams

          “But in today’s Entitlement Society they were only taking what is available to them. We won’t spend any time talking about the multitude of people that game the disability insurance, welfare and unemployment insurance systems. BUt there are presently some 90 million people out of the work force in this country, many of whom simply stopped looking for work, or weren’t willing to be creative and risk taking in starting their own business as you were.”

          As someone who was on the other side, I can say that this is false. The people who stopped looking for work are probably beaten down by the process. That’s what happened to me. I couldn’t move anywhere because I was handcuffed by my student loans from college, and I couldn’t get a basic job because my college degree made me overqualified. Not to mention, every job had hundreds of people applying.

          I stopped looking for work. I got creative, and it worked. But it was a gamble. No one thought it would work. I wasn’t even convinced it would work. And I can imagine a lot of scenarios where people try similar approaches and it didn’t work for them.

          You mention your friend as an example, and then extrapolate that to say that this is a widespread problem. I feel that these examples are a minority that has been vocalized to demonize the system. There are people who abuse the system. There are people who abuse any system. That’s just unavoidable.

          “Of present tax revenue over 98% percent of tax revenue is paid by the wealthier 50% in the country (the Makers), while (the Takers) are paying for only 2%. It’s patently unfair, and “the Makers” are generally fed up with it.”

          This isn’t true. The figures released in early 2013 said that the top 10% paid 70% of the taxes.

          http://money.cnn.com/2013/03/12/news/economy/rich-taxes/

          Also, if you took all the revenue that everyone made, I’m sure that the top 10% would be in the 70% range in that area too. Might even be higher.

          • piraddict

            “As someone who was on the other side, I can say that this is false. The people who stopped looking for work are probably beaten down by the process. ”

            Not sure what you what you said was false here.

            ” stopped looking for work. I got creative, and it worked. But it was a gamble. No one thought it would work. I wasn’t even convinced it would work. And I can imagine a lot of scenarios where people try similar approaches and it didn’t work for them.”

            This is an essential element of entrepreneurship. Most new businesses fail. It’s hard to succeed. That’s why so few try in the first place. Kudos to you for pursuing your dream and making it work.

            “Of present tax revenue over 98% percent of tax revenue is paid by the wealthier 50% in the country (the Makers), while (the Takers) are paying for only 2%. It’s patently unfair, and “the Makers” are generally fed up with it.”

            This isn’t true. The figures released in early 2013 said that the top 10% paid 70% of the taxes.”

            The two sets of statistics are compatible. The top 10% pay 70% of the taxes while the top 50% pay 98+% of the taxes. This just indicates that the top 50th to 90th percentiles pay 28 % of the total taxes paid while the top 10% of payers pay 70% of the total axes paid. Add them together and the conclusion is that bottom half of the earners in the country are paying less than 2% of total tax revenue.

            A relevant question is on whom is this money then spent? Taking away areas of common concern like defense, transportation, education etc. and you have the social welfare system. The primary beneficiaries of this are the elderly, the low or no income people, and who else? These transfer payments make the recipients wealthier, and the payers of taxes poorer, but it questionable to what extent the overall society is benefitted. I am in favor of private charity, but oppose delegating charity to a government bureaucracy.

            The tax system enables a massive transfer of wealth from the most productive to the lessor productive members of society. In some instances that may be good. In others, probably not. And for sure the unintended consequences of the overall system out weigh the good that it sometimes creates.

            I am glad you were helped by the system. At least some good can come from a hopelessly flawed system, which will eventually come crashing down from the weight of it’s own expense.

  • CalipariFan506

    Recently in America we have dealt with “bubbles” bursting. Like the home market and many predict college loans will be next. IMO baseball’s TV bubble will be a prime candidate to burst at some point. You cannot tell me that 10 times more people are watching Phillies games than Pirates games. The Astros were terrible but they had games in September where reruns of the Cosby Show were outdrawing them (this is actually true, I can’t find the link). I see know way these TV networks can ever fulfill the contracts they are signing right now and if/when this starts happening, these teams with huge equities in their TV networks could be in hot water.