MLB revenue disparity and its impact on competition

[Playing Catch]

Perhaps more than any other topic over the years, this one has derailed the most threads, so I thought I would start a topic.

There is no debating that the big clubs dominate free agency and collect stars like baseball cards. But there are some that believe this only has a small effect on the competitiveness of the league, and some that feel like the Brewers will never compete for a World Series.

I have a number of thoughts on the topic, and I think there is more nuance and subtlety to the issue than is often acknowledged. I think that while it is true that being a top spender doesn't ensure a World Series -- or even a playoff birth, I think that if the situation isn't resolved in the next CBA, the Brewers, and other small-revenue teams that have had recent success, will begin to struggle to convince fans that they can compete for championships.

There are a number of factors that have allowed fans of small-revenue teams to feel hopeful each spring. But will that continue?

If the Brewers played in the same division as the Dodgers, Braves, or Mets, would we feel as optimistic about competing for a playoff birth?

If the union is able to cut team control down to 5 seasons, instead of 6, will the Brewers be able to compete? Is this system fair to the players, or just an artificial way to allow small-revenue teams to compete? Does MLB need a salary cap and revenue sharing?

Are super-teams actually good for MLB? Is competitive balance overrated? Would a draconian NFL-style salary cap and parity water down baseball too much?

[Soupbone]

Out of all of your points the one that hits home for me is "there are a number of factors that have allowed fans of small revenue teams to feel hopeful each spring but will that continue?" We may have gone beyond that point with a lot of fans already. Sure, we can win a division but our postseason success has been limited. Doubt that either the owners or players care about that right now as they are both making lots of cash. Blame it on whom ever you want but neither side is anything but greedy. Who suffers? Maybe no one. The fans keep going and the game moves on.

[Brock Beauchamp]

The most concerning aspect for me is that a new stratification of teams has emerged over the past few seasons: the super-spenders.

In previous eras, teams like the Yankees and Dodgers were kinda lumped in with the Red Sox, Cubs, Angels, Astros, etc. There was a top-third of baseball that all jostled for payroll supremacy depending on their competitive cycle.

But in the past few years, a level above those teams has emerged as the Dodgers and Mets lead the way into ludicrous territory. So now we have a new level above the "large market", occupied by the Dodgers, Mets, and Yankees.

This only pushes teams like the Brewers down a rung, further from sustained competition.

[Axman59]

Who would have thought the Dodgers and Mets could make the Yankees seem like tightwads? Amazing.

[Frisbee Slider]

3 hours ago, Playing Catch said:

Are super-teams actually good for MLB?

Yes

 

3 hours ago, Playing Catch said:

Is competitive balance overrated?

Yes

 

3 hours ago, Playing Catch said:

Would a draconian NFL-style salary cap and parity water down baseball too much?

Yes

I much prefer MLB to any other league, even as a Brewers fan. 

Ultimately, until revenue disparity impacts overall league revenue, I don’t expect much will change.

[treego14]

MLB needs to break the league into three divisions:  (1) Big Market, (2) Middle Market, (3) Small Market.  MLB then can crown 3 champions each season.

College Sports, High School Sports does this sort of thing and everybody understands why it is necessary.  Multiple divisions are needed because common sense tells us it is necessary.

MLB has no common sense right now, AND thus MLB is an unfair league.

One can like baseball and still go to games, root root for the home team and all, BUT many of us know it is competitively unfair and our chances of winning it all suffer immeasurably as a result!

We need some brave owners, players, and former owners and players to start a campaign and waves of fans will join them to protest the MLB for its obvious unfairness as it stands now!

[Frisbee Slider]

Is MLB in the business of fairness or maximizing revenue and franchise value?

If the latter, they are doing fine.

7 minutes ago, treego14 said:

MLB has no common sense right now, AND thus MLB is an unfair league.

 

[tmwiese55]

As long as the cheap control for 7ish years aspect is there the non-big spenders can still be competitive like they have been.  Mostly because the vast majority of these mega contract end up being bad contracts and the 'cheap' teams still control their own good players through the majority of their prime, and then the 'rich' teams overpay them as they age.   That combined with the overall flukiness of baseball in playoffs combined with wider playoffs will keep giving the poor teams involved. 

However, we know the players hate the team control and arbitration type years and will keep hammering at that in future CBAs.  Might be wrong but didn't they get that down by 1 year in the new one? Maybe it was talked about and didn't get included though.  And I think even us fans of a poor team generally agree with that setup being a bit unfair to the players (especially with how little most are paid in the minors too).  So, if that keeps getting reduced and/or the system forces to pay drastically more in those control years a balance has to come in return in regards to FA spending, salary cap, etc.   Basically, if the advantage/quirk that keeps the poor teams competing gets reduced/taken away then something has to be done to reduce the rich teams advantage on the other end.  Basically if the rich teams start being able to buy all the best players earlier/younger it could be too much to overcome for the poor teams. 

[yourout]

1 hour ago, Frisbee Slider said:

Yes

 

Yes

 

Yes

I much prefer MLB to any other league, even as a Brewers fan. 

Ultimately, until revenue disparity impacts overall league revenue, I don’t expect much will change.

I would like to see some form of increased draft compensation for teams that cant compete revenue wise.

Maybe more picks or higher picks depending on the FA losses.

[sveumrules]

2 minutes ago, yourout said:

I would like to see some form of increased draft compensation for teams that cant compete revenue wise.

Maybe more picks or higher picks depending on the FA losses.

They already have this,

Competitive Balance Rounds awards additional picks to small markets every year, and the FA compensation rules for players with QOs favor smaller markets by awarding them higher draft picks than if the team losing the player is a tax payer.

[yourout]

Just now, sveumrules said:

They already have this,

Competitive Balance Rounds awards additional picks to small markets every year, and the FA compensation rules for players with QOs favor smaller markets by awarding them higher draft picks than if the team losing the player is a tax payer.

I was thinking that they could increase the compensation as the revenue gap grows.

 

[Playing Catch]

1 hour ago, treego14 said:

MLB needs to break the league into three divisions:  (1) Big Market, (2) Middle Market, (3) Small Market.  MLB then can crown 3 champions each season.

This won't happen in my lifetime, but I've long wondered about this before. I think I would enjoy a tiered system that included promotion/relegation like International soccer. MLB could even expand to say, 45 markets. Add Las Vegas, add Charlotte and Nashville, add two more teams to New York and LA. Bring back Montreal!

With this said, this would be a bad deal for the big hitters, who end up subsidizing the sport. This is why soccer clubs like Barcelona and Real Madrid are trying to form a "Super League" that would not include past performance as criteria for future participation.

1 hour ago, tmwiese55 said:

However, we know the players hate the team control and arbitration type years and will keep hammering at that in future CBAs.

I didn't follow the last negotiations, but I'm presuming that the "give" on the part of MLB was higher pay/accommodations for minor leaguers and probably a raise to the minimum salaries(?) But yeah, the players couldn't care less about competitive balance, and neither do the big spenders. In the next CBA the small-revenue teams will need to stick together to avoid losing a year of team control without some other form of "competitive balancing" measures.

[Playing Catch]

2 minutes ago, Playing Catch said:

But yeah, the players couldn't care less about competitive balance, and neither do the big spenders.

And sure... the little guys may not care about it either, so long as they are making money. But the issue that could happen is small-revenue teams losing fan interest to the degree that they are no longer making money... THAT'S why the small-revenue clubs need to be able to at least "look" like they can compete.

[tmwiese55]

The key to this in the future will probably be the players being open to an NFL/NBA style system.  As of now it seems they're against it because it would kill the massive lottery style paydays like have been happening.  Of course it would all come down to how much money is guaranteed and what split they get, but in general there should be a case to be made that wins a players vote because a system like that would shift the money from very few of them getting those megadeals to more of the second tier/middle class players being paid more. And presumably it would alter the first few years pay so they're not so drastically underpaid then, and would pay more for minor leagues too.  Essentially a shift to more even distribution of wealth among players instead of the  massive gaps now. In theory, majority of players should vote for that since very few get the mega deals. 

There's flaws in the NBA setup but that is what they've gotten right from the players perspective. Instead of LBJ making 100 mil the last 20 years (like he would've in a true open market) the other 70 mil gets spread out to 2-3 other players. 

[Fear The Chorizo]

As long as there continues to be an amateur mlb draft and international signing process, well run organizations will find ways to field consistently competitive mlb ball clubs without having to print money to sign veteran free agents on the downslope of their careers.

Baseball has and always will be a young man's game - but it also has the biggest hurdle between amateur and major league professional players and because of it their player development model is vastly different than the nfl or nba, where revenue sharing teams get their pick of league-ready talent every draft.  Mlb clubs that excel at player development, talent evaluation in the draft, and mining underappreciated prospects from other teams can win at the MLB level consistently without carrying a $200m plus payroll.  The revenue sharing that mlb does have actually is plenty of $ for organizations to draw from and build good ballclubs without needing to sign a 32 yr old outfielder to a longterm 9 figure contract who might give you a couple seasons of solid production before his body falls apart.

[Fear The Chorizo]

3 hours ago, tmwiese55 said:

The key to this in the future will probably be the players being open to an NFL/NBA style system.  As of now it seems they're against it because it would kill the massive lottery style paydays like have been happening.  Of course it would all come down to how much money is guaranteed and what split they get, but in general there should be a case to be made that wins a players vote because a system like that would shift the money from very few of them getting those megadeals to more of the second tier/middle class players being paid more. And presumably it would alter the first few years pay so they're not so drastically underpaid then, and would pay more for minor leagues too.  Essentially a shift to more even distribution of wealth among players instead of the  massive gaps now. In theory, majority of players should vote for that since very few get the mega deals. 

There's flaws in the NBA setup but that is what they've gotten right from the players perspective. Instead of LBJ making 100 mil the last 20 years (like he would've in a true open market) the other 70 mil gets spread out to 2-3 other players. 

The NBA also has the huge advantage of teams only having to worry about 12 players on their roster, not 40 plus 5-6 minor league team rosters full of prospects and organizational depth.  I think the nfl is more comparable to mlb, and despite massive revenue sharing their player contract system is awful compared to what mlb players have in terms of guaranteed contracts.

[Soupbone]

The Dodgers didn't sign a 32 year old outfielder.

They signed perhaps the best baseball player ever who is 29.

Plus an international pitcher who is 25.

For over 1 billion total.

The system is broke.

[BrewerFan]

14 hours ago, Frisbee Slider said:

Is MLB in the business of fairness or maximizing revenue and franchise value?

If the latter, they are doing fine.

 

Are they though? Why has a league that plays roughly 1/10th of the games generating far more revenue? Nearly twice the revenue...while growing at a far greater rate.

Doesn't sound like they're maximizing their value.

Seems like they'd probably do better if they collectively bargained their TV contracts like the NFL and the large market owners had the incredible foresight to do when they were not nearly as big as Baseball. 

[BrewerFan]

14 hours ago, tmwiese55 said:

However, we know the players hate the team control and arbitration type years and will keep hammering at that in future CBAs.  Might be wrong but didn't they get that down by 1 year in the new one?

No, that did not get included(or Chourio would likely not have signed).

[Frisbee Slider]

1 hour ago, BrewerFan said:

Are they though? Why has a league that plays roughly 1/10th of the games generating far more revenue? Nearly twice the revenue...while growing at a far greater rate

Attanasio group paid $223 million in 2005 for the Brewers. Estimated value is now $1.6 billion. A 7x return. About double the return of the stock market over same time span. 
 

By contrast, the Packers were valued at $849 million in 2005. Now valued at $4.25 billion. I appreciate the Packers don’t have a conventional owner. However, Packers franchise value went up 5x, since 2005 (less than Milwaukee).
 

I loved (to hate) the 90’s NFL super teams of Dallas and San Francisco. Today’s NFL product, while popular, seems far less entertaining, to me.

[Frisbee Slider]

Are there great teams in the NFL in 2023? 
 

[BrewerFan]

8 hours ago, Frisbee Slider said:

Attanasio group paid $223 million in 2005 for the Brewers. Estimated value is now $1.6 billion. A 7x return. About double the return of the stock market over same time span. 
 

By contrast, the Packers were valued at $849 million in 2005. Now valued at $4.25 billion. I appreciate the Packers don’t have a conventional owner. However, Packers franchise value went up 5x, since 2005 (less than Milwaukee).
 

I loved (to hate) the 90’s NFL super teams of Dallas and San Francisco. Today’s NFL product, while popular, seems far less entertaining, to me.

Ok, so the Packers in a city of 100,000 people are worth 4.25B and the Brewers are worth 1.6 and that's proving your point that they're "maximizing revenue and franchise value?" Even your very narrow example highlights my point. 

 

So again, 17 game schedule vs a 162 game schedule and the NFL dwarfs MLB. And you don't think their revenue sharing and the league's parity, the legitimate chance for every team to win, the Jets' inability to just pay more than every other franchise has nothing to do with that?

https://nesn.com/bets/2023/07/you-wont-believe-how-much-more-revenue-the-nfl-rakes-in-over-mlb-nba-and-nhl/

 

You can directly tie the NFL's revenue sharing with its TV contracts to its blowing past MLB in revenue and becoming the more popular league.

[Frisbee Slider]

I agree the NFL is more popular than MLB. Popular products are not necessarily excellent products, though.

Are there any great teams in the NFL in 2023? Would you rather own an investment that increased 7-fold (MLB) or 5-fold (NFL)?

Football games on Sunday afternoons when many people are off work lend themselves better to live television than baseball games at lunch time on Wednesday.
 

My point was that MLB owners and probably players are plenty happy with their economic positions. There isn’t a lot of incentive for owners or players to make radical changes.

 

[Jim French Stepstool]

9 hours ago, Frisbee Slider said:

Attanasio group paid $223 million in 2005 for the Brewers. Estimated value is now $1.6 billion. A 7x return. About double the return of the stock market over same time span. 
 

 

But (I assume) you can say that about pretty much all MLB teams. The Brewers organization is doing wonderfully when compared to other run-of-the-mill large businesses. But when compared to the other MLB teams that they actually have to compete against............

[Frisbee Slider]

5 minutes ago, Jim French Stepstool said:

But (I assume) you can say that about pretty much all MLB teams. The Brewers organization is doing wonderfully when compared to other run-of-the-mill large businesses. But when compared to the other MLB teams that they actually have to compete against............

All sports franchises seem to be greatly appreciating in value. Baseball, even more than football.

To that end, I am skeptical anything will or should be done by owners to adjust ‘revenue disparity.’

Millions of Ohtani fans do not care about luxury tax thresholds.