by Jonathan Halket
No league, no enterprise, no product is perfect. Even baseball, with its divinely inspired 90 feet between bases, has warts. So too has football (“soccer” in the USA. But since I am writing about profession European - mainly English - leagues, I will defer to their name for the sport), of course; something few Americans need reminding.
There is little point in comparing their on-field products and rules of the game. The pace, the scoring, the use of tie games or not are part of each’s identity. Nor is this an admonition that Major League Baseball’s off-field structure should replicate, say, the English Premier League’s.
But baseball does from (at least) three problems.
First, the game is struggling to embrace its growing international status. Professional leagues are popular across Latin America and Asia but an MLB team has yet to play a meaningful game against a foreign team.
Second, stadium building is an utter waste of public resources and goodwill. Using public funds to help build stadiums leads to a host of evils: the corruption of officials, the indebtedness of cities and the footloseness of franchises.
Third, MLB should be more competitive. MLB is currently a legal cartel which restricts entry, exit and competition. Some areas have too few teams and others have too many. Some existing teams would offer a better product to their fans and extract fewer profits if incentives were properly structured.
Each of these problems has a solution, drawn from the way that European and more specifically English professional football is structured, that would make the professional game more fun for fans but could lead to resistance from one of the other major stakeholders, either the players or the owners. However, in concert, each of my proposed reforms offers something substantial to players or owners so that if all three reforms are jointly pursued, all stakeholders could gain from their joint adoption. That said, I have done no number crunching and cannot say that the gains from one reform would necessarily outweigh the costs of another to either the owners or the players. In some respect, the devil would be in the details. But each of the three would improve the game for fans. None are individually novel.
Challenge #1: Deepen and widen the professional game
Reform #1: “FA Cup” and “Champions League”, shorten the MLB season and lengthen rosters
Baseball has the best minor league system of all the major professional sports in North America but is one of the worst at capitalizing on it. It also has huge followings internationally with leagues in South Korea, Japan, Mexico and Venezuela, among others (and of course Cuba, which would be closed to MLB currently).
(American) Football and basketball both have thriving symbiotic relationships with the NCAA, which shows that there is a taste for competitions even if the level of play is below that of the top professional leagues. Minor league baseball is not nearly as popular, nor are the television contracts and media coverage as lucrative and as extensive.
Most minor league teams are not autonomous. They exist to train talent for the major league level and so winning championships has secondary emphasis. When major league teams’ rosters expand at the end of the season, they only sometimes consider their minor league affiliates’ post-season competitiveness when calling up players.
The World Baseball Classic is also unsatisfying. On its own, it is a nice way to see international talent that has not made it on to American TV screens and, without Olympic baseball, it is the only way to see nations compete. However, it is infuriatingly occasional and uncoordinated. Players from MLB come into Winter competition in Spring Training form. Rosters are thrown together and playing time often used to soothe egos.
European football offers solutions. Within a country, there are FA Cup-like competitions and across countries there is the Champions League (and the runner-up UEFA Europa Cup) competition for professional teams.
Most countries in Europe have their own leagues with their own regulators. The top league in England is the Premier League. Germany has the Bundesliga, Italy has Serie A, and Spain has La Liga. Beneath these leagues are lesser leagues and beneath them still more leagues and then semi-pro/amateur leagues. Top professional teams often compete for several different trophies in each season. They compete for their within-league trophy, their within-country trophy and also one of the across-Europe trophies. Inter Milan, an Italian team, last season accomplished the rare feat of winning all three of their potential trophies by winning the Copa Italia, Seria A and Champions League.
Most countries have a within-country competition for all teams in that country. In England, it is called the FA Cup. Nearly any team can qualify for it, with the better teams receiving byes into later rounds of the competition. “Minnows” end up eventually playing Goliaths, though, and English fans annually treated to potential “Miracle on Ice, USA vs USSR” type upsets.
This season, United Manchester, a club team with mostly local players, fell just short of the chance to play against Manchester United, arguably the most famous professional team in the world. It is easy to see how a similar scenario in baseball would be hugely appealing: some former college players or low level minor leaguers getting the chance to play meaningful baseball against the Red Sox in Fenway Park.
And meaningful baseball it would be if the sport adopted the FA Cup policy of granting the winner a spot in the European-wide competition (in baseball’s case, this would be the world-wide competition). Top teams do not always play their best players in FA Cup games but they play to win. Top baseball teams would likely follow similar strategies: the Red Sox might not pitch Jon Lester against lesser teams, but they’d probably bring in Jonathan Papelbon in the ninth inning if they were only leading by one run.
More important to teams would be the world-wide competition. In Europe, the Champions League is just that - a competition with all the top teams from the top leagues. For instance, the top four teams (out of 20 total) from the English Premier League qualify for the Champions League. Making the Champions League means a huge pot of money for teams from TV revenue and tickets. The better the team does, the more money it makes.
Likely revenues from similar inter-country play in baseball are hard to forecast. TV markets in the various likely countries are disparate as are typical household incomes and thus ticket prices. But it is hard to imagine that a three game series with the Nippon Ham Fighters from Tokyo versus the New York Yankees would fail to earn oodles of money.
Like the Champions League, the appeal of inter-country professional baseball would not be huge at first. But with revenue and international rivalry comes team and fan interest. Most English football fans would prioritize winning the Premier League Title (i.e. the World Series) over winning the Champions League, but not by much. Baseball would have a long way to go to get that kind of sentiment, but it has to put another foot forward besides the World Baseball Classic if it hopes to get there.
What would the likely stakeholders feel about internationalizing and deepening professional competition?
Fans: Fans obviously win here. They get more competitions, more interesting baseball, more interesting stories. Unlike now, local teams at all levels have a chance to play against the big guys without paying for a fantasy camp.
Owners: Owners also obviously win here. More games are played, meaning more revenue. Internationalization, in particular, has been a goal of the Bud Selig regime. By adopting these competitions, they’d reach new markets across countries but also within the USA.
Players: Players actually are winners here too, though it will require contract negotiations. Clearly they will rightly demand their share of the increased revenue that these games will bring in.
On the downside for the players, seasons will be longer (though perhaps some of Spring Training could now be sacrificed) and travel demands higher. However, superstar players will be payed more - potentially much more - for these high revenue international games (or even just the possibility of helping the team qualify for such games). The more profitable the owners find success, the more rewarded superstars become.
With longer seasons, superstars, particularly superstar pitchers, will be leveraged. The best players will be played more often in high impact games. As in European football, when good teams play games against lesser teams (even in league play), they will not always use all of their best players. So the players will not necessarily play many more games on an individual basis. Furthermore, if teams are allowed to lengthen their rosters, then many more players could see high level action. The best players play in the best games and journeymen get more chances to play. Minor leaguers who have never been and may never otherwise be in the spotlight also would get an opportunity. So players of all abilities win. Lastly, since so many of the players are from other countries, at the very least, this would be a chance to play in front of a hometown crowd. But, by enabling serious inter-country professional baseball and the concomitant revenues, it may also allow hometown teams to compete on the international player market, increasing salaries and the likelihood that foreign players can remain in their home market at a competitive salary.
Challenge #2: Stadiums built with public money; teams threatening to abandon cities; teams underspending in old stadiums
Reform #2: Privately financed stadiums
If expanding competition within and across countries was a win-win for players and owners, privately financed stadiums are lose-lose. But they would be win-win for fans and the non-fan public.
This is not the time to prove that public financing for stadiums is a boondoggle (see JC Bradbury at the http://www.sabernomics.com or this essay - http://www.cato.org/pub_display.php?pub_id=2479). There are plenty of reasons why stadiums might be a public good - one that triggers extra employment and other benefits for a good value - but none of them turn out to be true or, at least, large enough to justify anywhere near the amount of public funding, through direct subsidies, concessions and tax exceptions, that goes into these urban Colossuses.
Moreover, other countries show that there is a purely private alternative. England provides little if any public funding for stadiums but has no shortage of them: London has twice as many large stadium as New York City (including both American football and baseball stadiums).
Alas, there’s no easy way to implement private funding. Public funding increases baseball’s profits. Private funding, by decreasing the amount of money to be split between owners and players, would mean less money for each of these stakeholders. Neither the players nor the owners would push for such a reform. Many public officials have been all too willing to enable the public funding of stadiums, in part due to kickbacks (ticket related - http://cityroom.blogs.nytimes.com/2010/12/20/gov-paterson-fined-62125-for-taking-world-series-tickets/ - or not), press connivance and public misunderstanding.
So banishing public funding faces an uphill battle, which is a shame because the gains to the public are large. For one, the public would save money. For another, there would be (slightly) less corruption of public officials.
But there would also be large gains for fans in particular. Without owner versus government haggling, owners would have only themselves to blame for old stadiums. Gone would be basis for the Florida Marlin, Jeffrey Loria excuse for low investment in players. Furthermore, owners that had debt financed stadiums (or a lot of equity in a stadium) would be much less willing to move their teams to new cities, abandoning their old stadiums and incurring new debt with a new stadium.
Privately financed stadiums are not a free lunch for fans. Some ticket prices would probably go up but not many, most likely, as owners are nearly monopoly providers of tickets already. Some teams may be forced to scale back on expenditures when their debts become large, as some Premier League teams have been forced to - but better the teams than the local government.
Challenge #3: Competitive balance
Reform #3: Relegation and promotion
MLB has a competition problem. The solvable problem is not at the top end of the spending spectrum. Rich teams will always be better off, at least without more revenue sharing. The problem instead lies with teams that can choose to remain dormant for years, spending little on free agents. These sleeping teams (examples include San Diego, Pittsburgh, Tampa Bay, Florida and Kansas City) can become competitive for several seasons with the right draft picks and other high risk good fortune, but bottom of the standing finishes are far more frequent.
Tastes vary as to how many abysmal seasons are forgiven by a playoff-bound season and perennial losers suffer as much from poor management as from financial deprivation. But fear is a powerful motivator. No team in the English Premier League dares come into the season expecting a “re-building” year and a last place finish and that is due to fear of relegation.
In all of the European football leagues, the worst teams (the bottom three out of 20 in the Premier League) are sent out of the top league and into the second league (and likewise for the worst of the second league into the third, etc...). The best teams from the lower league then move up a league. This is relegation and promotion and it is profoundly healthy for the sport’s ecosystem.
Relegation and promotion means that new teams from growing areas can earn their way into the top leagues. It means that teams in huge markets will face more competition for fans - an entrepreneur could buy, for instance, the Brooklyn Cyclones and invest in them and a few winning seasons later find her team in the Major Leagues. Moreover, new teams would not be at a huge competitive disadvantage if older teams did not have huge subsidized stadiums.
Owners have every incentive to avoid relegation. The revenues from the top football leagues are orders of magnitude larger. Relegated teams open up markets for other teams. If the San Francisco-Oakland area truly was not large enough to sustain two teams, then one would eventually likely be relegated, helping the other get enough revenues to be competitive.
Fans: Fans win with relegation and promotion, though of course in any given year a few teams’ fans will face the disappointment of relegation. However, each season, their teams will be forced to compete. And each victory for bad teams will still matter, keeping seasons interesting until the end.
Fans in cities or areas without Major League teams will still have more exciting leagues to follow due to promotion. Lower, minor league seasons will matter - even more so if there’s also an FA Cup-like competition. Moreover, Major League owners will not be able to shop around cities so easily, threatening their teams’ fans and their cities’ public officials, since the candidate cities for a new team will already have teams at other levels looking to earn their way up.
Players: Players can actually gain from relegation and promotion. More excitement in lower leagues means more money for lower league players. Risk of relegation also means mediocre teams with mediocre players are significantly better off than bad teams with bad players. So mediocre players are rewarded more. And players are rarely stuck with bad teams that are not trying to compete.
Relegation does not usually directly impinge on players either. Relegated teams usually trade or allow many players to resign with teams that stay in league as their talents and salaries are usually more appropriate for the higher league.
Owners: Current MLB owners would obviously lose from relegation. Right now, bad teams are at little risk of killing their golden geese. Of course, would-be owners gain a lot from the opening up of the club. And this would spillover to current owners that also own part of minor league franchises. These teams, in Brooklyn, Las Vegas, Pawtucket and elsewhere, suddenly become more valuable with the possibility of earning their way up and the higher excitement that these rejuvenated leagues would provide.
Three football-like reforms - Champions League and FA Cup competitions, ending publicly financed stadiums and relegation - can improve the game of baseball for fans. Owner and players would lose from some of the individual reforms but the long-term gains from the others would, I think, be large enough if the reforms were structured properly.
Each of the reforms, particularly ending public financing of stadiums, could be carried out without the others. But each’s effects on owner incentives and fan interest would be much stronger with the other two. Intra-league competition via an FA Cup would be better with the proper minor league teams that would come about due to promotion possibilities and relegation threats. Inter-league competition via a Champions League would offer substantial revenues to successful top league teams and thus the necessary rewards for all teams in the league to justify competitive spending. Private stadium financing with little possibility of profitable relocation would force owners to invest in their current team in the current city or sell to someone willing to invest. Fans would have the opportunity to follow a team from a low league up all the way to international competition over the course of many seasons but also each season have hopes for Cinderella victory in the FA Cup.
Jonathan Halket is an economist in New York. He welcomes questions and comments here.