When the Miami Marlins shipped reigning National League MVP Giancarlo Stanton to the New York Yankees last month for a few slices of pizza and some salary relief, it may have closed the door on a relatively brief period of baseball history in which small-market teams at least had a fighting chance. While the sport has an interest in its marquee, big-city franchises being competitive and well cared for, once again the Lords of the Realm are allowing greed and stupidity to consign legions of fans to rooting for long-term losers.
The Miami franchise has been operated like one of Mitt Romney’s Bain Capital acquisitions from the get-go, with repeated cycles of binging and purging that have left the team with a dispirited and rightly cynical fan base. But even if the Marlins are a special case, the Stanton trade is an omen of dark days ahead for baseball’s smaller-market clubs. Last year’s playoffs, in which the final four teams (the Cubs, Dodgers, Astros, and Yankees) were from America’s four largest cities, is the shape of things to come unless fans start loudly making demands for the next round of labor negotiations.
Baseball is unique among the four major American sports in not imposing any kind of salary cap on payrolls — just a toothless “luxury tax” that the rich teams have no trouble working around, and some inadequate revenue sharing. Even before the free agency era that began in 1975, baseball featured a level of inequality that makes America look like Sweden. Between 1923 and 1962, the New York Yankees won the World Series 20 times. The expansion in the number of teams from 18 in 1961 to 30 today has made that kind of single-team dominance impossible, but it has not reduced the longstanding and heavy correlation between payroll and on-field success.
Yet the last 10 years have seen a number of small-market teams reach the expanded playoffs, like the three-year run of excellence by the Pittsburgh Pirates between 2013 and 2015, the Kansas City Royals’ 2015 championship, and the six-year run of strong performance that started in 2008 for the Tampa Bay Rays. But it’s important to note that all three of those success stories were based on very long stretches of dreadful, losing baseball — what observers now call “tanking” to get high draft picks year after year. If even a well-managed small-market team pursues the tanking strategy but whiffs on one or two of its draft acquisitions, they could be looking at a decade of futility or more. That’s not good for the sport.
A big part of the problem is the new collective bargaining agreement, signed in 2016, that runs through 2021. That deal seemed designed explicitly to screw amateur players around the world, as well as to eliminate the clever workarounds that allowed smaller-market teams like the Oakland Athletics and Minnesota Twins to be competitive for long periods in the 2000s.
That agreement also did nothing about the biggest source of unfairness in baseball, which is dramatic differences in local television contracts for each team. In 2016, the Dodgers brought in $204 million in local TV revenue, while the Marlins, Rockies, and Rays earned only $20 million each. Teams only have to put 31 percent of this TV bonanza into the revenue sharing fund. That means big-market, big-spending teams have plenty of extra money to throw at the best players.
The 2016 CBA also created a complicated system that imposed caps on teams’ spending on international amateur free agents. Under the old system, many (though not all) international players were put in a kind of free-for-all that allowed teams to bid on the open market. Today teams can only throw big money at international players who are at least 25 years old and have played in a foreign professional league for six years or more. This is how we got the spectacle of a potential Japanese superstar named Shohei Otani being forced to accept $2.3 million from the Angels when he could probably have gotten $200 million on the open market.
Before you argue that this actually helps small-market clubs, remember that teams like Cincinnati and Milwaukee are rarely competitive for the big free agents, so the international market was one place where those teams could overpay to get what they want, while still generally spending less than they would on the typical open-market signing. No team currently has more than $5.75 million to spend on international players, who are, of course, the biggest losers in baseball’s punitive new system. For a sport that already has massive social justice issues in the way it treats ballplayers recruited out of Latin America, a deliberate move to reduce salaries for international free agents smacks of racism and colonialism.
The new CBA also altered the system that awarded draft-pick compensation to teams losing free agents. The players association disliked the way that compensation attached to players tended to decrease their free agent value. After the 2015 season, for instance, Nationals shortstop Ian Desmond was unable to sign a long-term deal because clubs didn’t want to cough up a valuable first-round draft pick for a player of relatively modest impact. The players union made this a major issue in the negotiations, and now all first round picks (the most valuable to rebuilding teams) are protected for buyers. This is one of the reasons the Pirates were just forced to trade pitcher Gerritt Cole to the Astros for a marginal return — they knew that losing him to free agency after 2019 wouldn’t net them a high enough draft pick to make hanging on to him worthwhile.
And finally, the CBA continued the relatively recent practice of imposing limits on how much teams can pay players in the annual Rule 4 amateur draft. So where a team like the Royals could once upon a time draft a difficult-to-sign, college-bound player late in the draft and blow him away with money (still much cheaper than signing even a mid-tier free agent), beginning with the 2012 labor agreement each position in the draft was assigned a maximum dollar amount. Not only does this snatch millions of dollars out of the hands of young ballplayers, it made it much harder for clever small-market executives to maximize value in the draft.
All of these changes are only now starting to affect outcomes on the field. One measure of how badly baseball has screwed up over the last decade can be seen in a measure called the Gini Coefficient, which is typically used to measure national economic inequality. Evan Zepfel of the Harvard Sports Analysis Collective applied it to baseball team salaries and found that beginning in 2004, the Gini Coefficient in baseball mostly fell (meaning team salaries in the sport became more equal) until 2012 when it began to climb back up.
Another long period of big-market dominance of Major League Baseball would be a shame. Giving more fans in more markets a shot at the title, even if the sport remains relatively unequal, is in the best interest of baseball’s long-term viability. To do that, baseball needs to sharply increase the sharing of local TV revenues, and to convince the players union that competitive balance is just as important to the sport as maximizing every last dollar of free agent contracts.