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In case you had any doubts: no, contraction isn’t happening

Mar 6, 2011, 9:50 AM EDT

michael-weiner-with-reporters AP

Beyond some half-crazed ravings from Hank Steinbrenner and a speculative column by Ken Rosenthal, no one has seriously been discussing contracting any teams.  To the extent anyone is taking the ravings or the speculation at all seriously, however, MLBPA leader Michael Weiner put it to rest in an interview with the St. Pete Times yesterday:

“Do I think it’s likely that the owners are going to try to contract? I don’t,” Weiner said after meeting with Rays players during his annual spring camp tour. “Do I think there’s — to borrow your word — a ‘legitimate’ reason to contract? I don’t think there is. All I would say is if that changes, if contraction becomes a goal of the owners in this negotiation, the tenor of the talks would change quickly and dramatically.”

Weiner is a man who tends to be very careful with his words and he errs on the side of understatement.  So when he says stuff like “the talks would change quickly and dramatically,” it’s like most of us saying “if Bud Selig brought up contraction I would literally pour gasoline on the conference table and light it on fire.”  It’s not happening and Weiner doesn’t think it even has a chance of happening. To the extent anyone brings it up as a serious possibility, they’re living in a non-reality based world.

If there is only one argument that will convince you of this, let it be this one: to contract a team, the owner of that team will have to be paid (a) the market value of his franchise, because baseball would literally be taking away a piece of property in which he has invested hundreds of millions of dollars; (b) some premium above that which would compensate him for the loss of year-to-year revenue that asset stood to generate for him; (c) another large chunk of money that would pay off whatever local obligations the team had in terms of a stadium lease and contractual and charitable commitments the team had made in the community; and (d) some other sum of money to deal with the political implications of it all, be it in the form of legal fees to fight the politicians who would work overtime to keep their local team from being contracted or some other sort of payout — a job creation fund? Massive lobbying? — that would head off that political opposition before it became truly problematic.

It’s not hard for me to imagine that to contract a team it would cost close to a billion dollars by the time it is all said and done. Really, I’m not exaggerating.  Then figure that you’d have to contract two teams to make the schedule workable.  As such, the total it would cost to contract two teams would be multiples over the total amount of money has been paid to all low revenue teams in the eight years since the current revenue sharing program has started. Revenue sharing payments, you’ll remember, that were the very reason why people started talking about contraction in the first place.

As a result of all of this, talking about contracting teams to do away with revenue sharing is like talking about euthanasia to do away with a case of allergies. The “solution” is laughably worse than the very problem it’s fancied to solve.  And as such, it’s ridiculous to even propose it.

If contraction ever comes it will be because the game as a whole is losing money like crazy. Not because some people within the game don’t quite like the way the copious amounts of money the game is making is being shifted around.

  1. spookymilk - Mar 6, 2011 at 10:00 AM

    Thanks for this. I now have a place to point my paranoid, conspiracy-theorizing friends.

  2. heynerdlinger - Mar 6, 2011 at 10:10 AM

    I think the only flaw in your argument is the piece about the up-front cost of the team being separate from the amount needed to replace the revenue stream. These guys understand that when they invest millions of dollars into their team, they have the option of investing those millions in other vehicles. If the current or future revenue from those investments isn’t as lucrative as what they could make from other vehicles, there has to be some other non-monetary reason for the investment.

    I’m not saying that there’s zero value to this part of the evaluation, but it’s really the return on the investment that makes these owners pony up those millions. What this implies, of course, is that you can estimate how much revenue these teams make by taking a look at what the teams are selling for. The Rangers sale is complicated by the borrowed money, but they paid nearly $600M for that team. At a pessimistic 3% return on that cash, the equivalent yearly revenue is $180M. And that’s $180M of profit.

    • PanchoHerreraFanClub - Mar 6, 2011 at 10:45 AM

      3% of $600M = $18M

      • uyf1950 - Mar 6, 2011 at 10:52 AM

        I was just about to write the exact same thing.

    • heynerdlinger - Mar 7, 2011 at 8:29 AM

      Yep, I’m an idiot for missing a decimal place. Sue me.

  3. heynerdlinger - Mar 6, 2011 at 10:37 AM

    In other words, if I have access to $600M and can make $180M a year by investing in a relatively safe index fund, that baseball team better give me something more than $180M a year.

    • JBerardi - Mar 6, 2011 at 12:17 PM

      Dude, even Madoff never promised those kinds of returns. Please learn math.

      • heynerdlinger - Mar 7, 2011 at 8:33 AM

        The underlying math is the same, albeit off by a decimal place. $18M a year of profit is still nothing to sneeze at, and that’s the pessimistic return of 3%.

        The point remains that these franchises are enormously valuable sources of revenue that would be extremely expensive to buy out and eliminate.

  4. heynerdlinger - Mar 6, 2011 at 10:45 AM

    And really, where else but America do we get with one breath Ken Rosenthal floating a ridiculous idea where teams like the A’s and the Pirates get bought out by the other owners and eliminated, while in another breath we have the Wilpons claiming that they’ll be able to line up investors to drop $200M on a minority share of the Mets.

  5. uyf1950 - Mar 6, 2011 at 10:58 AM

    Aren’t there other ways of forcing contraction if MLB really wanted to. For example change the formula for revenue sharing. Those border line teams that now profit from revenue sharing would no longer be able to count on the charity of others. Hence some would start to lose money and either be forced to relocate to better baseball cities or go bankrupt. I would think there is more ways to “skin the cat” so to speak then what everyone assumes to be the traditional method of contraction. Don’t get me wrong I don’t think it will happen in the foreseeable future, but never say never.

    • tomemos - Mar 6, 2011 at 2:09 PM

      But why would MLB want to?

      And as for changing the revenue sharing agreement: that’s done through the CBA, isn’t it? MLB can’t just change it unilaterally. Do you think the union is stupid enough to agree to a plan that would make two or more baseball teams unprofitable? They know where that would lead.

  6. lbehrendt - Mar 6, 2011 at 12:00 PM

    Craig, I agree with what you’ve said here, and I may bring a small canister of gasoline with me to my next meeting over a conference table. But you should note that the figure you’ve cited in your link to is for a single year, and is not cumulative for the 8 years we’ve had revenue sharing. The cumulative amount of revenue sharing paid during the life of the program is somewhere between $2 billion and $3 billion. Your point still holds, of course, because the total amount of revenue sharing paid to any single team is much less than the cost you’ve cited for contracting that team.

  7. stairwayto7 - Mar 6, 2011 at 11:11 PM

    If contraction is done you do it by the newest teams! Fla, Tampa, Az and Colorado. Then go by teams in 2 cities, Cubs and Mets are gone. Everyone knows the Cubs are the biggest joke in all of sports!

  8. bigtrav425 - Mar 7, 2011 at 9:03 AM

    That sucks…there def needs to be contraction of the Marlins and toronto and possibly arizona and tampa bay.I dont think MLB is in as dire need to contract as Basketball tho

  9. BC - Mar 7, 2011 at 12:32 PM

    Contract the Mets. Put me out of my misery.

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