72 replies to this topic

[philly sox fan]

I may have missed it, but I'm suprised there haven't been a lot of discussion (not just here, but in the media in general) about the giant payroll disparity between the Red Sox and the other teams in the LCSs. This year we started to hear a lot of people lumping the Sox in with the Yankees as a pair of teams that dominate the league with brute financial force. That's not terribbly accurate for about 60M reasons, but as long the Sox and Yankees are not in a do or die fight for just one playoff spot, then it certainly is true that the lesser goliath has a pretty big advantage over the rest of baseball. With the Yankees gone and three low payroll teams left with the Sox, it shouldn't be too shocking if those other teams look at playing the Sox as more or less the same as playing the Yankees.

Here are the payrolls of the four LCS participants and the Yankees.

Table

Rank	Team	Payroll
1	NYY	208
2	Boston	143
23	Cleveland	62
25	Colorado	54
26	Arizona	52

The actual disparity between the Yankees/Sox and the other teams is even bigger because both teams will have to pay luxury tax money and both teams spent a lot of money on posting fees that isn't included.

The Yankees have a ~40% payroll advantage over the Sox, but the Sox have a roughly 300% payroll advantage over the other three LCS teams.

From those teams perspective is there really much difference between playing a Yankee team with a 4-fold payroll advantage and a Sox team with a 3-fold payroll advantage? I don't think so.

On the other hand, if competitive balance was so critically important to the MLB powers that be shouldn't they be crowing about the fact that 3 teams in the bottom third of payroll are competing toe-to-toe with the behemoths from Boston and New York?

The Sox financial advantage flows down througout the organization, but I think it's most clear looking at the starting staffs for the four LCS teams. The Sox rotations is very much a rich team's rotation and the other three teams very much have small market developed rotations.

Boston

Beckett - On the trade market only to a team willing to take Mike Lowell's so-called albatross contract. That ridiculous miscalculation priced most teams out of the Beckett market.

Schilling - A veteran, expensive star player who used a no trade clause to restrict his availability to big market teams that were ready to win immediately.

Matsuzaka - 52M just to talk to the guy

Wakefield - finally a guy that anybody could afford

That's a big market rotation in every way.

Cleveland

Sabathia - 1st rd pick out of HS in 1998, a home grown ace signed to below market contracts

Carmona - signed as an inexpensive international free agent in 2001. A home grown co-ace, at least for this year.

Westbrook - Westbrook was acquired in 2000 in a prospect for veteran trade for David Justice. That's almost a classic small market-big market now for later trade except the Indians were quite good that year. Why the hell did they trade Justice anyway?

Byrd - signed a 2yr/14.25M contract prior to 2006. In the free agent market Byrd is a C+ kind of a pitcher. Better than the scrubs who get real cheap one year deals, but not quite good enough to get the standard 3 or 4 year grade B pitcher deal.

Colorado

Francis - 1st rd pick out of C in 2002

Morales - cheap international free agent signed in 2002

Jimenez - another cheap international free agent, this one signed in 2001.

Cook - 2nd rd pick out of C in 1997

Due to thier ballpark and their previous huge blunders with Hampton and Neagle, the Rockies are highly motivated to produce thier own pitchers.

Arizona

Webb - a lowly 8th rd pick out of C in 2000 who developed into an ace

Doug Davis - acquired from Milwaukee for Johnny Estrada. That's an odd, but creative deal between two small market teams that were both trying to make the leap into the playoffs and were able to find a complementary fit

Livan Hernandez - Hernandez was a short term, modestly priced (6M/yr for 1.5 yrs) salary dump from an even poorer team

Micah Owings - a 3rd rd pick out of C in 2005

Byrnes has been more creative than Shapiro and O'Dowd, but the rotation hangs on the homegrown ace.

[SoxinSeattle]

On the other hand, if competitive balance was so critically important to the MLB powers that be shouldn't they be crowing about the fact that 3 teams in the bottom third of payroll are competing toe-to-toe with the behemoths from Boston and New York?

Great post. The payroll disparity in the league does not keep the low payroll teams from being competitive, it keeps them from being competitive as often as the big market clubs. So the fact that three little guys has made it to the final four does nothing for the argument against the fact that MLB needs some sort of salary control.

[sfip]

Not saying there isn't a huge payroll disparity among these teams, but was it a coincidence that you stopped at 4 pitchers and didn't include Lester, a homegrown starter who has an outside chance at starting game 4?

Edit: Then again, I conveniently forgot about the money Boston spent on Clement.

Edited by sfip, 10 October 2007 - 10:25 PM.

[PedroKsBambino]

Interesting comparison. Here's hoping the Sox crush the little pygmies in spite of the unfairness of it all!

One thing that is worth noting, though not entirely fair, is that the Sox get more out of their market than anyone, largely because prior ownership stumbled blindly into the perfect regional sports network setup which has become hugely profitable, and partly because the TV ratings are ridiculous for the Sox. So some of the expenditure is a reflection of the fans and the team's cultivation of the fans rather than pure market size. Of course, the Sox market is also a lot bigger than any of these three markets, too.

Ehh, however you cut it...we have a big financial edge here and hopefully that translates successfully to the playing field!

[5belongstoGeorge]

I suspect the payroll incongruity is going to be a featured topic on Fox.

Yahoo Sports Playoff Coverage has already started the David versus Goliath drumbeat

[philly sox fan]

Not saying there isn't a huge payroll disparity among these teams, but was it a coincidence that you stopped at 4 pitchers and didn't include Lester, a homegrown starter who has an outside chance at starting game 4?

Not really, it doesn't change things in 2007.

But the ability of the Yankees and Sox to develop and perhaps integrate quality young pitchers like Hughes, Chamberlain, Kennedy, Buchholz and Lester scares the shit out of the rest of baseball. One of the ways the financial playing field has been leveled in the past has been for big market teams to make expensive free agent mistakes. And what better way to make those mistakes than to desperately need pitching.

Even ground competition between the Yanks/Sox/et al and the various pygmies requires movement in both directions.

Roughly, a team probably needs 100M of talent to be a top contender. That means the pygmies have to be really good at scouting and player development and be able to spend just 50-60M for that 100M talent. It also means that the big market teams have make the kind of poor free agent decisions that lead to them spending 120M for less than 100M worth of talent.

Unfortunately, the Yankees are proving that it's pretty hard to spend 200M and not at least get 100M worth of talent.

[Lollardfish]

Unfortunately, the Yankees are proving that it's pretty hard to spend 200M and not at least get 100M worth of talent.

That's actually the amazing thing about the relative lack of competent pitching on the Yankees as they ended the year - Wang, PetTitte, Hughes, Joba, Rivera. And Wang was terrible. 200M, 4 pitchers ready to contribute in the post-season. 2 of whom were "low-cost" call-ups. Wow.

[ShoelessJoe]

Well, I guess at this point we have to ask what constitutes a "small market." Phoenix is the 12th largest media market in the country, bigger than Seattle, Minneapolis/St. Paul, St Louis, Miami, and a bunch of other markets with teams which outspend the D'Backs. I really question how much this city can be defined as a small market. The Mariners have a payroll of just over 100m, yet have a smaller media market than the Diamondbacks. So how, again, are the D'Backs at a serious competitive disadvantage? There are about 1.8m TV household in Phoenix as compared to 1.7 in Seattle and 2.3m in Boston. Denver and Cleveland have 1.4m and 1.5m TVs repectively, so you could say they are in a the second tier—although still not far off from Seattle, who manages a 106m payroll. So if their markets are about 2/3rds the size of Boston's, why are their revenues and payroll disproportionately smaller?

They have the potential to expand their audience and revenues beyond what they have. Are they unwilling to take the financial risk of investing in the team, or a regional network? If so, that's one thing. But I don't think their competitive disadvantages, while real, are as drastic as their small payrolls would imply.

KC, Cincinnati, Milwaukee, St. Louis, with under 1m households, I think qualify as "small market."

Boston is the seventh largest market, behind NY, LA, Chicago, Philly, Dallas & Oakland/SF. Yet the Sox outspend all the teams in those markets except the Yankees. Chicago, LA, and NY are MUCH larger (NY and LA are more than twice as big.)

TV markets by household

Edited by ShoelessJoe, 10 October 2007 - 11:13 PM.

[Eric Van]

Shoeless Joe has a great POV.

The proper comparison is by potential revenue from the market given equal fan interest. TV households are a big chunk of that, but there are other elements you could include.

The Sox have a payroll that greatly eclipses other teams with a similar-sized market because the fans have ponied up the bucks by selling out the park every night despite the highest ticket prices in the game and by watching the broadcasts in record numbers. It's a formula that could have happened for any of a dozen other teams.

The Rockies already knocked off the Phillies, who have the largest unshared market in the game (and the third largest market if you divide the NY, LA, and Chi markets in half, which only seems fair). If the Phillies had our fan base, there'd be competing with the Yankees in terms of payroll. Starting the David / Goliath thing now is a little silly.

Edited by Eric Van, 11 October 2007 - 12:30 AM.

[LahoudOrBillyC]

I agree with SJ and EV here, and have been saying similar things around here for years. philly's post points the payroll imbalance, and that is very real, but one can not simply connect that imbalance to an underlying market disparity. (He does not do this.)

There is an imbalance in the markets of the various MLB clubs, but that imbalance is dwarfed (IMO) by the disparity in the abilities of the various teams to generate revenue in their market, and the disparity of the willingness of different teams to spent their revenue on payroll. MLB has a system in place which penalizes teams which do a good job of making money, and rewards teams that do a poor job at it.

Again, there is an inherent underlying market imbalance, but the payroll differences do not measure that.

[philly sox fan]

My interest in the economics of baseball tends to blow hot and cold. Organization wide economic considerations certainly shape the game we so enjoy on the field and therefore are interesting on that level. But it's also dry, boring crap that a very small number of people are actually credible and interesting on the topic.

It is true that these payroll discrepancies don't perfectly match simple market differences between the teams, but I believe it is also true that more sophisticated analyses done by people like Nate Silver and Vince Gennara have shown that economic motivation driven by market size differences are very real and should MLB become a completely rational economic industry (I know, fat chance) then those differences would have stark consequences for teams with different market sizes.

I tend to see discussions about how high a team's payroll should be as mostly about ownership and not something it is very easy to be an informed outsider about. Discussions about what a team is able to accomplish with its actual payroll are baseball operations discussions that are much more interesting and much easier to be informed about.

Starting the David / Goliath thing now is a little silly.

Well sure, but not everybody has a vested interest in quashing discussions that might mildly diminish the magnitude of the accomplishment of the Sox baseball operations staff.

[Smiling Joe Hesketh]

One the issues I've always found most interesting about the Sox' payroll situation is that I think their position is unique among major league teams today. The Sox undoubtedly have enormous revenue streams, an ownership committed to winning, an extremely loyal fanbase willing to spend insane money to see and support their team, and an extremely valuable cable TV network covering the club. There's no earthly reason why the Sox should not spend a lot of money on their player payroll; if they did not there would be a lot of fans accusing the team of a fundamental breach of faith, IMHO. So on that hand the Sox are indeed Goliath to most other teams in baseball.

On the other hand, no other team in baseball has to deal with the spectre of the Yankees like the Red Sox do. The Sox and Yankees compete for the same division title every year. While other teams in other divisions have a shot at the playoffs by winning their division, the AL East divisional playoff spot has until this year run through NY and their $200 million plus payroll. So while they may be Goliath to the rest of the teams in baseball due to the size of their payroll, they are David in their own division compared to the Yankees and that club's payroll spending.

Some of this may be unfair to the other AL East teams; I'm sure Toronto and Baltimore and Tampa Bay don't view the Sox as any type of underdogs whasoever. But I think most fans would be pretty upset if the Sox did not spend to their fullest abilities to build a team; they have unusual capacity to due that these days.

[ShaneTrot]

These teams have drafted pretty well but they also have had some plum picks. Upton was #1 overall and Tulowitzki was the seventh player picked in 05. Hell Colorado and Arizona picked 8th and 9th overall this year. I would love for the Sox to be able to draft that high. Of course, I don't want them to suck that much to get the early picks

[loshjott]

Boswell picked up the theme in today's Washington Post, including this prickly line: "...except for the $143 million, buy-a-title Red Sox -- who now look so much like the Empire they claim to hate that they should consider switching to pinstripes -- this October is going to be a tale about how less can be more."

[ShoelessJoe]

I tend to see discussions about how high a team's payroll should be as mostly about ownership and not something it is very easy to be an informed outsider about. Discussions about what a team is able to accomplish with its actual payroll are baseball operations discussions that are much more interesting and much easier to be informed about.
Well sure, but not everybody has a vested interest in quashing discussions that might mildly diminish the magnitude of the accomplishment of the Sox baseball operations staff.

That's unfair. I certainly don't have a vested interest. And EV raises an excellent point: the Phillies (and many other teams) have done a terrible job at brand-building. Their failure to exploit the large Philadelphia market has nothing to do with the Red Sox baseball ops staff. There is an enormous revenue stream out there waiting for them to exploit, if only they had the guts to do it. "They're standing out there waiting to give you their money. Are you going to take it? Are you man enough to take it?" The same is true (to a lesser extent) of the Diamondbacks. But it's going to entail financial risk: you have to field a team that people want to follow year in and year out, which is going to cost money, and you have to build a quality network on which they can watch their games, which also costs money. But it will pay off in the long run if you succeed: the better the team gets, the more people watch, the more ad revenue, (which the team gets to keep—unlike shirt sales and whatnot, which gets shared with the league.)

If you have a team in a <1m TV market, you have a legitimate gripe, because that really hamstrings your ability to bring in money (not that the Royals really try, content to profit off the luxury tax.)

[smastroyin]

These teams have drafted pretty well but they also have had some plum picks. Upton was #1 overall and Tulowitzki was the seventh player picked in 05. Hell Colorado and Arizona picked 8th and 9th overall this year. I would love for the Sox to be able to draft that high. Of course, I don't want them to suck that much to get the early picks

The thing with Colorado and Arizona is that I could easily see them being completely out of the playoff picture next year.

What the Red Sox and Yankees pay for is the ability to compete every year. It is what drives their revenue model. The Red Sox make more money by selling out year after year and getting good ad rates on NESN. These other teams make more money by not spending anything and competing once in a while.

Honestly, I think Cleveland is the only interesting case study here, because they should be good for a while, most likely due to a great run of Latin signings over a two year period (Martinez, Peralta, Sabathia, Carmona), taking advantage of a desparate GM and a crumbling franchise (Sizemore) and having their former GM allow himself to be ass-raped for a couple guys he overvalued (Hafner for Diaz/Drese).

[The Gray Eagle]

""...except for the $143 million, buy-a-title Red Sox -- who now look so much like the Empire they claim to hate that they should consider switching to pinstripes"

Yes, the best way to "buy a title" is to spend $60 million a year less than another team in your division every single year, and hundreds of millions less over the past 5 years.

In the reality based view, the only way to "buy a title" is to outspend every other team in baseball by tens of millions, especially the teams in your own division. Any team $60 million behind a division rival isn't buying anything, even a playoff spot.

It makes no sense when people claim that the $60 million the Sox are behind the Chokers is irrelevant, yet the $40 million they outspend a lot of other teams by is huge and worthy of disdain. Either both amounts are irrelevant or both amounts are vast and difference-making.

[BCSoxFan]

According to the Bureau of Economic Analysis, here's the 2006 income per capita in the four remaining LCS metrolpolitan areas with national ranking in parenthesis:

Boston: 50,037 (6th)
Cleveland: 37,070 (74th) [about even with Providence]
Denver: 44,299 (16th)
Phoenix: 33,911 (131st)

I imagine it's not just number of eyeballs, but also the wallets that come with them.



btw, Philly is 42,988 (23rd)

[Smiling Joe Hesketh]

It makes no sense when people claim that the $60 million the Sox are behind the Chokers is irrelevant, yet the $40 million they outspend a lot of other teams by is huge and worthy of disdain. Either both amounts are irrelevant or both amounts are vast and difference-making.

Well, I think the idea is that as you get towards the high end of the payroll spectrum, the increases you get in on-field performance become more marginal with each extra dollar you spend above a certain amount. There's only so much improvement one can expect from a team even if you spend $500 million on it.

The Red Sox front office would be worthy of scorn if they were raking in all this cash and NOT spending it on the on-field product.

[Rudy Pemberton]

I'm not sure how this effects the calculus, but it always seems worth noting that this ownership did pay a lot of money to purchase this team, far more than the owners of the Rockies and D'Backs paid for their teams. So while their payrolls and revenues are higher; I'd assume their costs are too. The payroll disparity is certainly worth noting, but it seems less important than it did several years ago. Maybe that's just my selfish view of the matter; but in some cases I still think a high payroll can cause you to make some poor decisions, as evidenced by the Yankees who have all these crappy contracts with no hope of unloading.

[NortheasternPJ]

you have to build a quality network on which they can watch their games, which also costs money

Philly is the perfect example of how to screw this up. By signing up with Comcast Sports Net, the Phillies allowed Comcast to launch a holy war against DirecTV and Sunday Ticket at the expense of their fans. It was just as bad if not worse than the situation with YES a couple years back. DirecTV customers were unable to watch any of the Phillies games broadcast on CSN which I believe was most of them. The entire situation had absolutely nothing to do with the Phillies but they basically sold out their fanbase so Comcast could try to gain leverage against a rival.

[ShoelessJoe]

According to the Bureau of Economic Analysis, here's the 2006 income per capita in the four remaining LCS metrolpolitan areas with national ranking in parenthesis:

Boston: 50,037 (6th)
Cleveland: 37,070 (74th) [about even with Providence]
Denver: 44,299 (16th)
Phoenix: 33,911 (131st)

I imagine it's not just number of eyeballs, but also the wallets that come with them.
btw, Philly is 42,988 (23rd)

Ah, now we're getting somewhere. But how relevant is this? The real money is in TV, since the team gets to keep it all, and ad income would be more closely tied to number of eyeballs rather than PCI.

Next, ticket sales. If you field a good team, you should be able to sell your luxury boxes in any of these large metropolitan areas and probably sell most of your single seats to boot. This is where per capita income would probably have the most effect, if it does, because you would not be able to charge the high ticket prices of some of the wealthier cities.

And again, merchandise sales don't go to the team, but to the league.

Lurker "Jittles" raises an interesting objection:

Shouldn't the TV market question include the whole region? The Red Sox have access to a media market that spans all of Mass, NH, VT, RI, Maine, and half of Connecticut. Thought Phoenix has nearly as many TV's as Seattle, and 2/3 as many as Boston, I imagine that all of AZ and the relevant media area is much less populous (fewer TV's) than the area covered by NESN. This is especially true given the density of population in the region. How many people live within 150 miles of going to a Red Sox game? How does that compare to Phoenix/Denver? And Cleveland's ability to expand its market is limited by the Reds and Pirates, and even the Tigers to some extent...

Edited by ShoelessJoe, 11 October 2007 - 09:10 AM.

[Average Reds]

The Red Sox front office would be worthy of scorn if they were raking in all this cash and NOT spending it on the on-field product.

This cuts right to the core of the matter.

In the 2008 offseason thread we got into a discussion about whether Carl Pohlad was a smart businessman or not based on the way he ran the Twins, and the point I tried to make was that it depends on the metrics you look at. The Twins are one of a number of teams out there who - if they had the foresight, imagination and guts to invest wisely - could build a revenue machine that is much bigger than what they have now. The problem is that owners like Pohlad (a financial wizard but a marketing dolt) don't understand how to promote their teams to their fan base and extend their franchise into related revenue streams. So instead of bulding, they try and squeeze dollars out of politicians and fans, which just ends up pissing everyone off. (Or, like Pohlad, they end up insulting their fan base by trying to contract the team.) Given this, it's not surprising that they end up crying in their beer about being a 'small market team with no ability to spend like the Red Sox' even though the dynamics of their market would allow this if they had the inclination and skill to pull it off.

The Red Sox, through a combination of circumstance, skill and blind luck have created a machine that let's them invest in the team while still making a profit. If these other teams suddenly woke up with this kind of revenue stream, they wouldn't invest it in the team simply because it's not how they are oriented.

End of rant..

[dcmissle]

A few points.

Odd article from Boswell, whose wife and in-laws are big Sox fans and who is certainly smart enough to know you can't buy a title. There is a story here, but it's a positive one -- the playing field is more level than it once was, and if you deploy your resources wisely, you have a chance to win the WS. The only villains are guys like David Glass, who simply pocket the money geared toward making smaller market clubs more competitive. Boswell, I think, is just pissed because he fears this post-season will get short shrift with the 3 pygmies.

I don't know what the "line" says and I don't care. The writer of that Yahoo article needs to put the weed aside if he thinks the RS are "heavy favorites" over the Indians.

[smastroyin]

Next, ticket sales. If you field a good team, you should be able to sell your luxury boxes in any of these large metropolitan areas and probably sell most of your single seats to boot. This is where per capita income would probably have the most effect, if it does, because you would not be able to charge the high ticket prices of some of the wealthier cities.

Sure, but the problem is that Boston has the 4th highest cost of living, so having the 6th highest per capita might mean they have less disposable income.

The CPI for each of these cities in 2006:

Boston 223.1
Cleveland 191.1
Phoenix 111.5
Denver 197.7

Cost of Living Index

Boston 126
Cleveland 86
Phoenix 104
Denver 102

Cost of Living expressed in terms of that $50 K

Boston $50K
Cleveland $34K
Phoenix $41K
Denver $40K

Phoenix might have a complaint, everyone else is pretty even in terms of income/expense.

[Jethro Q. Walrustitty]

What the Red Sox and Yankees pay for is the ability to compete every year. It is what drives their revenue model. The Red Sox make more money by selling out year after year and getting good ad rates on NESN. These other teams make more money by not spending anything and competing once in a while.

I would argue that this is exactly the way it should be from an economic point of view. MLB is different from the other two major sports in that fans are far more likely to be diehard followers of their local team. Therefore it makes sense for the teams in the biggest markets to have a competitive advantage. In the NFL, it doesn't matter that the Colts are in a tiny market, plenty of people still follow Peyton Manning and crew. It doesn't hurt the NBA very much that the best team over the past decade is in San Antonio, not New York. But if the Royals could put together a team that would win 95 games for the next ten years, and win multiple titles, MLB as a whole would profit much less.

[mr guido]

The funny thing is that it's not like the other teams didn't try to have a big money rotation. Randy Johnson is on a 2 year, $26m deal. Mike Hampton is in 2nd to last year of his 8 year, $121 million deal (oops, maybe they woulda been better off going for Manny that offseason). The biggest difference between the $150m payroll and the $50m payroll is that with a big one you can eat your mistakes if you're smart, while the AZs and COLs have to be a bit more lucky.

The good news is that the Rockies' owners have been quoted saying they expect to spend ~$70m next year, which will be necessary to cover arbitration hikes and so on. They're in a unique position, because for the most part free agent acquisitions have been total busts, and it's only now when they have a roster stocked with homegrown talent (some of whom had minor league exposure to places like Colorado Springs, elev 6035 ft or Casper, Wyoming 5,150 ft) that they are seeing success.

By the way, what's a good source for current salary info? ESPN's is clearly out of whack, showing the Sox with a 24 man team that includes supposedly spending $8m on Hinske & Kielty.

Edited by mr guido, 11 October 2007 - 09:33 AM.

[PedroKsBambino]

Shouldn't the TV market question include the whole region? The Red Sox have access to a media market that spans all of Mass, NH, VT, RI, Maine, and half of Connecticut. Thought Phoenix has nearly as many TV's as Seattle, and 2/3 as many as Boston, I imagine that all of AZ and the relevant media area is much less populous (fewer TV's) than the area covered by NESN. This is especially true given the density of population in the region. How many people live within 150 miles of going to a Red Sox game? How does that compare to Phoenix/Denver? And Cleveland's ability to expand its market is limited by the Reds and Pirates, and even the Tigers to some extent...

Pretty sure Silver's study on BP addressed this issue, though I don't have it handy right now.

[8slim]

The problem I always have with this discussion is where do you draw the line of demarkation for big market/small market? And honestly, isn't that classification missing "medium market"?

Up until a couple years ago people often lumped Philly and Detroit in with the "small market" teams, simply because they were big time losers. But of course those are huge markets with immense revenue potential, if not fully realized by their ownership. Cleveland is the 17th ranked media market, Phoenix 13th and Denver 18th. I wouldn't necessarily call any of them "small". Not New York or Los Angeles, but not small. Hell, Tampa is 12th and if you add in Orlando (19th), a market they absolutely could own if they were at all competent, they'd essentially be a top 10 market.

Its been said time and time again that the real advantage the highest revenue clubs have is the ability to quickly cover their mistakes. Outside of that there is competitive balance in baseball, and ownerships rightly make their own decision about their salary level.

As an aside, recently I came across an old fantasy baseball preview magazine from 1994. It was interesting to note an article on the reigning champion Blue Jays, who at the time were drawing 3-4 million fans a year and had the highest payroll in the game. And yet now I'm sure Toronto would be called "small market" by a lot of folks.

[Omar's Wacky Neighbor]

Phoenix might have a complaint, everyone else is pretty even in terms of income/expense.

Just throwing this out there, and not saying it has any bearing on what's being duscussed: aren't there a ton of retirees in the Phoenix area?

I hear people talk about retiring to only two places: Florida and Scottsdale (OK, occasionally San Diego). Never heard of an AARP couple talk about spending their golden years on the shore of Lake Erie.....

[Dogman2]

Sure, but the problem is that Boston has the 4th highest cost of living, so having the 6th highest per capita might mean they have less disposable income.

The CPI for each of these cities in 2006:

Boston 223.1
Cleveland 191.1
Phoenix 111.5
Denver 197.7

Cost of Living Index

Boston 126
Cleveland 86
Phoenix 104
Denver 102

Cost of Living expressed in terms of that $50 K

Boston $50K
Cleveland $34K
Phoenix $41K
Denver $40K

Phoenix might have a complaint, everyone else is pretty even in terms of income/expense.

I think you have some of that backwards. Boston has the 6th highest Per Capita income and the 4th highest cost of living. What we are seeing is that there isn't less disposable income, rather we are seeing some parity between income and disposing of non-living expenses. You are right in that the other markets such as Phoenix show a larger cost of living index and a smaller income per capita ratio when compared to the other larger market teams. In other words, less income to spend on luxuries and more spent on living expenses.

[dcmissle]

As an aside, recently I came across an old fantasy baseball preview magazine from 1994. It was interesting to note an article on the reigning champion Blue Jays, who at the time were drawing 3-4 million fans a year and had the highest payroll in the game. And yet now I'm sure Toronto would be called "small market" by a lot of folks.

I don't have the figures handy, but I believe that baseball in Canada never fully recovered from the last work stoppage and cancellation of the WS. Toronto used to be big market. If those Petey/Wetteland Expos had been permitted to complete their season, there might be baseball in Montreal today.

[mr guido]

Ah, but part of that "cost of living" is the cost of entertainment, ie baseball. If everything in a city costs a lot, baseball tickets get lumped in and the prices can increase over prices in other cities. And when the team spends that money in the free agent market, it doesn't matter at all what the local buying power of that dollar might be. A team definitely benefits from being in a high income, high cost of living environment.

Also, high income cities tend to have lots of industry, and a team needs industry to buy ballpark advertising and luxury boxes. The benefits extend beyond just expanded tv markets.

[Average Reds]

I don't have the figures handy, but I believe that baseball in Canada never fully recovered from the last work stoppage and cancellation of the WS. Toronto used to be big market. If those Petey/Wetteland Expos had been permitted to complete their season, there might be baseball in Montreal today.

I think that the demise of the Expos was mostly related to three things:

• The fairly radical changes to the political environment in Montreal over the past two decades or so, which alienated a significant portion of the non french-speaking populaiton and drove them off.
• The worst stadium in basball.
• An owner who simply didn't want to invest in what he perceived - probably correctly - as a losing battle given the trends he was seeing.

There's no question that the strike didn't help things. And the imbalance between the currencies of Canada and the US was a legitimate problem for Canadian owners, since a significant portion of their revenues were in a Canadian $ and their payroll was in US $. But these two problems have resolved themselves, even if temporarily. The three I highlighted were what killed the Expos.

[mr guido]

It's interesting that 3 of the 4 teams in the playoffs right now (Colorado, Cleveland, Boston) are the ones who have had MLB's longest streaks of selling out the home ballparks. This makes you think that all of these teams are capable of supporting a "big market" payroll... assuming that the team is worth watching. A world series win by COL or CLE and I imagine you could see these teams north of a $100m payroll in a few years, assuming the ownership is willing.

Arizona, not so much. They tried that already, and didn't even fill the ballpark to capacity in 2002 despite finishing again with 98 wins.

Boston is clearly already there. It's the perfect storm for the owners; high income city, lots of industry, a long history of baseball obsession, and a team that has finished over .500 in 36 of the last 41 years.


(As an aside, if Colorado does manage to win it all & go on a roll, I'll be proud to say I attended the last "small market" game at Coors Field. I bought tickets 7 rows behind home plate for $25 each... they got manhandled by the Marlins, and then started their march to the playoffs the next day. They drew 4,483,350 fans in their inaugural year at Mile High. Who knows what next year will look like. The Broncos have been .500+ in 17 of their last 21 seasons, so they're the big draw now, but that certainly could change.)

Edited by mr guido, 11 October 2007 - 10:31 AM.

[Paul M]

The size of your market does correlate with success, but it's not the sole determinant.

I remember in 1990 the A's had the highest payroll and Baltimore was last; in 1997, Baltimore was first and Oakland was last.

Management matters and with few exceptions, the extra effort and building of a winner--and sometimes a new ballpark--can make you go from have to have-not.

But, times have changed: cable tv is more important, revenue sharing, luxury tax, more shared money, etc. Teams now seem to be eschewing the big money free-agent acquisitions and going with young talent.

The superpowers of the next 5 years might be some of the have-nots of the last five years.

The worst franchises in the 80s ended up being two of the best in the late 90s--Seattle and Cleveland.

[twothousandone]

The Sox rotations is very much a rich team's rotation and the other three teams very much have small market developed rotations.

True enough, especially with the supporting info, and "starting rotation" isn't cherry picking.

But the give up for Beckett/Lowell would otherwise get mentioned as a cheap international pick-up, had Ramirez not been traded. Randy Johnson isn't included because he's injured. The experience with Helton, Neagle and Hampton has to eliminate the Rockies as a paragon of frugality, although there does have to be a statute of limitations.

I think Cleveland can say they are fighting the good fight. The other two are very suspect.

[dcmissle]

Management matters and with few exceptions, the extra effort and building of a winner--and sometimes a new ballpark--can make you go from have to have-not.

Baltimore went from 'big market' to 'small market' in the course of 12 years solely because of Angelos' mishandling of the franchise.

[LahoudOrBillyC]

Peter Gammons wrote a story in the mid-1990s about how Boston fans should get used to being one of the "have-nots", as they were not going to be able to compete with the Blue Jays new baseball palace. The Red Sox, as Gammons often wrote in those days, were playing in a dilapidated dump located in a neighborhood whose streets were filled with sewage, rats, used condoms, and the homeless.

Miraculously, the market "changed".

[dcmissle]

Peter Gammons wrote a story in the mid-1990s about how Boston fans should get used to being one of the "have-nots", as they were not going to be able to compete with the Blue Jays new baseball palace. The Red Sox, as Gammons often wrote in those days, were playing in a dilapidated dump located in a neighborhood whose streets were filled with sewage, rats, used condoms, and the homeless.

Miraculously, the market "changed".

Peter long had for the BJs a rather severe case of what the manufacturer of Cialis urges immediate medical attention. If I read one blurb from him about "that young, terrific, starting rotation in Toronto," I read 50.

[Average Reds]

Peter Gammons wrote a story in the mid-1990s about how Boston fans should get used to being one of the "have-nots", as they were not going to be able to compete with the Blue Jays new baseball palace. The Red Sox, as Gammons often wrote in those days, were playing in a dilapidated dump located in a neighborhood whose streets were filled with sewage, rats, used condoms, and the homeless.

Miraculously, the market "changed".

I remember this - for a long time it was simply "common knowledge" that the Sox would not be able to compete with the Yankees without a new stadium to generate sufficient revenues. The market "changed" when the current ownership group realized that Fenway had enough untapped value to allow them to rehab the park in stages .... if they were smart enough to create a business platform that allowed them to capture the value.

Baltimore went from 'big market' to 'small market' in the course of 12 years solely because of Angelos' mishandling of the franchise.

Interesting to remember that towards the end of his life, Edward Bennet Williams decided to "reward" the loyalty of the O's fans by signing an agreement to build Camden Yards in downtown Baltimore. At the time, the move was considered a financial disaster - one that by most estimates diminished the value of the franchise by tens of millions of dollars when Williams' estate sold out to Eli Jacobs in 1989. (Jacobs sold to the Angelos group in 1993.) Of course, the construction of Camden Yards turned out to be a genius move that turned the franchise into a financial powerhouse for years - notwithstanding the fact that Angelos has subsequently obliterated this advantage through years of mismanagement.

Any owner or executuve who talks about how they can't compete because of the market, the stadium, etc., is probably right .... but they are usually talking about their own shortcomings.

[Rudy Pemberton]

It wasn't that long ago when the Sox were referred to as a "mid-market" team...didn't Harrington use that phrase all the time? I really think things changed when Pedro got here- the excitement and interest that generated and all the success that followed really opened up a lot of untapped revenue potential. The Yankees being so good during this time certainly sucked but it had to be a factor too.

[Rough Carrigan]

Another item to note in considering the economic status of these teams is that the Arizona Diamondbacks aren't a David fighting a Goliath. They're more like a Visa or a Mastercard team. They deferred huge amounts of money paid to the players on that start of the millenium team such that they're paying out something like $25 million per year in payroll this year and for a couple more years to players who aren't even on their roster any more. Their $65 million or something like that payroll is costing them something like $90 million and a big chunk of that is going to guys out on golf courses.

[Rough Carrigan]

On the other hand, no other team in baseball has to deal with the spectre of the Yankees like the Red Sox do. The Sox and Yankees compete for the same division title every year. While other teams in other divisions have a shot at the playoffs by winning their division, the AL East divisional playoff spot has until this year run through NY and their $200 million plus payroll. So while they may be Goliath to the rest of the teams in baseball due to the size of their payroll, they are David in their own division compared to the Yankees and that club's payroll spending.

This is an excellent point because, elsewhere in MLB there's almost a silent agreement to go cheap amongst competitors. The Cardinals and the skinflint Dewitts get to go cheap because the Cubs aren't spending as much as they could which helps the Astros and penurious bastard Drayton McLane go cheap (he spent only $600,000 on the first half dozen rounds of the draft this year!) and the Brewers, Reds and Pirates sure aren't going to bust that up. If the Cubs, for example, spent more like $145 million, it would force the Cardinals to spend more. But they all kind of look around and see that none of their competitors are going to the limit and so they don't have to do anything.

Any of these other teams that want to whine about the Red Sox payroll should be invited to have a $200 million team in their division.

[singaporesoxfan]

Back on old SoSH, I posted that DC was the largest metropolitan area (then) by far without a team, and that if you looked at number of residents in the Consolidated Metropolitan Statistical Areas and divided them by the number of teams in the area, you would see that Boston doesn't really rank highly in terms of market size - showing that the Sox had a great ability to generate revenue far beyond their 'actual' status as perhaps a mid-market team.

On the other hand, if you did those numbers, you'd also see that the NY-NJ-CT area really needs a 3rd team. So the Yankees are indeed a financial juggernaut, but aided in part by having an excessively large market.

Edit: found what I wrote then, although realise now that I was using MSA populations.

Most MLB teams play in one-team cities with Metropolitan Statistical Area populations of 1.84 million (KC) to 5.6 million (Philly). (2000 Census data - admittedly this does not count Toronto or Montreal. Incidentally, the data also show why DC is glaringly in need of a baseball team - it's the only city in the largest 25 that doesn't have a team.) Chicago has 2 teams in an MSA of 9.1 million. L.A. has 2 teams in an MSA of 12.4 million (including Orange County).

By contrast, New York has 2 teams in an MSA of 18.3 million. That's a full 5.9 million more people than L.A. - i.e. enough to support at least a mid-market team. So the more I think about balance, the more I think the fairest solution is a new New York or New Jersey baseball team - bring us back to the halcyon days of Yankees-Dodgers-Giants. Not that Steinbrenner or the Wilpons would ever accede to that.

Edited by singaporesoxfan, 11 October 2007 - 12:27 PM.

[Dogman2]

Another item to note in considering the economic status of these teams is that the Arizona Diamondbacks aren't a David fighting a Goliath. They're more like a Visa or a Mastercard team. They deferred huge amounts of money paid to the players on that start of the millenium team such that they're paying out something like $25 million per year in payroll this year and for a couple more years to players who aren't even on their roster any more. Their $65 million or something like that payroll is costing them something like $90 million and a big chunk of that is going to guys out on golf courses.

That has nothing to do with soliciting fan revenue though. Because the D-backs front office made that decision wouldn't prevent fans from coming to the park now as opposed to 2000-2001. They weren't attending then, what differen ce does it make whom is on the payroll now and not on the field. Arizona won then, and they are winning now. Either way, they need a better marketing prospectus to exploit the fan revenue stream, thereby enticing ownership to pony up for players to maintain fan interest.

[Ananti]

This is an excellent point because, elsewhere in MLB there's almost a silent agreement to go cheap amongst competitors. The Cardinals and the skinflint Dewitts get to go cheap because the Cubs aren't spending as much as they could which helps the Astros and penurious bastard Drayton McLane go cheap (he spent only $600,000 on the first half dozen rounds of the draft this year!) and the Brewers, Reds and Pirates sure aren't going to bust that up. If the Cubs, for example, spent more like $145 million, it would force the Cardinals to spend more. But they all kind of look around and see that none of their competitors are going to the limit and so they don't have to do anything.

Any of these other teams that want to whine about the Red Sox payroll should be invited to have a $200 million team in their division.

Yup, take the Yankees out of the AL East and put, say, Cleveland in there, Boston's payroll would probably drop down to the 100 to 110 million range, and the payroll of the division the Yankees go to would go up by any average 10-20 million per team at least.

[Ananti]

Back on old SoSH, I posted that DC was the largest metropolitan area (then) by far without a team, and that if you looked at number of residents in the Consolidated Metropolitan Statistical Areas and divided them by the number of teams in the area, you would see that Boston doesn't really rank highly in terms of market size - showing that the Sox had a great ability to generate revenue far beyond their 'actual' status as perhaps a mid-market team.

On the other hand, if you did those numbers, you'd also see that the NY-NJ-CT area really needs a 3rd team. So the Yankees are indeed a financial juggernaut, but aided in part by having an excessively large market.

Edit: found what I wrote then, although realise now that I was using MSA populations.

The thing is, the Red Sox own not just Boston, but all of New England with the exception of the western part of Connecticut.

That is not necessarily true for a team like Phillies, they own Philadelphia, but to the west is Pittsburgh, to the south is Baltimore, and to the north is NY. The population in the total area they cover is smaller than Boston.

The team that probably owns the largest population are the Braves, as they own everything from southern Virginia to Alabama, and stretechs as far west and Tennessee. But they are not as into baseball as the northeast.

Edited by Ananti, 11 October 2007 - 02:00 PM.

[ShoelessJoe]

The thing is, the Red Sox own not just Boston, but all of New English with the exception of the western part of Connecticut.

That is not necessarily true for a team like Phillies, they own Philadelphia, but to the west is Pittsburgh, to the south is Baltimore, and to the north is NY. The population in the total area they cover is smaller than Boston.

The team that probably owns the largest population are the Braves, as they own everything from southern Virginia to Alabama, and stretechs as far west and Tennessee. But they are not as into baseball as the northeast.

Still, there are 12 million people in Pennsylvania, compared to about 15 million in all of New England. If the Phillies had a network that was capable of reaching all the televisions in the state (a la NESN) and not tied to a particular carrier, they would be on a pretty level playing field, especially given their powerful home base of Philadelphia. If they competed year in and year out, I wonder if they couldn't poach most of the state from the woeful Pittsburgh Pirates. caveat:I don't know much about how loyal fans in the west are to the Pirates.

[Rudy Pemberton]

For whatever reason, though, nearly everyone in the Boston area cares about baseball and it's been this way for a long time, hasn't it? I have friends who didn't give a damn about baseball, they move to Boston, and suddenly they love baseball. This isn't really the case in other parts of the country. I would assume there's a lot more baseball fans in NE as opposed to Pennsylvania (now football, that's another story).