It’s June, and narry have I said a word about baseball.. While I think the White Sox are on the verge of a breakout, I will focus on matters economic for a moment.
Baseball fans are aware that the Los Angeles Dodgers, and the 15 fans who show up for first pitch had to be taken over by Major League Baseball because its owner could not meet payroll after going through a divorce where his wife got control of home plate, the visitors dugout, one testicle, and Vin Scully’s microphone. This shed light on something going on in MLB that has in fact been a problem in our country for a long time, AND has indeed been contributing to our current economic woes: teams going into debt to pay for players (and other things), when the prospects of repayment are at issue.
Certainly going a little into the hole isn’t the end of the world, especially when there is a good prospect of repayment. Major League Baseball has had rules for the better part of the last decade that are supposed to limit a team’s ability to go into debt for obvious reasons: if a team goes to far in debt, the team risks either going under or having to be bailed out by the other owners …. and then trying to sell the franchise in an economic market that is currently unfavorable to buying Major League teams (read: MLB won’t be able to make much money on the deal). Of course, not all teams follow the rules.
There are currently nine teams who have over-leveraged their teams:
1. Los Angeles Dodgers (half of everything is now owned by the owner’s wife .. MLB had to take over the rest)
2. New York Mets (they spend lavishly, and they aren’t the Yankees)
3. Baltimore Orioles (they have been mired behind the Yankees and Red Sox for the better part of 20 years, and then the Expos moved to Washington, taking a portion of the fan base with them)
4. Detroit Tigers (they are located in Detroit, which means most of the fans that are left are now in the suburbs and won’t drive anywhere near Detroit)
5. Florida Marlins (they are located near Miami, and the people of southern Florida may not know that the team exists despite 2 World Series championships. Their average attendance is lower than my high school’s average attendance in flu season).
6. Philadelphia Phillies (they have a high payroll, and despite selling lots of tickets as they are on the longest string of success in the past 30 years, the costs are outweighing the money they are pulling in).
7. Texas Rangers (the Rangers have long had a habit of paying sums of money that are bigger than the GDP of several countries for players … and then not selling out the stadium. This dates back to their former owner, George W. Bush, who, of course, has nothing to do with our current economic problems. The only thing going for the Rangers is that they have started to draw more than flies to games in the past 10 years, and the recent AL Championship is likely going to help that.
8. Washington Nationals: you were in Montréal, you moved to a city whose permanent population really can’t afford tickets, and the people who can tend to be more mobile than the average city. The debt came with them from Canada, and it is still with them.
oh yeah … one more
9. Chicago Cubs
The Cubs are in the midst of a perfect storm of bad timing and bad economics. The Tribune company had to sell the team, and even though they came down from their over 1 billion dollar initial asking price, the Ricketts family vastly overpaid for the team (and an ancient field that is not in the best of condition, and a share of a cable TV sports network). I recently heard a speech from the family patriarch who was convinced that he didn’t want to buy the team, but his son, who started off as a vendor in the stands at Wrigley Field selling beer to the sheep who show up, was convinced the deal was foolproof because no matter how bad the team is, the people still fork over money.
On the surface … that’s a no-lose deal, ala the Simpson’s episode where Mr. Burns opens the casino and realizes that the people are literally handing him money for absolutely nothing … the perfect business!
The problem: to buy the team, the Ricketts had to give up a gigantic percentage of their collective worth. That means once they got the keys to the Field, and the rights to start drafting players and bringing in the big guns through free agency, they had no money to do this. Most people in baseball realized this about 6 months before the Ricketts actually bought the team. Cubs fans are realizing this right about now.
But, baseball is a way to make that money … so the Ricketts raised ticket prices. Wrigley Field’s AVERAGE ticket is now over $50! That’s the most expensive average price in Major League Baseball, and that includes the Yankees who are selling their box seats for several hundred a pop, plus the rights to your first born child. Also, while this is Chicago, it is important to note, this ain’t the Bronx! There simply aren’t that many people who have that kind of money.
2011 saw the inevitable. Wrigley Field now has a string of games where the games are not selling out! I’m not talking the slow stumble of the drunks from the Cubbie Bear who show up to have their picture taken in the 5th inning to prove they were there before hitting the bars, and I’m not talking about games where there is cold or a threat of rain. I mean there are tickets that are not being sold. The Cubs have even had to start advertising their tickets to remind people that they are still there.
The White Sox, despite almost double the salary commitments of the Cubs, have been more fiscally responsible (they also won a World Series in this century … always important to point that out!), and aren’t in as bad financial shape.
So while Cubs fans initially rejoiced that “one of them” was now in charge of the team instead of the faceless Tribune Corp, the sad reality of fiscal impotence has set in: the team will need to get very good at drafting/trading cheaper players to see any success in the future. Please note: the only real success that the Cubs have seen in picking great players have involved:
1. a player for whom steroids was not enough, and had to cork his bats.
2. a pitcher who will pound anyone and anything that is not an opposing pitcher
3. a Hall of Fame classy pitcher that they let go of …. twice.
In short: the Cubs are screwed …. if you are a Cubs fan, and you really appreciate baseball (don’t just go for the bars and semi-naked women like some frat boy from DePaw), please consider saving yourself pain and joining White Sox Township. You won’t regret it!