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By RFT Staff
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Still, if baseball doesn't require a bigger pie, it desperately needs a more equitable means of slicing it. "Even the worst complainants in Major League Baseball no longer claim that the revenue stream over all is inadequate," says Miller. "Even Bud Selig, who is not the brightest man in the world, can write as he did a week or two ago that if the problem does get worse, the solution is more revenue sharing -- on a real wholesale basis -- than the very small start of revenue sharing that we've got." Rosentraub agrees: "The question simply becomes at this point, 'How do you share revenues?' Baseball currently shares 39 percent of revenue. If you say that football has a better model -- and it clearly does -- should it come closer to the 80 percent rule that football has, which does equalize the playing field quite a bit more?"
What's essentially required is a way of redistributing the local-TV money that accounts for the major difference in clubs' revenue. "Twenty-five years ago," James notes, "these were marginal revenues, little tiny stuff, and no one really thought through the implications of how they would be sold. So they made an agreement in which the teams, in addition to their main sources of revenue, could also sell off their broadcast rights in their local markets. It's the same thing that starts wars: People make agreements without thinking through the implications of the agreement."
Having created the problem through its lack of foresight, baseball now seems equally blind to its solution. "The answer to this is so obvious that it's unbelievable that people have to talk about it," James says. "When two baseball teams play a baseball game, it is natural and normal that they would both expect to share equally in the broadcast rights of that game. That's what you would expect to have happen. Thus the natural rule is that, whatever rights you get from broadcast in any form, 50 percent go to the league and then are split by the league among all the teams in the league. If they would just do that, the problem doesn't entirely go away -- the Yankees still have a huge advantage over the Minnesota Twins, but it becomes a 3-to-1 advantage rather than a 10-to-1 advantage."
Sharing TV revenues, however, is not the entire answer, in the view of many, because owners are so profligate in their spending, helping escalate salaries at a rapid clip. Herzog offers an example: "When the last strike occurred, (Chicago White Sox owner Jerry) Reinsdorf was the guy who was telling them all, 'Don't do this' -- he was for the strike -- and soon as the strike's over he goes ahead and signs Albert Belle for $10.5 million a year. Now, the highest-paid ballplayer up till that time was Bonds at about $7.5 million. So he skipped $8 million; he skipped $9 million. He went to $10.5 million. Now, five years later, we're already up at $15 million. There's just no end to it."
The problem is further compounded by deep-pocketed owners who can continue to spend freely even if they're compelled to share a portion of their substantial revenues. This is especially troublesome in the case of clubs owned by media corporations. Because they regard their baseball holdings, at least in part, as software -- programming -- they're potentially much more willing to overspend to ensure a winner, which boosts both ratings and the price of commercial airtime.
"You know," says Herzog, "if I were in the Western Division of the National League, and Rupert Murdoch comes in and he's going to be in my division and he offers $310 million to our good friend Peter O'Malley for the Dodgers, before you let him in, you gotta say to him, 'Well, are you going to share your pay-TV revenue with us? Are you going to share your cable-TV revenue? Otherwise, we're going to vote against you, because we know you're going to blow us out of the tub.' He's already doing that. I'm not saying the Dodgers are a shoo-in to win, but he's already given Kevin Brown $105 million (over seven years); he's already got his payroll up to $85 million. If they don't get in the World Series this year, his payroll will be over $100 million, because he's going to keep spending money on ballplayers because he doesn't care what his salary structure is. Basically, he wants the Dodgers to be the best team in baseball, and he doesn't care about the other clubs."
Not everyone agrees with Herzog: Lamping -- seconded by economist Zimbalist -- questions the notion that corporate-owned clubs such as the Dodgers, Braves and Cubs will inevitably behave irresponsibly. "If you have a publicly held company that owns a team, they have a fiduciary responsibility to their shareholders to not slash shareholder value," says Lamping. "I think you have to be careful that people don't overreact just because a large company happens to buy a team. Yes, it might present some risks, but at the same time -- it's going to sound strange -- it could bring more discipline."