In recent weeks, the demands made for the reform of Major League Baseball sounded like they were plagiarized from Huey Long: Soak the rich! Share the wealth! To each according to his need! Baseball was listening. The strike-averting settlement reached by owners and players last week reflects the consensus that what America’s sport needs is a big dose of a foreign ideology: socialism.
The game, you see, has lost its competitive balance. Fat-cat teams like the Yankees and Braves amass revenues that dwarf those of Montreal and Kansas City—allowing them to acquire the best players money can buy and lock up playoff spots year after year. Commissioner Bud Selig makes an unassailable point when he says it’s too hard for the Tampa Bay Devil Rays, spending $43 million a year on player salaries, to go head-to-head with the Yankees, who cheerfully lay out four times that much. Compare that with the NFL, where revenue sharing prevails, and where a squad from the remote village of Green Bay, Wis., (population 102,000) regularly humbles teams from New York and Chicago.
So, baseball owners came up with a cockamamie scheme aimed at reducing inequality: redistributing income from the haves to the have-nots and penalizing lavish expenditures. The agreement that averted a strike will divert nearly a billion dollars from wealthy franchises to poor ones over the next four years. Meanwhile, big spending will be sternly punished with a “luxury tax” on any team’s payroll exceeding $117 million. This combination is supposed to shrink the gap among team payrolls and give fans in the provinces a chance of seeing a pennant a bit more often than Halley’s comet.
But it’s absurd to think that competition has ruined the national pastime. If anything, the imbalance decried by owners and fans stems from a shortage of capitalism, not from an excess. Using some artificial formula to equalize revenues will serve as only a modest hindrance to the big spenders. A more promising remedy is to do for teams what free agency did for players: Stop forcing them to stay in the same place forever, and let them migrate in search of riches.
The disparity between teams in large and small markets may seem like an unalterable law of nature. There is no way around the fact that some cities have far more fans and TV viewers to cash in on. But in conventional businesses, profits don’t parallel population. The reason George Steinbrenner pulls in such vast streams of cash is not that he enjoys access to the biggest market in the country. It’s that he enjoys nearly exclusiveaccess to that market. In any other industry, a firm earning outsized profits would attract lots of rivals eager to grab some of its business. But in baseball, such undignified wrangling isn’t allowed. Residents of the New York metropolitan area can choose from a dozen ballet companies, hundreds of car dealers, and thousands of pizza joints. But they have only two options for Major League Baseball: the Yankees and the Mets.
With more than 20 million potential customers locally available, the region could undoubtedly house additional big league teams. University of Chicago sports economist Allen Sanderson figures that five clubs might feed comfortably off the New York-New Jersey-Connecticut fan base. Chicago, whose suburbs currently support four minor league teams, could absorb another big-league franchise. Southern California might attract a couple more as well. Washington, D.C., has long pined for an expansion franchise, only to be blocked by the Baltimore Orioles, who prefer not to share their patrons. With free movement, the O’s would have no more say in the matter than Wal-Mart has over Target’s expansion strategy.
But Major League Baseball treats its teams like medieval serfs, tied to the land for life. No franchise has been allowed to relocate since 1971, when the Senators abandoned the nation’s capital for Arlington, Texas. The simplest thing baseball could do to eliminate the advantages of wealthy teams is to let franchises go wherever the getting is good. If New York can support more than two teams—as it did when it was much smaller, before the Dodgers abandoned Brooklyn—there’s no good reason it shouldn’t have the chance. Owner Walter O’Malley, after all, left not because he couldn’t attract fans but because he couldn’t get the new ballpark he wanted in Brooklyn and was able to secure a sweet deal in Los Angeles.
Unrestricted movement would give the sport something resembling a competitive environment. The revenues of wealthy teams like the Yankees would shrink in consequence, leaving them less money to purchase pennants. Selig sees contraction as the way to restore balance, by eliminating the weakest performers. But in a freer market, cash-starved teams could go where they are wanted. If the Royals lack a sufficient following in Kansas City, maybe they could find one in Newark or Bridgeport. True, some cities would lose baseball. But preserving teams in places that can’t support them makes no more sense than keeping steel mills open when their costs exceed their rivals’.
The deal that settled the strike creates a system resembling welfare before it was reformed—penalizing the most ambitious clients while creating a permanent class of underperforming dependents. Better to insist that they all do more to fend for themselves. For players, Major League Baseball is a ruthless meritocracy, with only the best surviving. It’s time for owners to try that system too.