Contraction?  HAHAHAHAHA!!!!!   (06/09/01)

I received a question from a reader concerning all the talk about contraction.  Bill Farber writes:

"I heard a guy on TV yesterday saying that NoVa/DC would have a MLB team either next year or the 2003 season.  His reasoning was based on the fact that a number of teams are simply unable to continue financially and that moving to DC would be a better option than contraction rumors that are flying around.   He specifically said he thought the Expos would come to DC since the people of Montreal don't have any American Congressmen to complain to.  Do you agree with these thoughts?  If not, what do you think?"

Long time reader - first time questioner.
Bill Farber
Fredericksburg, Va.

Well, Bill, that line of reasoning certainly makes sense.  However, no one has ever successfully accused baseball's owners of doing anything sensible.  According to several studies, for the past 10 years, the NoVa/DC area has been the 2nd best market, demographically speaking, for baseball.  This wasn't true of DC when the previous owners of Washington's teams decided to move.  Today, only New York has more people who fit baseball's core audience with as much disposable income.  That means that Northern Virginia/DC would be more profitable for baseball than 29 cities that already have teams.  I say more profitable for baseball because each team gets a cut of the gate attendance.  A team that sells 30,000 seats per game will generate a lot more income for both home and visitor than a team that brings in four or five thousand a game.  And yet during that time, the owners have voted to put expansion teams in 4 non-DC locations, two of which are now struggling to stay afloat.


Leverage.  Ever since Toronto built the Skydome, any time an owner wanted a new stadium or a new lease, he simply threatened to move his ballclub to DC.  Every time, the civic leaders of those municipalities pushed for whatever measures necessary to keep the team in town.  No elected official wants to be the guy who let the hometown team leave.  However, the last several times a stadium referendum has been put to a vote (in Minnesota and in Florida), the measure has been resoundingly defeated.  Essentially, the voters said, "go ahead, move.  I dare ya."

Faced with rejection and defeat for the first time, the owners' knew they couldn't all move to DC.  Once one team moves there, their leverage is gone.  Despite the fact that all the owners would make more money with a team in NoVa/DC than they do with a team in, say, Montreal, they still wouldn't get as much money as they get from these leveraged negotiations.  After all, they get publicly financed stadiums, tax breaks, incentives, etc.  So rather than move a team to DC and lose that leverage, the owners got together and decided that they should simply threaten to dissolve the unprofitable teams.  This way, they punish the voters for not giving them what they want AND keep their options open for future extortions, er, leveraged negotiations.  The bonus is that they could always expand BACK into those contracted markets.  Not very subtle, are they?  Pretty much like their effort to use replacement players in 1994 and label it "major league".

The problem is that contraction has some very big obstacles.  For each team contracted there will be 25 fewer major league jobs.  More importantly, there will be at least 13 fewer high paying jobs: an everyday player at each position, 4 starting pitchers and one closer.  The Player's Union uses the salaries of these players as leverage in arbitration negotiations.  I doubt very seriously that the union will be willing to simply give that bargaining power away simply because the owners are crying poverty.

This problem is compounded by the impending labor negotiation.  The current labor agreement expires at the end of this season.  The owners want to institute some kind of salary cap as a means for controlling escalating salaries, despite all evidence that points to the fact that salary caps do nothing to reign in superstar salaries.  In fact, all they have proven to do is reduce the salaries of average players and transfer that spending to the coffers of consultants and attorneys who look for creative ways around the salary cap so that the owners can afford the superstars.  So if the owners are seriously considering contraction, one has to wonder what they could possibly offer the Players' Union in exchange for both a salary cap and fewer jobs.  With all the money that gets thrown around, what could the vast majority of the players want that they can't buy already?  A relaxed dress code?  Free office supplies?  Exemption from state and federal law regarding contraband substances?

Then there's the problem of what to give the owner(s) whose team gets contracted.  How much is a sacrificial and purely symbolic buyout, however pyrrhic, worth?  Are there that many owners who badly want to get out of baseball?  Can't you see the owners crying to the media, "We can't get oodles of free money and equity from new stadium deals any more, so we are going to give this poor owner a billion dollars (and it will cost that much at the minimum) for his little team to show the unsympathetic public just how destitute we are".  Hello?  Anybody home?

And finally, who's gonna take the contracts of the players whose team is dissolved.  Almost all of those contracts are guaranteed.  Sure, there are plenty of teams that will take on Vladimir Guerrero's multi-million dollar contract.  But most teams make enough mistakes on their own when signing players.  Who's gonna assume Hideki Irabu's $4+ million contract or the $3 million a year owed to Graeme Lloyd?  The Yankees can't take all of them.

So, no, I don't believe contraction is an option.  It's a bluff and a bad one at that.  Note to baseball's owners: in this game of poker, you've got a 10 high and everyone but you knows it.

My guess is that the owners will lock out the players this winter/next spring, the media will portray the players as greedy for not accepting a salary cap even though no one in their right mind would ever accept such nonsense on their own earning potential, and that even though much of next season will be canceled, nothing will get resolved.  They'll finally agree to keep the status quo for another few years and NoVa/DC will still not have a team.

Pretty gloomy really.  There was a time when I was optimistic that reason would win the day.  But in the last 20 years, baseball's labor negotiations have been a case study in what not to do in conflict resolution and with Bud Selig at the helm, I don't really see a change in that pattern or a happy ending.

However, there's always the possibility that the owners will come to the realization that moving a team to the DC area would be quite profitable for the team that moves there and that they'll hold an auction for the privaledge of doing so.  OK, maybe not.

Thanks for reading.

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