Tuesday, December 1, 2009
John Henry argues for change
You have to hand it to John Henry; he's not shy about his opinions. In an e-mail to the Boston Globe's Nick Cafardo, Henry writes about changing baseball's economics:
"Change is needed and that is reflected by the fact that over a billion dollars have been paid to seven chronically uncompetitive teams, five of whom have had baseball’s highest operating profits," Henry responded in an e-mail. "Who, except these teams, can think this is a good idea?"Henry added, "While the Red Sox are in the 16th largest media market we’ve found a way to be very competitive even though we are funding other teams. At the end of the day, the small market clubs still cannot begin to compete with the Yankees and have a very hard time competing with the teams that are struggling to pay them so much. Consequently, a system that directly impacts competition has to replace the current system, that hoped to, but ultimately did not cure competitive imbalances."
There are a couple of ways to make an argument. One is to stick to the facts scrupulously and hope the weight of your facts will carry the day. Another is to begin with a falsehood and hope nobody notices, then continue from there.
Henry seems to have chosen the latter method. Are we really supposed to believe that the poor mid-market Red Sox have risen to the top of the performance (and revenue-production) heap simply by the dint of their hard work and intellectual brilliance? According to the Media Info Center, in 2004 the Red Sox played in America's fifth-largest TV market. It's true that Boston proper is not a particularly populous city, but when you consider the entire metropolitan area -- not to mention Maine, New Hampshire, Rhode Island, Vermont, and a big chunk of Connecticut, there's virtually no way to slice the data and arrive at any conclusion except that the Red Sox benefit from playing in one of baseball's top 10 media markets. And John Henry knows this as well as anyone.
His actual idea does have some merit, I think:
"It’s a very simple approach in which payroll tax dollars replace revenue sharing dollars and go directly to the clubs that need revenues in order to meet minimum payrolls that should be imposed on each club receiving revenue. Further, players would have to be protected with a guaranteed minimum percentage of overall revenues. This would be a very simple and effective method in reducing top payrolls and increasing bottom payrolls with no tax on revenues," Henry wrote.Henry added that "The World Series should be determined by fully competitive teams on the field - not by how much particular clubs can afford to spend. A better solution is to address competition directly so that clubs can generate revenue more equally as teams become competitive across baseball."
I suppose I'm naive, but it's hard for me to figure a reasonable objection to a system that guaranteed the players a reasonable percentage of overall revenues ... except for the little problem of defining "revenues." Do you count the Yankees' revenues from the YES Network? If the Dodgers set up a subsidiary to run their massive parking lots, do those revenues count? Because if not, the Dodgers could simply lower ticket prices and raise parking prices.
The players don't like explicit link between their salaries and the teams' revenues because they don't want to have to worry about the teams' revenues, and also because they don't trust the owners (and of course they shouldn't). Which isn't to say a soft salary cap wouldn't promote competitive balance. Still, I believe that Henry vastly overstates his case when he suggests that money wouldn't still play a role. Does he mean to suggest that the Yankees wouldn't still vastly outspend the Royals? And doesn't he know that baseball's competitive balance compares favorably with that of the other sports, all of which already do many of the things that Henry wants to do?
And then there's this:
"Baseball has determined that the best way to deal with the Yankees is to take as much of their revenue as possible. I see that in direct opposition to the ideals this country was built on. Baseball is a business and should be treated as such. Baseball is also a sport that needs competitive balance in order to prosper. Taxing their revenues and other “large markets” in the way it is presently done, is simply confiscation on an order of magnitude never seen in any industry in America," Henry said.Henry finds the system counter to the manner in which most owners operated in the industries in which they became rich men.
"It's amazing because owners, some of the most ardent capitalists in the country – who have all made their fortunes through capitalism, have imposed a tax system on baseball they would never sit still for in any of their industries," Henry said.
Please. Baseball owners operate as a collective monopoly, tightly controlling their "industry" with all sorts of rules and agreements that operate expressly in opposition to competition and the free flow of capital that supposedly exemplify "the ideals this country was built on." Baseball should be treated as a business? OK. Tomorrow, let's abolish the amateur draft, invite new franchises to compete in New Jersey and Brooklyn, and stop blackmailing municipalities into spending many hundreds of millions of dollars to support "businesses" that generate little tax revenue and a paltry number of full-time jobs.
I'm not sure who John Henry is trying to convince. If he's trying to convince his fellow owners, he should probably e-mail them directly. If he's trying to convince us, he should probably stick to the facts.