Maury Brown and I had another long chat via email, touching on a lot of the top issues in the world of sports business. Maury, as you may know, runs the Business of Sports Network and bizofbaseball.com and has been a consultant for professional teams. He also blogs at MauryBrown.com. We did one of these chats back in June and decided to try it again. The conversation took place over the last couple weeks, beginning right around when baseball season ended.
MB: So, Tim, the Yankees have now won their 27th World Series, and since then, there’s been a chorus from mainstream and alternative media for a salary cap in Major League Baseball. I covered this in a column, but to me, the reasons for not having a salary cap are numerous. For one, MLB has the least amount going to player salaries, compared to its capped brothers in the Big 4 sports. Am I off here?
TL: Well, I don’t necessarily disagree with your analysis, but I do think that baseball has a least a public relations problem on its hands when it comes to the salary cap issue. There is just no escaping the perception that the Yankees went out and bought themselves a championship. They went and got the three main free agents this offseason, and they probably wouldn’t have won the title without them. Yes, their payroll actually went down this year, but they are one of only a few teams capable of pulling off that kind of offseason spending.
It’s true that league pays its players less overall, but in a strange way, I think the spending by the Red Sox, Yankees and a few other big-market clubs actually depresses spending by other franchises. If I’m the Reds with a payroll of $75 million and I see the Yankees spend $200 million on payroll, what impact, really would another $20 million or $30 million in free agent spending make? But if the Yankees are capped at $120 million, the Reds might be able to rationalize some additional spending since they aren’t so far behind.
The Yankees are good for baseball. We saw that in the TV ratings for the postseason, they fill opposing stadiums and they bring in a lot of revenue which is then shared amongst all clubs. But with their news stadium, the YES network and the size of their market, they have a revenue advantage that is enormous, and they don’t seem to be deterred by the luxury tax.
I’m not sure I advocate a cap, because I don’t think it’s a league-wide problem as much as a Yankees problem. They operate on a different stratosphere than everyone else. Whether the league can create a system designed to keep a single team in check is questionable, but I wouldn’t mind a luxury tax with additional teeth, or system that calls for greater redistribution of local income.
MB: Well, that’s the conundrum, isn’t it? The Yankees have been thumbing their nose at the Luxury Tax since it was put in place, so you either work at it there, or you get more calls for a salary cap.
But, a salary cap seems a far off notion. Fans look at the NFL and NBA and try to apply it to MLB, and they’re really different animals. There’s so much weighted toward local revenues on baseball’s side that trying to get a cap and floor in place would be exceptionally difficult.
It’s academic, however. There have been not one, but two work stoppages over owners’ attempts at a salary cap. Selig and Co. aren’t going to risk that at this stage.
And besides, as we’re seeing the NFL and the NBA, a salary cap doesn’t mean bliss. It seems that the NFL has submitted their economic proposal to the NFLPA, with the two main planks being a rookie pay scale, and owners asking for exemptions for expense credits. The latter is interesting in that the premise is owners are asking that expenses for things like stadium development, marketing costs and security costs are deducted as “expense credits”. That would lower the amount that the players have in the “revenue pie” to collect from. Maybe it’s me, but this seems a difficult issue for the players to want to take on. I haven’t seen the details, but let’s say it’s a blanket deal — no adjustment by franchise. Why would a player for the Redskins want to help pay for a new Chargers or Niners stadium? Can you imagine asking Redskins players to help Jerry Jones build the new Cowboys Stadium?
TL: This issue of stadium costs has been something owners have been complaining about for a while. Their argument is that league revenues increase from new stadiums, and a good chunk of that money is passed on to players. Which is not a terribly unreasonable stance, except that owners clearly benefit more from that increased money. And certainly, it’s a tough sell asking players to help fund stadiums for rival teams.
I’m not sure how I feel about this expense credit concept. If I’m DeMaurice Smith, I might consider calling the owners’ bluff and accept the idea, under the knowledge that new stadium construction will be limited or even non-existent during the length of this upcoming CBA. If the credits apply to new construction and not existing debt, then you’re talking about four new stadiums, at most. There’s Minnesota, San Fran, San Diego, and maybe this new one in Los Angeles. What are the odds they all get built in the next five years? Slim, I’d say, especially if the economy continues the way it is. The devil will be in the details, but my sense is that the union can accept the expense credit concept without a ton of financial risk. The important thing will be to see what else they can get the owners to relent on in return.
In any case, I don’t see this being enough of a sticking point to cause a lockout. I am actually quite optimistic that a deal will get done without a work stoppage, because neither side is really asking for a major sea change. Every other work stoppage we’ve seen has involved one side asking for major structural reforms, and that’s not really the case here. It’s just that you’ve had some heightened rhetoric and the threat of this uncapped year that has made the situation seem dire.
What’s your sense of whether a work stoppage will happen in the NFL?
MB: As an outsider, I could see DeMaurice Smith making every effort to make a statement to the players that he means business when it comes to representing them. Whether that pushes the matter to a work stoppage will most likely depend on how much heel digging there is on either side. There’s an awful lot of pressure on management’s side to achieve a level playing field among the ownership ranks. You look at revenue potential of new Cowboy Stadium, with the likes of the 2010 NBA All-Star Game likely pulling in 80,000 fans… that’s a lot of revenue for a non-NFL related event.
I look at the NFL (or any other league with a CBA expiring): the likelihood of a work stoppage is always higher in tough economic times. When the money is flowing freely, there is a relative state of contentment between owners and players. When times are tough, belt tightening always raises suspicions with the player unions as the owners refuse to open their books to them. At the very least, I think there’s a very good chance that we’ll see an uncapped year in 2010 for the NFL.
Speaking of player unions, there’s a whole lot of upheaval going on right now in North American sports leagues. You have not only DeMaurice Smith taking over for the late Gene Upshaw, but Donald Fehr is stepping aside after serving as MLBPA Executive Director since December 1983, and the NHLPA is in complete disarray since Paul Kelly’s firing. With so many CBAs expiring in 2011, do you see much changing with all that is going on with labor’s side?
TL: Here’s how I gauge each league’s labor situation:
NFL: May go to uncapped year, but sanity will prevail and they will strike a deal that isn’t too different from the one they have now, maybe slightly more favorable for owners.
NHL: Despite the total chaos in the union, players will realize that the current economic system has worked to get the league back on steady footing, and no one will want to upset the apple cart. Commissioner Bettman had hinted at trying to cut down on super-long contracts, but seems to have softened a bit on that based on some statements I’ve seen.
NBA: This is the one league that might benefit from a stoppage, because it’s the most out-of-whack when it comes to how much certain players make and the overall financial health of franchises. Commissioner Stern will happily take a season off if it means restoring sanity to things. You have a lot of mediocre players making a lot of money, and a lot of teams bleeding cash. In the end, I bet we see some sort of stoppage, probably a brief one, that results in a pay scale that allows for more money for superstars and less for middle-of-the-road guys.
MLB: There are a number of issues on the table, and I’m very curious to see whether we end up with a worldwide draft and/or rookie pay scale. And I’d like to see what kinds of adjustments there are to revenue sharing and the luxury tax. I don’t see the union making major concessions, though. Michael Weiner is a protege of Don Fehr, who was a protege of Marvin Miller. The last thing he’s going to want to do is come off as weak.
Of course, steroids is always an issue when it comes to baseball. It does seem like Commissioner Selig takes a bit of an unfair beating on the issue. But you know this is going to come up again when Mark McGwire walks into spring training as a coach for the Cardinals. What do you think McGwire will say, if anything?
MB: I don’t see how McGwire can avoid not saying anything now that he’s the hitting instructor for the Cardinals. He’s going to get asked about it repeatedly as long as he chooses to be an active part of the organization. And, when you think about it, he should say something. He’s not in danger of perjuring himself due to the vagueness of his comments to Congress, and if he did use PEDs and decides to say as much, as we’ve seen with Andy Pettitte and Jason Giambi, the public is pretty much willing to forgive and forget for the most part. Look at Andy Pettitte: Here he is the starter for the deciding game in this year’s World Series, and there was hardly a whisper about his hGH use.
For the most part, I think the public has grown weary of the whole “steroids in baseball” topic. Is it me, or has the topic mostly been fueled by the media?
TL: No question, people are sick of the steroids issue. And I think most writers are as well. The problem is that for a long time, things kept happening that were impossible to ignore. You had several of the game’s biggest stars, some of whom were breaking timeless records, tied to PED’s. Then you had Congressional hearings. Then the Mitchell Report. Then Roger Clemens challenging the Mitchell Report. Then Clemens and Brian McNamee before Congress.
I think that’s one of the reasons why there was a backlash against Selena Roberts when she published her book about Alex Rodriguez. Yeah, it was a significant revelation that he took PED’s, but most people were sort of ready for the issue to die at that point. And that’s why, as you point out, the issue garnered hardly a mention during the postseason.
When it comes to baseball, I think we’re at a point now that testing is strong enough that we can have a reasonable idea of who is cheating and who isn’t. At the very least, the attitude toward PED’s has changed so that young players coming into the league don’t have the attitude that’s acceptable. As for what players did in the past, we’ll never know precisely who took what and when. But we know there was an era when steroids and PEDs were widely used, and we can take that into account as we evaluate players from an historical perspective. Everyone will have their own opinion on how to do that, but that’s ok.
As for McGwire, I would like to see him address the issue in the way that Andy Pettite did. Unfortunately, his steroid use may have been more widespread and harder to explain away. But people are willing to forgive and move on if there’s a proper amount of candor.
MB: On MLB, I have to bring up some old history that could not be more important. At the baseball winter meetings, former MLBPA executive director Marvin Miller gets yet another shot at the Hall of Fame. Love him or hate him, it seems unconscionable that Miller is not already in the Hall. The advent of free agency, salary arbitration… basically, labor rights for the players, and their ascension into power were all during Miller’s watch. Do you think it’s time, and do you think it will happen?
TL: Should it happen and will it happen are two different things. I do think there’s a general feeling among fans and writers that Miller deserves to be in. If the criteria is “contributions to the game” he’s a slam dunk. But there are so many people inside of baseball that see him as the root of all evil. I think it’s key that Bud Selig recently came out in support of Miller. And if you look at the 12-member electorate that will review the special executives/pioneers ballot, it’s somewhat favorable. You have two of the smarter Hall of Fame players in Robin Roberts and Tom Seaver, plus a few smart writers in Rick Hummel, Hal McCoy and Phil Pepe. Yes, there are a few old execs on there too, with David Glass, Bill DeWit and Bill Giles. But my sense is that Miller has a good, though not great, shot at getting elected. Nine votes will do it, and I say he gets exactly nine. But that’s just a guess.
You’ll be in Indianapolis to cover those winter meetings, so I look forward to reading your dispatch from there. It will be interesting to see how many traditional reporters will be there. I’m sure you saw the numbers of papers that didn’t send anyone to the World Series. Some big names missing. We sent two, because we still think it’s important to have a presence at big events. But there seems to be a growing question of the value of having reporters present at games when there is so much available to fans in the form of replays, highlights and social media. At the very least, the “game story” is something that many folks believe will go the way of the Dodo.
I’m curious, as someone who digests baseball for a living, what value you place on the traditional game story. What role should beat writers play in this day and age?
MB: I’m a firm believer in viewing sports through as many prisms as possible. I’d like to believe I’m an unbiased soul, but the truth is, we all have our perspectives, and leaning on just that one view is, in my mind, awfully limiting. So, the beat writers are still of value, and provide a great service to the sports news public; each writer is likely to cover at least one aspect of the game that another may not have.
Where there is concern is the blurring between reporting and being a columnist. You used to always be able to count on The Associated Press to offer up content that was about as unbiased as you could get, and other outlets strove to meet that benchmark. Now, I’m not so sure. With the blogsphere becoming a competitive platform, traditional media has asked reporters to report, but also provide opinion within online companion blogs. I’m not saying this is good or bad (I’m certainly guilty of this style), I’m simply saying it creates camps of one opinion or the other. Media has always had some form of bias, but the lines have become far clearer over the last decade or so. With beat writers offering up their opinions on the likes of Twitter, it makes it harder for me to read the straight reporting and not start see hints of the writer’s opinion surface. So, what winds up happening (at least for me) is reading game stories from multiple sources to try and get as broad a picture as possible from differing perspectives while holding on to what I have viewed or listened to.
As we’re winding this conversation down, I have to ask: Beyond the economy, what has been the biggest sports business story of 2009? In no particular order, I’d say the sale of the Cubs, the opening of Cowboy Stadium, Manny and A-Rod’s involvement in PEDs, Vick getting out of prison and being picked up by the Eagles… just the tip of the iceberg.
TL: I was about to write “the economy” and then realized you said “beyond the economy.” So now you’re making me think, here. We had some big stories, but some of the ones you mention also fizzled out very quickly. I guess I’d go with the revelations about Manny and A-Rod. Those are two of the biggest names in baseball, and I think their link to PED’s told us once and for all that no one can be perceived as clean. With A-Rod, there was a belief that he was clean because he was simply a great athlete from a young age and that he never got that bulked up. And with Manny, there was a feeling he was too aloof and lazy to care about dealing with a steroid regimen. The revelations about these two players kind of put a stamp on things and in an odd way allowed people to move on from the steroid era.
Manny’s suspension also served as a demonstration to people that baseball was serious about cleaning up the game. Keep in mind that he did not test positive for a performance enhancer, but a substance people believe is used to bring back the loss of testosterone after a steroid cycle. But that was enough under baseball’s system, even in the absence of a positive test for steroids themselves.
Last question: What will be the big story for 2010?
MB: Now’s the time to say, “economy.” Yes, there has been talk of pulling out of the recession, but its effects are going to be hanging over all of sports for two, maybe three years. The downturn in the economy influences everything from ticket prices, to free agent signings, sponsorship agreements, television… the gamut.
But, that’s the easy way out – the easy thing to point out –let’s get into some other areas.
You have to start with the Winter Olympics in Vancouver. That ties into the economy. Will be interesting to see how television advertisers approach their spending on the games, and how attendance is. If the NFL goes into an uncapped season, it will be one of the biggest stories for next season. In terms of MLB, the sale of the Texas Rangers is out there. How much, if any, equity Tom Hicks retains will be closely watched. But, for pure juiciness, the nasty divorce proceedings between Frank and Jamie McCourt will be watched closely by not only sports media but the likes of TMZ. The only thing attached to that is the fate of the Los Angeles Dodgers.
The other stories, close to home for those in the D.C. area will be whether Stephen Strasburg is called up by the Nationals and how that influences attendance for them, and finally, will Dan Snyder’s meddling ways continue to sour one of the great fan bases in all of U.S. sports in the Redskins.
And just think… that’s just what we can see on the horizon. Imagine what will jump out of nowhere.