- The Washington Times - Monday, April 16, 2001

By what royal decree is Peter Angelos the Duke of D.C.? For those who missed it, Mr. Angelos, the Orioles owner, proposed that baseballs central office buy out four small-market teams and dissolve them. Nominally, this would be a step toward fixing the sports tilted economic table but what is Peter the Greats true motive? According to the Minnesota Star Tribune, Mr. Angelos wants to keep baseball out of our nations capital.
Relocating teams to larger markets Charlotte, N.C., Washington, D.C., and Santa Clara, Calif., to name a few is a better option, but it makes Mr. Angelos unhappy. Baseball prevents multiple teams from playing in the same media market, granting to the current market resident what the league calls "territorial rights." As reported in the San Jose Mercury News, these lines of demarcation are near sacred in the sport. Bud Selig, the commissioner of Major League Baseball, said, "Baseball has territories, and we have to be very respectful of those territories. They have been brought about by years of discussions." While Mr. Selig did state that he will ensure that teams remain competitive, he added the following caveat: "verybody understands what the ground rules are."
In a land of many kings, such ground rules are almost impossible to change. But territorial rights have to go.
There has been much ado about the Darwinian, capitalist idea of dropping non-competitive teams. Many see it as a better alternative to revenue sharing, which reeks of socialism and finds small-market owners using shared funds in ways other than for the on-field talent spending for which it was intended. But this view misunderstands an important aspect of economics; namely, original property rights.
Due to the territorial rules that govern Major League Baseball (MLB), Mr. Angelos owns the leagues stake in Baltimore (and probably the D.C. area) not just the team, but everything that comes with the city. The Twins owner, Carl Pohlad, owns the Minnesota area: the ball club, the media market, etc. If this seems like a raw deal for Mr. Pohlad, it is.
The Twins seem to always be considering a move to the D.C. area, Charlotte, or some other city with a larger media base. Under baseballs current ownership agreement, they simply cannot move without permission, and even then, they could not go to certain cities. Removing this malapportioned land ownership would allow the Twins to move wherever they want. Outside factors aside (their stadium lease, for example), the Twins could again become the Washington Senators. Mr. Angelos is left with two options. He can either whine about the move, but live with it, or he can give the Twins money to keep them from moving.
A capitalist society frowns upon a government-created monopoly and the rules prohibiting team movement are exactly that. By not allowing the Twins the right to move, MLB grants the Orioles undue controls over the Baltimore market, and quite possibly, the D.C. area as well. For this reason, revenue sharing of any kind appears to be nothing more than a welfare system. It is far from it. Payments made to smaller market teams often fit perfectly into a natural, free-market outcome.
Of course, the plans floating around the Internet (mainly fan driven) do not mesh with principles of the free market. The most popular plan, as suggested by the Commissioners Blue Ribbon Panel, takes 40 percent to 50 percent of local revenue (after ballpark expenses) and puts it into a centralized pool.
The problem this causes is simple: It removes small-market teams incentive to put together winning teams. Money can easily find its way to places that neither improve the teams quality nor attract more fans _ the owners bank account, better press accommodations, higher salaries for non-player personnel, etc. The trick is getting money to small-market teams but still make them earn it.
The key and the devil lies in the details. Lets say the Twins go to Baltimore and lose, 5-1. The Orioles get almost all the profit from ticket sales, concessions, parking, etc. Mr. Pohlad is paying for half the entertainment out there, but gets none of the money. There is little incentive for him to send his ballplayers hundreds of miles. And if the Twins do not show up, the Orioles lose out on all that money. It is apparent that the Twins deserve a cut of local revenue, and that 40 percent to 50 percent suggested by the Blue Ribboners sounds accurate.
This differs from the central pool plan because there is nothing centralized about it. Instead, it rewards teams for fielding good teams both at home and on the road. If the Red Sox face the Yankees in the Bronx, only two teams take home money the Red Sox and the Bombers. The Twins do not get to free ride on baseballs most storied (and most lucrative) rivalry. In order for them to benefit greatly from the pseudo-revenue sharing system, Minnesota needs to field a quality team. Without attracting fans on the road, there is no revenue to be shared.
It is true that a welfare-state baseball economy will lead only to less money being reinvested into talent, and more money creatively finding its way off the books. But not all revenue sharing is bad for the sport. Owners own teams, not cities. To grant them monarchical control over an entire media market subverts a proven economic system and causes most of baseballs economic problems. Open markets lead to fair solutions and hopefully a team in our nations capital.

Dan Lewis is a freelance sportswriter. He can be reached via e-mail at dandlewis.net.

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