The Marlins embarrassing fire sale has a lot of people talking about the business model of that franchise and how it has long been a bare bones payroll operation that feasts on revenue sharing. Essentially, the Marlins ownership is operating the cheapest team possible so that they can profit from MLB redistributing wealth designed to help small market teams increase payroll and be more competitive.
Revenue sharing is meant to take from the rich and give to the poor. It’s supposed to take money from the Yankees and give it to the A’s so that the A’s can add a little more payroll and be a little more competitive. It’s good for the parity of the sport.
But the Marlins are gaming the system and running a skeleton crew because the only condition of revenue sharing is being an MLB team. Other small market clubs don’t do this. They are trying to win with limited resources and find creative ways to do so. Tampa Bay and Oakland are classic examples of clubs that sell high on players who are due big raises and buy low on guys who are undervalued.
They play Moneyball. Miami plays “Losing Ball.” Just put 25 guys on a roster and feast on the profits. It’s obnoxious and the next CBA should put rules in place to spot it, but it got me thinking about market size and success.
A lot of smaller market/revenue clubs have exploited the Moneyball model and won a lot of games in the last decade. We also see a lot of big market teams win. What about the middle range clubs?
I think middle market clubs might actually be at a disadvantage and I’d like to outline why.
Big market teams can afford risky extensions and free agent contracts to good players. If the Yankees overpaid Alex Rodriguez (they did), they are not threatening the long term health of the franchise. If that contract stinks in 2014, they can spend their way out of the hole. They may choose not to, but they have that option given the resources at their disposal.
Small market clubs have the opposite arrangement. They can only afford favorable contracts. They lock up young players very early and guarantee a smaller sum, but do so much earlier than they have to. On the FA market, they sign players coming off down years and injuries who rich teams don’t bid on.
Both approaches have worked in recent memory. The Yankees and A’s are great examples. They both won 94+ games this year with dramatically different business models. Both can be successful if the right leadership is in charge.
But I believe that mid-market clubs are in a tough situation relative to the big and small markets. Mid-market teams have the resources to spend on the market, but they can only do so in a limited way. The Brewers, for example, could afford to sign Josh Hamilton this year (or Fielder last year), but if they plunked down that cash, they would be boxed in for years to come. If the contract didn’t work out as planned, they would not be able to spend their way out of it in 4 years and would be stuck with Hamilton and a bunch of AAAA players.
They have the money to spend sometimes, but not all the time. Their fans demand action, but if the action fails because all big deals are risky, they cannot fix it with another big deal. If they don’t provide action and sign Casey Kotchmans, their fan base will be unhappy because they look at the payroll and see the flexibility.
They have the money to spend, but if they spend it now, they can’t spend it later. In other words, when they go for it, they have to guess right. Signing that big player has to work out or it torpedoes the club for years.
These clubs want to avoid risk, but fans demand risk because they know the team can afford it. Fans are impatient and want to win now, but organizations want to win consistently. If they take a bad risk, it will ruin them.
The Yankees can take bad risks and spend out of them. The A’s never take bad risks because they can’t afford it. The Brewers can take risks, but they can only do so every so often. With an impatient population like sports fans, that’s a tough spot to be in if you’re a GM.
When do you spend? If you think Hamilton is a bad risk, you should pass. But if you pass too much, your fans start to drift away. They start to resent you. If they stop coming, the payroll is more constrained and you can’t win them back as easily.
Basically, mid-market clubs are stuck between spending and fans who understand why they can’t spend.
Tampa Bay and Oakland can trade their star players on the cusp of free agency and their fans understand that they’re getting a good return at the right time before they can’t afford these stars. A lot of mid-market teams can’t do that. Imagine the Reds trading Votto this year before the extension. Fans would have revolted.
We often speak about the struggles of the small market clubs, but small market clubs have gotten it right in the past. It’s not impossible to succeed in that framework. I think it’s harder to win from the middle because you have to balance resources with expectations.
That said, it’s hard to feel bad for MLB GMs who have one of the most fun jobs in the world.