Special to Page 2
Steve Forbes is the head of a media empire, one of the richest men in America, a former presidential candidate and an advocate of a national flat tax rate. He's also a huge baseball fan, with an avid interest in the statistical and analytical side of the game. Page 2 recently sat down with Forbes to trace his roots as a baseball fan, get his take on the business side of the game, and more.
Page 2: How and when did you first become a baseball fan?
Steve Forbes: It was back in 1957, when I was approaching my 10th birthday. I came across an issue of Sports Illustrated that contained scouting reports on teams and players. Before that, baseball to me had been Snoreball, something that interrupted my favorite TV shows. I kept rooting for perfect games [so] the game would end quickly. But it soon captured me, enraptured me. The numbers were fascinating. All of a sudden you could learn so much about the players and the game, and you could understand it all without going to accounting class. I became hooked.
P2: What was your favorite team growing up?
Forbes: I grew up a Dodgers fan. But I was a bigger fan of the game. Making sense of the numbers and the scouting reports, getting to know the players was exciting for me.
P2: What's your favorite ballpark, past or present?
Forbes: When I came to be fascinated by baseball, the Dodgers were moving to Los Angeles, so I never got to Ebbets Field. I did see them play in New Jersey a few times, at old Roosevelt Field. My first game there, I saw Don Newcombe pitch.
Much later in life, when my wife and I had five daughters, one of them became a fanatical Yankee fan, so I became a fan too. We'd make the trek several times a year out to Yankee Stadium, which is always great. I got to Wrigley Field a few years ago. I also enjoy some of the newer parks. The theory of building the new parks to have that same intimate feel as Wrigley Field is a sound one.
It's funny, there's the Curse of the Bambino, and Yankee Stadium is also known as the House That Ruth Built. One of my daughters posited that in 2004, when the Yankees announced they wanted to build a new stadium, somewhere Babe Ruth said, "Mess with my house, off goes the curse."
P2: Did you have any rooting interest in the Tigers-Cardinals World Series?
Forbes: I would have liked to see the Tigers win, just because it would have been so amazing to see a team go from 119 losses to a World Series title in three years.
P2: What are your favorite baseball books or baseball writers?
Forbes: I used to read Red Smith all the time when he was with the Herald-Tribune -- the sports page was colored green in those days. Jim Brosnan's The Long Season was really a great book. It really got into the personal side, brought players to life. He had a wonderful way of writing. I was in summer school doing penance for my lack of reading the previous year. Jim Brosnan was a savior for me from that ordeal.
P2: On to some business questions baseball's revenue-sharing plan is essentially a flat tax with a progressive additional tax above a certain point. Do you agree with the current system? If not, how would you structure revenue sharing?
Forbes: In that sense I'm a Libertarian. I like taxes flat, but I also like taxes at zero. The less you Sovietize the sport the better. In the last seven seasons, each World Series has been won by a different team.
P2: Is public spending to improve the financial situation of private businesses such as pro sports teams justified? If so, when?
Forbes: Studies have been done that generically show that stadium spending has been overhyped. There are always exceptions, where putting a stadium in a downtown corridor can revitalize things. But the key to revitalizing cities is a benign economic environment. Lower property and business taxes and you make it easier for people to set up businesses. Business will then start to flower. Building a stadium should be done because you're already prospering. It should not be a means to prosperity, but a result of prosperity.
P2: Every year, Forbes magazine publishes a study where it places a valuation on all 30 MLB teams and writes about the state of the game. What was the impetus for starting this study? How big a role did you play in getting it going?
Forbes: People are interested in sports, but most of the news revolves around who's acquiring or releasing which players. The business side hasn't received nearly as much attention. It's become very clear that in professional sports you can have operating losses and still have capital gains, and you have tax loads to deal with as well. The Yankees are worth over $1 billion. But given how much sports dominate our lives, it's surprising that the numbers aren't higher. There's a growing worldwide audience -- for all pro sports, not just baseball. And yet teams' valuations are lower than they are for most large companies.
P2: Major League Baseball's response to the annual study has become predictable, where they lash out at it, claiming teams are routinely losing big sums of money, as opposed to the healthy profits that the study usually claims are being made. How do you explain the gap between the two sides' findings?
Forbes: Obviously if you're in Major League Baseball, especially as contracts come up, you want to have a pity party, hang a black crepe and say things are terrible. It's been going on since the days of Curt Flood, even before that, to the early days of the reserve clause.
P2: How is it that teams were able to get away with something like the reserve clause, which gave players very little in the way of rights, even compared to society as a whole and workers in other industries?
Forbes: It's astonishing that you could have something like the reserve clause. It grew generically once baseball got traction in this country. If players could wander around with no loyalty, it was thought that it would wreck the game. Even the players thought that! When the Supreme Court codified it in the 1920s, they argued that they liked the game and didn't want to tamper with it. But it was with one of the most torturous, pretzel-like decisions, an incredible twisting of logic to justify its existence. Like so many paradoxes, when the clause was revoked, at a time when loyalty was less than ever before, the game became -- and has continued to become -- more and more popular.
In the meantime, the nefarious New York Yankees, by having so much star power, which purists deplore, are a huge draw on the road as well as at home. Everyone has benefited from it.
P2: Ticket prices in baseball remain, on average, well below those of other pro sports. But premium seats, especially at high-profile stadiums, have reached the point where they're largely scooped up by businesses who want to entertain clients and use them as a corporate perk. How do you feel about that shift in ticket pricing, to where the best seats have become essentially a business-entertainment deduction for companies?
Forbes: Given the finances of baseball, that was inevitable. As soon as they discovered that when you offer someone a seat with exclusive hot dogs you can charge 50 times as much, it was bound to happen.
P2: Do you see the higher ticket prices then being due to higher salaries, or just a case of supply and demand?
Forbes: It's both. Suddenly you have a bigger expense nut to deal with. But it's an issue of demand too. Yankee Stadium was sold out for most of the year, everyone wanted to be there, so the demand is there if you want to raise ticket prices.
If you look at the phenomenon of Billy Beane, though, and the recent history of baseball, you can see that money alone isn't enough to ensure success. By using advanced metrics, which more and more teams are using, you can still field a competitive team, even if you don't have a big payroll.
P2: If there's one thing you'd want to change about baseball, what would it be?
Forbes: [Laughs] The idea that other teams should win the World Series other than the New York Yankees.