Low-revenue A's rise up
Sometimes, being a baseball fan is like being a financial analyst. Owners and the Players Association make conflicting claims about the profitability of baseball teams, reflecting their best interests, and we are left to either ignore the chatter or try to make sense of it. We are absorbed with talk about the increasing gap between the "haves" and the "have-nots," but we don't really know what's "true."
The ultimate "have-not" is defined as a team with low revenue and low payroll playing in a bad baseball market. Therefore, the "have-not" is likely to have a bad performance on the field. The "haves" generate high revenue and a high team payroll in good markets and therefore are more likely to reach the postseason.
For the owners, the facts appear simple. The Yankees have won the World Series three of the last four years by milking the New York market and paying top dollar to any player. Meanwhile, the Twins, Marlins and Royals seem to have no hope of competing from Day One. Yes, here comes the most-used word in the 2000 baseball dictionary (besides "walk-off") ... disparity.
But in a year where talk of competitive balance is arguably at its height -- with the Blue Ribbon Panel report and the Yankees' payroll topping $100 million fueling the banter -- it is ironic that the Oakland A's, clearly a "have-not" with low attendance and an anemic payroll, have a very good chance of making the playoffs. And how about the Chicago White Sox, a team in a large market but with a low payroll and average revenue stream? They easily ran away with the AL Central while apparent "haves" like Baltimore and Texas bought their way into futility.
What has recent history told us about the "haves" and the "have-nots"?
Forbes magazine annually publishes data that includes team revenue. Although no one can vouch for the accuracy of its data and analyses, it's the best we can do. According to Forbes here are the five teams with the most revenue and least revenue in 1995, with team payroll and record (* = made playoffs):
1995 - Haves
Team Revenue Payroll Record Yankees $97.68M $58.2 (1) 79-65* Orioles $76.48M $48.7 (2) 71-73 Braves $76.14M $47.0 (4) 90-54* Rockies $75.07M $38.0 (9) 77-67* Indians $73.28M $40.2 (7) 100-44* Average $79.73M $46.4 83-61 (.576)
1995 - Have-Nots
Team Revenue Payroll Record Pirates $24.03M $17.7 (24) 58-86 Padres $25.88M $25.0 (22) 70-74 Expos $27.60M $13.1 (27) 66-78 Twins $29.19M $15.4 (26) 56-88 Astros $29.39M $33.6 (16) 76-68 Average $27.22M $21.0 65-79 (.451)
Four out of the five "haves" -- the Yankees, Atlanta, Cleveland and Colorado -- made the playoffs in 1995, while the Astros were the only team of the five "have-nots" to have a winning season.
Here are the same lists for 1999, the last season for which we have complete data:
1999 - Haves
Team Revenue Payroll Record Yankees $177.94M $92.0M (1) 98-64* Mets $140.59M $71.5M (8) 97-66* Indians $136.78M $73.5M (6) 97-65* Braves $128.27M $79.3M (3) 103-59* Orioles $123.61M $75.4M (5) 78-84 Average $141.44M $78.3M 95-67 (.586)
1999 - Have-Nots
Team Revenue Payroll Record Expos $48.80M $15.0M (29) 68-84 Twins $52.64M $15.8M (28) 63-97 Athletics $62.58M $25.2M (24) 87-75 Pirates $63.19M $23.7M (26) 78-83 Royals $63.55M $16.6M (27) 64-97 Average $58.15M $19.3M 72-90 (.444)
The same percentage applied as four out of the five "haves" made the playoffs -- the Yankees, Indians and Braves all made it for the fifth straight season. And, once again, it was the Orioles that ruined the perfect percentage. Meanwhile, one out of the five "have-nots" (same percentage) had a winning record, the Oakland A's.
The ratio of revenue between the "haves" and "have-nots" got smaller between 1995 and 1999, although the absolute difference increased and that is really the more relevant number to those owners pleading injustice.
These ultimate "haves" and "have-nots" paint a picture of no hope for teams with little revenue. But in the seasons following 1995, two "have-nots" became successful on the field. The Padres won division titles in 1996 and 1998 (with a World Series appearance) while the Astros won three straight division titles from 1997-1999. The Astros now have a new stadium, otherwise known as an immediate maximum money generator, and the Padres have one on the way.
Does this mean this year's "have-nots" have success in their future? Some say teams like the Padres and Astros haven't really been that successful.
"The Padres have been around since 1969 and the Astros since 1962," said Rod Fort, professor of economics at Washington State University and co-author of "Hard Ball." "Three division titles in 31 years and five in 38 years ain't much to crow about. And some might argue that winning the division title isn't the same thing as winning big. Alas, fans of the Twins, Royals, Expos and Pirates have a while to wait before they can match the success of the Padres and Astros."
But as union head Donald Fehr has questioned over and over again this year: Is the disparity really increasing or has the success of the A's and White Sox shot down grounds for argument?
In 1998, the eight playoff teams finished the season in the top 12 in payroll (Padres don't exactly qualify as an ultimate "have-not" here since the team did finish 1998 ninth in the league in payroll). And last year, all eight playoff teams finished in the top 10 in payroll.
This year is a different story, as it might be the first time that two teams that began the season in the bottom third of payroll make the playoffs. The A's began the season 25th in payroll, the White Sox 26th. The last time a team made the playoffs that close to the bottom of the payroll chart was 1991, when the Atlanta Braves ranked 21 out of 26 teams.
As bright as Oakland's future may look on the field due to their young talent base, their potential to go from a "have-not" to a "have" isn't necessarily a foregone conclusion.
"What we know regarding the have-nots is that it is possible for any team to pull it off once," said Kenneth Shropshire, professor of legal studies at the University of Pennsylvania's Wharton School. "Thus all of the teams listed (as have-nots) could find a way to have an isolated successful season. What the Yankees have shown is the large-market capability to create the 'D' word, Dynasty."
Andrew Zimbalist, economics professor at Smith College and author of "Baseball and Billions" agrees. "Anyone in the world who pretends that there is not a problem in Oakland, just because they make it to the playoffs, really has their head in the sand," he said.
If the A's can somehow increase their revenue (see new stadium here), their chances of playing regularly in October is possible. For example, the list of teams that increased their revenue the most from 1995 to 1999 includes five potential playoff teams for 2000:
New York Mets +$87.91 million New York Yankees +$80.26 million Seattle Mariners +$76.09 million Cleveland Indians +$63.50 million St. Louis Cardinals +$62.42 million (Can anyone say Mark McGwire?)
Baseball is not suffering in terms of pulling in the dough. Overall revenue growth in baseball has been strong in this period, with average team revenue increasing by 87.8 percent or an average annual growth rate of about 17 percent (very good for over a period of four years).
In the end, however, despite Oakland's breakthrough in the victory column the past two years, we might not know if Billy Beane is dining with Brian Cashman at the "have" table until Jason Giambi is past his prime.
Darren Rovell covers sports business for ESPN.com. He can be reached at firstname.lastname@example.org. Eddie Epstein works as works as a senior sports analyst for PricewaterhouseCoopers.
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