The Day the MLB Financial System Died


December 18, 2008.

That’s the day in which I became extremely cognizant of the financial landscape in major league baseball.  I had denied it for years and finally accepted it on that faithful night.  There’s a depressing feeling that overwhelms your body and spreads like an infection.  Admitting that there is a problem is the first step of the healing process.  My ill-fated dreams of a small-to-mid market team having prolonged, sustainable success disappeared like a fart in the wind (shameless movie reference).  The question now became where would a simple Cleveland Indians fan such as me find serenity?

With regards to the financial landscape of America’s favorite pastime, that day should live in infamy.  On that day the New York Yankees announced the signings of A.J. Burnett and C.C. Sabathia (as he was formerly known) for 5 years, $82.5 million dollars and 7 years, $161 million dollars, respectively.  The substantiated rumor of a Mark Teixeira signing was also in the waters and sure enough five days later the story broke on his 8-year, $180 million dollar contract.  In less than a week the Evil Empire reeled in three of the top four free agents of 2008 at an inconceivable cost of nearly half a billion dollars.  In case you do not have a calculator handy, that’s $423.5 million dollars spent by one franchise in a single month, to be more precise.  Mull that over for a second… seriously, are you kidding me?  I still get jacked up when I think about it.  Upon hearing the news of these signings Mark Attanasio, the Milwaukee Brewers principal owner said, “at the rate the Yankees are going, I’m not sure anyone can compete with them.  Frankly, the sport might need a salary cap.”  Attanasio’s comments were not the bitter ramblings of an owner that offered a player the richest contract in team history (5 years $100M) only to be snubbed.  They were probably the epitome of what 80% of baseball owners were feeling.  Then again, what’s $61 million dollars between friends?

When it comes to baseball I am, in the truest sense of the word, a realist.  I do not expect the Cleveland Indians to spend with the likes of the New York Yankees and the rights fee they receive from YES Network.  I am passionate about baseball and arrogant about my knowledge and understanding within it.  And I do not apologize for this.  It’s like a PhD. mathematician having a conversation with a high school calculus student while they sit on the magic carpet of a kindergarten class before naptime: both individuals are out of their element in one fashion or another.

Being a Cleveland sports fan certainly comes with its own set of bumps and bruises.  Any time a Cleveland team is in a playoff game the 4-letter anti-Christ network reminds us all of Red Right 88, The Drive, The Shot, The Fumble, the expanded strike zone for the 1995 Atlanta Braves pitching staff and of course, Joe Table.  In the present day I do not wave pom-poms for my teams because it makes me a more pleasing fan.  You will not hear me saying “thank you” to the front office of the Cleveland Indians.  You know why?  Because I am their customer, not an employee.  When the Boys of Summer make a move I am deliberate in my assessment, whether it’s Greg Swindell, Robby Alomar, David Dellucci, Matt LaPorta or even Russ Canzler.  I once had the opportunity to meet and converse with the Indians’ higher ups.  I told them that the day I stop being critical is the day I am no longer a fan.  Having said all that, what do I think about the 4-year $56 million dollar signing of Nick Swisher?  Oh, we’ll get there Tribe fans.  (Spoiler alert: if you’re Kelly Kapowski from “Saved by the Bell” then you won’t like what I have to say)

Being a logical, knowledgeable, passionate fan in Cleveland can be as lonely as the pitcher’s mound in the 9th inning of a perfect game.  Think I’m wrong?  Try having a rational conversation with a fanatic or call into a sports talk radio station.  You will be ridiculed for simplicity, laughed off air or simply dropped in mid-sentence.  On a grander scale, being rational does not sell advertising space or create social media chatter.  “The truth” costs high power executives their job, shortens column inches and reduces salary wages while simultaneously burning bridges.  It’s my opinion that truth and objective expression exists solely within individuals from local websites, podcasts, and internet radio.  Those who have nothing to lose are typically the most honest.  Do you think Chris Antonetti will ever freely admit that he traded for damaged goods in Ubaldo Jimenez?  Or Mark Shapiro divulge that Brandon Phillips was jettisoned because of his narcissistic attitude?  Those are rhetorical questions but nonetheless I digress.

The truth of the matter is major league baseball is dying.  The top free agent spenders have the capability to absorb expensive, lengthy contracts.  When one player has a salary that is almost half of the total payroll for the lowest teams in the league there is a systemic problem.  I would bet a buffalo nickel that the Steinbrenner family is regretting Alex Rodriguez’s contract.

In 2012 the top 9 teams had an average payroll of $144,306,741.  The bottom 9 teams were at $65,292,615.  Evaluating the league at groups near 1/3 aids in lessening the effects of the extremes, particularly the Yankees on one end and Rays or Marlins on the other.  Over the last ten years the disparity between payroll of the top and bottom teams saw only one true outlier: 2009.  Even the Indians had an elevated payroll that year ranking 15th in baseball at $81,625,567.  The stock market crash in December 2008 and ensuing Great Recession clearly played a role in allowing small market teams to take on more lucrative yet economical, short-term contracts.  Conversely, the top spenders were more focused on slashing payroll.  We have seen the average salary increase over those ten years more than $840,000, obviously at a higher rate than commensurate with inflation.  The MLBPA is making money hand-over-fist so they don’t care.  The owners are unaffected until attendance drops below their revenue generated from rights fee.  And the fans are the ones footing the bill.  See the problem?

There was a time in 2009 when overall payroll was down and idealists thought that this might be the turning point for the sport to right itself.  Three years later and a ten-year contract to Albert Pujols, we’re right back in the same mess up a creek without a financial paddle.  Pujols’ contract carries a total of $240M for ten years and maxes out at $31M in 2021 when he will be 41 years old.  Mike Ilitch is clinging to life and willing to spend it all for one more winner in Detroit so he gave Prince Fielder a 9-year $214M contract but (God eventually rest his soul) he will not be alive to see it to fruition.

Am I supposed to be happy that the Indians signed Nick Swisher to a 4-year $56M contract with a 5th year option that has been described as “easily vesting,” leading to a max contract of 5 years, $70M for a 32 year old?  Hell no.

But the reality is sometimes Cleveland has to overpay for a product that no one else is bidding on simply to acquire its services.  We are our own worst enemy, but nonetheless, I digress.

Marcus is a friend of More Than a Fan and one of the good guys among Cleveland sports fans. He went to a real school for something important, but has earned a degree is Indians Fandom from a school far more emotionally expensive than any university around; The Dolan Family Ownership School of Mid-Market Teams.

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Marcus Seeley contributes MLB columns to More Than a Fan.