One other point: I think that people miss the big picture when they point out that this or that team prospered in a small market by winning and being well run, drafting and trading wisely etc. etc. The fact is that winning in baseball, as in most sports, is a zero-sum game. At the end of the year, there will be as many wins as losses on the ledger, losing teams along with winning teams, and only one WC champion. If the 30 most intelligent and competent human beings on the planet ran the 30 MLB teams, this would remain true. So it is not reasonable to support a system where the league as a whole loses money by pointing to the fact that individual teams might buck the trend by being very successful on-the-field.
Is it possible that the owners said “for decades” that free agency would bankrupt them? Was free agency on the table for that long? But no big deal in any event. I don’t you can count an erroneous prediction for the future as an example of “lying” - it can be very hard to predict how changes to an economic system will impact. And - as I’ve noted previously - there has apparently been an explosion in revenue during the past several decades (possibly due to cable and other national media outlets).
But beyond this, the fact is that the owners are now claiming that they are going bankrupt. And if the idea is that we ought not to believe them now because they’ve lied in the past, you cannot introduce past predictions of bankruptcy as evidence - that would be rather circular.
Could you fill in some details? I am aware of only one collusion case - decided for the players by arbitrators.
Again, some details. I remember a study by a guy the union hired to make their case. Are there independent studies that have reached this conclusion?
It certainly was regularly discussed beginning with the Curt Flood case (1970, IIRC) if not earlier.
Good point. However, I would count future predictions that had little if any factual support at the time (e.g. Bowie Kuhn’s ‘oil under third base’ bushwa) to be in the same category as a lie. But I’ll try to remember to dig out Lords of the Realm tonight for more specific instances of MLB owners’ dishonesty. And Ball Four, too, has some doozies.
I’d also contend that free agency, at least in its first decade or so, helped revitalize fan interest.
I would note that even by the analysis these guys put forth, most of the difference between them and MLB is in what better represents a better way of looking at baseball’s finances (e.g. Forbes seems to feel that EBIDTA is more important than actual earnings - a concept that is falling increasingly out of vogue on Wall Street these days) and simple distrust (e.g. of the owner’s expense statements). These as opposed to clear indications of chicanery.
Which is not to say that there are not some ways in which losses are clearly inflated. But for the most part, the examples I’ve seen have been relatively minor - what you might expect in any business. The big discrepancy appears - best I can tell - to be for factors listed above.
My favorite is when the owners give sweetheart deals for the local broadcast rights to their affiliated media companies, so the team’s “revenue” is decreased, while the media company’s profit margin is substantially increased. I know of at least four teams that have done precisely that: the Yankees (Steinbrenner’s MSG network), the Braves (Turner/Time Warner’s TBS), the Dodgers (Rupert Murdoc’s Fox Sports), and the Rangers (Tom Hicks’ Southwest Sports Group). I’m sure others have done the same thing.
Izzy, there’s simply no question that the owners have cooked their books. Note their complete refusal to permit any independent auditing, not to mention their refusal to permit the players to talk about the real numbers (which they are given access to pursuant to the labor agreement).
I’m seeing two distinct questions here, minty. One is, “How is your analysis affected by the tendency of expansion teams to start off as basket cases?”, and the other is, “If you have more total teams, wouldn’t you expect the percentage of teams attaining the LCS over a given period to decrease, affecting your analysis?”
They’re both good questions, especially the second one.
The effect of bad play by expansion teams drags down the 1969-93 period a lot more than the 1995-2001 period. The classes of 1961, 1962, and 1969, so to speak, didn’t have the benefit of free agency to speed their entry into baseball’s mainstream, and it shows in the numbers. The 1977 expansion teams could have taken advantage of free agents, but for whatever reason, chose not to pursue that avenue during their early years. But most of the 1993 and 1998 expansion teams bid on free agents.
Some quick stats on how the teams from the various exapansions did:
Conclusion: the Mets and Royals notwithstanding, not only did the 1969 and 1977 expansions lower the percentage of 1969-1993 teams to gain the LCS, but even the 1961 expansion was still pulling things down post-1969. OTOH, the expansion teams of the 1990s (excepting the Devil Rays) have actually helped the average for the 1995+ period: two of the four 1990s expansion teams have made the LCS since 1995, as opposed to 10 of the 26 pre-existing clubs.
Now, how about the effects of simply having more teams?
Whether it’s noticeable in the results or whether it gets swamped by other effects, one has to assume that having more teams has an effect. In the 1995-2001 period, there were an average of 29.14 teams competing for 4 LCS slots; in 1969-1993, there were an average of 25.44 teams competing for the same slots. An extra 3.7 teams (average) has to work towards reducing the percentage of teams that make the LCS in a given basket of seasons.
But by how much?
It took a bit of work, and I kept on getting my numbers wrong, but eventually I came up with a rough approximation. (And given some of the variables, rough is as good as I’m gonna be able to manage.) Back in the pre-wildcard days, we had 6-team divisions, then we had 7-team divisions.
If the division winners were picked at random, the mathematical expectation is that, over a 7-year period (which is what I used in my analysis), 72% of the teams in a 6-team division would win at least once, as opposed to only 66% of the teams in a 7-team division.
Four 6-team divisions is 24 teams, not that far below the average 25.44 teams in the 1969-1993 majors. And four 7-team divisions is 28 teams, not much below the 29.14 teams in the 1995-2001 majors. So I’d say this is a pretty good rough approximation: given the sizes of the leagues as they were in the two time periods, the downward effect on the percentage of the teams in the playoffs in a 7-year period should be 6% or slightly under.
There are two other questions worth asking, IMHO:
What is the effect of the wild card on the diversity of teams in the LCS?
I flat-out don’t know. My guess is that it helps in some ways, hurts in others.
What was the effect of the absence of free agency in the 1969-1975 period on the 1969-93 stats?
It sure looks like it worked to hold down the number of teams in the playoffs. The first seven 7-year groupings involved pre-free-agency years: 1969-75, 1970-76,…,1975-81. And what percentages of teams made the playoffs? 46, 54, 49, 45, 44, 44, and 47: all the below-50% years in the 1969-93 period involved at least one pre-free-agency year.
Once completely into the free-agent era, it goes: 54, 58, 69, 73, 73, 81, 73, 65, 62, 62, 58, 57.
And remember, in 1977, the AL added two teams, which should have had the effect of decreasing the percentage of teams in the LCS by about 3% in each 7-year period. Instead, it went up.
My conclusion is that all these factors on my analysis are best treated as a wash. The only one we can quantify is the effect of more teams. But the effect of bad expansion play on the 1969-93 base period is undeniable; it’s just hard to put a number to it. And the effect of the pre-free-agent era on the early part of the base period certainly appears to be pretty significant.
I still think the 40.6% of teams making the LCS in the 1995-2001 period is strongly suggestive of a real difference in the post-strike era. Hopefully we’ll have a postseason this year, so we can see how the numbers hold up for the 1996-2002 period.
Pretty impressive, although I note that the 6% expected drop in appearances that would result from the addition of new teams erases a good chunk of the disparity between the pre- and post-1994 periods.
But since people in my line of work hire people in your line of work as expert witnesses because we all went to liberal arts colleges, can I bug you to see if you can account for one more factor? That is, the 1996-2001 Yankees, who have singlehandedly accounted for 25% of all LCS appearances in that period. Yankee dominance is hardly a new phenomenon to baseball, but it was notably absent in the other years of your study. Of course, Yankee dominance is Exhibit A in many competitive balance arguments, but it’s less compelling evidence of systemic failure if the rest of the teams are about normal in LCS appearances.
How many teams actually have affiliated media companies? Most of the ones you mention (& I think the Cubs are most frequently mentioned with regards to this issue) are large market teams, which don’t seem to have that great an incentive to downplay their revenue. Although maybe they’re doing it to help out the media part. (I think you might be mistaken about the Yankees, BTW).
By who? I’ve seen owners reps claiming the books were audited “three times”.
This makes little sense to me. So you say they’ve actually given the players the numbers that show the owners’ bargaining position to be bogus, but are just hung up on letting them talk about it? (If giving the “real numbers” would show the players that all my future claims were going to be bogus, that is the last thing I would give up in a bargaining agreement). Far more likely that the owners don’t want details of their finances made public - a sentiment that I share with them.
minty - hey, I went to a liberal arts college too!!
Math is a liberal art, y’know.
Yankee dominance may hardly be new to baseball, but it’s been gone long enough that the phrase “everything old is new again” seems to apply.
After all, their 31 year interregnum (1965-95, when they won a ‘mere’ 4 AL pennants and 2 world championships) was almost as long as the 44 seasons from 1921 to 1964 when they won 30 AL pennants and 20 world championships, and basically ruled the world of baseball.
I’m not sure, off the top of my head, how to account for that factor. But also, I must admit that my main reaction is that Yankee dominance of that sort would be worse for baseball than it was in the 1921-64 period. There’s a lot more things for people to do now to entertain themselves, and if the Yankees were to resume that sort of dominion over the sport, it would just be one more reason for serious fans of other teams to pay a bit less attention to the game, for more marginal fans to drift off altogether, and for kids across most of the country to never become fans in the first place. And Lord knows they’ve got plenty of reasons already.
And also, I became aware that such a thing as baseball existed, right around the time the Yankees were falling off their pedestal in the mid-1960s. The game I love is the game as it existed in the interregnum. I didn’t mind the Yankees being one of the stronger teams in baseball (and especially in the AL East) for much of that time - I think that’s good for the game, actually - but I’m not ready to love a sport where there’s a seeming near-inevitability to a Yankees championship. So for me, it comes down to what I’m willing to live with as normative, and the Yankee dominance of 1921-64 and 1996-2001 is not it.
Izzy - my copy of Lords of the Realm seems to be in a secure undisclosed location somewhere about the house. I’ll trip over it sooner or later.
Any baseball stats I’ve injected into this discussion have been from the awesome baseball stats site, www.baseball-reference.com . I dunno if this is kosher or not (if it’s not, mods, kill this part), but they take donations to keep their site up. I’ve sent them money already, since I’m at a stage of life where I’ve got some shekels to spare for a good cause. And IMHO, they are that.
Yes–by the owners’ auditors, whose audits were then kept secret from the public.
Again, that’s exactly correct. The owners don’t want the public nosing through the books, but they had to give up the real numbers to the players’ union as a result of the collective bargaining agreement. When Commissioner Bud and his pals went to testify before Congress last winter about how bad they have it, the players asked permission–and were refused–to speak up about what they had seen and how that compared to the owners’ sworn testimony.
Actually, yes Minty patially is. The Yankees did give a sweetheart deal to their network, but it wasn’t MSG, it’s the YES network. YES is the collaboration between the Yankees, Nets and I think Devils to broadcast the vast majority of those teams games. Just started this past year in fact.
Don’t forget the Red Sox. The biggest reason they sold for 700+ million is because of the channel/tv rights that came with the team. The team itself is probably “only” worth 300 or so million.
Actually, yes Minty patially is. The Yankees did give a sweetheart deal to their network, but it wasn’t MSG, it’s the YES network. YES is the collaboration between the Yankees, Nets and I think Devils to broadcast the vast majority of those teams games. Just started this past year in fact.
Don’t forget the Red Sox. The biggest reason they sold for 700+ million is because of the channel/tv rights that came with the team. The team itself is probably “only” worth 300 or so million.
It occurs to me that the owners actually have a disincentive to cook their books in a less profitable direction, because of the possibility that they may one day want to sell their team. It might be difficult - if you’ve spent years proclaiming that you are suffering horrendous losses - to convince a prospective buyer that really your team is a very profitable one that he should shell out big bucks for and that the losses were for show.
My best guess based on what I’ve seen so far- and I could be wrong - is that there is little substantive dishonesty here. As anyone following the accounting scandals knows, there is a lot of room for interpretation when it comes to accounting rules, both dishonest and honest. I would be inclined to think that there may be even more room for divergent opinions and treatments when it comes to professional sports teams, which are probably more dissimilar than similar to other businesses. Further, unlike in publicly traded companies when there is great pressure to push the numbers in one direction, most or all sports teams are privately owned, which gives somewhat more leeway.
So I would be inclined to think that there are indeed different accounting standards being used by the various different teams. And the result of this is that you cannot directly compare one team’s books to another’s. And that this does cast some question as to the certainty and precision of the numbers being bandied about. But that what some people are doing is pointing to the most aggressive accounting treatment with regards to every issue as being the “true” numbers, and thereby “proving” all others to be fraudulent. Not impressed, to this point.
With regards to the specific media issue, I think you have to have some basis for declaring that the contracts are under fair-market price - merely pointing to the team being affiliated with the media outlet (as some are doing) is not enough. In the case of the Cubs, the comparison with the White Sox is a valid indicator.
minty, I’m unsure of what your point is about the auditors - all auditors are the “company’s auditors”. And the purpose of the audits is not to produce some sort of report for the public but to sign off on the company’s numbers. In this case, I think there are two Big 4 accounting firms auditing the owner’s numbers - are you suggesting that they are not signing off on them but the owners are not revealing this? When bankers lend money to the clubs, whose numbers are they relying on - some un-audited numbers? Are the owners keeping two completely different sets of books?
(BTW, RTF it would appear that you’ve erred in your statistical analysis in that you’ve used overlapping time periods and calculated a SD which you’ve then applied to a completely distinct time period. Meaning that you’ve overestimated the significance of your result, probably by quite a lot (specifically, your standard deviation is artificially low). Perhaps a regression analysis with a moving average component would be a better model. But I don’t really think this type of messiness lends itself to statistical analysis that well in any event).
No, it would not be difficult. Just open up the books to the prospective buyer, who will thereupon exclaim upon how brilliantly the team owner has made oodles of money while crying poverty to the public.
Precisely my point. The accountants sign off a worst-case scenario audit, then the owners announce that they’re polishing up their application for food stamps–but of course, they don’t ever let the public look at the actual figures the doomsday audit result is based upon.
Yes, in that there is no public oversight, by the SEC or otherwise, over an audit of a private company.
Ha! Despite great attendance at Wrigley field and nationwide exposure through WGN (owned by the same folks who own the Cubs), the White Sox–whose own attendance sucks and who certainly do not have comparable broadcast exposure–purportedly made $6.5 million more than the Cubs last year. Come freakin’ on!
Cite from Rob Neyer (read the columns for Dec. 10 & 15), who makes this excellent point:
No. I’m suggesting they’re performing audits so as to underestimate revenues and overestimate expenses, within the considerable margin for “interpretation” that the accounting profession is so well known for these days. And if the owners are being completely honest in their representations to the public, why don’t they open up the books?
I don’t suppose anyone’s considered that the decrease in competitive balance after the last strike may have been a result of the luxury-tax/revenue sharing arrangement worked out? Y’know, the one that the owners want (and the players have agreed in principle) to extend even further?
Look at it like this: by basing the revenue sharing on payroll instead of, say, revenue, creates a massive incentive to be non-competitive. If, for example, an owner were totally profit-oriented, and didn’t care if the team sucked (hello, Carl Polhad, and whoever the hell owned the Expos), they could strip their payroll to the bare minimum and hence become eligible for maximum revenue sharing, while teams that were paying for good players and TRYING to compete were being forced to pay extra to them.
If I were George, I’d be pissed off, too.
Not to mention that any revenue sharing plan that makes, say, the Indians give money to, say, the Phillies, sucks outright.
minty, we’re at an impasse regarding other issues - deep into opinion territory. But I believe you’ve misunderstood my comment about the Cubs. I was not disputing your position regarding the Cubs. i was giving them as an example of a case where actual evidence exists for lower than market value contracts. This by contrast to other examples cited, where the mere fact that the team is affiliated with a media outlet is being offered as evidence that there is revenue shuffling. The Cubs are the most frequently mentioned in this regard, in articles I’ve read. Also the Braves.
I wasn’t trying to give the impression of sweetheart broadcasting deals from the mere fact of affiliation with a media company. Any number of teams have been accused of doing that, and I was just listing examples of those the ones that have been so accused. If you want specifics in any particular case, I’d be happy to look them up when I have time.
