Money Matters: Funds Key to MLB Success
Friday, October 14, 2011
In a world of perfect competitive balance, all 30 Major League Baseball clubs would have an equal chance at playoff baseball. While that thought is nice, it’s not reality. Teams like the Chicago Cubs, a team without a World Championship since 1908, and the Pittsburgh Pirates, who finished below .500 for the 19th straight season, make that evident.
So, why is it that some clubs — the Yankees, Red Sox, Cardinals, the Phillies — play deep into October every year, while others basically start and finish each season with no real hope of a championship?
“A key part of the equation is money,” says John Lord, Ph.D. ’71, chair and professor of sports marketing. “large market clubs have a significant structural advantage — higher local television rights and high-paying sponsors – in generating revenues.”
Lord says that in a sport without a salary cap, these big revenues allow for big payrolls, giving large market teams the advantage of signing the game’s very best. While a mistake in player acquisition or development by the Yankees can simply be covered with more cash, the same mistake by a small market club, which lacks the comparable revenue, such as the Pirates or Royals, could cost them their season – a clear disadvantage.
In addition to money as a major factor in big league success, Lord points to statistical studies of payrolls versus winning which show a much smaller relationship than originally thought.
“Compare the Cubs, who placed fifth in a mediocre National League Central division, to the Rays, with a recent World Series appearance despite the second lowest payroll in baseball as proof,” he says.
Lord believes that through solid work in evaluating talent, drafting and signing players, developing players in the minor leagues and utilizing revenue effectively, small market teams can level the playing field.