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Subject: Baseball Prospectus & Revenue Sharing
Posted by: Madman
- [21020124] Mon, Feb 11, 2002, 02:00
Sheehan's Daily Prospectus.
He stated: "It's clear that revenue sharing above a token level should act as a drag on salaries. Assuming rational decision makers (pause here for five minutes of unbridled laughter), teams should be willing to pay players according to the revenue that they're expected to create. However, if a team can only keep a percentage of that marginal revenue, the value to the team of that player is lessened, and their offer to the player should be reduced accordingly."
My winded response:
The main theoretical justification for revenue sharing is that it would dramatically increase the odds for an otherwise small revenue club to win a championship. If this justification is valid and if revenue sharing were to be enacted, then a quality player will have a higher gross marginal revenue for an otherwise small market club. Ergo, the size of that fraction of the marginal revenue that a small market club could retain under a revenue sharing agreement could, in theory, be much, much higher than the entire value of the marginal revenue generated by that same player under a non-revenue sharing scenario.
In plain English, revenue sharing could create a situation where 28 teams might place a greater value on the acquisition of a championship-calibre player, as opposed to the current situation where only a limited number of clubs currently compete for such an individual. The 29th team is the Yankees -- they are already at the top of the heap; the 30th team is the Expos, and I'm not sure anything can be done to increase the marginal revenue they would enjoy in such a situation. :)
This is not to say that revenue sharing wouldn't likely have some distributional impacts on salaries. The very, very top players may experience a salary decline, since the wealthiest clubs would experience the effect you are discussing (only the wealthiest clubs can conceivably bid for such players, so obviously a revenue sharing plan would hurt the players those clubs would otherwise hire). However, for the vast majority of free agents (i.e., those not lucky enough to be sought after by the Yankees), a revenue-sharing induced increase in demand for their services could easily be a correspondingly large boon to their financial fortunes.
Thus, it is to say that I fail to see why it is "clear" that revenue sharing should be a drag on salaries in aggregate. I think this is only "clear" if you make a set of particularly unrealistic and restrictive assumptions regarding what the marginal revenue for an acquisition will be. I would only be persuaded that your argument was clear if you could also argue "clearly" how and why the marginal revnue of a newly acquired great players would not be systematically different under such a systematically different revenue scheme.
I'm not saying any of my rambling here is "the" way the world is. But I do think the entire situation is a lot less clear than virtually anyone (at BP or elsewhere) is assuming.
Just wasting time until baseball starts. I just piped off this email. We'll see if they are similarly bored at the moment, or if my argument is in error on some dimension. :) |
| 1 | blue hen, almighty
Leader
ID: 27048221
Mon, Feb 11, 2002, 03:55
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There is definite merit to the idea that 28 teams bidding on a player will likely give him a higher salary than if five teams are bidding. And I wouldn't eliminate the Expos and Yankees. Well, I guess you could eliminate the top-tier teams, but if the bottom team in the league wasn't in a position to be competitive, then the system won't work as well.
Let's not forget that if 28 or so teams had a shot at the playoffs, attendance would probably rise across the board.
I was reminded this weekend of something I already knew. Basketball is marketed as individuals. Put the most marketable player on a crappy team and the Wiz sell out all 41 road games. McGwire, Sosa, Griffey, and that's about it, are the only ones with a major effect in baseball. So why is it that Jersey needed only a year (and a Kidd infusion ) away from respectability while baseball has such a parity?
I don't much care for David Stern, but I'll give him a lot of credit for playing to his sport's strengths.
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