How to Fix Baseball
And why it will never happen
Author’s note: Happy Easter, everyone! I am taking the opportunity today to break from my usual content of real estate and the economy to talk about America’s (supposed) Pastime, the game of baseball. Check back next week for more of the usual fare. Have a great week, everybody.
Baseball has a problem. The games are on, but fewer and fewer people are watching.
Why is this happening? Well, for starters, a 162-game season is a slog. It is just hard to sustain attention day-in and day-out for that long of a season. By comparison, an NFL regular season is 17 games neatly divided into weekly increments and an NBA and NHL season are both 82 games (which can also feel kind of long, especially with lengthy playoffs that follow). In two of the most popular sports leagues in the world, the English Premier League and the German Bundesliga, teams play 38 and 34 games, respectively. Major League Baseball stands alone with an abnormally high number of games.
And those games are long. In 2021, MLB games lasted an average of 3 hours and 10 minutes, the longest ever. This was despite efforts to quicken the pace, which apparently have not worked. People just don’t have the attention span for that length for time anymore, especially younger people who have grown up in a world of constant distraction and immediate stimulation. According to Evan Bleier of Inside Pitch, 40 years ago the average time of a game was a much more manageable 2 hours and 33 minutes. The games today are nearly 25% longer than they were 40 years ago.
And let’s be honest. Not only are there nine innings with commercial breaks between every half inning plus pitching changes, there are just too many long swaths of time during a baseball game where not much happens. To baseball purists and many lifelong fans, these moments are part of what crooner Terry Cashman would call baseball ballet, the beauty of the game. But for people who did not grow up with an idealized, nostalgic view of the baseball, a lot of these inconsequential moments are just, well, boring.
Consider the chart below showing World Series TV ratings going back nearly forty years:
In 1973, the first year for which data is available, approximately 35 million Americans watched the World Series. In 2019, just prior to the pandemic? The number was down to just under 14 million. The overarching trend is unquestionably one of decline.
A Money Problem
One key problem facing Major League Baseball (or, perhaps, created by Major League Baseball) is that there is often a mismatch between the incentives of the team owners and the interests of the fans. Sure, what owner would not want to make a deep playoff run? Every single owner wants to win the World Series. But they don’t always field a team capable of doing that and, from their perspective at least, that is fine because Major League Baseball teams are highly profitable ventures even when the teams are losing. This is because of two things: TV deals and Revenue Sharing.
According to Blake Williams of Dodger Blue and Craig Goldstein of Baseball Prospectus, MLB’s TV deals with ESPN and TBS plus local TV contracts yield every single Major League team just over $100 million per year. This is on top of additional revenues from team and stadium sponsorships, sports gambling deals, and, of course, the tickets and ballpark revenue that come from the actual games. There is a lot of money flowing into and around professional sports, including baseball.
On the Revenue Sharing side of things, per Baseball Reference:
In Major League Baseball, 48% of local revenues are subject to Revenue Sharing and are distributed equally among all 30 teams, with each team receiving 3.3% of the total sum generated. As a result, in 2018, each team received $118 million from this pot.
What this means is that even small market teams earn revenue from professional baseball as a whole as revenue is essentially funneled from the more profitable teams like the Yankees, Red Sox, and Dodgers, to low-performing, small-market teams in places like Pittsburgh, Miami, and Oakland, just to name a few.
The idea behind Revenue Sharing was to make a more equitable playing field: teams in big markets are always going to be able to attract more lucrative sponsorships and are oftentimes where the highest profile players want to play so they can not only play before larger crowds in a more high-stakes atmosphere but also so they can generate their own personal endorsement deals. This does make it harder for smaller market teams to compete, hence the creation of the Revenue Sharing program.
The consequence of Revenue Sharing, however, is that it is not absolutely necessary for teams to field a high quality product on the field in order to be profitable. As writes Griffen Floyd of The Pitt News regarding the Pittsburgh Pirates, just to highlight one example:
The Pirates’ payroll in 2021 was a little more than $54 million. So, hypothetically, if the Pirates kept a similar payroll next year, national TV rights would cover the costs entirely, and then some — leaving a sizable portion for owner Bob Nutting, a man worth $1.1 billion in 2020, to potentially pocket.
It’s not that Nutting and other small market owners don’t have the money to compete against large market teams. They’re choosing not to, and the owners are getting rich off fans who blindly support them with that defense.
Small market teams and owners like the Pirates and Nutting aren’t the beleaguered victims they are often made out to be…They aren’t losing money, they’re making out like bandits and walking over their fans in the process.
A season of 162 games is long for any team’s fan base, but what about teams who are waving the white flag before the season even begins? Consider this: the Los Angeles Dodgers, who are the favorites this year to win the World Series, have a 2022 payroll of just over $285 million, which is almost as much as the Miami Marlins, Pittsburgh Pirates, Cleveland Guardians, Oakland Athletics, and Baltimore Orioles will pay their teams combined in 2022. Six teams (the Dodgers, Mets, Yankees, Phillies, Padres, and Red Sox) have payrolls over $200 million this year while eight teams are below $100 million. The low spenders are just not going to be able to compete with the high-end teams, and why should the fans of the teams that are not going to put up a fight stick with them for 162 games? In 2021, the Miami Marlins averaged 7,933 fans per game at their home games. The Oakland Athletics were second worst with just 8,767 fans per game. Major League Baseball is plagued by these non-competitive teams, which diminish the overall product to the detriment of the entire league and the sport as a whole.
The Solution is Relegation
The solution to Major League Baseball’s problems lies in the British football (a.k.a soccer) concept of relegation. There are thousands of soccer teams in Great Britain, and they are organized in a hierarchical format of leagues and divisions, the topmost of which is the English Premiere League (EPL). The EPL is the top twenty teams in all of British soccer (think of Liverpool, Manchester City, Chelsea, Tottenham Hotspur, etc.). What is unique about this league, however, is that at the end of the season, the three teams that finish at the bottom of the standings are sent down a league. The top teams from the league below are promoted up into the EPL.
The brilliance of this system is that it penalizes poor play, which, of course, can be due to actual ineptitude on the field, but it can also be the result of owners and executives “tanking” the season. When a team is relegated to a lower division, it is a hit to both the prestige and finances of a team as the television and sponsorship contracts are not worth as much in the lower divisions, not to mention teams are playing in lower quality and smaller venues in front of fewer fans. There is also just an issue of pride: no team wants to get relegated.
This threat of relegation incentivizes all teams to give it their all for the full season. It also makes for a more interesting fan experience as success for a team might not necessarily be winning the season title, but rather just remaining in the top league and not getting relegated. Imagine being a fan of the 17th worst team in the English Premiere League the last two weeks of the season. Do you think fans of the worst teams in Major League Baseball care about the season from, say, the All-Star Break on? People in Baltimore aren’t watching the Orioles in September - they already moved on to the Ravens as soon as NFL training camps began at the end of July.
The relegation system also motivates teams in the lower leagues to strive even harder knowing they can get promoted up a league, which comes with more lucrative financial rewards, higher profile games, and, of course, the chance to ultimately be the top place finisher in the very topmost league.
Therein lies another wonderful aspect of this tiered system: in theory, any team in the whole of Great Britain, could potentially make it to the English Premiere League and win the league title. It may take many years of working their way up league by league, continually getting promoted by finishing at the top of each league, but, in theory at least, any team could do it.
Imagine a system like this for Major League Baseball in the United States. It’s not an exact comparison because minor league baseball teams in the United States are all connected with the major league teams, but imagine Triple-A baseball was its own league and the Rochester Red Wings could get promoted to Major League Baseball and the Pittsburgh Pirates could get relegated to Triple-A. Or imagine if the Portland Sea Dogs could get promoted to Triple-A, and even if there was a hope that the Portland Sea Dogs could someday make it to Major League Baseball by continuing to win their way up. That would make watching the Sea Dogs that much more exciting.
A relegation system like this would not only raise the stakes for Major League Baseball teams and their fans, it would also infuse this country with excitement about the game of baseball. I live in Bangor, Maine, and twice in the last thirty years has Bangor tried to host an independent league home franchise: the Bangor Lumberjacks and the Bangor Blue Ox. Neither team got off the ground, and I believe it was because there was a big question of “so what.” These teams were not going anywhere, and the players were probably not going anywhere either. But what if there had just been the potential that they could have. What if there was a chance of the Bangor Blue Ox playing their way up to Single-A or even beyond. I think it would have been a lot more exciting for everyone. And I think this is one of the reasons why soccer is so popular in England. Yes, it has a deep history there, but so too does baseball in the United States. Communities wrap themselves around their teams in British soccer in ways that we don’t here with baseball in the United States and I think relegation (both the possibility to move up and the risk of being sent down) plays a key part of it.
Why it Will Never Happen
Unfortunately, the financial incentives and power structure in Major League Baseball are too strong to make such a significant change like this. MLB owners are not going to enact a system that would potentially allow their teams to get kicked down a league, losing untold millions of dollars along with prestige, pride, and reputation. Moreover, it is doubtful the TV networks themselves would support such a change, even if it would mean millions of Americans would suddenly be more interested in their local teams. ESPN doesn’t want to do Sunday Night Baseball in Rochester, New York, though. (Then again, ESPN will do Monday Night Football from Green Bay, Wisconsin, which is about half the size of Rochester, and the Green Bay Packers are one of the most storied (and valuable) franchises in the NFL).
Alas, however, it also appears that neither the MLB owners nor the league commissioner have any real understanding of how or why baseball has declined in popularity over the years. Just last week, the president of the Cincinnati Reds, an organization that has not won a playoff series since 1995 and that has had just five winning seasons since the current owners bought the team in 2006, said in response to fan frustrations, “Well, where are you gonna go.” As in, we’re the only game in town, so you’re going to cheer for us. Questions have consistently abounded about whether Commissioner Rob Manfred actually likes baseball.
But fans do have places to go. They can go to other sports, including basketball, hockey, and soccer. Or they can go watch Netflix. Or they could stream any one of thousands of possible shows on dozens of streaming devices. But no one is compelling them to go to the Great American Ballpark in Cincinnati. The Reds are 2-6 to start the season by the way, and lost their most recent home game to the Cleveland Guardians, 7-3, on Wednesday before 10,976 fans in a stadium built to hold just over 42,000.
Ben Sprague lives and works in Bangor, Maine as a V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Follow Ben on Twitter, Facebook, or Instagram.
Happy Easter Ben! I agree with most of your article about baseball although the Big market teams didn't fair all that well last year. At least the top 6 you mention. Houston and Atlanta caused the small viewership to the World Series and teams such as Tampa Bay, Milwaukee, and White Sox with payrolls approximately half of the top 6. The big markets with the Yes and Nesn channels will allow to spend more $$ and I think it has to do with all the associated monies with swag, etc.
In the meantime, lets hope the Red Sox do well in 2022 and cheer for the Pirates to make the playoffs. America loves an underdog story just like Atlanta last year to hosting and winning a "WORLD SERIES" after having the "ALL STAR" game taken from them in 2021, I hope most americans still cheer for fair play and an even playing field which as you have pointed out is becoming tougher and tougher.
Thanks for the great articles and please keep them coming.
Phil Adams
I grew up playing baseball and still love the game but for me the purest baseball is being played outside the MLB stadiums, where neighborhood and amateurs teams play.