Friday, January 14, 2005

The 5 Biggest Problems the Royals Face

The Royals' offseason is winding to a close, and it doesn't appear that they're going to be making any additional moves before the start of the season. Mike Sweeney is grumbling about being misled and hinting at a trade request, but the Royals have very few options when it comes to moving Sweeney (more on this in a moment), so that isn't likely to happen.

So, as the team approaches spring training, I'm going to lay out the 5 biggest problems the Royals face right now as a franchise over the next several days, starting with the obvious one: market size.

1) The size of their market, even in their own division. This might not be particularly enlightening on a basic level, but the point is worth repeating. The Royals play in the third smallest television market in all of major league baseball (just ahead of Milwaukee and Cincinnati), but that actually understates the problem. The real issue is that even in their own division, perceived to be weak and therefore equitable for small market teams like the Royals, they are BY FAR the smallest market:

Number of TV Households
Detroit: 1.9 million
Chicago: 1.7 million (half of 3.4 million, assuming a split with the Cubs)
Minnesota: 1.7 million
Cleveland: 1.6 million
Kansas City: 0.9 million

Minnesota, once a candidate for contraction, is nearly twice the size of Kansas City. The team operates under serious financial hardship with poor revenue streams from the putrid Metrodome and a below market local TV contract, which has leveled the playing field financially with the Royals for some time (and given how successful they've been, underscores how well run the Minnesota franchise is). But their market potential is truly much greater than Kansas City's, and if they ever get a new stadium, their finances and TV contract will grow considerably, leaving the Royals in the dust.

These market inequities do not excuse the complete lack of baseball competence that the Royals have displayed under the Robinson and Baird regimes, which are the primary causes of the team's fall from grace. But it does give you an idea of the financial handicap under which the Royals operate.

If the league were serious about realigning to make truly competitive divisions for the regular season, the Royals would be sharing a division with Milwaukee, Cincinnati and St. Louis (yes, St. Louis is a small market with only 1.2 million TV households). Of course, Milwaukee and Cincinnati have brand new, high revenue generating stadiums, and St. Louis has a new stadium under construction, creating another immediate disadvantage for the Royals. But with a new downtown stadium the Royals would be on a relatively level playing field with these teams.

Solutions? The next CBA must contain provisions for sharing local revenues that encourage investment among low revenue teams. The late Doug Pappas proposed a plan that would establish just such a system that takes the proper incentives necessary to induce small market clubs to invest while punishing high revenue clubs from overspending. No matter the system, it has to recognize two principles.

First, high-revenue teams cannot succed without the participation of low-revenue teams. The Yankees may bring in 40,000 per game, but they wouldn't even HAVE games if the Devil Rays, Blue Jays, Indians and Royals didn't roll into town for the pleasure of being bludgeoned. The current system (a result of a CBA in the 90s, I believe) leaves all local revenue with the home team, which does nothing to promote competitiveness throughout the league.

Second, shared revenues must be proportionate to the local revenue generated as a result of the games. A system that simply takes a percentage of local revenue and places it into a shared pool that is redistributed proportionately throughout the league doesn't provide much of an incentive for cash-poor teams to make investments in their own team. On the other hand, if small market teams know that investments into their team will yield greater financial returns not just in home gate receipts (and TV revenues) but also in ROAD game receipts (which constitute 50% of their schedule, after all), then they'll have a real financial incentive to invest as much as possible to try to field a winning team (or at least with players that will bring in crowds). If the Royals go into New York every year without a competitive team or any players that fans will flock to see, then it will depress attendance ----> lower gate receipts -----> less local revenue shared with the Royals. Pappa system goes further, shielding nearly all local revenues from small market teams while taxing large market teams heavily for their indulgences. This would have the effect of reducing competitive imbalance and squeezing player salaries.

Of course, large market teams will still retain their competitive advantage due to their television contracts (but a case could also be made that those revenues should be shared proportionate to ratings as well), but at least a system of this sort produces market incentives for teams like the Royals to field competitive teams year-after-year so their fans don't have to endure "rebuilding" seasons every other year.

The other problems (to come):

Mike Sweeney's contract.

Where are the corner outfielders?

Pitching injuries.

Does David Glass really want to win?


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