Thursday, March 10, 2005

What Must David Glass Do?


What are the responsibilities of a baseball owner? On the Royals discussion board, there is a minority but persistent view that David Glass, being super wealthy, is a "cheap" owner who owes it to the City to invest more money in the baseball team. While I think Glass spends far too much time pretending that he could play with the big boys if he wanted to, and there are some sensible, creative investments he could make that could pay dividends down the line, the bottom line is that he is under no obligation to do so - and a spending frenzy on major league payroll doesn't make any sense anyway.

This isn't a benevolent enterprise. If David Glass wants to give his money to charity, there are far more important causes than professional baseball in Kansas City. I've never understood why anyone expects an owner to lose tens of millions of dollars a year to placate a few thousand hardcore baseball fans.

In fact, David Glass is just playing the hand he was dealt. The CBA is structured to give low revenue teams like the Royals a DISINCENTIVE to invest in their teams. It requires all teams to share 34% of all their local revenue from the first dollar. The Royals end up receiving a large chunk of revenue sharing dollars (about $20 million), but the CBA doesn't give the team an incentive to invest it in the team. Doug Pappas puts it best (and I stole all of this stuff from him, to give proper credit):

In fact, [34%] revenue sharing has a greater deterrent effect on bad teams like the Royals and Devil Rays than on the Yankees or Red Sox. Any club would be reluctant to increase its payroll by $1 million unless it thought the move could increase local revenues by $2 million. This would be relatively easy for contenders, for whom a better team means higher attendance and a better chance of making the playoffs --but for bad teams, spending an additional $5 million to improve from 67 to 75 wins is a terrible investment. Thus while sharing money with low-revenue teams may be a good idea, taxing them isn't.
A smart system would give the Royals revenue sharing money and then let them spend it without penalty. But right now there is a penalty, to the tune of 34% of any increased revenue resulting from those investments. That's crazy.

In any case, with the amount of money the Royals could conceivably spend on free agents ($15 million more? $20 million more?), there isn't a chance in hell that those acquisitions are going to move the Royals from 58 to 94 wins, which is what it would take for the investment to payoff in higher local revenues (attendance, TV ratings, merchandise sales, etc.). Glass may as well just give out the pin to his PayPal account.

No, until the CBA becomes much more low-revenue team friendly, the Royals' strategy has to be to try to develop their own core talent so they can generate cheap win shares, and fill in with bargain free agents where necessary. There's a natural limit to how much the Royals can spend in free agency, and its not going to matter one bit if the team doesn't develop core players from their own player development system.

But that's primarily Allard Baird's responsibility. David Glass' should be focused on improving competitive balance in the CBA, not burning his money unnecessarily for a charity case.


At 7:07 PM, Anonymous Anonymous said...

David Glass is to cheep to pay money for a good player. I know how he works I work at Wal- Mart. He wants everything and pay nothing. Funny that it does not work that way in todays sports world. Look at the royals record.


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