Thursday, April 5, 2012

The Bubble Sport Goes Completely Insane Again

For those of you who are not big sports fans and may not realize it, today is Opening Day in Major League Baseball. Once again, hope springs eternal, with every team starting out with a blank slate, dreaming of the possibility of October games and World Series title. I’ll admit, I became hooked on baseball as a kid watching the Big Red Machine back in the mid-1970s, and despite souring on it for awhile after the so-called “labor” dispute that resulted in the cancelling of the 1994 World Series, it has always been my first sporting love.

Like so many other things in America, however, the influence of big money has greatly tarnished America’s game. Beginning in the 1970s, player salaries began to escalate to previously unimaginable heights thanks to the efforts of an aggressive players union. I remember being shocked as a kid back in 1977 when slugger Reggie Jackson, one of the very first superstar free agents, signed a contract with the New York Yankees that would pay him over a half-million dollars per year. But Jackson’s union wasn’t through by a long shot, and over the next 20 years would aggressively confront the owners and stage a couple of strikes which would wipe out large portions of the 1981 and 1994 seasons. The end result could not possibly have been more ironic, during a period in which labor unions in general greatly declined in power and influence and the wages of the average American stagnated in real dollar terms, a professional association representing a group of professional athletes won more and more concessions until Alex Rodriguez really broke the bank by signing a truly staggering $250 million contract with the Texas Rangers in 2001.

Not, however, that we should at all feel sorry for the exclusive billionaire boys club that represents Major League Baseball owners. Starting in the 1980s, no group benefitted from the 30-year debt fueled bubble and the coddle-the-rich tax policies ushered in by Reaganomics. Even as player salaries were exploding, the values of major league baseball teams were rising even faster. Franchises that exchanged hands for $10 million back in the 1970s were suddenly going for hundreds of millions of dollars. And because nearly every city that hosted a major league team was eagerly ready to rape its own taxpayers to build new stadiums featuring revenue generating corporate skyboxes, life was truly good for the fat cat owners.

The only blip on the radar screen was the aforementioned dispute that resulted in the cancelling of the 1994 World Series. At the time, it seemed that the millionaire players and billionaire owners may have finally gone too far in antagonizing the fans. Attendance actually dropped for awhile and the brilliant “leaders” of the game began desperately searching for a way to put fannies back into the seats. Realizing that “chicks (and everyone else) dig the long ball,” what they came up with was a nefarious scheme to “juice” the baseballs and to look the other way while the players juiced themselves so they could hit more home runs. Soon, roided up Goliaths with swollen heads and shrunken testicles were bashing the livelier balls out of the park in record numbers, eventually shattering the two most sacred numbers in all of American sports: 61 and 755. Integrity of the game be damned, we've got millions of tickets to sell.

Baseball finally seemed to at least partly reclaim its senses during the middle of this past decade. Public outcry over steroid use finally helped purge the sport of that particular scourge. Free agent contract awards also leveled off, and for more than a decade no other player signed a contract for even close to the amount of Rodriguez’s deal. In the wake of the 2008 financial crisis, in fact, baseball owners became particularly stingy about giving out the big money, no doubt recognizing that their sport, lacking the massive national television deal that so buoyed the NFL, was far more dependent on the now financially distressed fans for its survival. Attendance, which had been steadily growing since the late 1990s, leveled off in the wake of the crash.

Then suddenly, this past offseason all restraint fell by the wayside and Major League Baseball has resumed throwing money around like there is literally no tomorrow. The Miami Marlins, who had always had a reputation for being a notoriously cheap franchise that would trade star players rather than pay them the big bucks, went all out after a shady, taxpayer funded new stadium deal, giving out over $200 million in free agent contracts to several players. Not to be outdone, the Los Angeles Angels, Detroit Tigers and Cincinnati Reds each paid out well over $200 million for just one player, bringing the 2001 Rodriguez deal much closer to the norm.

But even all of that paled in comparison to the mind boggling figures involved in the recent sale of the Los Angeles Dodgers. Prior to this past month, no major league team had ever fetched more than the $845 million the Cubs were purchased for in 2009. Yet despite that precedent, the Dodgers were sold to a new ownership group for the staggering sum of $2.15 billion, a figure as unprecedented today as the Rodriguez contract was a decade ago.

Right about now, those of you who have indulged me to this point in the article are probably very reasonably asking: “so what does this have to do with peak oil and economic collapse?” Well, the fact is that baseball wouldn’t be throwing around these incredible dollar amounts if the sport wasn’t confident that it is going to see vastly increased revenues going forward. It is, of course, the fans who ultimately pay those nine-figure salaries being doled out to star players and whose support is what increases the value of a franchise well into the ten-figure range. The billionaires who made these decisions clearly believe that in the near future the economy is going to start booming again, and that the average fan will have plenty more money in their pockets to blow on attending baseball games and buying lots of overpriced food and memorabilia at the stadium.

Obviously, I don’t subscribe to that theory. It is really hard to imagine that with all of the headwinds facing working and middle class Americans—underwater mortgages, massive student loan debts, skyrocketing health care costs, tepid job market and high gasoline prices to name a few—that they are suddenly going to experience a surge in their disposable incomes. And all of that is not even counting what will happen when the economy does finally slip back into recession.

The fact is that Major League Baseball, which benefitted greatly from the loose fiscal policies of the bubble years, is now in the process of blowing the biggest bubble of all at precisely the worst possible time. The sport is setting itself up for a spectacular blow up akin to the way Las Vegas kept building larger and more lavish casinos right up until the moment when the gamblers stopped coming in such large numbers and the local economy cratered.

So, as I said before, it’s Opening Day. Hope springs eternal for every baseball fan, who can for at least this one day imagine that this will be the year their team makes it to the World Series. Enjoy it while you can, because the idiots who run the game have virtually ensured that the sport is heading for a very spectacular downfall.

Let’s play ball!

Addendum: Here's a little story from Deadspin about how if you have cable or satellite teevee, you are subsidizing billionaire sports team owners, whether you want to or not.

Bonus: "Put me in, coach...I'm ready to play today"


  1. I still enjoy sports sometimes, but like so many things, the greed has reached such an obnoxious level that I’m to the point that I don’t care all that much about any of it. I really think people can have just as much fun going to the low level stuff- in Arizona you could sit in the sun and go to spring training games. We have a low tier hockey team around here and it can be fun to go to see them- last time I went they handed out loaves of bread after the game. It was wonderfully WTF? It was also cowbell night. That’s always a plus.

    We recently had the local team hit the Final 4 with all the tents around town and their 30 dollar officially licensed crap t-shirts and such. A friend told me her daughter worked for the Kansas University paper during school and they had to pay a separate entity something like 40,000 a year to use the logo of the Jayhawk mascot on the school paper. It’s to the point of weird- the money involved and the rules. And the vast majority of kids playing just get used up and spit out.

    Like everything else, they are finding a way to milk every penny out while producing a lesser, more plastic product. Maybe it all went downhill when they started naming stadiums after corporate entities, I don't know.


    "Nine of 30 teams reportedly in violation of MLB debt service rules"
    LA Times June 02, 2011 | By Bill Shaikin

    Nine of 30 teams reportedly in violation of MLB debt service rules according to information presented in a confidential briefing at the owners' meetings last month and confirmed to The Times by three people familiar with the presentation.

    Commissioner Bud Selig declined to comment for this story. His predecessor, Fay Vincent, said he would consider the number of teams in violation of the sport's debt rules to be "troublesome."

    The rules, intended to ensure clubs have the resources to support their financial obligations, generally limit a team's debt to 10 times its annual earnings, although Selig has wide latitude to enforce those rules.

    "You've got to be thinking, with two of the premier franchises in trouble and a major-market team that has just come out of bankruptcy, what else is out there?" said the banker, who declined to be identified because of his work with the league and its clubs."

    Ha, what the hell would a banker know about bankruptcy? MLB has simply adopted the modus operandi to any and all modern financial problems. "Just relax the rules and put it on credit!"

    My favorite television commercial in the past 10 years parodys this perfectly.

    Lending Tree Perfect Life -