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Competitive Balancing Act I, Scene I—The King James Version: An Overview of the Literature
2004-02-24 13:49
by Mike Carminati

Other entries in the series:

Competitive Balancing Act I—The King James Version: An Overview of the Literature, Scenes I, II, and III
Competitive Balancing Act II—This Is Pop: Redefining Large- and Small-Market by Population
Competitive Balancing Act III—C'mon Freddy, Everyone into the Poo-el: Reviewing the Available Player Pool
Competitive Balancing Act IV—Natural Resources: Attendance and Competitive Balance

I called the New World into existence to redress the balance of the Old.

—George "Oil" Canning

I was watching "Real Time with Bill Maher" the other day, and Bill's guest for one segment was Republican Senator George Allen, son of the Redskin and Ram coach of the same name. Maher, citing the Alex Rodriguez trade, posed a question—well, I guess it was more of an analogy. He said that he always viewed the Republican party like the baseball: the rich get richer and the rest are left to their own devices. Allen responded that they were closer to the more egalitarian NFL: everyone gets a chance. (Or as we used to say in school, "So-and-so is like a doorknob. Everyone gets a turn." But maybe we intended something else there.) Allen then nauseated the audience with a stream of obviously pre-canned football analogies about how great the Republicans are that must go over big on Rush Limbaugh, right before the segment denigrating a new African-American quarterback each week (I know that was on ESPN not on Limbaugh's show).

Anyway, the idea that the NFL was a model of parody—oops typo—parity and that baseball was ruled by the Yankees and a handful of others running roughshod over the rest of the teams is so ingrained in the American collective conscious that even politically incorrect shows accept it without question. This is the NFL that has a perennial underclass of teams in Arizona, Cincinnati, Detroit, San Diego, etc. Meanwhile in baseball, the Yankees haven't won a World Series since 2000 and "small market" teams like the Marlins and Angels have won the last two seasons. But baseball, mostly through its own doing, gets no credit. Running down the competitive balance in the game was a personal hobby for Selig for the two seasons prior to the negotiations for the last Collective Bargaining Agreement in 2002. It seems that he did such a good job that his alleged efforts to promote the game ever since the CBA was signed still are not making a dent in the din.

The general zeitgeist seems to hold that baseball is not occupying an even playing field so to speak. I happen to disagree with this position. I started a still-born study on the issue last year and would like to revive it and hopefully finish it before the season starts.

Here's where I left off:

The financial results of the past season prove that salaries must come down. We believe that players in insisting upon exorbitant prices are injuring their own interests by forcing out of existence clubs which cannot be run and pay large salaries except at large personal lose.

The season financially has been a little better than that of [the previous year], but the expenses of many of the clubs have far exceeded their receipts, attributable wholly to high salaries. In view of these facts, measures have been taken by this League to remedy the evil to some extent for [next season].

—NL President William A. Hulbert, September 29, 1879, announcing the adoption of what he called the "uniform player contract" but which became known as the "reserve clause" after a league meeting in Buffalo.

Today baseball woke up and recognized there was an 800-pound gorilla sitting in our living room — the lack of competitive balance in the game. Let’s cure some of the problems. Enough is enough. Baseball has been for too long a big, old oil transport ship that takes forever to turn. Bud should take the rudder and turn ASAP.

— Larry "Luke" Lucchino (Get it? He fights the Evil Empire), then of the San Diego Padres (he's since been promoted to Red Sox), January 20, 2000

By every measure, baseball is in the midst of a great renaissance. Never has the game been more popular. We set a new attendance record in 2000, drawing nearly 73 million fans to our ballparks. More fans attended Major League Baseball games than attended the games of the other three major professional team sports combined. When you add the 35 million fans drawn by minor league baseball, the aggregate number of fans that attended professional baseball is nearly 110 million. In the so-called halcyon days of New York baseball in 1949, the three New York teams—the Yankees, the Dodgers, and the Giants—drew a combined 5,113,000. Last season, the Yankees and Mets drew 6 million.

The only set of circumstances—and I have often said this, Senator —that can impede this great renaissance is our inability to solve the problem of competitive imbalance. During the past decade, baseball has experienced a terribly disturbing trend. To put it simply, an increasing number of our clubs have become unable to successfully compete for their respective division championships, thereby making post-season appearances, let alone post-season success, an impossibility.

The enduring success of our game rests on the hope and faith— key words here, ‘‘hope and faith’’—of each fan that his or her team will be competitive. At the start of spring training, there no longer exists hope and faith for the fans of more than half of our 30 clubs, and we must restore that hope and faith.

The trend toward competitive imbalance which is caused by baseball’s economic structure began in the early 1990’s and has consistently gained momentum. Indeed, as I testified in 1994 before members of the U.S. House of Representatives, baseball’s economic problems have become so serious that in many of our cities the competitive hope that is the very essence of our game is being eroded.

Unfortunately, baseball’s economic problems have only worsened since 1994, and for millions of our fans the flicker of competitive hope continues to become more faint. The competitive imbalance problem is one that, if not remedied, could have a substantial effect on the continuing vitality of our game.

— Baseball Commissioner "Concealment, like a worm i' the" Bud Selig (from Twelfth Night) at the Senate hearings on competitive balance (i.e., Hearing Before The Subcommittee On Antitrust, Business Rights, And Competition Of The Committee On The Judiciary
United States Senate entitled "Baseball’s Revenue Gap: Pennant For Sale?"), November 21, 2000.

Competitive balance has been a concern in baseball almost since the beginning of the sport as an organized concern. In two years leading up to last year's labor dispute and the resulting collective bargaining agreement, Bud Selig and the owners painted a dreary picture of baseball's immediate future. Whether this was just a negotiating tactic or an airing of the sport's laundry in public, it did seem to correspond to the year leading up to the first deadline for the old CBA. And when the deadline was extended in the wake of the September 11th tragedy, the rhetoric seemed also to be extended. Talk of competitive balance since the new CBA is of how the Angels rode the crest of positivity that the improved competitive balance engendered. (You might guess my stance on the issue from these observations.)

I am belatedly starting a series on competitive balance to examine how balanced the game has been historically and how balanced it remains today. The first section of the competitive balance series will review what has been written up until now regarding the topic. Of course, it will be in my own idiomatically irreverent style. I will review the findings of baseball's independent Blue Ribbon Panel of MLB insiders, paleontologist Stephen Jay Gould's explanation for the death of the .400 hitter, Bill James' 1990 analysis on competitive balance, economist Andrew Zimbalist's take on the state of the game, as well as a few papers that I have found online from non-professionals.

The Report of the Independent Members of the Commissioner's Blue Ribbon Panel on Baseball Economics (July 2000) and Its Updated Supplement (December 2001)

"Professional baseball is on the wane. Salaries must come down or the interest of the public must be increased in some way. If one or the other does not happen, bankruptcy stares every team in the face."

—Chicago White Stockings nee Cubs owner A.G. (as in America's Game and "almost god") Spalding, 1881.

"Unless something happens, we're all going to be out of business. When you have as many teams as there are losing money, something has got to give."

—Cleveland Indians chairman Patrick J. "Don't Call Me Shaquelle" O'Neill, 1985.

"The one thing we know today is we can't continue to do business the way we have in the past."

—"Hey Bud, let's party" Selig, 1992.

First, let me say that this is the finest work (or works) of fiction on the list. And the fiction starts line one, page one:

The Commissioner's Blue Ribbon Panel on Baseball Economics, representing the interests of baseball fans, was formed to study whether revenue disparities among clubs are seriously damaging competitive balance, and, if so, to recommend structural reforms to ameliorate the problem.

If you believe that, then you must believe that the commissioner acts solely in the best interests of baseball and that George W. (the other one) was looking out for Joe Lunchpail when he instituted his tax rebate and the doublespeakiest of all, the Patriot Act. There are sixteen men on the panel (listed on p. 54), twelve of which work on or own a major-league team. The four independent members that are the sole members listed on the front of the report (Richard C. Levin, George J. Mitchell, Paul A. Volcker, and George F. Will) are not without their ties to the sport as well.

Doug Pappas has a great review of these documents at his site, in which he points out:

The four "independent" members are Yale president Richard C. Levin, who drafted the owners' 1989 salary cap proposal; former Federal Reserve chairman Paul Volcker, who represented the owners on the last blue-ribbon economic panel, in 1992; former Senator George Mitchell, often mentioned as a possible Commissioner; and columnist George Will, who in a remarkable conflict of interest serves on the boards of both the Orioles and the Padres.

I'll have to defer to Kramer regarding Mr. Will: Kramer found him "attractive", but "I don't find him all that bright." I'm sorry to bring down the collective IQ of those reading this study.

Anyway, the period covered by the study corresponds to the period since the signing of the last CBA (or at least the peace presaging the previous CBA), 1995-1999. It was released in time to become the basis for the war over the last CBA (which was to be signed at the end of the 2001 season but because of the September 11 tragedy was postponed for one year). So clearly it was envisioned as propaganda. Even though some of the recommendations of the panel (more revenue sharing and no salary cap) were less extreme than the owners' original bargaining position and even the final position agreed upon in the CBA.

However, maybe these men who have an incestuous relationship with baseball can still view the facts objectively. Their mandate is as follows after all:

[T]he Independent Members were charged with studying the economic condition of the game and producing a report addressing the relationship between MLB’s current economic structure and competitive balance, and the ramifications of the current economic system for the future growth, health, stability and competitive balance of Major League Baseball.

Well, there's one problem with that theory: the facts they use for baseball's finances are solely based on what the clubs reported. Therefore, there are only three teams who claim to have made money over the period covered (1995-1999), the Yankees, Rockies, and Indians. The Braves allegedly had the fourth highest revenue in baseball over that period and still lost about one mil annually. One has to wonder how the Braves deal with TBS is factored into the revenues/expenses. The Dodgers are alleged to have lost over $15 M a year 1995-99. And yet Rupert Murdoch bought the team for $350 in the middle of all these losses. And as Pappas mentions Financial World and Forbes estimated that baseball made $400 M over the same period.

Also, there's the skeleton in baseball's closet that the panel does not discuss, the missing money. The report states:

"Measured simply in terms of gross revenues, which almost doubled during the five complete seasons (1995-1999) since 1994, MLB is prospering. But that simple measure is a highly inadequate gauge of MLB's economic health."

That may be but the panel never says why. They do go on about how the revenue disparity among the various quartiles in baseball grew over the four years even though the revenue for the teams at the lowest rung in the ladder still grew, just more slowly as if that were a shocking finding. They never discuss why the total revenues for baseball went from $1.4 B to $2.8 B (an almost $1.4 B increase) directly due to local revenue increases while total payroll went from $0.9 B to $1.5 B (an almost $0.6 B increase). Local Revenue is defined as "gate receipts, television, radio and cable fees, ballpark concessions, advertising and publications, parking, suite rentals, postseason, spring training and other baseball revenues." (p. 59) There's about a $0.8 B difference. That's more than half the revenue at the start of the four-year period and that's from the extremely conservative numbers that the clubs reported. Where did it go? Why isn't it even discussed in the report? Did it go only to the top quartile? They don’t say. They go on about sharing revenue when there's nearly and drafting prospects off the 40-man roster from better teams but there's almost a billion dollars that disappeared into the ether, enough to cure all of baseball's woes, and they don't even mention it.

They do mention that "club debt nearly quadrupled over seven years, from $604 million in 1993 to $2.08 billion in 1999" (p. 12). And yet were expected to swallow that fabrication out of wholecloth without further elaboration. This is an industry in which sweetheart stadium deals are handed to club owners while the one real expense player payroll is being outpaced by revenues, and yet debt quadrupled. Didn't this send any red flags to the panel that the fiscal numbers were more Monopoly than Arthur Anderson (or maybe it's the reverse since Enron)? I forgot that they were so far in bed with the clubs that they would even enjoy spooning with Bud Selig ("Those aren't pillows!"—Planes, Trains, and Automobiles).

I can't speak to the revenue numbers because they are a) not really available, b) too labyrinthine and c) all bloody bollix anyway (Sorry, I was just watching Angel and felt compelled to channel Spike). For many teams baseball is inextricably entwined with the owners' other businesses as evidenced by underpriced cable deals and the like.

In a later section of the study, I will speak to the payroll numbers, which Pappas also points out is erroneously based on rosters (25- and 40-man) as of September 1 of the given year. This obviously increases the payroll numbers for contending teams who regularly add high-payroll for the stretch run even though they oftentimes will not even pay as much as the prorated salary of the mid-season acquirees.

It's not as if all of the suggestions made by the panel are without merit. Revenue sharing is clearly the most logical if not unfortunately the most straightforward way for baseball to resolve its disparities. However, even though this augustly owner-favored panel recommends it, the owners are still too distrustful of each other to enact it.

They also come down against contraction: "If the recommendations outlined in this report are implemented, there should be no immediate need for contraction." (p. 44; italics theirs) And they are for relocation: "Franchise relocation should be an available tool to address the competitive issues facing the game. Clubs that have little likelihood of securing a new ballpark or undertaking other revenue enhancing activities should have the option to relocate if better markets can be identified." (p. 43; italics theirs) That is counter to the de facto position of baseball, which has had an unstated 30-year moratorium on clubs relocating. Then again, baseball is all for the threat of relocating, to paraphrase Ian Faith, to prize new stadiums and other concessions out of the locals.

However, I am not a big fan of a number of their findings. Their overall conclusions (p.1) are as follows:

a. Large and growing revenue disparities exist and are causing problems of chronic competitive imbalance. (Italics theirs)

b. These problems have become substantially worse during the five complete seasons since the strike-shortened season of 1994, and seem likely to remain severe unless Major League Baseball (“MLB”) undertakes remedial actions proportional to the problem. (Italics theirs)

c. The limited revenue sharing and payroll tax that were approved as part of MLB's 1996 Collective Bargaining Agreement with the Major League Baseball Players Association (“MLBPA”) have produced neither the intended moderating of payroll disparities nor improved competitive balance. Some low-revenue clubs, believing the amount of their proceeds from revenue sharing insufficient to enable them to become competitive, used those proceeds to become modestly profitable. (Italics theirs)

d. In a majority of MLB markets, the cost to clubs of trying to be competitive is causing escalation of ticket and concession prices, jeopardizing MLB's traditional position as the affordable family spectator sport. (Italics theirs)

Wow, I'll agree that "small market" owners are lining their pockets with money that they could be re-investing into their teams. And I'll agree that the revenue sharing and luxury taxes of the old CBA did not a heck of a lot. I'll even agree that "[l]arge and growing revenue disparities exist."

However, I have a problem with stating that the problems of competitive balance are "chronic" based on the finances. It may be true but I don't think you can base it on the shoddy factual information here.

I also have a problem with their prediction that the alleged problems are "likely to remain severe" unless baseball intervenes. First, this was a great bargaining chip for the CBA negotiations. And second, the problems, if there are any, may just be cyclical. I mean we are talking about an era in which three teams dominated pretty well: the Yankees, the Braves and very briefly the Indians. Sure, a few others snuck in. The Marlins even won a World Series, but these teams accounted for eight of the ten World Series teams during the period.

They also allegedly constitute two of the three money-making teams in baseball (and the Braves only lost money due to oppressive accounting). So maybe that confirms the claims of revenue disparity? Or maybe given the austere measures in Cleveland and Atlanta in the last couple of years, those teams just happened to have put together short-lived dynasties, that while they lasted resulted in greater revenues.

That, of course, still leaves the high-spending, high-revenue Yankees unaccounted for. But if its one club that is a problem, how does that constitute a chronic problem. Besides couldn't that problem be cured by the creation (or rather relocation) of the New Jersey Expos?

The last point that ticket prices and concessions are driven by the costs to remain competitive has been proven false by a Doug Pappas study that I'll go into later. However, I'll say that this assertion is patently ridiculous and defies over hundred years of baseball history as well as basic economics. Teams set ticket prices to maximize profits. If they could charge $1000 and sell out every night they would. However, that is unlikely. So what they do is try to maximize the money the take in. If that means fewer people attend but prices are higher, so be it. They know that higher prices will result in fewer fans in the stands. They estimate how many fewer and determine what price will maximize the final gate.

There are some other assertions/findings in the study that cause me agita as well. The words "strong correlation" are used a bit:

[T]here is a strong correlation between high payrolls and success on
the field. (p. 4)

There also has been a stronger correlation between club revenues/payrolls and on-field competitiveness in the years since the issue of competitive balance was studied by the Joint Economic Study Committee which issued its report in 1992. (p. 12)

If I remember my Statistics correctly, "strong correlation" is a term used to indicate that the relationship has a 90% confidence interval, that you can be at least 90% confidence that the a value will fall within a reasonable distance from a line drawn between the data points for the data. I see no indication that any such evaluation was performed and would be surprised if one even was. We will do an analysis of our own in a future section of the study.

Then there's the other sport envy, a mania that Bud and the other baseball leaders have promulgated for some and made part of our collective sports culture.

Baseball operates under an anachronistic economic model, unlike the NFL and NBA…The NFL and NBA have thrived with structures that allow franchises in widely different kinds of markets (including small media markets such as Green Bay and San Antonio) to succeed. (p. 6)

An indicator of such balance would be a ratio of approximately 2:1 between the average payroll of the payroll Quartile I clubs to the average payroll of the payroll Quartile IV clubs…In recent years the NFL, which enjoys substantial competitive balance, has had a ratio of the average of the highest seven payroll teams to the average of the lowest seven of less than 1.5:1. The comparable figure for the NBA during the last three years has been less than 1.75:1. MLB's current ratio, using either 25-man roster payrolls or 40-man roster luxury tax payrolls, is in excess of 3.5:1. (p. 7)

Well, a weak union and a salary cap will do that. Why is 2:1 ideal? And why is having a low payroll in and of itself a bad thing? Talented young teams sometimes have low salaries. Look at what the Indians did in the early Nineties. Look at the bloated salaries of the Mets and Rangers over the last few years or the Orioles a few years ago and then consider the level of success on the field those teams achieved.

Besides this statement seems to be contradicted by this snippet in the supplement:

In 2001, the ratio was closer to 3:1. In 1999, the last season examined by the Blue Ribbon Panel, the actual gap in average payroll between payroll Quartile I clubs ($78.8 million) and payroll Quartile IV clubs ($20.2 million) was $58.6 million. By 2001, the actual gap had grown to $64.4 million.

The ratios were getting closer but the disparity was greater. So which is it ratios or the disparity?

Besides, successful teams will probably have higher payrolls if you look just at the team in the successful season. The Marlins had a high salary in their one successful year in the period, 1997, and then had smaller payrolls and much less success in other years. If you look at the Indians in the Nineties, you'll see that they had success with a relatively small payroll and then with a larger payroll. Well, I'm getting ahead of myself: this will be looked into in a later section.

One thing that this study does provide us is a definition for or rather a measuring stick of competitive balance:

Proper competitive balance will not exist until every well-run club has a regularly recurring reasonable hope of reaching postseason play. (Italics theirs; p. 5)

"Well-run" is hard to define, as is the overly alliterative "regularly recurring reasonable hope". I'll attempt to define the latter later on in the study and use it to measure competitive balance.

"The Numbers" series by Doug Pappas

"You go through The Sporting News for the last 100 years, and you will find two things are always true. You never have enough pitching, and nobody ever made money."

—Donald "We've been kicking ass for 35 years; We're ten-and-one" Fehr

"Anyone who quotes profits of a baseball club is missing the point. Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and I could get every national accounting firm to agree with me."

—Paul "Double X" Beeston, as a vice president with the Blue Jays and later baseball's chief operating officer until similar open-mindedness got him canned.

Pappas put out an eight-part series based on financial disclosures made by MLB for the 2001 season. This was to buttress Bud Selig's testimony before Congress over contraction. Remember the famous gagging of Donald Fehr over the players union's knowledge of the real financial statements and Rep. John Conyers' "We don't have the numbers, we don't have the numbers" attempts that fell on deaf ears?

Conyers also soon after asked Selig to resign following the disclosure of a loan he received from Carl Pohlad in violation of baseball's rules. When Bud demurred, Conyers then suggested that baseball a) table the contraction issue for a year and b) remove the gag from MLBPA's collective mouth over the fiscal numbers because of concerns "that baseball's losses may have been overstated" and "that financial material exists which has not been turned over to the Committee." Bud's response was a tutorial in how to assert, "Of course," while really saying, "No frigging way!" Bud's own doublespeak, Buddlespeak.

Anyway, back to Pappas. He poses, "MLB somehow managed to lose $519 million in 2001 despite record revenues of more than $3.5 billion. This claim was met with derision by virtually all independent observers… Are the books cooked? If so, how?"

Pappas then proceeds to examine the financial disclosures item by item: gate receipts, local media revenues, postseason revenue, local operating revenue, player compensation expenses, national and local expenses, and interest expenses.

His only issues with the revenues are the low cable revenues for the two superstation teams, the Braves and the Cubs as well as the Phils and Red Sox who control the cable outlets (and possibly the Tigers hiding some of their new-stadium money).

However, Pappas really gets rolling when he starts to delve into the expenses. First, payroll:

Player salaries are investments. A team that spends its money wisely wins more games, and in any market, a winning team means higher attendance and more public interest[,] which ultimately translates to larger media contracts and more money for the owner... A team which spends poorly, like the Orioles or Devil Rays, has the worst of both worlds: higher expenses without higher revenues. (Italics his)

He also points out that two of the top three teams missed the playoffs and that the A's were 26th in payroll but had the second-best record in the majors. This flies in the face of the Blue Ribbon Panel's 1995-99 analysis.

Pappas then introduces a formula to compare team payrolls, called marginal salary for marginal win. He feels this is an improvement over facilely dividing payroll by wins. Given that there is a minimum player salary that must be met, "it's impossible to spend $0 on a team." So Pappas divines that a team made up of league-minimum players would win 30% of its games (49-113) though he doesn’t explain where that figure comes from. His final formula is then:

Marginal salary per marginal win = (Adjusted player compensation - $13,000,000) / ((Winning percentage - .300) x 162)

With this method he finds that the Twins, who were last in payroll, got the most wins for the least money ($480K in marginal salary per marginal win). They were followed by the A's (26th in payroll but only $526 K per marginal win), M's (9th and $941 K), and Phils (23rd and $972 K).

Meanwhile the Orioles, who were 12th in payroll, paid the most per marginal win ($4.53 M), followed by D-Rays (19th in payroll, $3.27M per marginal win) and Rangers (8th and $3.26 M). Rounding out the top four were the Red Sox, whose payroll was number one barely ahead of the soon-to-be-dubbed "Evil Empire" Yankees and whose marginal salary per marginal win was $3.12 M.

This clearly shows that payroll does not translate into on-field success, at least not in 2001. It is much more in line with Pappas' payroll-as-investment theory.

Finally, Pappas tackles what baseball terms "National and Other Local Expenses", but Pappas dubs a "black hole". It's basically every other expense besides team payroll and interest.

He finds that expenses vary greatly and that not all of it can be explained by more funds being invested in the farm system and other valid expenses. Clubs seem to use this category for hiding accounting tomfoolery (e.g., the Cubs charge themselves three times the norm for advertising on their own TV channel and in their own newspapers.)

He then uses the A's as an example of a streamlined front office:

[T]he average club spends almost 50% more than the Athletics to achieve far less. If every club were to reduce its non-stadium-related overhead to Oakland's level, MLB would save more than $500 million. That they haven't is strong evidence that MLB is exaggerating its financial difficulties.

Pappas is not enamored of baseball's revenue sharing plan for two reasons:

First, it doesn't require recipients to try to compete: owners can simply pocket the money, treating it as a no-obligation subsidy.

The second problem results from a definitional ambiguity. "Small-market team" can mean either "low-revenue team" or "team that plays in a small metropolitan area."

The result is that "MLB's revenue sharing formula shortchanges popular, well-run teams in smaller cities while rewarding incompetently managed big-market clubs" and that the welfare-recipient Milwaukee Brewers end up being the most profitable team in baseball. I'm sure Bud Selig doesn't mind that a bit, no matter how little he may have had with that happy news.

Pappas suggestion for fixing revenue sharing is to factor in market size. He also advises, "MLB needs to realize that badly run teams should lose money. Very badly run teams should lose even more."

Finally, interest payments that comprise about a third of baseball's losses in 2001 are, in Pappas's view, a rococo of half truths and outright lies. For example, he explains that if the Twins were sold for $150 M, one half would be considered the price of the franchise for tax purposes and the other half for the player acquisitions costs for players already under contract, which would be a tax write-off. Therefore, what is considered a loss actually benefits the owner. (In this example, a $175 M loss is a $60 M gain.)

Pappas promises to explain how "the owners' [then] current labor proposal…could actually reduce the competitive balance the owners claim to be protecting" in the last entry, but inexplicably never touches the subject (To quote Fred Willard in A Mighty Wind, "Wha' happened?").

Instead he compares baseball's numbers against a Forbes magazine report. Forbes estimates that baseball's $232 M in losses are actually a $76.7 M profit. The report was of course lambasted by Selig and the MLB reps. as "pure fiction." I had to include this part because it was too good to pass up:

In the real world, where Selig wields his precious Blue Ribbon Panel report as a club to demand givebacks from the players and new stadia from the taxpayers of Minnesota, Kansas City, Miami, and Oakland (to list just the clubs threatened during Bud's 2002 Extortion Across America tour), any writer meeting the Commissioner's standards of "good journalism" should be fired. Unless and until MLB allows an independent outside auditor to review all its financial records, and to disclose the results publicly in a report whose contents are not subject to MLB's prior review and control, its self-serving statements should be afforded no more deference than those of any other special-interest pleader.

I think Pappas's study counters any believability the Blue Ribbon Panel may have had left. But it leaves as back at sea. Next we will look at how paleontologist Stephen Jay Gould's investigation of the death of the .400 hitter could affect competitive balance.

"The Model Batter:Extinction of 0.400 Hitting and the Improvement of Baseball" from Full House: The Spread of Excellence from Plato to Darwin by Stephen Jay Gould (1996)

[T]he game hasn't changed...I see the same type pitchers, the same type hitters...I am a little more convinced than ever that there aren't as many good hitters in the game… They talked for years about the ball being dead. The ball isn't dead, the hitters are, from the neck up.

—Teddy Ballgame in The Science of Hitting (pp. 11-12, 1972 ed.), on his experience as a manager (a quote that has taken on added nuance thanks to Williams' son). This quote faces a graph titled "Decline of the Hitter: From 1930 to the Present", which of course shows a steady decline in runs scored, homers per game, and batting average accompanied by a sharp increase in shutouts until 1968. However, the graph continues until 1970 and these trends all reverse, so to negate their impact, those two years are designated expansion years. (This is also disingenuous since there were no new teams in 1970, while the expansion years of 1961, 62, and 65 are not so designated.)

Two things have pretty much taken care of the .400 prospect. One thing is called the slider…[the] second reason is the improvement of the bullpen.

—Stan Musial, who never managed the Senators

Skip: You guys. You lollygag the ball around the infield. You lollygag your way down to first. You lollygag in and out of the dugout. You know what that makes you? Larry!

Larry: Lollygaggers!

Skip: Lollygaggers. (shaking head in shame)

—"Bull Durham"

The .400 hitter is like Jacob Marley in A Christmas Carol: both are long dead but their spirit casts a pall over the present. Even though baseball just experienced arguably its offensive apogee in the last decade, one still hears throwback journalists decrying the quality of today's ballplayer. And without exception the rallying cry of the things-were-better-in-my-dayists is the death of the .400 hitter, the number that revisionist history has made into the watershed mark of the game.

This subject may seem far afield of our topic of competitive balance. However, remember that implicit in the .400-hitter post mortem are all the issues that pertain to competitive balance: the quality of play, distribution of players, and the general advancement in training, equipment, strategy, etc.

After all, as Gould poses, "Something terrific, the apogee of batting performance, was once reasonably common and has now disappeared…The best is gone, and therefore something has gotten worse. [However, I] claim that [the] extinction of 0.400 [sic] hitting really measures the general improvement of play in professional baseball" (p. 79). (This is of course a favorite of old ballplayers.)

There are two conventional explanations for the demise of the .400 hitter:

1) What Gould dubs the Genesis Myth from "There were giants in the earth in those days" (Genesis 6:4). "In the good old days, when men were men…players were tough and fully concentrated…How could any modern player, with his high salary and interminable distractions, possibly match this lost devotion?" (pp. 80-81)

2) The second is the "tougher conditions" theory, "the claim that changes in play have made batting more difficult (the Genesis Myth, on the contrary, holds that the game is the same, but that the batters have gotten soft)…The three institutions of baseball that might challenge good hitting [are]…better pitching, better fielding, and better managing." (p. 82)

They’re two sides of the same coin. Either players got softer or the game got harder, but either way, the offensive game is the worse for it. Right? Well, Gould disagrees: "The extinction of the 0.400 hitter measures general improvement in play (p. 81)…Isn't it more reasonable to assume batting has improved in concert with other factors in baseball? (p. 88)…If pitching and fielding have slowly won an upper hand over hitting, we should be able to measure thus effect as a general decline in batting averages (p.98)…[but] in fact, the mean batting average for everyday players has been rock-stable [with exceptions] throughout our century. (p.99) (Actually, a graph that Gould includes of the mean batting averages 1876-1980, p. 103, shows the fallacy of Williams' chart of the same for the period 1930-70, that I mentioned earlier, since it demonstrates fully that a small sample can lead one to certain conclusions—that batting was in decline—that evaporate when one pulls back and views the whole panorama of data.)

Gould points to larger player pools, better training, increases in player size, and increases in records in other sports as a plausibility argument for a general improvement in the sport.

He also develops a way of looking at peak performance as the "right wall" or physical limit that manifests itself in the data accompanying empirical measurements in sport (e.g., the batting average of a league leader or winning Boston Marathon times).

Gould offers that our perception of what a .400 means is what is in error "by treating '0.400 hitting' as a discrete and definable 'thing,' as an entity whose disappearance requires a special explanation…In fact, our propensity for recognizing such a category at all only arises as a psychological outcome of our quirky propensity for dividing smooth continua at numbers that sound 'even' or 'euphonious'"...When we view 0.400 hitting properly as the right tail of a bell curve…then an entirely new…explanation becomes possible for the first time. (p. 100)

Gould's explanation is that while mean batting averages remained steady but the averages became more clustered around the average and the variation for the extremes shrank. He started with a simple study of the top and bottom five averages and then went on to study the standard deviation based on all "regular" players. I do have a problem with this approach in general because as one adds more players playing more years naturally the standard deviation shrinks. However, I do think that Gould latched on to a true trend even though his statistical proof may overstate that trend.

The trend is due to a few factors that Gould delineates. First, complex systems such as baseball improve over time and variance decreases. "In baseball's youth, styles of play had not become sufficiently regular and optimized to foil the accomplishments of the very best." (p. 113) He points to specialization and division of labor (though the trend he graphs on p. 115 of the decline in baseball players who fielded more than one position in a given year may have reversed itself in recent years due mostly to the overspecialization on modern pitching staffs—we have even seen the return of the pitcher/position player at the major league level). He also points to the steady decline in the standard deviation of team winning percentage since 1900. (Again as more teams play more games, this trend is overestimated, I think more here than with batting averages.)

The second factor is that "as play improves and bell curves march toward the right wall, variation must shrink at the right wall… [A] 'right wall' must exist for human achievement. We cannot, after all, perform beyond the limits of what human bone and muscle can accomplish." (p. 116) I must point out that a .400 batting average is not like running a marathon at the speed of light. After all, a batting average is just based on probability. A .400 average occurs in short series like a playoff from time to time. And look at batting averages at the end of April every year. Small samples can do that. However, there is no physical limitation that prevents someone from batting .400. I can see the argument that as schedules went from 136 to 148 to 154 to 162 with various stops on the way, the probabilities along with the other factors mentioned finally caught up with the .400 hitter. But there are no more physical limitations today than there were in the day of Wee Willie Keeler. That would be batting 1.000, which it is physically impossible to exceed.

That said, the era-defined right wall does exist though it is not defined by physical limitations of the players (actually this assertion seems counter to everything else in Gould's study) but rather by the probability-defining environment in which they play. I also agree that improvement in play has brought the average player closer to the theoretical right wall and decreased variation.

To be continued….

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