Simply Baseball Notebook: Cover Stories

Why Contraction?

December 2001


The 2001 MLB season ended with one of the greatest World Series ever. Since it's completion many positive things have happened: an international sensation, Ichiro became the first player since Fred Lynn in 1975 to win both the Rookie of the Year and the MVP, Roger Clemens won his unprecedented sixth Cy Young, and Barry Bonds became the first player ever to win four MVPs. All of that, however, has been greatly overshadowed by one suddenly infamous word - Contraction.

Baseball commissioner Bud Selig claims it simply must be done, he says the owners are losing money and that it cannot continue. Selig says the process is economically motivated and that the owners have finally begun to address the problems that plague baseball. A recent study performed by Stanford economics professor, Roger G. Noll, suggests that contraction does not make sense from an economic standpoint and that Selig and the owners may have ulterior motives for initiating the contraction process. Here is a look at that study.

According to Noll's findings MLBs net benefit for contracting the Montreal Expos would be around $45 million annually. The benefit for eliminating another team such as the Minnesota Twins would be much less, around $28 million per year. He believes it would be worthwhile to fold the Expos, but eliminating second franchise would not pay off.

"Taking into account litigation costs and the effect on the attitudes of fans, MLB probably would be left slightly worse off folding two (teams) than not folding any," Noll says.

Noll believes that the owners may be trying to "disrupt the unity of the players association" by using contraction as leverage. The owners' record against the players union is not good and many believe the owners have been looking for a tool such as contraction in an effort to swing the pendulum in their favor.

However, Noll believes the owners are playing with fire if the above is indeed the case, "Most likely, neither the owners nor the players truly know what the effect will be, in which case the contraction threat introduces significant financial uncertainty to the short-term future of baseball," he says. "Uncertainty itself is a form of financial cost for example, will contraction-induced collective bargaining troubles reduce season ticket sales for 2002? If there is a chance that this will happen, the financial attractiveness of contraction to the remaining teams is further reduced."

A second, and more sinister motive is that the owners plan to eliminate two teams no only to expand in three to five years and cash in on the large expansion fees. It cost Tampa Bay and Arizona over $200 million back in 1997 and according to Noll baseballs revenues have increased greatly since then and would cost much more in the near future.

The mere fact that the owners agreed to expand only five years ago and now claim they cannot go on with 30 teams says that they are motivated solely by greed and the bottom line. In fact Selig claims the only dissension among the owners on this issue is that many of them believe four teams should be contracted not two. That is particularly curious when you realize that four teams have been added since 1992!

The third, and in Montreal and Minnesota, most relevant motive is the push for teams to build new stadiums. Repeated efforts to build publicly funded stadiums in the before-mentioned locations have failed and they may be used as an example for other cities such as Oakland and San Diego to build or be eliminated.

Noll concludes his study be saying "At best, MLB is rolling the dice (on contraction), because it can not possibly know whether contraction will weaken the players union and cause cities to be more willing to subsidize baseball stadiums, while avoiding a negative response by its customers."

Perhaps the owners take the fans for granted believing that if they came back after the cancellation of the World Series in 1994 that they will come back no matter what. Maybe they haven't thought about it at all. Is it possible that the egos of these billionaires have become so detached from reality that all they are concerned about is piles of money and beating the players union?

-David Zingler


Simply Baseball Notebook