How baseball became a game of haves and have nots

Welcome to Inside Sports, a bi-weekly look behind the scenes of the sports business and those who cover it.

This week, we go inside the world of professional baseball with The Wall Street Journal’s insider, Jared Diamond.

Major League Baseball in 2018 is not without its problems.

Its detractors say the games are too slow and run for too long, the audience is too old, and it lacks the star power of the NFL and NBA.

But off the field, the MLB has inadvertently begun to mirror contemporary America: the middle class is shrinking, and a yawning gap has opened up between the rich and poor. In fact, last month’s underwhelming World Series between the Boston Red Sox and Los Angeles Dodgers illustrated a league now defined by haves and have-nots.

The number of meaningless games played through the year and the contrast between the league’s best and worst is seeping into all levels of the business.

Ballpark attendance figures and TV ratings were down this year in the regular season. Even more alarmingly, ratings for the World Series also plummeted. Baseball insiders are still digesting how exactly a Boston and Los Angeles contest—on paper a mouthwatering matchup—fell so flat. Critics denounced what should be the game’s crown jewel as a boring contest bereft of star performances.

This week the industry has gathered at the Omni La Costa Resort in Carlsbad, California for its annual GM meetings.

Today, according to The Wall Street Journal’s baseball ace Jared Diamond, there are just four teams in the game’s power elite: the New York Yankees, Chicago Cubs, Boston Red Sox, and Los Angeles Dodgers.

All reside in big media markets and are globally recognized brands. They boast huge front offices, enviable branding and can lavish players with deep payrolls and expect to contend each season.

“They’re on a different plane to what anybody else can operate from consistently,” Diamond says. “Entering each season, it feels like they’re far ahead of the rest.”

This year, the World Series-winning Red Sox were clearly the best team in baseball, winning a remarkable 108 of 160 regular season games. 

Winning is par for the course in Boston.  Their massive fan base and burgeoning balance sheet demand a sustained period of competitiveness. There may be the occasional off-year, but fans trust they will swiftly bounce back.

After the power four, the next rung finds a few inconsistent big-spending teams such as the San Francisco Giants, the Washington Nationals and the St. Louis Cardinals, who compete regularly but lack the clout of the power four.

Headlining the middling third tier this year were the Milwaukee Brewers who began the year with an opening day payroll of $90 million. For comparison’s sake, the Red Sox’s payroll was $206 million.

With a modest front office staff and a comparatively puny payroll, this small market team from Wisconsin found itself just one win away from landing in the World Series.

But the biggest issue for the Brewers and teams like it, according to Diamond, is figuring out how to retain that effectiveness and compete consistently over a sustained period.

While the Brewers will likely be very competitive for the next two years, fans know it’s highly unlikely the group of players that rode them to their current success will stay together in the long term.

Owners in small markets have long grumbled about their inability to compete financially with many of the big market teams.

“It’s hard to retain players in smaller markets,” Diamond says. “You draft, you bring them in to your organization, you develop them, they’re with you for six years and then you know in most cases they won’t stay. It’s frustrating for fans as well, because there’s players you love but know in the back of your mind probably won’t stick around.”

It’s even tougher for baseball’s minnows. These teams spend frugally and regularly fritter away years in uncompetitive, unwatchable states before enjoying all-too-fleeting moments of competitiveness and then sliding back into the mire.

The Miami Marlins are the poster child for this group. The Marlins won just 63 games and lost 98 in 2018 with an $85 million payroll and haven’t even made the playoffs since 2003. That year they remarkably defeated the Yankees in the World Series.

The Kansas City Royals similarly made the World Series in 2014 and 2015 and won it in their second attempt. But their descent since has been precipitous. This season they notched an atrocious 58 wins and lost 104 games.

“The Royals had an incredibly fast decline for a team that was so good three years ago,” Diamond says. “But that’s because of their market size: if they were the Yankees or Dodgers, they would have found a way to keep on rolling after winning the World Series in 2015.”

The Baltimore Orioles swing between competitive and awful, too. In 2018 the hapless O’s lost a stunning 115 of 160 games.  The last time they bottomed out, they spent a miserable stretch from 1998 to 2012 losing more than they won.

Diamond says that as he travels around ballclubs and locker rooms around the country, the issue of whether teams were tanking and being deliberately uncompetitive is being hotly debated.

“It’s frustrating for fans of these teams because it feels impossible to see their team consistently compete,” Diamond says.

Teams tank seasons in every sport, but the problem seems endemic in baseball.

“You don’t want teams or fans to think they have to be this bad in their down cycles,” Diamond says. “It shouldn’t have to be so cyclical. Even a small team with creativity and ingenuity should be able to become a sustained winner. But now it’s much easier for a small team to act like the Marlins, where they are horrible for a long stretch and then every once-in-a-while build an incredible team that wins a World Series. You don’t want that to be the normalcy.”

Teams on lower rungs are hamstrung by several issues unique to baseball.

Although big spenders are levied with a luxury tax, the sport is one of few without an actual salary cap. So smaller teams are regular losers in arms races for top player and coaching talent.

Team owners must decide whether they will open up their purse strings, leaving the managers making the baseball decisions less involved in setting team budgets.

That’s how you get situations like Pittsburgh Pirates owner Robert Nutting trading away the big contracts of his team’s elite talent like Andrew McCutchen and Gerrit Cole in the last offseason: to save himself money. 

“It affects the team’s whole operation,” Diamond says. “The four biggest teams have enormous front offices and extraordinarily large analytics departments, which is important. We actually don’t even know how big they are, because the teams don’t have to make that information public. They have more analysts, more people crunching numbers and more people with more interesting ideas, and that really matters.”

In the early 2000s, the Michael Lewis book Moneyball chronicled the manager Billy Beane and his ability to get the pint-sized Oakland A’s competing with the Yankees through ingenuity and analytically oriented thinking.

“It showed how teams with not a lot of money could be better than the rich teams as long as they’re smarter,” Diamond says.

Although Billy Beane ended up staying at the Oakland A’s – in the process turning down an offer from the Boston Red Sox to be the highest-paid executive the game has ever seen – analytics have come to define baseball in the modern era.

The problem is, the rich teams are getting smarter themselves and the one advantage smaller teams had – being smart with numbers - they can no longer rely on.

“It’s been a conversation in the game for so long,” Diamond says. “It’s almost shocking, but there are still a lot of people afraid of numbers. They don’t understand it and it makes them feel like the game is changing in a way they don’t like. But there’s really no debate: analytics have won - no question.”

Diamond says the MLB defends those ratings and attendance drops by citing the bad weather that plagued the game this season. And it’s true, there were more games played under 40 degrees and a huge number of games postponed.

MLB executives also argue that winning parity is strong in that no team has won the World Series in consecutive years for decades, ensuring baseball’s top prize is regularly shared around the country. And that’s certainly true, too.

But the problem with that rationale, Diamond says, is that every team’s goal is to ultimately win the World Series, but only one can achieve that. You want small market teams to feel like they can at least have a regular shot at making the playoffs. 

“I work at The Wall Street Journal, so I think of sports as a business,” Diamond says. “But baseball is not a normal business, it’s just not. Almost no owner owns a team as their primary business, it’s usually not how they made their money.”

At Dodger Stadium, losing seasons are no longer tolerated. The Dodgers have won six consecutive division titles and made the World Series the last two years. Winning is what matters above all – even making money.

“Yes, the Dodgers make a huge amount of money,” Diamond concedes, “but they also realize there is sort of a trust involved with owning a team like Los Angeles, who are unique and represent Southern California. They know they have to deliver a product that’s consistently worth watching. And they do it. There’s huge value just in that.”