By Mark Hyman
As Bud Selig spoke from his office in Milwaukee, the sweet music of a pennant race crackled over the radio. The Cubs and Cardinals were locked in a tight contest. And Selig, baseball's indomitable commissioner, was savoring every foul ball. "Tie game, terrific game. But the whole season has been close and competitive," cooed the commish.
This time, Selig wasn't serving up the usual management pablum. As Major League Baseball (MLB) enters the home stretch this month, it's in the unfamiliar spot of being awash with unpredictable finishes. On Sept. 16, 15 teams of baseball's 30 franchises were in the hunt for post-season glory. The flush Yankees and Braves seemed bound for the playoffs, as usual. But so might be tightfisted also-rans such as the Florida Marlins and Kansas City Royals.
The hot races are good news for baseball. More fans are dreaming of miracles this fall, and some of them are showing up at ballparks. Attendance is up 47% in Miami and 27% in K.C. The nomadic Montreal Expos, owned by MLB and playing 22 games in Puerto Rico, have posted a 21% gain.
"I feel very good about where we are," says Selig. But there are already signs that the good feeling may not last. Chief among the troubling signals: the still-widening gap between what rich franchises such as the Yankees pay their players and the pittance parceled out by their poor relations. Even more worrisome: Some clubs that are receiving a windfall in revenue sharing have nevertheless slashed their payrolls.
In 2002, the payroll spread was $91 million -- from the Yankees' league-high $125 million to the Tampa Bay Devil Rays' $34 million. This season, the gap between the same teams is a staggering $133 million (table). In fact, five of the eight franchises ranked at the pay-scale bottom this year reduced their budgets.
Shrinking payrolls from struggling teams are hardly what fans expected after owners and players signed a labor deal last year -- one that Selig & Co. heralded as pivotal to restoring competitive balance. Two key provisions were supposed to do the trick. The first is a luxury tax assessed only against teams that exceed a payroll threshold -- this year, $117 million. The other is the most aggressive revenue-redistribution system the sport has ever had. As a result, Tampa Bay receives $20 million this season -- but still cut its payroll from $34 million to $20 million.
Most observers agree that the luxury tax is affecting many free-spending teams -- but not the Yankees, the team that owners most hoped to rein in. The Bronx Bombers started the season as the only team over the threshold and went even higher in July, when they traded for Aaron Boone, a $3.7 million-a-year third baseman. Meanwhile, the Los Angeles Dodgers, who arguably are one potent hitter away from a playoff spot, made only modest moves. "There has been a broad-based attempt by owners to convince fans that the $117 million number is a hard cap, that it's not good business to go above it," says Scott Boras, agent for Texas Rangers all-star Alex Rodriguez.
Revenue sharing shifts about $265 million from rich clubs to poorer ones this year. But so far, teams on the receiving end aren't spending their way to the top. "Those clubs are taking the proceeds and investing for the long term in player development," explains Rob Manfred, the owners' chief labor negotiator. But Tony Attanasio, the agent for Seattle Mariners star Ichiro Suzuki, doesn't buy that line. Some owners are pocketing the windfall, he suspects: "That's truly a disgrace. Those funds should be directed to putting a winning team on the field."
So if revenue sharing isn't behind this season's seesaw playoff races, what is? Chalk it up partly to clever talent evaluators in Kansas City, Miami, Montreal, and Oakland who have their plucky teams playing as well as rivals with far gaudier payrolls. All in all, it should be a nail-biting final weekend. Just don't count on it again next year. Hyman is contributing editor for Sports Business.