“Where are you going to go?”: MLB owners think you are dumb

I think there was some hope, some small moment of optimism when the new collective agreement was ratified, that MLB owners would just be quiet for a while. Dick Monfort made a fool of himself during negotiations, and in general none of the 30 clubs did much to convince fans they were all that interested in providing a premium product. The CBA got done, we have baseball, can someone please stop putting a microphone in front of Hal Steinbrenner?

Then three different stories came out this week that just re-iterated the case that, if MLB is indeed dying, it is at best the victim of negligent care by the very sources of capital that sustain it. Bob Nutting continued to do Bob Nutting things, Phil Castelleni sub rosa threatened to move the Cincinnati Reds, and the New York Yankees are the most valuable team in North American pro sports, boosted by a ten-figure stake in hospitality that rivals the game’s richest regional sports network (RSN).

We could talk about each of these episodes in turn, but it’s more important to view them as different facets of the same problem; the outright disdain that ownership has for its consumer. The Pittsburgh Post-Gazette released one of the most comprehensive studies of the guts of an MLB organization that you’ll ever read, concluding that, without factoring in capital appreciation, the Pirates routinely pocket eight figures a season while running out what could at best be described as a Quad-A roster.

And then of course three days after that story, we find out that the Pirates, the Pittsburgh Pirates, increased in value of the last twelve months, now estimated to be worth around $1.32 billion, or 33 percent more than the Kansas City Royals sold for just 28 months ago. The bulk of this valuation comes from $705 million market value of future MLB-related cash flows, that is, how much is it actually worth to be able to bank nearly nine figures a season in revenue share dollars and national TV money? Meanwhile, the Pirates opened the season with an estimated MLB payroll of just $37.9 million, just 15 percent of anticipated revenue.

Even the recent extension of Ke’Bryan Hayes and nailing out cost certainty with Bryan Reynolds aren’t great indicators of the Pirates ploughing those record profits back into the team, since new rules in the CBA mandate that teams spend to certain thresholds of “new money” every year in order to qualify for their full share of revenue pool money. Putting up $8.8 million for a 25 year old third baseman isn’t a bad way to ensure that your full slice of that $100 million a year pie hits.

Now, lest you criticize these kind of cynical, anti-competitive practices (in every possible use of the term), Phil Castelleni will be very, very grumpy with you. How dare you impugne the cutthroat baseball instincts of a man whose father was a rich fruit seller, bought a baseball team, and gave it to his son as inheritance. Should you, well, hope you can withstand a pretty common, hardly-veiled threat that owners have rolled out for generations:

There you have it folks. If you’re upset that the team you root for is stripping the club down to the studs, that an owner who has managed just four Wild Card appearances in 15 seasons, is perhaps not honoring the legacy of the original MLB team, we’ll just move the whole club somewhere else. This is a child’s behavior. You’re on the soccer field at recess and someone slide tackles just a little too hard, and the spoiled kid a grade below you picks up his ball in a huff and walks off.

And then, of course, the Yankees’ own valuation tipping the scales at $7 billion, with their fourth of a stake in Legends Hospitality providing somewhere around $100 million in free cash flow a year to the team depending on your source. Add that to more than $300 million in RSN cash flow, plus “experiential” revenue — the money from tickets, parking owned by the team, and all those chicken buckets — and while Hal loves to whine about his various bondholders, there’s a reason why this club is never going to be sold.

But y’know what, the monies and valuation and all this other stuff doesn’t really bother me that much. This isn’t capitalism, MLB owns a monopoly on baseball and can charge what they want — tickets, chicken buckets and the like are priced to optimize revenue, not necessarily make the game as accessible to everyone. That’s the nature of this business, and if we want it to change, we need to be having different conversations. What bothers me is the unfettered arrogance.

Phil Castelleni, Bob Nutting and Hal Steinbrenner control assets worth just shy of $10 billion dollars. Those assets have become increasingly decoupled from fan interest or engagement, and so before we get into the traditional baseball season activities of bemoaning strikeouts and the death of the hit ‘n run, it’s worth revisiting that ownership doesn’t care about that stuff either.

The gravy train has gotten so rich that they don’t even care about pretending about caring anymore. These aren’t the first instances of teams showing their outright disdain for their fanbase — Jeffrey Loria became a billionaire by doing that — but it feels more and more like standard practice, that if these are flubs or gaffes, nobody is overly concerned with correcting or preventing them.

The glory of the private corporation used to be that you didn’t have to disclose anything, or comment on anything. No earnings calls or boring analysts asking about table 14 in appendix B, you got to keep all that in house. Things are different now; the AP has leaked financials in the past, the Post-Gazette made intrepid use of public information requests in their article.

Fans are getting smarter than they’ve ever been. There’s more information available about how our favorite team invests in its onfield product, and by extension, in its relationship with the fans. Yet owners have shown, over and over, with greater frequency, that they think we’re all dumb, and that turns me off the game more than a 25 percent strikeout rate ever will.