The myth of the “small market team”
When you listen to people talk about “small market teams”, or even just money and baseball, there seems to be some confusion between not having resources and not spending resources.
As I’ve mentioned before, the main money differential between the “haves” and “have nots” in baseball comes down to local television revenue. Major League Baseball has a national television contract with FOX and with ESPN that generates a great deal of income, which is evenly distributed to all the teams in the league. This is good. However, individual teams also have the right to sell their local television rights to the highest bidder and keep all of that money for themselves. That’s good for some, but not so good for others. How much money those teams receive from their local television contracts depend on two factors - how much advertising money showing those games can potentially bring to a network, and how many networks want to gain control of those rights.
Bidding wars can’t be predicted. Sometimes a new network enters the fray, sometimes networks drop out, maybe a team gets more popular because they’re winning more, maybe the popularity drops because they’re winning less. Potential advertising money, however, can be estimated pretty safely.
Now, an advertiser wants, ideally, for his ad to be seen by as many people as possible. The more people they reach, the more value it has. So, value can be directly attributed to the number of potential households that ad will reach. Since the network is local (at least, in most cases), the number of potential viewers is measured by the number of television views in that metropolitan area. If you go by Neilson numbers, this is how the TV markets look in major league cities:
1 - New York (Yankees, Mets) - 7,355,710
2 - Los Angeles (Dodgers, Angels) - 5,431,140
3 - Chicago (Cubs, White Sox) - 3,417,330
4 - Philadelphia (Phillies) - 2,919,410
5 - Boston (Red Sox) - 2,391,840
6 - San Francisco-Oak-San Jose (A’s, Giants) - 2,359,870
7 - Dallas-Ft. Worth (Rangers) - 2,292,760
8 - Washington, DC (Nationals) - 2,241,610
9 - Atlanta (Braves) - 2,059,450
10 - Detroit (Tigers) - 1,943,930
11 - Houston (Astros) - 1,902,810
12 - Seattle-Tacoma (Mariners) - 1,690,640
13 - Tampa-St. Pete (Devil Rays) - 1,671,040
14 - Minneapolis-St. Paul (Twins) - 1,665,540
15 - Phoenix (Prescott), AZ (Diamondbacks) - 1,596,950
16 - Cleveland-Akron (Indians) - 1,556,670
17 - Miami-Ft. Lauderdale (Marlins) - 1,496,810
18 - Denver (Rockies) - 1,401,760
21 - St. Louis (Cardinals) - 1,216,700
22 - Pittsburgh (Pirates) - 1,186,010
23 - Baltimore (Orioles) - 1,087,730
26 - San Diego (Padres) - 1,025,730
31 - Kansas City (Royals) - 894,580
32 - Milwaukee (Brewers) - 886,770
33 - Cincinnati (Reds) - 883,230
Of course, this doesn’t take into effect neighboring markets, but when it comes to “local TV”, this is pretty much what we’re dealing with.
The success of a team plays into this, making a channel’s ownership of television rights more attractive. Two teams with very similar baseball markets in size, Pittsburgh and St. Louis, are going to have very different sales numbers because the Cardinals win, and therefore get viewers. The Pirates don’t. Therefore, the Cardinals’ rights are going to go for a lot more than the Pirates.
Market size does play a role, though. The cost of three commercials during a Reds game is never going to approach the price that it costs for three commercials during a Yankees game. But teams that are relatively even (Tampa, Minneapolis, and Phoenix, for example) can greatly affect their own performance by how they use the money they have instead of complaining about how much they actually have.
Tampa spent early and unwisely (Greg Vaughn, Wilson Alvarez), failed, and got labeled with the reputation of a failure, which drove off fans. Tampa now conserves their money and builds a team based on youth (or at least says they do, which isn’t always apparent).
Phoenix spent money they didn’t have with the belief that if they built a winner now, they’d establish the fan base early and not be as concerned when those big name players got old and they needed to rebuild. Arizona has since hit their bottom (last season) and have decided to start spending again, whose results remain to be seen.
The Twins ownership maintains they’re a small market team that needs to tighten their belt in order to survive. However, the Twins aren’t as low in the TV money picture as one would be led to believe, so their belt-tightening can only go towards profit for ownership. While that’s not necessarily a bad thing, to blame it on market share instead of an ownership decision is questionable.
There’s a few numbers in there that stand out. First off is #8, Washington. It’s easy to see why Orioles owner Peter Angelos didn’t want to see the Expos roll into town. Angelos’ Orioles could claim Washington as their market as well, adding the #8 market to their #23 market in Baltimore. While the Orioles still have a TV contract in Washington (and, interestingly, the Nationals do not), once the Orioles contract runs out, the likely focus of Washington DC stations will be their hometown Nats instead of the O’s, leaving the O’s to deal with their #23 media market, putting them shoulder to shoulder with the Pittsburghs and San Diegos of the league. Another is St. Louis at #21. Now, people don’t think of the Cardinals as a small market team, despite them literally being in a “small market”, smaller than 22 other teams. Yet, they ranked 10th in payroll. They rank lower in market size than Oakland (splitting the #6) and Minnesota (#14), two teams that seem to regularly cry poverty.
In case you were curious, the markets missing in the list that don’t have major league teams are Sacramento (#19), Orlando (#20), Portland, OR (#24), Indianapolis (#25), Hartford/New Haven (#27), Charlotte (#28), Raleigh-Durham (#29), and Nashville (#30).
So just because a team doesn’t spend money or doesn’t draw fans, it doesn’t necessarily mean that they’re a “small market”.












