The myth of the “small market team”

Tom | | Thursday, March 31st, 2005

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”.

Retest

Tom E. | | Wednesday, March 30th, 2005

agnosticism

88%

Islam

67%

Buddhism

54%

Paganism

54%

atheism

50%

Satanism

50%

Judaism

42%

Hinduism

33%

Christianity

17%

Which religion is the right one for you? (new version)
created with QuizFarm.com
That’s the re-test. I feel a little better about myself now, at least.

More later, including news about the layout.

Devil

Tom E. | | Tuesday, March 29th, 2005
You scored as agnosticism. You are an agnostic. Though it is generally taken that agnostics neither believe nor disbelieve in God, it is possible to be a theist or atheist in addition to an agnostic. Agnostics don’t believe it is possible to prove the existence of God (nor lack thereof).

Agnosticism is a philosophy that God’s existence cannot be proven. Some say it is possible to be agnostic and follow a religion; however, one cannot be a devout believer if he or she does not truly believe.

agnosticism

96%

Satanism

83%

Islam

67%

atheism

63%

Buddhism

63%

Paganism

46%

Judaism

46%

Hinduism

42%

Christianity

25%

Which religion is the right one for you? (new version)
created with QuizFarm.com

Interesting. Apparently, I’m that||close to worshipping Satan.

I don’t think I did this right. I’ll retake it again later.

Scott Elarton, you go boy!

Tom | | Monday, March 28th, 2005

I took a flier on Scott Elarton in my Scoresheet league this year, mainly because it’s always good to have innings guys, but because I thought he’d be a decent risk. I threw him out on the second day of the draft early, and people ran from him like the plague, and I got him for the league minimum. I ended up signing him for two years.

Elarton was pencilled in as a 5th starter for Cleveland going into spring training, and appears to have secured his spot in the rotation between the injury to C.C. Sabathia and a great spring, going 3-1 in five spring starts with a 2.70 ERA.

A former top prospect for Houston, Elarton pitched well in a relief role for the Astros, with the occasional spot start until making the rotation for good in 2000, at the age of 24. His 2000 season saw a drop off in his numbers, but the powerful Astros offense defended him, allowing him to pile up 17 wins, albeit with a 4.81 ERA. Elarton’s poor ERA was the lowest in the rotation, however.

Elarton’s dropoff in strikeouts foreshadowed potential problems, and Houston dealt him to Colorado for Pedro Astacio, himself having a weak season. Both would end up having shoulder problems, and Astacio only pitched four games for Houston the remainder of the season, before leaving as a free agent.

Elarton, already having problems keeping the ball in the park at Enron, ended up in a worse situation in Coors Field. Elarton pitched four games himself for Colorado after the deal from Houston, got shut down, and then missed the entire 2002 season with a torn labrum. Torn labrum’s are bad news - unlike other pitching injuries (including the vaunted Tommy John surgery - ulnar collateral ligament reconstruction - where 85% of pitchers are expected to make a full comeback) torn labrums are pretty much the nail in the coffin. To quote Buhner.com favorite Will Carroll, “if pitchers with torn labrums were horses, they’d be destroyed.”

Ouchies.

The list of once promising pitchers who’ve had torn labrums reads like a “whatever happened to?” reunion: Mike Harkey, Robert Person, Jim Parque, Mike Sirotka, Ryan Anderson. Hell, two pitchers who are currently in the league other than Elarton who have come back from labrum surgery, Gil Meche and Rocky Biddle, didn’t exactly light up the majors last year, with Meche posting a 5.01 ERA and Biddle’s ERA a sterling 6.92.

All isn’t lost, though. Meche’s 2004 problems may have had more to do with mechanics than his shoulder - after being sent down to AAA and later recalled, Meche had a 3.95 ERA in 13 starts, to go along with a 6-2 record. While his strikeouts aren’t impressive, that’s still quality pitching. Elarton, after getting hammered in Colorado and finally getting released by the Rockies, signed on with Cleveland in 2004. In Cleveland (where Jacobs Field is a bit more forgiving to a pitcher who gives up the long ball than Coors Field), Elarton logged a 4.53 ERA in 21 starts, considered to be along the league average, and managed a 4.12 ERA after the All-Star Break.

Meche and Elarton make for good stories in 2005 - Meche having his labrum surgery in 2001, Elarton having his in 2002. While both make for good stories, I only care about Elarton - I mean, he’s on my team. What did you expect?

Test monkey

Tom E. | | Saturday, March 26th, 2005

Ah, Saturday.

While I get to take a day off from the Baseball Blog, I get to hit random things here in the regular blog. No restriction. No boundries.

Nothing to talk about.

Which, really, is what a blog is all about. The baseball blog’s purpose is to get me to write every day (or at least every weekday) about a subject, kind of getting a portfolio together. That way, if lightning struck and someone was considering hiring me to write about sports (or at least baseball), I could point to something, not just my occasional baseball article wrapped around PS2 reviews and my rants on job hunting and the police test.

As I wrote this and thought how my mind scatters, I’m reminded that Tara told me I should look for ADHD studies that I could potentially participate in. When you don’t have medical insurance, you’re willing to volunteer for any poking and prodding that’s out there.

Pretty sad, isn’t it?

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