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Tuesday, November 24, 2009

The Blue Ribbon panel, 9 years later

By Tangotiger, 11:55 AM

In July 2000…


MLB commissioned a report as a press release to distribute ahead of bargaining with the union, on the CBA.  The press, not wanting to be a press agent so obviously, implicitly demanded that the report be titled something else.  MLB, not even waiting for the press to make this implicit demand, beat them to the punch by calling it a “blue ribbon panel on baseball economics”.  There, everyone is happy.

MLB, rather than going after impartial economists (they’ve gotten bitten real bad when they’ve done that in the past) instead hand-picked their panel.  The biggest name was the extremely highly respected (and future Redsox owner) George Mitchell.  This guy is huge.  For a Canadian like me, I don’t care too much about who was the U.S. Senate leader, any more than an American cares about Pierre Elliot Trudeau (unless he’s dating a starlet).  But, being a peace envoy to the middle east is a huge deal.  The only other peace envoy I heard of was the galaxy-renowned Sarek.  Credentials, George Mitchell’s got.

That said, just because you are honest and respected doesn’t mean you are not biased.  Indeed, because you are human you are biased.  It’s part of being human.  This is why we say things like “avoid appearance of impropriety”.  It’s not that we believe there is impropriety, but we want to avoid the appearance of such.  This is why MLB doesn’t select its arbitrators.  George Mitchell, as fine a person as he is, as fine a public servant as he is, as impartial a person as you may find, would not qualify as one.  Indeed, as strange as it sounds, knucklehead Carrie Prejean would be more qualified to be an arbitrator in MLB than George Mitchell.

The only time I’ve ever heard of that both sides chose against the Carrie Prejean pick and chose for a George Mitchell pick was when USSR was playing Canada for the Canada Cup.  All the referees were from the NHL, and the organizers schedules an American to referee the game.  The Russians insisted on a Canadian to referee.  Such was the hostility that the Russians had for the Americans that they thought that a Canadian would be more unbiased involving a Canadian team than an American would be involving a Russian team.  When Jason Jones says that everyone loves Canadians because we are like “the world’s gay friend”, this is what he’s talking about.

Who else was on that panel?  George Will is another one.  Yup, the press loves to report on its own.  Why do you think the MLB MVP awards are so popular in the press.  That’s right, because the press owns the awards.  How convenient.  Having George Will in there guarantees press coverage.

Then we have Paul Volcker.  I presume this guy, former chair of the Fed, who survived both a Democrat and Republican president would be acceptable to both sides.  He seems to be a guy with no appearance of impropriety.  But, so did Arthur Levitt, chair of the SEC.  The NHL hired him, ahead of their negotiating with the union, to provide a “super audit” (a claim since retracted by the NHL seeing that accountants said what Levitt provided would not even qualify for a regular audit, never mind the super duper audit Bettman was claiming). That report, which I dissected, was not unbiased.  When you get to do 100% of the hiring, the guy being hired is automatically biased, no matter how good and honest that human is.  Remember, all our failings go back to the fact that we are human.

The fourth guy on the panel was Richard Levin.  Eh?  That’s the Canadian in me.  Wiki tells us he’s a professor of economics and Yale president.  Sounds like a good guy.  If the deck was stacked, one would hope that professor Levin is the one who would at least provide the necessary balance.

Anyway, I have never read this report, and I’ll read it now.  Let’s see if it’s bullsh!t, or it has some honest-to-goodness good stuff in there.  I’ll be back, I dunno, this afternoon, maybe tomorrow.

(By the way, I was tempted to say it was “time to look at this” report.  This gets written alot about other things.  It’s time to do this, it’s time to do that.  Well, maybe it’s time for the writer to do this, but this hardly means it’s time to do it.  Indeed, if the writer never did it, no one else would have done it.  It’s not time to do anything.  All it is is that it’s time to do SOMETHING other than whatever else you wanted to do.)

#1    Tangotiger      (see all posts) 2009/11/24 (Tue) @ 12:36

Sigh.

I find it hard to believe an economist would say this:

“In a majority of MLB markets, the cost to clubs of trying to be competitive is causing escalation of ticket and concession prices, jeopardizing MLB’s traditional position as the affordable family spectator sport.”

***

“With the exception of 1998, even the World Series loser has been from payroll Quartile I. (The 1998 loser, San Diego, was from Quartile II and lost in four games.)”

Wow.  We’re quoting things where the Padres lost in 4 games?  Really?  How horrible.

***

They’re talking about recommendations now… I’ll be back.


#2          (see all posts) 2009/11/24 (Tue) @ 12:38

I’ve used this for a number of undergrad papers on history topics.  It’s useful when you want to write a paper using 3 sources and the prof tells you to use 20, but otherwise there’s not much of value in there.  I found it while trying to put together an economics paper, but ultimately didn’t find anything that I could use for that topic.  Like the Hakes/Sauer paper, it got tossed into my stack of papers I used to disguise the fact that my academic papers were really piggybacking off work by Dave Cameron or HBT or some other blog article.  These things are typically frowned at by academics.  For some reason, an article from 2008 is disqualified as a ‘primary source’ for a history paper, but a basically useless and immediately obsolete “Blue Ribbon Panel” from 2000 isn’t.


#3    Tangotiger      (see all posts) 2009/11/24 (Tue) @ 12:41

a. Revenue Sharing—MLB should share at least 40 percent, and perhaps as much as 50 percent, of all member clubs’ local revenue, less local ballpark expenses as uniformly defined. The limited revenue sharing enacted in recent years has failed to promote competitive balance, as intended. The modest amount of revenue that has been shared in recent years should be increased substantially in recognition of the indispensable role played by the visiting team in generating what historically but misleadingly has been referred to as “local revenue.”

I agree on principle.  There’s two teams plays.  If this was a barnstorming league, you’d think both teams would split the proceeds.  Or, maybe more like boxing, where the winner of the game gets a larger purse.

I disagree though as an entrepreneur.  If you lose half the local revenue, then you lose alot of incentives to do local promotions, and stuff, knowing that half your revenue will disappear.  Indeed, this socialist proposal doesn’t make much sense on a league that depends on local revenue.

It works in the NFL, because the TV contracts are national.  And their stadiums are sold out.  (Do half the local gate go to the opposition?  Probably not.)

So, I don’t think this proposal is such a given.  It requires careful study.  I’ll see if they actually study the issue later in the paper.


#4          (see all posts) 2009/11/24 (Tue) @ 12:45

I sometimes make up my own acronyms. By HBT I mean THT. smile


#5    Tangotiger      (see all posts) 2009/11/24 (Tue) @ 12:46

b. Competitive Balance Tax—MLB should levy a 50 percent competitive balance tax on club payrolls that are above a fixed threshold of $84 million and clubs should be encouraged to have a minimum payroll of $40 million.

Bad idea.  In practice what happens is that teams do like the Expos did and sign Graeme Lloyd and Irabu.  Instead of smart signings, they just make big signings.  Stupid signings.

Instead of saying they should spend say 60MM$ on payroll, why don’t they say they should spend whatever it takes so that they have between 30 WAR and 50 WAR on players.  If the idea is to make sure all teams are “competitive”, then don’t base it on salary, but base it on talent.  Especially since a team can “buy low” by having tons of arb-eligible players who earn 50 cents on the dollar.

Yanks want to sign CC and Teix?  Well, drop Damon and Matsui.

That’s really what they want done.  You can create some sort of exchange to establish the values of players, create some sort of system that forces players to be valued honestly, rather than a way to game the system.


#6    Tangotiger      (see all posts) 2009/11/24 (Tue) @ 12:48

c. Central Fund Distributions—MLB should use unequal distribution of new Central Fund revenues to improve competitive balance, creating a “Commissioner’s Pool” that is allocated to assist low-revenue clubs in improving their competitiveness and in meeting the minimum payroll obligation of $40 million.

Power of the purse.


#7    Tangotiger      (see all posts) 2009/11/24 (Tue) @ 12:53

d. Competitive Balance Draft—Major League Baseball should conduct an annual “Competitive Balance Draft” of players in which the weakest eight clubs would have a unique opportunity to select non-40-man roster players from the organizations of the eight clubs that qualified for the playoffs.

Yes, 1000 times yes.  This is the “expansion team” rule.  Definitely.  I don’t see why the MLBPA would be against this.  Indeed, they may favor it.

This recommendation, in addition to the previous one, shows some good thinking by the panel to not be a rubber-stamped panel.  Why are these things not being implemented?

This is a good rule, one which already exists in some form for expansion teams.

You can put in a few extra rules, like you can’t have a team pick more than 2 seasons in a row, etc.  A team can’t lose more than 3 players, etc, etc, etc.  Lots of good thinking can come out of this one.


#8    Tangotiger      (see all posts) 2009/11/24 (Tue) @ 12:55

e. Rule 4 Draft—Major League Baseball should implement reforms in the Rule 4 draft. Among the reforms would be inclusion of international players, elimination of compensation picks, increased opportunity for low-revenue clubs to sign top prospects, allocation of a disproportionate number of picks to chronically uncompetitive clubs, and allowing the trading of draft picks.

Elimination of comp picks!  Yes, 1000 times yes.  Low-rev clubs to sign top prospects?  Yes, yes.  Giving some teams more draft picks?  Wow, yes, that’s cool.  Trading draft picks.

Again, what’s Selig done about this?  Nothing.  That’s another good proposal.


#9    Tangotiger      (see all posts) 2009/11/24 (Tue) @ 12:57

f. Franchise Relocations—Major League Baseball should utilize strategic franchise relocations to address the competitive issues facing the game. Franchise relocation should be an available tool to address the competitive issues facing the game. Clubs that have little likelihood of securing a new ballpark or undertaking other revenue enhancing activities should have the option of relocation if better markets can be identified.

If they mean this in a literal sense, that relocation should be made easier, then yes, 1000 times yes again.

If they mean this that this is a way to get the public to subsidize teams by more threats of relocation, then no.

Selig however is firmly against the actual relocation of franchises.


#10          (see all posts) 2009/11/24 (Tue) @ 12:59

^ It’s thoroughly unimaginative work.  Just a couple decades of really shitty ideas with the Made in 2000 label slapped on it.


#11          (see all posts) 2009/11/24 (Tue) @ 13:14

It would seem you’re more enthused about some of it than I am.  Without going to in-depth, I worry about how the competitive balance draft incentivizes a club to allocate resources.  If a successful club is consistently losing 3 of its mid range prospects, it encourages them to push towards a win-now mentality.  Just thinking about on a first-order basis, it would seem that winning would become more cyclical.  It would be very difficult to construct a consistently successful roster.


#12    Tangotiger      (see all posts) 2009/11/24 (Tue) @ 14:20

...it would seem that winning would become more cyclical.  It would be very difficult to construct a consistently successful roster.

That’s a design feature, not a bug.

What is the objective here?  To reward smart management? No!  It’s to make sure each team has some DECENT chance of making the playoffs.

There are (currently and since 1995) 8 teams that make the playoffs every year.  So, over the last 15 seasons, that’s 120 teams that have entered the playoffs.  What is it that we want for “competitive balance”?  The average for the 30 teams (let’s count Expos/Nats as one for these purposes) is 4 times per 15 seasons.  That means, what, we’d like at a minimum 2 and at most 8 playoff appearances per team, every 15 years?

And what actually has happened?  4 teams haven’t made the playoffs in those 15 seasons (Expos/Nats, Pirates, Royals, and Jays).  Another 4 teams have made the playoffs once (Reds, Tigers, Brewers, and the expansion Rays).

On the flip-side, the Yanks (14 of 15), Braves (11) and Redsox (9) have made it “too much”.  You have 11 teams that make it non-competitive in a league of 30.

So, you need to create a system that makes it harder to the Yanks, Redsox, and Braves to keep making it, and easier for the other 8 teams to make it.  That’s the plan, if you buy into competitive-balance.

Is it a question of “management” or is it a question of market size?

You can even force the issue by putting say the Yanks, Braves, Redsox, Cardinals, Indians, Angels in the same division (all told, they had 55 appearances), and giving them 3 slots in the playoffs.  So, in a 15-year frame, they’d get 45 appearances, or an average of 7.5 each.

You’d put the 8-bottom teams noted earlier and put them all in the same division.  They had 4 playoff appearances in 15 seasons, but if you guarantee them 1 spot each year for the division, that gives you an average of 2 appearances per team.

You can create an infinite number of ways to get at competitive balance, if you really wanted that.

MLB cares ZERO for competitive balance.  And the only fans who care about it is for those who were also-rans.  I imagine the Tigers fans USED to care about it, and now they don’t.


#13    Rally      (see all posts) 2009/11/24 (Tue) @ 14:44

"Instead of saying they should spend say 60MM$ on payroll, why don’t they say they should spend whatever it takes so that they have between 30 WAR and 50 WAR on players.”

I like the idea, but it would require MLB to establish official, standardized projections.  So the Yankees can’t sign Holliday, Lackey, Bay, Mattingly, Mantle, and DiMaggio and turn around and say “but we only project Mickey as a 1.5 win player”

I would offer the CHONEs to be the official projections for MLB competitive balance purposes for the sum of one million dollars, but after checking the price of gold, perhaps I should hold out for 100 billion dollars.


#14    Tangotiger      (see all posts) 2009/11/24 (Tue) @ 16:01

Rally: agreed.  You can do what I did with the Forecasters Challenge, and get everyone to submit a list of best to worst players, and convert that to dollar amounts or WAR totals, and then average it out (exempting your own players).

In order for say the Mets not to mark as 1,2,3,4 Rollins, Utley, Howard, Hamels in the league (thereby overvaluing the Phillies players), you’d need to have some disincentive for the Mets to do that.


#15          (see all posts) 2009/11/24 (Tue) @ 16:43

"I imagine the Tigers fans USED to care about it, and now they don’t.”

Nor do Phillies fans (that’s me).  As an economics guy, I’m trained to like systems that reward or even over-reward competence.  I like that the franchises that employ the Moore’s and Minaya’s and Wade’s of the world are punished.  I’d like to improve the distribution of talent at its lowest stages of development, better everything at the HS and College levels and a smarter, more open drafting system.  Competitive balance doesn’t have to punish success.


#16    brent      (see all posts) 2009/11/24 (Tue) @ 17:22

There have been 11 non-competitive teams. The Nats/Expos should eventually sort themselves out as that was an orchestrated disaster. Teams like KC and Pittsburgh have had poor GM decisions seal their fate. I don’t follow the Braves, but they haven’t made the playoffs since 2005. At least they have had a downcycle. In 2001 and 2005, the Braves won the division with 90 or less wins. The other three years they won by 10 or more games. The division just wasn’t up to beating them at the right time. However, that leaves the ENTIRE AL East as non-competitive. Bos has made it only 1 extra time, but NY is the driving force behind it as Bos wants to try to remain competitive to NY. MLB just needs to rectify this by perhaps giving NY an automatic birth or set a hard cap.


#17          (see all posts) 2009/11/24 (Tue) @ 23:22

In order for say the Mets not to mark as 1,2,3,4 Rollins, Utley, Howard, Hamels in the league (thereby overvaluing the Phillies players), you’d need to have some disincentive for the Mets to do that.

Give the first draft pick to the team that gets its estimates closest, weighted with its division/league higher than the other league. So you can screw over the Phillies valuation if you don’t mind getting royally screwed for it.

If you brought in the new expansion draft for the lowest teams, you wouldn’t need to give them the first draft picks anyway—they’d already get first shot at snagging players of some value without a signing bonus at tiny salaries.


#18    Kenny      (see all posts) 2009/11/25 (Wed) @ 10:17

I was figuring maybe this very old post of mine to alt.sports.baseball.ny-yankees (and later to rec.sports.baseball) might be of at least a little bit of interest here.  It’s about a talk with President Levin where I had the opportunity to ask him a couple of questions about baseball.

http://groups.google.com/group/alt.sports.baseball.ny-yankees/msg/8f6ec16b1730da0c


#19    Tangotiger      (see all posts) 2009/11/25 (Wed) @ 11:26

Feel free to cut/paste.  Google groups is blocked at my office, and I presume many others.


#20          (see all posts) 2009/11/25 (Wed) @ 11:45

Kenny1111
View profile
More options Oct 29 2002, 5:56 pm
Newsgroups: alt.sports.baseball.ny-yankees
From: Kenny1111
Date: Tue, 29 Oct 2002 17:56:39 -0500
Local: Tues, Oct 29 2002 5:56 pm
Subject: Talk with Richard Levin (Blue Ribbon Committee member)
Reply to author | Forward | Print | View thread | Show original | Report this message | Find messages by this author

So today we had what is called a “Master’s Tea,” in which someone from the university or outside comes to have an informal talk in our residential college (dorm).  Today’s guest was Yale President Richard Levin, and I was able to ask a couple of baseball questions.  I didn’t want to monopolize his time on a topic that few were probably
interested in, but I did learn some interesting things that I will summarize as best as possible without inflicting my bias:

(1) I pointed out the way teams hide revenue by owning multiple companies, specifically using the examples of the Dodgers and FOX, the Braves and TBS, and the Cubs and the Tribute Company (I didn’t say WGN, but I figure he knew what I meant).

He agreed that this is an issue, and that we really can’t take the numbers at face value without delving into the books and looking at
all of the multiple companies that the owners may have.

(2) I pointed out that in the revenue sharing schemes the owners get money and just pocket it.

He acknowledged this, and said that he would have wanted a payroll floor, but the union was against this.  We do know that the union was against this based on the issues earlier this year. Unfortunately I did not have time to propose other ways that this could be avoided
besides a salary floor.

(3) I mentioned Derek Zumsteg’s (sp) plan of basing the re-distribution system on market size (population).  He said that was the plan he proposed and wanted from the start, as it would not penalize teams that have done well making money in their market.

------

Now my comments:

Based on the fact that we only spent a few minutes of the roughly hour-and-a-half on baseball, I’m happy with what I learned, in that
Selig did have some advice in what I feel was the right direction (i.e., redistribution based on population, and the issue with owners hiding money).


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