Can MLB Survive in San Diego?

Websoulsurfer offers some interesting thoughts on the Padres current payroll situation and long-term prognosis. A few points deserve further attention:

I have found that no team since the advent of Free Agency has won a World Series with one player making more than 16% of total payroll and no team has made it to the World Series (or even the NLCS) with one player making more than 20% of the total payroll.

This seems to match what we would expect. Many investment strategies emphasize diversification as a way to minimize risk, the idea being that any single failure is less likely to cause a catastrophic collapse. You know, don’t put all your eggs in one basket.

No small market team today can afford to keep players of Adrian Gonzalez’s caliber, players that will earn $20+ million in free agency, and continue to compete with one player taking up such a large of a percentage of their total payroll.

I’m in total agreement here as well. My opinion diverges from Websoulsurfer’s, however, when it comes to the implications of these realities. He asserts that “The system in baseball as a whole needs to be changed in order for these small market teams to consistently compete.”

Many people believe this to be true, but I am not one of them. Organizations have demonstrated that smarts can overcome money. The Oakland A’s, thanks to Moneyball, are the most famous example, but the Cleveland Indians and Minnesota Twins also have found ways to thrive over the years despite relatively limited resources. There is no reason other teams cannot duplicate these successes… as long as they know what they’re doing.

This is why building a strong farm system is so critical to teams like the Padres. If you’re operating on a tight budget, you don’t ever want to feel compelled to overspend on a premium talent. It is better to have good, cheap replacements ready when the time comes to move Gonzalez or let him walk than to enter into a contract that restricts the procurement of supporting talent. Ask Tom Hicks about Chan Ho Park and Alex Rodriguez, or the Rockies about Mike Hampton and Denny Neagle.

Given the choice between smarts or money, I’ll still take smarts every time. I mean, I’d prefer both; who wouldn’t? But I’d rather follow the model of the 21st century Twins than the 21st century Baltimore Orioles, who have just enough cash to throw it at the wrong people.

Don’t get me wrong, money has its advantages. For one thing, you don’t have to be as smart because it’s easier to outspend your mistakes. But there are ways for small-market teams to consistently compete that don’t involve tweaking the system. Such strategis may not be easy to formulate and execute, but as other teams have shown, they do exist.

(Also, from a pride standpoint, I have an issue with attempts to artificially “level the playing field.” I suspect I’m in the minority, but I want to see “my” team win based on its own merits, and not because of anyone else’s pity.)

Websoulsurfer’s larger point, as I understand it, is that he doesn’t have concerns about San Diego’s viability as an MLB market. In his view, the current situation is a by-product of the Moores divorce and a broken system that prevents small-market teams from competing with the big boys.

I don’t share this outlook, and to illustrate why, I will quote liberally from the Ducksnorts 2009 Baseball Annual:

The climate, geography, and history of San Diego are a blessing and a curse. With consistently great weather; easy access to the Pacific Ocean, mountains, and desert; and transplants from other parts of the country (because of the substantial military presence here, and because it’s just a desirable location), San Diego provides residents ample opportunity to ignore its home teams.

The NBA (Hawks, Clippers) has been unable to keep a franchise in San Diego. Minor-league hockey (Gulls) and basketball (Stingrays) have encountered similar issues. The Gulls, for their part, were a dominant force in the IHL, WHL, and WCHL, but ultimately collapsed despite their success in a city that offered people so many other entertainment options. (A new version of the Gulls recently resurfaced in the WSHL, but who knows how long that will last?)

The problem hasn’t been as severe for baseball, although there have been moments. Prior to the 1974 season, the Padres were all but headed to Washington, D.C., before Ray Kroc bought the team and kept it in San Diego. Still, the Topps Baseball Card Company had been confident enough to print cards that winter identifying several Padres players as members of the Washington National League team.

Later, when [Tom] Werner came to town in 1990 and conducted his infamous Fire Sale in 1993, questions regarding San Diego’s viability as an MLB market resurfaced. When Bud Selig considered contraction in the early part of the 21st century, Minnesota and Montreal were the two most frequently identified targets, but San Diego also entered into the discussion.

The existence of a big-league baseball club in this town is not a given. It never has been, and it likely never will be. With teams directly to the north in the larger media markets of Los Angeles and Orange Counties, another an hour’s flight to the east in Phoenix, the vast Pacific Ocean to the west, and the economically challenged nation of Mexico to the south, the Padres simply don’t have much room to expand their fan base beyond those that call San Diego home or otherwise claim ties to the city.

Is the situation beyond hope? No. As the Padres showed in the mid-’90s and during their first four years at Petco Park, it is possible to succeed here. (In fact, I’m convinced that if the Padres win Game 163 in 2007, we’re looking at an entirely different picture right now, but that’s another notion altogether and one that nobody can prove or disprove.)

But sustainable success in this market will require effort. The farm system, a key driver toward that end, is finally bearing fruit; with any luck, the new regime will be able to continue what Grady Fuson and company started.

Beyond attracting and retaining talent, the bigger challenge is attracting and retaining fans. The old boss did a good job of building the product, but assumed that a winning team would sell itself. It didn’t, and when the team stopped winning, the fans stopped caring.

The new boss appears to be making the right moves in terms of generating interest in the team beyond what it does on the field. I go to games for the baseball, but people seem to be excited about this year’s giveaways. I’m glad for that, because it could help drive ticket sales, which would help keep the Padres in town and me at the ballpark watching games while other folks play with their bobbleheads or whatever.

To answer the question in the title, yes, I believe MLB can survive in San Diego. However, as the Padres have demonstrated over the years, it won’t be easy. And I sure as heck don’t ever take their presence for granted. There are probably better markets for a big-league ballclub. Not that there is any indication that this will happen, but it would break my heart to see the Padres pick up and move to one of those markets.

Here’s hoping the current effort to make nice with disillusioned fans converts to success on the field and at the gate. I’m not ready to let go of this team.

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16 Responses »

  1. Nice job Geoff. I agree with you on pretty much everything. I think the fandom can reach out further than it has though. It just needs better marketing than it has shown in the past. Thankfully they just hired numerous marketing & branding people this past off-season so we’ll see what they can do.

  2. Good Post!!!
    I get really tired of the argument that “it’s the Yankees and Dodgers fault that the Padres are in last place”. The Twins, Indians, and A’s are great examples of what can be accomplished. To a lesser extent, I would add the Mariners. They have never been to the WS but they have had some very good, exciting teams.

    Also, this is the second time in about 2 weeks that you have made reference to the 2007 team (game 163). Sounds like you had high hopes for them. I didn’t think they were that good, but then again, if the Rockies won the pennant, the Padres certainly could have.

  3. A good Q&A with Moorad here …

    My favorite is this one … and it’s actually relevant to this topic …

    QUESTION: We have discussed the payroll budget before. What is the total going into spring training? You have talked about it eventually rising. Have you set targets for future seasons — or is that dependent on future revenues?

    ANSWER: We’ll head to spring training at about $41.5 million, largely a function of the young roster that we currently have. As our roster matures over time, our payroll will increase. Assuming revenues continue to track, I believe we will end up in the $70 million range.

    … which tells me that when the time comes, and the team is poised for a post-season run, the payroll budget will have room to bring in the final pieces necessary.

  4. Excellent analysis (as if that was a shock). However, on the leveling of financial playing fields, it needn’t entail a handout (beyond whatever revenue sharing is already done via network TV contracts)–how about either or both total payroll and individual salary caps?

  5. This is a huge long discussion so I am going to make one point and then finish up the thought over the weekend on my blog. I don’t think the solution is welfare or pity, it’s good common sense.

    1) I would like to see a system where all teams share in media contracts. The Yankees who make $250+ million on their English language TV broadcast alone could not make one dime of that if the other teams were not on the field for those games. They should split that 50/50 with those teams or MLB should hold all broadcast rights and then split them equally among teams.

    No other major sport has individual team contracts for media.

    That is only POINT 1 of what I believe needs to be done.

  6. Geoff, I should have led off with great post. I agree with almost all of what you have to say there about the Padres.

    Obviously I believe that MLB is broken in terms of some teams not having an opportunity to compete. Teams like Pittsburgh, KC, Milwaukee and Cincinnati have begun almost every season for the past 17 years knowing their team had little to no chance of even being competitive. Milwaukee’s new stadium did breathe life into them, but they have only had one playoff appearance in the last 26 seasons.

    Minnesota and Cleveland are in much larger media markets and their media contracts at 3-4 times the size of the Padres media contract (which is the lowest in baseball) are ample evidence of that. Cleveland has had only 4 seasons with a record over .500 in the past 10 seasons and are not expected to contend any time soon, so they really cannot be counted as a tremendous success in a small market.

    I just think baseball does need to level the playing field a bit so those fans can at least have hope of competing.

  7. “the Padres simply don’t have much room to expand their fan base beyond those that call San Diego home or otherwise claim ties to the city.”

    It’s all about branching out to the Catholics, Geoff!

    In regards to 2007: If Milton Bradley misses stepping on Mike Cameron’s wrist by the slightest of margins then Bradley never goes ape-sh*t trying to kill Mike Winters (The butterfly effect).

    No “ape-sh*t” = No torn ACL.

    Serious chance at WS victory if the Padres were healthy. Ifs and buts….

  8. @Parlo: My thinking behind ’07 is that the Padres were basically as good as the Rockies, who got hot and went to the WS. Had the Padres reached the playoffs, they stood a good chance to do the same.

    @Websoulsurfer: Thanks much for the inspiration. I look forward to reading your proposed solutions.

  9. Love your writing, but could not disagree more. Until there is revenue sharing implemented, we will be facing a league of haves vs. have-nots. Yes, teams will get into the post season from smaller markets every year, but if you are a fan of those teams, don’t expect it to be a regular occurrence.

    Here is one cut at what it looks like:

    Basically, if you are consistent, high spender (top quartile) you are 2.12x more likely to make the playoffs than a medium spender and 3.6x more likely than a low spender. High spenders make it every other year, medium once every 5 years, low once every six. That is not a formula for long term engagement of the fans of over half your league (high = six teams, med = 8, low = 16). This drives me crazy.

  10. The problem with most of the more extreme revenue-sharing ideas is that they don’t account for the higher purchase price or marketing success of many big market teams. You don’t want their success to become a bludgeon, but you don’t want to disincentivize success, either.

    Yes, the larger-market teams need opponents. But the smaller-market teams need the national drawing power of the big boys, too. There’s some tweaking to be done to corral the absolute top end spenders, but baseball evidences more parity, in terms of championships, than other sports with more rigid payroll controls and revenue distribution.

    The failures of the Pirates and the Royals have much more to do with long-term front-office ineptitude than market size. Pittsburgh’s Huntington seems to be breaking free of past patterns, in a good way, while KC’s Dayton Moore has chosen to break from his predecessors by discovering ever new methods of failure.

    I have no doubt that being able to spend more is an advantage, even though there are teams like the Mariners who have consistently spent a lot without succeeding. But many schemes to fix the problem do no such thing. We saw it with revenue sharing, which led to several smaller-market teams either pocketing money or blowing it on poor FA choices rather than making strategic investments.

  11. Fair points, but I think you can address these.

    On creating incentives for teams, you can leave some portion that is the least correlated with market size. Maybe it is not 100% goes into the pools.

    On making sure the money goes to payroll, the thing that MLB and MLBPA would negotiate would be the % going to salaries. A team might be able to defer some of their share, but eventually it goes to salaries or gets taken back.

    On purchase price of franchises, tricky, but this is stuff for rich dudes to sort out. I cannot get worked up if Bud Selig gains relative to the Steinbrenners.

    Yes there is arguable marketing success differences, but my current analysis shows correlation between payroll and market size to be up at .90. So perhaps some of extra spending comes from marketing savvy but the bulk is from just being in the right market.

    The reason, I think, this does not get fixed is that it kind of works for the major players:
    MLBPA: doing well
    Major Market Owners: have a competitive advantage, winning, doing well
    Minor Market Owners: not winning, but probably turning a nice profit.
    Major Market Fans: yea haw, we win, you lose
    Minor Market Fans: we get screwed, but we don’t have a true advocate, so it will stay like this.

    Bitterly yours…

    But I still can’t wait for BP’s prospect analysis. I cannot stop watching and hoping, but I do so sadly.

  12. Jay,
    Market size ignores many things:
    The Red Sox have been in the same market for a century. They went 80 years with only 4 pennants and no World Championships.
    They have won two this decade. What’s changed?
    Ditto the Phillies and Angels.

    The Yankees and Mets share the same market. Your approach would value their wealth, fanbase, and success as being relatively equal.They are not!

    The Cubs are a much wealthier franchise than the White Sox.
    In all four of the 2 team markets, one franchise is significantly wealthier than the other.

    Market size ignores that the Yankees produced Derek Jeter, Mariano Rivera, Bernie Williams, Andy Pettite, Posada, Cano, etc. Meanwhile during the same era the Padres produced Jake Peavy, Khalil Greene, and little else. The Padres woes IMO are self inflicted.

  13. Great post, Geoff. Small market teams can compete with smarts. However, it is a tightrope; errors in signings that the Yankees could laugh off are killers in a small market. The Pirates have been a disaster for years due to poor signings and a bad farm system. As you note, as recently as 07 the Padres were a few outs away from perhaps a post season run.

  14. Geoff, Minor thing, but don’t forget the San Diego Rockets. They were an NBA (or maybe ABA) basketball team that departed for Houston long before the Clippers came around. Everybody thinks they are called the Rockets because of NASA and the Johnson Space Center in Houston, but they were called the Rockets when they were here because so may of the NASA and military rockets were (and still are) built in right here in SD.

    Oh and what about the Conquistadors? They were a minor league BB team here as well. If nobody remembers them I can’t blame you.

    Like I said, minor stuff, but interesting.

  15. @PF4L: Congratulations, you’ve caught an error in the ’09 Annual. Why did I have Hawks on the brain when I meant Rockets? I suspect it is because in the chapter on the Padres ’69 season, I mention that the Hawks and Rockets met in the NBA playoffs that year.

    Bad author. No cookie.