Athletes

Athletes

Kris Bryant Demotion Reminder that Major League Baseball is a Business

Professor Mark S. Nagel

Posted: April 23, 2015

On March 30, the Chicago Cubs sent highly touted third baseman Kris Bryant to the minor leagues, despite his excellent spring training performance where he hit 9 home runs in only 14 games. A casual fan might wonder why the Cubs would send down a 23-year old player who had already hit well in 70 games at Triple AAA in 2014, especially since the Cubs do not have an established third baseman or another emerging young player to play the position on their roster.

In a world where maximizing opportunities to win was the only priority, Bryant would almost certainly have been in the Cubs’ opening day lineup rather than in Iowa. However, the Major League Baseball Collective Bargaining Agreement grants players with between three and six years of service the right to salary arbitration, with those players completing six full seasons eligible for free agency. By leaving Bryant off the Cubs’ Major League roster for just a few weeks, they will effectively retain control of his exclusive bargaining rights through the 2021 season, rather than the 2020 season. They will also likely delay his arbitration eligibility until after the 2017 season. With succeeding arbitration contracts typically building upon previous years, and talented free agents commanding many multiple times their previous salary, the Cubs will likely save tens of millions of dollars with this decision and will enjoy the fruits of a highly discounted Bryant season in 2021, when he will 29 years old and likely in the plateau of his peak playing ability.

Though there are a handful of these types of situations each season, they often involve “smaller market” teams that have fewer financial resources than a “big market” team like the Cubs. Teams that have fewer financial resources and little hope of attracting top-level free agents often delay their star players’ advancement  to retain their services for as long as possible. Unlike some of these other teams, the Cubs have long been one of the top revenue producing franchises, with a widespread “local” television presence, extensive corporate sponsorship support, and a consistently filled stadium, Wrigley Field, that is in the middle of extensive renovations that will generate even more money in the near future.

The Bryant case has received extensive media attention not only because fans perceive the Cubs as being easily able to afford Bryant’s future contracts, but also because the Cubs – who last played in the World Series in 1945 and last won one in 1908 – appear to have a decent chance to make the 2015 postseason, if they can avoid disastrous injuries and maximize their opportunities in what projects to be a balanced National League Central Division. The Bryant demotion, according to various sabermetric analysts, could be “worth” a loss of more than a quarter of a win for the Cubs, even if he plays in Iowa for less than two weeks. If at the end of the season, the Cubs fall one game short of the playoffs, the cries from the Wrigley faithful will be extensive, especially with Bryant’s short-term “replacement” Mike Olt batting only .154 in his first 13 at bats before hurting his wrist.

The Major League Baseball Players’ Association has expressed their concern for the Bryant situation, but of far greater alarm is the percentage of overall MLB revenues that the players receive. As Nathaniel Grow of FanGraphs has recently noted, MLB player salaries are increasing rapidly, but at a slower rate than the skyrocking increases the owners have realized with the windfall in television revenues and other developing revenue streams. With some of those television revenues being structured in a “creative” manner along with some revenue sharing mechanisms that may be leading to a decreased need to distribute enhanced revenues to the players, the upcoming 2016 collective bargaining sessions will be critical for the players. By then, regardless of his performance, Kris Bryant’s “demotion” to start the 2015 season will likely be a side note to the far more pressing financial issues facing the industry.

About Professor Mark S. Nagel

A native of California, Dr. Nagel became a faculty member in the Department of Sport and Entertainment Management at the University of South Carolina in 2006. Prior to joining the department, he was the director of the graduate sport management program at Georgia State University. At Georgia State he was responsible for all aspects of the sport management program including recruiting and advising students, developing and scheduling courses, identifying and supervising adjunct faculty, and maintaining alumni and sport business relationships. Dr. Nagel has also previously worked as a sport management professor at the University of West Georgia and San Jose State University. Dr. Nagel currently serves as an adjunct faculty member at the IE Business School in Madrid, the University of San Francisco and St. Mary’s College of California. Before pursuing a career in academe, Dr. Nagel worked in different areas of sport management—primarily in athletic coaching and administration as well as campus recreation. During his years as an assistant coach of the women’s basketball team at the University of San Francisco, he helped lead the team to three NCAA Tournament appearances and a spot in the 1996 Sweet 16.

Dr. Nagel has co-authored three textbooks: Introduction to Sport Management: Theory and Practice; Financial Management in the Sport Industry; and Sport Facility Management: Organizing Events and Mitigating Risks. Dr. Nagel has authored or co-authored numerous articles in refereed journals such as the Journal of Sport Management, Sport Marketing Quarterly, Entertainment and Sport Law Journal, International Journal of Sport Finance, and Sport Management Review. He has also published extensively in professional journals as well as written numerous academic book chapters and given dozens of research presentations. He has also served as treasurer for the North American Society for Sport Management and the Sport and Recreation Law Association.