Labour

Labour

A’s Still Trying to Overcome MLB Mistakes

Professor Mark S. Nagel

Posted: February 26, 2017

Tagged: athletes / baseball / legal / players

As players report to spring training to prepare for the 2017 Major League Baseball (MLB) season, many pundits have noted that the business of baseball has never been better. During the off-season, MLB owners and the Major League Baseball Players Association (MLBPA) agreed to a new five-year Collective Bargaining Agreement (CBA). The labor contract ensured the league that encountered eight highly contentious labor stoppages from 1972 to 1995 would continue its streak of labor peace, something the other North American Big 4 leagues have not been able to duplicate.

The media quickly focused its attention on the aspects of the deal that appeared to have the greatest impact upon the on-field product: eliminating the All-Star Game from deciding World Series home field advantage, shortening the minimum disabled list stay from 15 to 10 days, and adding four off days to the 162-game schedule. Extensive discussion also centered on the perceived most important points affecting the business of baseball: changes to the free agent qualifying offer process and team compensation, increased luxury tax thresholds, and a hard cap on the bonus pool each club can pay international players. The new luxury tax requirements, combined with recent concern regarding the Los Angeles Dodgers debt-limit violations, had many wondering how much payroll the Dodgers might have to cut in 2017 and 2018 (Shaikin, 2016).

An additional, less publicized provision reduces the Oakland A’s revenue-sharing funds to 75% in 2017, 50% in 2018, 25% in 2019, and then eliminates them completely (“A’s being phased out…,” 2016). On the surface, it makes sense: why should a team in the 4th largest metropolitan market that has a thriving economy and wonderful year-round weather be permitted to receive revenue sharing dollars as if they were located in a depressed small market? The provision essentially chastises the A’s for staying in the dilapidated, 50-year old Oakland Coliseum and provides a huge incentive to create a workable solution in a new facility. Unfortunately, the reality is the A’s have worked to advance MLB in the Bay Area since 1990, but a number of their viable solutions that made financial and common sense have been repeatedly rejected in favor of preserving territorial rights for the Giants to the City of San Jose and Santa Clara County. These rights that have been deemed sacrosanct were actually a gift from the A’s that has been repaid with heavy doses of misery.

In 1990, after failing to secure public financing for a new stadium in San Francisco, the Giants petitioned MLB to move to San Jose. Unfortunately, after the A’s supported the Giants’ expansion into the new territory, 1990 and 1992 San Jose stadium referendums failed, leaving the Giants in antiquated Candlestick Park until San Francisco was finally able to move into privately financed AT&T Park in 2000. The Giants new home was actually farther away from Santa Clara County than Candlestick Park.

Common sense would dictate that MLB would then have asked or demanded the Giants to relinquish the rights to the South Bay, especially as residents and politicians of San Jose later allocated significant monies to build the A’s a new facility. Instead, MLB supported the Giants in their efforts to continually stymie the A’s attempt to move outside of Alameda County, a fact noted by former A’s owner Steve Schott in 2004, “There was no question about whose territory it was. They had to get permission from the A’s…They didn’t pay for those territorial rights, by the way… And now, if we talk about another stadium down in that area, they go berserk…” (Schmuck, 2004, para. 7).

As the Oakland Coliseum structural and financial problems exacerbated in the 2000s and A’s revenues continued to diminish in relation to the ever burgeoning industry, efforts to build a new facility in Alameda County were unsuccessful. After buying the A’s in 2005, owner Lew Wolff sought a viable stadium solution as a top priority. In 2011 it appeared that the team could move into a state-of-the-art, publically funded facility in San Jose. With the Giants refusing to budge and Bud Selig and MLB failing to act beyond creating an investigative, blue ribbon panel, the City of San Jose unsuccessfully attempted to sue MLB for antitrust violations, leaving the A’s to flounder in a terrible facility and within a less-than-ideal Oakland political landscape. With the new CBA revenue sharing restrictions and few alternative cities building a new facility, it appears the A’s must continue in an untenable situation or find a way to build in Oakland, a problem made more difficult by the NFL Raiders’ ongoing location crisis. New A’s President Dave Kaval has worked tirelessly in the few months he has been on the job, but he realizes it is an uphill battle that will not be easy to navigate to fruition (Slusser, 2016).

The entire situation makes little financial sense, especially since the A’s received over $114 million in revenue sharing from 2012 to 2015 and $35 million in 2016 (Dolich, 2016; Hickey, 2016). In a new San Jose facility, the Oakland A’s revenue would have skyrocketed, creating a situation where the A’s would likely have become a revenue sharing club, rather than one who received significant MLB support. More importantly for the players, the A’s payroll and ability to retain top players would have dramatically increased, creating a potential high-profile free agent destination in lieu of the current environment where the A’s rarely pay significant salaries to compete with other franchises for top talent. With San Jose willing to foot the stadium bill – a rarity in cash-strapped and anti-corporate welfare California – the only cost to transforming the A’s and significantly enhancing the financial wellbeing of the entire industry would have been an invasion of the Giants’ territory. Even if one is willing to grant the Giants the benefit of the doubt regarding their territorial rights, MLB has a history of forcing teams into another franchise’s territory. When MLB moved the Expos into Washington DC, they paid a significant financial penalty to Baltimore Orioles owner Peter Angelos. Unfortunately, that option was never offered to the A’s.

Instead, after languishing for years, MLB now appears to have blamed the A’s for their inability to develop a viable plan to stay in Alameda County, even though the political landscape in the East Bay is, to say the least, “contentious.” For the sake of the A’s and MLB, everyone should hope for a viable stadium plan, but at the same time, every party involved in this 25-year fiasco should have to take responsibility for the money it has cost the industry and the joy it has cost the fans.

IA’s being phased out of revenue sharing, so ballpark urgency. (2016, December 2). USA Today. Retrieved from [Link]

IIDolich, A. (2016, February 29). MLB revenue sharing a problem for A’s, Raiders. Retrieved from [Link]

IIIHickey, J. (2016, December 1). What does A’s news mean for stadium prospects? The Mercury News. Retrieved from [Link]

IVSchmuck, P. (2004, March 14). A’s, Giants lacking ground for compromise. The Baltimore Sun. Retrieved from [Link]

VShaikin, B. (2016, November 26). After $1 billion in player spending, Dodgers under MLB mandate to cut debt. Los Angeles Times. Retrieved from [Link]

VISlusser, S. (2016, November 17). New A’s president Dave Kaval focused on stadium, community. SFGate. Retrieved from [Link]

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.