What ‘sustainable success’ really means
We live in a time in which Major League Baseball front offices are increasingly cutting payroll and are seemingly happy to be “competitive” while eschewing -- and sometimes even fearing -- taking shots at being truly great. As we’ve discussed a lot around here over the past couple of years, a number of buzzwords -- and tortured justifications for low payroll -- spin out of that philosophy.
“Financial flexibility” is one we’ve had a lot of fun with. And to be sure, there are way more ridiculous ones. But there’s one you hear more often than all the others lately. Indeed, I can’t remember the last press conference from an owner or head of baseball operations that didn’t nod to it. What is it?
If you want to see it in action, look no further than yesterday’s introductory press conference of new Red Sox Chief Baseball Officer Chaim Bloom. Both he and team president Sam Kennedy used the term on multiple occasions when referring to the future goals of the Boston Red Sox.
In front office speak “sustainable success” does not mean “sustained on-the-field success” in the form of trying to win every single season. The “sustainable” refers to “financial sustainability,” making the term “sustainable success” mean “success on the field only so long as the team finances remain within our pre-set parameters.”
Which, hey, how can that be unreasonable? No business -- and baseball teams are businesses -- wants to win at any cost. Coke no doubt would love to finally vanquish Pepsi for good, but if they did at the cost of bankrupting the company, well, that’d be bad. Similarly, baseball teams no doubt want to win the World Series, but they don’t want to do it if it means the club is forced out of business itself.
Except, there’s one problem here: there is absolutely no reason to believe that any team would be at risk of that if they actually spent money on players and truly attempted to compete for championships every year.
Part of this is structural: the Astros and Nationals are each trying to defeat the other right now, but they are not Coke and Pepsi. They are part of the same larger business concern, they depend on each other’s survival and they and their 28 counterparts have a host of rules and business arrangements in which they work to prop each other up in various ways and in which they seek to share the wealth. Between that, a governmentally-bestowed and protected monopoly and the existence of massive public subsidies for their operations in the form of taxpayer-funded ballparks, the sort of competition at play here is very different than the sort of competition Coke faces vis-a-vis Pepsi. In turn, that renders the notion that we should talk about baseball teams’ need for “success within reasonable parameters” in the same way we do every other business nonsensical.
But the even bigger part of this is that there is no reason to believe any level of “going for it” on the part of a baseball team’s front office actually imperils the financial health of a baseball team, thereby requiring “sustainable” remedies.
Major League Baseball and its clubs have simply failed -- and, frankly, have never really tried - to establish that their viability or even their profitability is truly at risk if they try harder to win. Every team that slashes payroll or embarks on a rebuild says that it was necessary because they were on an unsustainable path, but unlike Coke and Pepsi, who release financial reports on the regular, baseball economics are almost completely opaque. Teams claim they are on precarious financial footing, but never do they provide evidence of it.
Meanwhile, the financial evidence we do see contradicts claims of unsustainability.
League revenues break new records every year. Franchise values have skyrocketed. Broadcast deals grow ever higher. The personal net worth of every single owner increases and smart, savvy businessmen jockey to buy-in to ownership groups, even to get a minority interest. Expenses -- in the form of player salaries -- remain flat.
Two teams have declared bankruptcy in the last ten years: the Texas Rangers in 2010 and the Los Angeles Dodgers in 2011. Each bankruptcy involved unique circumstances involving much more than the team’s simple assets vs. its liabilities, each resulted in the teams being sold at a windfall price, each old owner walked away richer than he had been before and each team went on to far greater financial and on-the-field success than they had been experiencing at the time of the filing. Which is to say: owning a baseball team is an almost idiot-proof business proposition, and even when idiots get involved they come out of it better off at the other end.
None of which is to say that it’s impossible that a team and its owner could become financially imperiled. It’s merely to say that, in the modern world of Major League Baseball, it simply hasn’t happened and no one has made a cogent, evidence-based case that it is likely.
Yet, when the front office executives speak about the need for “sustainability,” we are all expected to nod and agree that it’s crazy and irresponsible to spend money on good players past some arbitrarily established level. We are expected to assume that the intent and goal of the front office and team ownership is the same as ours as fans and that they are chasing wins rather than mere profits. We are expected to do all of this, by the way, with a complete and utter dearth of actual information on which to base a reasoned conclusion of what is sustainable and what is not. We are expected to accept that their ratios all check out without ever being shown the denominator.
A month ago the Red Sox announced that they will be slashing payroll and will either be actively unloading star players, letting them walk away or not pursuing new star players in a quest to get below Major League Baseball’s Competitive Balance Tax threshold. Yesterday, Chaim Bloom and Sam Kennedy talked about how it’s the team’s goal to “have sustained long-term success and compete for championships year in and year out.” These two concepts are not just not unrelated, they are absolutely and necessarily linked.
The larger context makes that abundantly clear.
- Kennedy and Bloom said this on the one-year anniversary of the Red Sox winning their fourth World Series title in the space of 14 years;
- They said this about a team that has made the postseason ten times in the past 15 years and which, a couple of anomalous stinker years here and there notwithstanding, has been such a strong and sustained contender for so long that the league’s other owners have built in rules in the Collective Bargaining Agreement that are pretty clearly aimed at neutralizing their on-field and financial success as much as possible;
- They said this about a team that is either the first, second, or third most valuable property in Major League Baseball; and
- They said this about a team whose owners created a sports and media empire on the back of its value and cash flow.
If that’s something that needs fixing -- if that’s something that’s not an object example of “sustained success” -- than words have no meaning. And if, in this context, those words don’t seem to make all that much sense, it’s worth asking why they are being deployed to begin with and what the true definition of “sustainable success” is to those who utter them.