Tuesday, August 24, 2010

Money Talking Issues

There seems to be a trend lately. If something can leak, it has been. First, we had British Petroleum, then we had all of the Wiki Leaks, and now Major League Baseball has been hit. An investigation is underway to uncover who opened up documents that exposed the financial histories of the Tampa Bay Rays, the Los Angeles Angels of Anaheim, the Seattle Mariners, the Florida Marlins, and the Pittsburgh Pirates according to the New York Times. Many teams are not publicly owned, so they do not need to release quarterly or annual reports to shareholders. They only need to give financial reports to the Commissioner's Office, Bank of America, J.P. Morgan Chase, Ernst & Young, and PriceWaterhouseCoopers. However, there is an interesting quote in this article from Vince Gennaro, a consultant to several major league baseball teams and author, said,

"If I were Major League Baseball, I'd be much more concerned if the Yankees' numbers were released. It would present a dramatic disparity and you'd begin to wonder how you can retain an economic structure that allows teams to earn such disparate amounts of money."

When I read this, what I think Gennaro might be referring to is the necessity for a salary cap. I definitely have mixed feelings about this. While I do think that the salary level is ridiculous, I also know that if the players aren't making the money, the owners are going to pocket more. Again, I do not have a problem with the owners making money because that is why they bought the business. However, what would ideally happen is that with less salary to pay because of the cap, ticket and merchandise prices might be able to drop to make baseball much more affordable for the average fan. I do not think that this would happen because as long as people are willing to pay for the tickets, the prices will not drop. However, I do not think that the owners would adopt the lower prices because when there's profit to be made, they will make it. So, I don't think that there should be a salary cap, because the intended effect to make the game more affordable for the fans due to fewer expenses would not happen.
Photo by daveynin on Flickr

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