Originally Published: March 21, 2018 6 a.m.
The 2018 baseball season is almost upon us but before the games begin, fans of a number of teams are advised to consider the words of Seattle GM Jerry Dipoto. “You could argue there is more competition to get the No. 1 pick in the draft than to win the World Series,” said Dipoto. That candor hardly endeared Dipoto to his fellow MLB executives, but it raised an interesting question: Is “tanking” a problem in MLB? The answer depends on whom you believe.
The last two World Series winners - the Astros and Cubs – were willing to lose for 4-5 years in the hopes of becoming more competitive in the long term. For both teams, the gamble paid off. The Cubs had gone 108 years without winning the World Series prior to 2016. The Astros had never won a title in their 56-year history until last season. Other teams have taken note, and although Dipoto was exaggerating, at least one-third of MLB teams aren’t in win-now mode. That tactic guarantees high draft picks, who, if they develop as projected, can turn teams around in short order.
Tanking has been a strategy permitted under every Collective Bargaining Agreement negotiated between the players’ union and management, thanks to the MLBPA’s historical opposition to salary caps and floors. The union prefers to rely on the market to determine individual and team salaries. Their rationale is arbitration and free agency will result in a rising tide that lifts all boats (salaries). Their theory worked in the George Steinbrenner era, but of late, business-minded owners and executives who place more reliance on analytics have been less inclined to open their checkbooks when agents come calling.
It’s clear neither the union nor the owners foresaw the impact of the competitive balance (luxury) tax, which imposes severe financial penalties on teams that exceed team salary levels. This year’s luxury tax threshold, $197 million, became a de facto salary cap and severely restricted the bidding on free agents. In combination with no salary floor, as exists in other sports, teams are free to field lineups with low or minimum wage players.
From the teams’ perspective, there is no downside to tanking. Some fans will be upset in the short term, which will negatively impact attendance. But with media rights making up the largest percentage of team revenue, financial success is no longer dependent on butts in seats.
Uber-agent Scott Boras ripped teams for not lavishing money on his stable of overpriced free agents. “Winning is the cement of baseball integrity,” Boras told The Athletic. “We kicked people out of the game when they tried to not win,” he said, a reference to the 1919 Black Sox scandal. “We have to get rid of the noncompetitive cancer…That is destructive to our sport because it has removed one-third of the competition.”
The fact is, tanking works, at least it did for the Cubs and Astros, and it’s doubtful their fans would agree with Boras. Whether his comments are mere hyperbole or become reality remains to be seen.
Jordan Kobritz is a former attorney, CPA, Minor League Baseball team owner and current investor in MiLB teams. He is a professor in and chair of the Sport Management Department at SUNY Cortland and maintains the blog, sportsbeyondthelines.com. The opinions in this column are the author’s. Kobritz can be reached at firstname.lastname@example.org.