17 November 2015
Corporate Ownership of MLB Teams
The 30 teams in the MLB combine for a value of $36 billion, with an average team value of $1.2 billion. In the past couple decades or so, a new trend has surfaced, which is corporate ownership of teams, which is having a corporation own a team instead of a person. Some people think corporate ownership is bad, but in reality it has had no negative effects and has the potential to save baseball by allowing small-market teams to compete with big-market teams.
There are currently four teams owned entirely by corporations: the Atlanta Braves, the Seattle Mariners, the Toronto Blue Jays, and the Washington Nationals. The main argument against corporate ownership is that teams would be run completely for profit and not provide an entertaining, winning team to fans. A local owner would be more emotionally invested in a team, and would focus on winning as well as profits. The main ways that a team could run purely for profits would be choosing cheaper players as substitutes so they are not spending as much money on players. Teams could limit their big-name, expensive players to increase marginal costs.
This, however, has not been the case with corporate owned teams. A winning team puts fans in the seats, and a very big piece of teams’ revenue comes from ticket sales, concessions, and parking. So more fans means more money, giving owners incentive to try to win. The four corporate owned teams have payrolls ranking 6th, 10th, 12th, and 13th in the league, so slashing payrolls to maximize profits has not been an issue. When Walt Disney owned the Angels from 1999-2003 and when Fox Entertainment owned the Dodgers from 1998-1999, both companies used the teams to promote their businesses. The owners increased payroll to make the team better and make a good name for the company, and the opportunity cost of this was higher profits. The trade-off was sacrificing profits for promotion of the corporation.
Another benefit to corporate ownership is helping small-market teams compete. The MLB has no salary cap, which is a price ceiling on players’ salaries. So theoretically the more money owners have, they can pay for better players and win more, making the competition unfair. Although payroll is not necessarily associated with wins, big-market teams typically win more games and make more playoff appearances than small-market teams. Most of the teams that come under the ownership of a corporation have seen their payroll increase. The Washington Nationals were a small-market team in 2005 with a payroll ranking 23rd in the league. But the Nationals came under corporate ownership of Lerner Enterprises in 2006, and climbed up the ranks and now sit in 6th place on the payroll scale. Corporate ownership of teams could provide small-market teams with the money they need to compete. However, this could also just end up causing inflation of player salaries, because all teams would have more available money, and there is a limited supply of elite players.
Corporate ownership has the potential to save the MLB by allowing small-market teams to compete with big-market teams. But if all teams were corporate owned, it could end up just causing players’ salaries to rise. For the state it is in now, corporate ownership has not had any negative effects on the MLB and I don’t think people need to worry about it ruining baseball at the moment.
"List of Major League Baseball Principal Owners." Wikipedia. Wikimedia Foundation. Web. 13 Nov. 2015.
"MLB Team Payrolls." Major League Baseball Team Payrolls 1998-2015. Web. 13 Nov. 2015.
Ozanian, Mike. "MLB Worth $36 Billion As Team Values Hit Record $1.2 Billion Average." Forbes. Forbes Magazine, 25 Mar. 2015. Web. 13 Nov. 2015.
Woolset, Matt. "Can Corporate Ownership Save Baseball?" Forbes. Forbes Magazine, 22 Feb. 2007. Web. 13 Nov. 2015.