Tuesday, November 13, 2012

Jeffrey Loria and the Ownership of the Commons

TODAY IN WHOLLY UNSURPRISING NEWS: The Miami Marlins have just undergone their third fire sale in their brief expansion-era history, trading Josh Johnson, Mark Buerhle, Jose Reyes, John Buck and Emilio Bonifacio to the Blue Jays for Yunel Escobar, highly rated prospects Jake Marisnick and Adeiny Hechavarria and possibly more.

It's a fire sale!!!!

Just a year ago, the Marlins moved into their massive, taxpayer-funded stadium, and now they are crying poor and building for the future. Teams build new stadiums to attract fans, thereby increasing revenue streams and enabling the team to have a higher payroll. Ideally, this added payroll leads to added wins, which in turn keeps the fans coming to the ballpark. Let's just say this has all been a massive failure.


The Marlins have done this twice before, but both previous fire sales happened immediately after winning the World Series (I don't know it that's better or worse, but it is interesting that they won the World Series twice). This time, they're not selling high, but just selling. Apparently, no matter how glitzy and new the stadium is, no matter the moniker (Miami instead of Florida), no matter how ugly the uniform redesign, no matter how outspoken the manager (who got chastised for being outspoken before getting unceremoniously dumped this offseason), fans in Miami don't want to come out and see the team play. Especially last year's team, which came into the season with high expectations, and basically took a dump for six months.

We should all hold off on evaluating this deal until we know exactly what the Marlins received and give the prospects a couple years. By all accounts, Toronto is loaded with prospects and it's pretty foolish to evaluate a deal like this in the short term anyway. A lot of people thought the Brewers were crazy to give up Matt LaPorta for 3/4 a season of C.C. Sabbathia, but that one worked out just fine. Also, Buerhle is getting up there in years, Reyes is overrated (and probably overpaid) and Johnson can't stay healthy, so this isn't necessarily the worst thing for the Marlins to get rid of these players and start fresh from a team construction standpoint.

It is a big deal, however, when one considers the implicit social contract between a team, its ownership and its fans.* The Marlins as a corporation are privately owned - Jeffrey Loria is the majority owner, and he's free to spend his money as he pleases - but as a sports team, they can only exist as part of a greater community, as a collective construction. Sports are pervasive in popular culture because they are the great democratic force; no matter where you go, you can talk about sports and connect to people through the prism of sports, and no owner can lay claim to that. Sports teams may be private entities, but sports are wholly public.

*(By the way, I do hate that immediately after this trade, all I can think about is social contract theory. Don't for a moment think I want to be this way.)

When the NBA owners were locking out the players, Malcolm Gladwell wrote an interesting piece about a shift in the paradigm of sports ownership, from that of "psychic benefits" to profit margins. He defined psychic benefits essentially as owning a team for the social cachet contained in owning a team, and derided the owners, many of whom paid above strict market value precisely because of this exclusive cachet, for now making a stand on the grounds of profitability and locking out the players.

What does it mean to own a team? Obviously, by the letter of the law, Jeffrey Loria is within his rights to make this trade, but he essentially defrauded the city of Miami, which may be on the hook for as much as $2.4 billion when all is said and done for his stadium. There was an implicit expectation that Loria would do his best to field a competitive team, but that hasn't been met. Maybe there was an equal expectation that fans would show up at the new stadium no matter the caliber of team, but that still doesn't excuse Loria's action in my mind. Instead of drawing fans by winning, the easiest way to endear oneself to a fan base, Loria's cutting and running, lowering his expenses so he can maximize his profits.

If Loria owns the team solely to be a profitable venture, well he got his stadium and baseball's revenue sharing is such that it almost pays to be mediocre. Ultimately, baseball's profit structure may be the problem: Loria knew that his team would have to spend a lot more to have a chance at a championship, but he would take on no added economic risk by cutting costs and fielding a team of scrubs. If Loria wants to sell now, he'll make a bundle, especially now that he has a stadium built, for which he took on no added risk. He should just sell to someone who will try to field a winner, but he won't.

Sports teams have to make some decisions based on dollars and cents, but the city of Miami gave Loria a huge check to incentivize him to field a winner. By making this trade, Loria's proved that he's given up. I wouldn't blame the fans of Miami if they did the same.

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