There Is No Such Thing as a “Small Market”
“The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.” –Karl Marx, The Communist Manifesto
“BLACKOUT RESTRICTIONS APPLY” –MLB.tv fine print
The Oakland Athletics hold a special place in the minds of baseball fans, as the team that was Ground Zero for the sabermetric revolution. They were the subject of Michael Lewis’ Moneyball, and continue to be held up as an example of how a baseball team can be competitive without paying big salaries. So, it was interesting to see this tweet from Jon Heyman a few days ago:
Two things stand out about this. The first is that, as recently as 1991, $33 million was enough to field the most expensive team in baseball. Now it’s not even enough for a single Max Scherzer. Even adjusting for inflation, $33 million in 1991 would only be ~$70 million today, which would be only the 24th highest payroll in 2022, below the Tampa Bay Rays and Seattle Mariners.
It is underappreciated, I think, the degree to which sports salaries ballooned in the 1990s. Of course, everyone realizes that athletes get paid a lot more now than they used to, but people tend to imagine a steady increase in player pay since the 1970s. In reality, there were two big spikes, the first coming right after the onset of free agency. Then, in the 1990s, there was another jump, largely thanks to cable and satellite television. As more channels started to bid on live sports, revenues jumped precipitously, and much of that eventually trickled down to the players.
But that change in the business model leads to the other surprising thing about Heyman’s tweet: that there was a time when OAKLAND had the highest payroll in the league. The A’s, it is often said, cannot possibly keep up with high-spending teams because they play in a “small market.” The subtitle of Michael Lewis’ book was “The Art of Winning an Unfair Game”—unfair, supposedly, because there was just no way for the A’s to spend as much as the Yankees. Except that wasn’t true in 1991. So what changed?
The conventional wisdom is that, as the revenues flooded into pro sports, they did not flood in equally. Teams in bigger media markets got a disproportionate share of the revenue because they had more potential cable customers to sell their games to. So while “big market” teams like the Yankees and Red Sox could afford to spend big on free agents, teams like the A’s were limited in their growth.
But this is total bullshit, for a couple of reasons. First, and most importantly: Oakland is not a small media market! Oakland is part of the Bay Area, which is the sixth-largest media market in the entire country, bigger than Boston, Houston, and Washington, DC, which are all considered “big markets.” It’s true that Oakland has to share the Bay Area with the San Francisco Giants—but LA, Chicago, and New York are all similarly split, and nobody grades those teams on a curve.
Secondly, for as much as baseball is still a regional sport, it is not totally regional. There are still major national TV deals, as well as revenue sharing in place to ensure that all teams get a slice of the pie. And, of course, not all fans live near their team, as MLB fans learn every year thanks to the league’s horrible policy of blacking out games all over the country. Oakland’s games are blacked out in fucking Las Vegas—over 500 miles away—presumably because some cable company thinks it’s reasonable to ask Nevada residents to pay for a Bay Area regional sports network.
In no other circumstances do capitalists ever accept a hard ceiling on the size of their market. Even in sports, they don’t really accept that—every league is constantly trying to expand internationally, or add new expansion teams. It’s only when it comes time to pay players that we hear that suddenly the number of potential fans is fixed. Suddenly people start referring to places like Miami or the Bay Area or San Diego as “small markets.” Really, these teams are just “low payroll” teams, and that low payroll is not some fixed economic law imposed on them by the universe, but a tool for appropriating the value provided by the players.