The Pittsburgh Pirates have not had a winning season since 1992. That’s nearly twenty years. 

But recently leaked financial documents indicate that perhaps a different kind of success is sweeter– the Bucs made nearly $30M in profit in 2007 and 2008.  For a team that expended only $100M in payroll during those two years, that’s pretty impressive.  Essentially, the Pirates derived so much profit by pocketing the $39M they received from MLB revenue-sharing in 2008 rather than using it to acquire better players. Revenue sharing is a mechanism meant to funnel profit from highly competitive teams to bottom-dwellers like the Pirates who draw fewer fans for the home team when they are on the road.  Yet the Pirates lack the incentive to spend money to improve their performance on the field and have instead chosen to sit complacently on top of a hefty profit at the bottom of the division each year.

To what extent is the management of a baseball team driven by economics?  The Yankees and Red Sox “buy” championships; the Pirates run their team like a cost-cutting, profit-driven business with little regard for where they end up in the standings; the Marlins’ front office plays the venture capital game by building up promising young prospects, turning them into big leaguers, and then “re-selling” them to wealthier teams to turn a profit.  There is a diverse range of strategies for the best allocation of financial resources in a world free from a salary cap.

How much do regional differences play a role?  Teams in cities like Boston, New York and Philadelphia are catering to an impatient and fickle fan base—a guy strikes out the side one inning and you love him; he gives up a home run in the next and suddenly you hate him, ridicule him for being an embarrassment to the game and tell him your grandmother could pitch better than him.  Fans in these places want to see results, and they want to see them fast.  Are Yankees’ and Mets’ GMs Brian Cashman and Omar Minaya under more pressure from New York fans to make the big deal and get the big name on their roster before the trade deadline?

Do teams like the Rays, Astros and Marlins who play in slower paced cities feel less of a time crunch, thus enabling them to spend less on young prospects in the hopes that one day down the road they might become a star and lead the team as underdog contenders?  Or perhaps this “strategy” is actually out of necessity rather than a luxury as tight budgets force them to take an approach with a slower return on investments.

So who’s more successful?  The Yankees win championships more frequently but pay a higher price to do so; the Rays and the Marlins manage to eek out a title every once in a while in an economically responsible fashion; maybe it’s the Pirates, if you value profit-driven returns over a respectable win-loss record.  But even if the Pirates are a paragon of financial success, well, all I can say is I admire the loyalty of any enduring Pirates fans out there.


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