Deficits, Live and Learn, Treasury, Trust

The Economics of the Florida Marlins

Can I be the first person to jump aboard the 2009 Florida Marlins bandwagon? For you non-baseball and non-ESPN fans, the Marlins are a Major League Baseball franchise based out of Miami Gardens, Florida.

Bring home the National League pennant, Marlins. Why stop there? Win another World Series ring. As for predictions, relative unknown pitcher, Josh Johnson, will take home World Series MVP honors. We’ll be calling J.J. Mr. November; not quite the same illustrious ring as Mr. October, but it’ll do. (The number of playoff rounds, and length of the division series has extended over the years, pushing the moniker of a playoff star, “Mr. October,” to logical collapse).

I wouldn’t call myself a baseball fan, per se. I love watching some good Championship Series or World Series playoff baseball. Watching the best athletes in the world compete is my addiction. Having said that, I’m not a die hard aficionado. You won’t catch me, unless in extreme cases of boredom, watching a regular season baseball game for more than one inning.

However, the Florida Marlins are an astounding franchise, deserving a great deal of reverence.

The tale of the Marlins goes a little something like this:

Since their first expansion season in 1993, they have consistently had trouble drawing fans to the games.

The first season provided plenty of excitement with the arrival of a new baseball franchise. For the next couple of years, attendance was competitive with the rest of the league. But once the novelty wore off, Miamians stopped coming to the gate. Sports business professionals have tried to explain the phenomenon for years. What is it about the Miami community and economy that will not support a baseball team?

There is a strong Latin American contingent in the Miami area. 62% of Miami-Dade County is of Hispanic or Latino descent. (1) This is notable due to baseball’s immense popularity throughout Latin America. Like fútbol, it doesn’t take much, in the way of equipment, to start a sandlot game. For developing countries, that makes a sport accessible. All a kid needs is a stick and a rock to fall in love with the game.

Every roster in the Majors features a bevy of Latin players. Major League clubs assign scouts to head “international programs” and run baseball academies in Latin countries. The Texas Rangers, for example, opened a new academy in San Pedro, Dominican Republic, in 2006. The end game is to identify and develop cheap talent. It’s cost-effective to build these facilities in Central and South America, and easier to sign more players. Scouts have patrolled Latin America for decades, and the resources being allocated toward Latin talent pools grow each year. Between the Miami demographics, and the presence of Latin players, why don’t Latin fans come out to the ballpark to see the Marlins?

One theory for the poor attendance records is the strong presence of retirement communities in Florida. Elderly folks, with fixed incomes, have not been able to keep up with the rising costs of a baseball “experience.” It’s not just the inflated costs of the ticket. The ballpark offers shops, restaurants, pools and $7 hot dogs. A day at the stadium can leave a person’s pockets empty.

The next theory is the hot and humid South Florida weather, particularly during the dog days of summer. Any person, let alone grandma and grandpa, may elect to pass on simmering for 3.5 hours in 65% humidity; even if there is chocolate chip mint ice cream, to be eaten out of a miniature batter’s helmet.

Somehow, though, Miamians fill the exact same stadium to watch the Dolphins play, the local National Football League (NFL) franchise. The difference is the Dolphins play 8 regular season home games per year, and football is the most popular sport in the country. The Marlins, on the other hand, play a painstaking 81.

The only logical explanation for the Marlins poor attendance is that the Marlins must stink. Wrong again. Few franchises have enjoyed more success, period; and no franchise has had more success with less money, and more roster turnover.

With limited revenue to work with, Marlins executives haven’t been able to lure big name free agents, who command big dollars. Instead, they’ve been forced to bring in affordable talent through the draft, adept trades and economical free agents. Once young players enter their farm system, they’ve had to be developed by great coaching.

Since their inception, the Marlins have won two World Series titles. After the first championship victory in 1997, a short five years after their first season, owner Wayne Huizinga blew up the roster. Although partly a philosophical decision, there just weren’t enough funds to retain their championship players. Fans did come out to support the team during the playoff run, but were scarce to be found through the 81 game marathon of a regular season. (2)

Beginning with the 1998 season, the Marlins started from scratch, slowly building up their farm system and talent pool once again. They missed the playoffs for the next five consecutive seasons, but improved their season win total from the prior year on three occasions.

Enter the 2003 season. The Marlins signed perennial all-star catcher, Ivan “Pudge” Rodriguez. How did the Fish pull it off? Sure, they’re strapped for cash, but they essentially “rented” Pudge for a year. Instead of inking Rodriguez to a long-term deal, they locked him up for one season. The strong, veteran presence of Pudge, teamed up with a talented young nucleus including first baseman, Derrek Lee, and high-kicking pitcher, Dontrelle Willis, made the Marlins a contender once again. Florida made the playoffs, advanced to the World Series and beat their fiscal polar opposite, the New York Yankees, four games to two. The Yankees sported a 2003 payroll of $152,749,814, the highest in the Majors. The Marlins sat on the other end of the spectrum, cutting coupons with a $45,050,000 payroll. For 29.5% of the payroll obligations of the Yankees, Florida took home their second World Series crown in eleven seasons of existence. (4)

Rodriguez, Lee and pitching staff ace, Josh Beckett, were notable players the team parted ways with, for budgetary concerns, after the next season. But the Marlins actually attempted to keep a few of their players, as well as bring up talented youngster, third baseman, Miguel Cabrera, for the next two seasons. In 2005, executives even increased payroll to $60,408,834, a franchise record. Although they produced two winning seasons following the World Series, their win total remained the same, and the Fish missed the playoffs both years. Another epic dismantling of the roster unfolded. Cabrera and Willis were dealt to the Detroit Tigers and payroll was shed like mad, to the tune of a new 2006 payroll of $14,998,500. (4) Management made it clear the Marlins would start anew, once again.

2007 and 2008 produced declining win totals as another young collection of players was thrown to the wolves. But, as usual, it was a talented group. After a couple of years maturing at the Major League level, the Marlins have jumped out to a fast start in ’09; at 11-1, they had achieved the best start in franchise history. Since that torrid start, they’ve dropped three straight games giving credence to the law of averages. While scoring almost 5.3 runs per game, and featuring a pitching staff posting a 3.61 earned run average, the Marlins look poised to make another postseason run. (3) And right on schedule. Recall, the Marlins missed the playoffs five years after their first World Series victory in ’97 only to win the Series in ’03. Now, after missing the playoffs for another five successive years after the ’03 run, the Marlins want another ring. But the Marlins don’t just win. They win on thrift. Their 2009 payroll comes in at $36,834,000, the lowest of all thirty teams. Compare that to their fiscal counterpoint, the New York Yankees, who boast the highest payroll in the Majors at $201,449,189. (4)

Let’s put the spending into greater perspective. Since the 1997 season, the New York Yankees have spent $1.882 billion in payroll. Compare that to a paltry $449.2 million for the Fish. Or, the Yankees have outspent the Marlins at a 418.9% clip. Yikes. (4)

The World Series Championships over that time span: Yankees, 3. Marlins, 2. Who’s getting better bang for their buck?

The economics of the Florida Marlins is truly astounding. They can’t muster a ton of fan support, so their revenues suffer. Instead of finding lines of credit, or printing IOU’s to keep up with the Yankees spending spree, they live within their means. Their organization has to streamline itself, work harder and be sharper than the competition. If I could replace all of Congress, and Treasury Secretary Tim Geithner, with members of the Marlins organization, I would. Without hesitation.

It’s not all bad, though, for Marlins owner, Jeffrey Loria. He purchased the Marlins for $158M in 2002. Forbes magazine valued the club at $256M in April, 2008. With the state of the economy, particularly the real estate economy in Florida, that figure has surely declined. Although the team leases Dolphin Stadium, a depressed real estate market gives even less incentive for fans to attend games and buy Marlins merchandise.

In addition, Miami-Dade County and the city of Miami has approved construction for a new ballpark at the legendary site of the Orange Bowl. At a cool $609 million price tag for the project, Loria will be sitting on a nice revenue-generating asset; that is, if fans fill the 10,000 seat stadium. In any case, with another strong year in ’09, the organization’s value should do nothing but appreciate. (5) (6)

Spending money does not guarantee results (listening government?). As Hall of Fame basketball coach, John Wooden, says: “Never mistake activity for achievement.” Cheers to the executives and the scouts of the Florida Marlins organization. Here’s hoping for a Marlins World Series championship in 2009.

________________________________________________________________________

(1) U.S. Census Bureau – State and County QuickFacts
http://quickfacts.census.gov/qfd/states/12/12086.html

(2) ESPN.com – Florida Marlins Franchise History
http://sports.espn.go.com/mlb/alltime/franchise?team=fla

(3) ESPN.com – Florida Marlins Clubhouse
http://sports.espn.go.com/mlb/clubhouse?team=fla

(4) USATODAY.com – MLB Total Payroll, Team-by-Team back to 1998
http://content.usatoday.com/sports/baseball/salaries/totalpayroll.aspx?year=2009

(5) Cot’s Baseball Contracts – MLB Contracts, Team-by-Team
http://mlbcontracts.blogspot.com/2005_01_19_mlbcontracts_archive.html

(6) Wikipedia – Florida Marlins Page
http://en.wikipedia.org/wiki/Florida_Marlins

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3 thoughts on “The Economics of the Florida Marlins

  1. Pingback: The Marlins | Wugez

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