So now we have only the once mighty Toronto Blue Jays to cheer for. This franchise was once the model of all sports franchises. But over the last decade it has fallen into bad management, incorrect assessment of talent, poor personal decisions, disappointing results, classless treatment of long-time Blue Jay employees, a tremendous drop in interest and attendance, and an overall apathetic view of the future prosperity of the sport and the team. 

How has it all gone so wrong?

When looking for answers sometimes it is best to start at the top – and all its reasons for the plight of the organization

Rogers Ownership and Management have claimed foul since they have taken control of the club. They assert that they cannot be competitive because they are a small-market team unable to match the revenues of the mighty Yankees or BoSox. They just don’t have the revenues to be competitive. We should just take the best we can get, as we will not be able to play with the big boys.

But let’s look further into this claim. With a national audience of over 15 million, in which Rogers is the prime media player (and where it leverages its media arm Sportsnet to flog other Rogers services), this claim is a just a gross misstatement. Along with the efficiencies Rogers generates in converging both content (Jays) and communications (cable/telecommunications), Toronto alone is considered the fifth largest media market in North America. If you add in the entire Canadian marketplace it rivals the top three on the continent. Ask the Milwaukee Brewers or the Minnesota Twins about this small-market claim and they will tell you that Toronto is definitely not playing ball in their kinds of small parks. And even if we accept the ludicrous claim that the Blue Jays operate within a small market,  that has not prevented such places as Oakland, Florida, and Minnesota from perennially fielding top-flight competitive teams.

The Ownership also claims that they are at a disadvantage because they receive their revenues in Canadian dollars, while they have to pay the players (their biggest expense) in US currency.  Yet this is also a bit of a puzzle. The Canadian dollar has greatly appreciated versus the American greenback over the last couple of years. The increase in value has only meant that the Blue Jays and their parent Rogers have prospered. Even if the Canadian currency hadn’t appreciated so much, it is common business practice when dealing in two currencies to hedge your currency exposure, so that large currency fluctuations in the short-run are not burdensome to ongoing operations.

Finally, since its heyday of the late 80s and early 90s the Toronto Blue Jays has been adopted as Canada‘s team. The old Blue Jay management knew this and celebrated it with such things as the Pearson Cup (after our former Prime Minister Lester B. Pearson). It hired Canadians in top baseball decision-making roles – Paul Beston, Gord Ash, and others.

While the team had an international flavour, with players and coaches from Latin America and the United States, there was still some apparent attempt to brand the Jays as a Canadian team. Despite the presence of many non-Canadians who were the core of the team during the World Series eras, the Jays still seemed committed to promoting a Canadian dimension. For instance, despite the availability of many perhaps more talented players, the Jays recruited a Canadian, Rob Butler, as a role player in their 1993 World Series winning team. Symbolically, this suggested a commitment to Canada and a way of trying to establish a connection to the Canadian fan, which is lacking in the current edition of the Jays.

The new management team, in what can only be called a bizarre miscalculation, has moved to disassociate itself from the red and white of the Maple Leaf. To wit, the team has removed any semblance of the Canadian flag on their uniform and collaterals, and has marketed the team under the ubiquitous Baseball North moniker. This has continued to fuel ambivalence and indifference from long-standing core Blue Jay fans who feel that their family has somehow sold them out.

Rogers Blue Jays – Not necessarily our Jays

Perhaps I am taking this core family issue too far. A baseball team is not a public trust. The franchise is a private enterprise owned by one of the most powerful Canadian corporations. One only has to look into the history of the Skydome to see that it was this type of thinking that got the Ontario government and its taxpayers in trouble to begin with.

Roger’s Centre Facts and Overview

The Hidden Costs of Playing Ball

Over this past winter the Skydome was sold to Roger’s for $25 million and re-named the Rogers Centre. This figure is a pittance if we remember back in the early 1990s when the annual interest charges were in excess of $20 million a year. This excessive debt load was the main reason that the Ontario government and its taxpayers got out of the Skydome business. They finally realized that the facility would never generate sufficient revenues to support the interest payments on the money borrowed (approx $60,000 a day).

Each year that the government retained an ownership stake, its financial responsibilities and the cost of Skydome increased. In fact, it was ultimately determined that there was no scenario – the facility was generating a modest operating profit – under which the revenues from the facility could support the interest charges much less repay the public for its investment. Quite simply, the public sector had paid too much for this entertainment marvel.

Corporate Welfare on the Ball Field

All this raises the further question of how much we as Ontario taxpayers have subsidized the Skydome, and how much Rogers has now benefited from our goodwill?  And the still further question: does a Sports Welfare system exist in North America?

How much did the Skydome Really Cost Taxpayers

Just looking at the numbers above, there can be no doubt that Ontario taxpayers have greatly subsidized the building that the Rogers Group purchased for $25 million.  And although the facility is no longer the architectural wonder it was in 1989, it has not depreciated in value over 95% in only 16 years.

As for the question of a Sports Welfare system, according to Mark Rosentraub,  in Major League Losers – The Real Cost of Sports and Who’s Paying For It,  a sports welfare system exists – indeed it thrives and continues to grow – because state/provincial and local government leaders, dazzled by promises of economic growth from sport, mesmerized by visions of enhanced wages for their communities, captivated by a mythology of the importance of professional sport, have failed to do their homework.

Quite simply, elected leaders have permitted the leagues and their teams to operate as cartels, with the ability to extract subsides that generate substantial profits for all the actors in the professional sports world. All the actors benefit – except the communities and taxpayers who provide this welfare, while hoping for economic benefits, improved community images, and a new sense of community spirit.

Cities and municipalities do not understand – or they chose to ignore – how small sports are as a part of any area’s economy, and how miniscule its impact is on a region, city or segment of a city.  Financial World has placed the economic activity that the Blue Jays generate for Toronto at only $56.4 million per year.  According to Mark Rosentrab, the most successful sports franchise has revenues that are less than half of any typical urban campus of a state university, and most teams have budgets equal to about 20% of the budget of an urban campus of a state university. In future, if the subsides provided to teams are ever to be curtailed or eliminated, sports franchises will need to be seen only as the interesting diversions and small businesses that they are.

The New Rogers Centre and the Upcoming Year

Corporate welfare notwithstanding, although the Skydome has a new name many feel that the 16-year-old facility is obsolete. Once hailed as a modern day wonder of the world it is now criticized for its sterility, view lines, and blandness – an example of how quickly tastes and opinions change over the years at the ballpark formerly known as Skydome.  

Changes in baseball stadium preferences in the 1990s and a resurgence of the older single-purpose stadium has led to modifications in architecture and design that emphasize viewer experience and entertainment. That is one of the new objectives for the management, as they spend $10 million on multi-media technology, fancy scoreboards, and new state-of-the art turf. Yet, for all the cosmetic changes little will change in the hearts of Blue Jay fans if there isn’t a change in direction on the field.

It looks currently as if the Blue Jays will be hard-pressed to challenge the perennial powerhouses in their own division (Yankees and Red Sox). The inability to trade for or attract high-level talent from other teams, compounded with the fact that the Jays lost their long-time best player Carlos Delgado to free-agency, spells out a struggle for this undermanned team.

Last year, the Jays were saddled with many injuries to key players, which helped contribute to their 94 losses (the most since the early expansion year of 1980).  Yet the addition of a couple of serviceable players, including Canadian Corie Koskie, and the prospect of an overall healthier team in 2005, should mean that the Jays will eclipse their 67 wins from last year. But much has to go right for this team to win as much as it looses in 2005. 

The Future

The Jays are looking to cost savings and cost certainty from the purchase of the Skydome. To that end, Roger’s has committed $210 Million in payroll to its ball team over the next three years (a raise of over 30% annually). Unfortunately the immediate savings occurred after this year’s off-season free-agent period. A chance to improve the team this year has been somewhat lost.

As for the future, in 2005 the Jays are committed to spend only $53 Million (a reduction from $58 million in 2004), placing them 21st out of 30 in payroll.  Now an increased payroll doesn’t necessarily mean a concomitant return in results (see Oakland and Minnesota). Yet there is a correlation of sorts between spending money and fielding a competitive winning team. That being said, the next two years promise to be a time where the franchise can use its money to reward its players’ performances, draft higher-priced amateurs, and purchase free agents from other teams, all in the hope of improving the overall talent.  

Yet for this team to recapture even a modicum of the buzz that surrounded it in the glory years from 1983 to 1993 it will have to give the fans a reason to believe again. No cosmetic changes to the venue will match the interest that surrounds an interesting, fun, competitive, and winning team.

Toronto has shown in the past that it supports a winning baseball team – four record-setting attendance years in the early 1990s attest to that. Time will tell if the franchise regains its former path as a model organization, or if continued failures and mismanagement put it on the same slippery slope as the Blue Jays’ former cousins from la belle province.

Robert Sparrow is a Toronto marketing analyst and noted local authority on the sporting life.

References

Ballparks.com Rogers Centre (formerly SkyDome), Toronto, Ontario

Welcome to Blue Jay Way

Major League Losers – The Real Cost of Sports and Who’s Paying For It, by Mark S. Rosentraub

City of Toronto, Toronto‘s Key Industry Clusters

Rogers Centre