MLB expands when its commissioner, working on behalf of the owners of each franchise, determines it is in MLB’s best interest for it to do so.

 

What does ‘best interest’ mean? It mostly comes down to financial gain for the owners.[1] As Bill White, former president of the National League, said during the 1993 expansion process: “This is a business deal… the franchises that are able to pay and to demonstrate financial stability are the ones that are going to get the award.”[2]

 

There are two main ways expansion is financially beneficial to the owners.

 

1. Newly incorporated franchises pay a fee to the existing teams to gain entry into the league. This is particularly attractive when the league is facing immediate financial problems. Former commissioner Fay Vincent has said that expansion in 1993 was partly done to provide the owners with money to offset the $280m fine they had received for colluding to reduce players’ salaries in the 1980s.[3] The 1998 expansion is often attributed to the owners’ need to raise funds following the strike-shortened 1994 season.[4]

 

2. Increasing the number of franchises can grow the league’s revenue in a way that increases the amount each franchise receives even though they are splitting the league’s overall revenue with more teams. Mostly, this comes down to attracting new fans to the sport. More fans mean more lucrative national TV deals, more sponsorship and more merchandise sales, for example – which are all split equally between franchises.

 

A third way has become increasingly relevant:

 

3. More teams make it easier to expand the playoffs. The playoffs are the most lucrative part of the season, and the owners are keen on expanding them. But the MLB Players Association (MLBPA) have long considered expanded playoffs to be detrimental to the players’ interests and so it has not happened. As Stephanie Apstein of Sports Illustrated put it: “The players’ position is that expanded playoffs will dilute competitiveness and suppress salaries: If you can make the postseason with 85 wins, why would you sign a big-ticket free agent?”.[5] Increasing the number of franchises might provide a route for the league to expand the playoffs without the MLBPA feeling that doing so means the competitive pressure to sign and retain expensive players has been lost.

 

There are other, more defensive reasons why MLB expands. These include:

 

• To avoid Congress re-examining the league’s antitrust exemption, which allows it operate as a monopoly. This would threaten the sport’s business model, which is premised on its undisputed status as the premier baseball league in North America. Part of the reason for the 1993 expansion was congressional pressure to do so, with the implicit threat that if MLB did not its antitrust exemption might be removed.[6]

 

• To prevent fans being ‘lost’ to other sports. People only have so much time and disposable income to dedicate to following sports and expanding the number of teams in MLB helps to retain its audience by giving more fans across a wider geographic spread a team to root for and content to consume.

 

• To remind existing major league cities of the high demand for franchises in new locations. This can help existing teams negotiate more favourable deals with the cities in which they are based – for example tax breaks, or below market value stadium leases – to avoid them relocating elsewhere.

 

• As a bargaining chip during collective bargaining negotiations. The players are always in favour of expansion, primarily because it means there are more major league jobs to go around but also because it can improve divisional alignment to help reduce travel. The 1993 and 1998 expansions were both announced immediately after a Collective Bargaining Agreement had been signed. 

 

And there is a related, pragmatic reason why a league with 32 teams is desirable:

 

• It is easier to schedule a league with 32 teams than with 30. Rob Manfred has previously said that “thirty-two is just a great scheduling number”[7] and that “having five teams in the divisions is problematic from a scheduling perspective”.[8] While not a primary reason for the 1993 expansion, it helped that MLB’s schedule format committee were positive about the change.[9]
   

This is not to say more altruistic motivations, like giving more people the opportunity to watch live Major League baseball and root for a hometown team, are not part of the equation. But they are not the primary reason.

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References:

 

[1] "Manfred: MLB Expansion Fee Could be in $2.2 Billion Range", Sports Illustrated, Associated Press, https://www.si.com/mlb/2021/04/27/rob-manfred-mlb-expansion-fee-over-2-billion, 27 April 2021.

[2] Playing Hardball: the high-stakes battle for baseball's new franchises, David Whitford, 1993.

[3] "Why Relocation and Expansion are a Pain for MLB", Fangraphs, Maury Brown, 17 August 2010, https://blogs.fangraphs.com/why-relocation-and-expansion-are-a-pain-for-mlb/

[4] "Rosenthal: Despite some financial incentives, MLB expansion is on hold. Here’s why", The Athletic, Ken Rosenthal, 11 January 2021, https://theathletic.com/2315404/2021/01/11/rosenthal-mlb-expansion-on-hold/

[5] "For MLB Owners, Playoff Money Trumps ‘Health and Safety’", Sports Illustrated, Stephanie Apstein, 2 February 2021, https://www.si.com/mlb/2021/02/03/mlb-owners-prioritize-playoff-money-union-proposal

[6] Playing Hardball: the high-stakes battle for baseball's new franchises, David Whitford, 1993.

[7] "MLB's Manfred likes idea 32 teams, potential realignment", Sports Business Journal, (no author), 13 October 2021.https://www.sportsbusinessjournal.com/en/SB-Blogs/Behind-the-Scenes/2021/10/13/manfred

[8] "From Universal DH To Radical Realignment: Here's How MLB Might Look If It Expands To 32 Teams", Forbes, Maury Brown, 3 December 2018, https://www.forbes.com/sites/maurybrown/2018/12/03/from-universal-dh-to-radical-realignment-heres-how-mlb-might-look-if-it-expands-to-32-teams/

[9] Playing Hardball: the high-stakes battle for baseball's new franchises, David Whitford, 1993.