Sports are about money. Nobody understands that better than owners, whose money is the principal currency of competitiveness. Two of them, Golden State Warriors owner Joe Lacob and Boston Red Sox owner John Henry, recently gave interviews to The Athletic about funding their respective enterprises, the former approaching dynastic status and the second in panic mode. Let’s see what they had to say.
On buying a championship:
Lacob: “Oh, come on. That’s a joke; I think it’s ridiculous. … One trade and no free agent beyond the minimum. How can you say we bought the title? It’s crazy.”
Henry: “If you add the championships together of those four clubs [Yankees, Padres, Dodgers and Mets], I’m not sure they would match our total over the last 20 years. … However, if you are asking if we are going to now move to $300 million payrolls, the answer is no.”
Lacob is lying through his teeth, and Henry is delusional. But both can teach us a lot about Sportsconomics.
Saying the Warriors did not buy a title is hilarious, as every team who as ever won anything bought it. Players cost money, and so it would be much more accurate to say that certain titles are cheaper than others. When Leicester City won the Premier League in 2016, their total payroll was 48.2 million pounds, which turned out to be 12 million pounds less than the fee for Leicester star Riyad Mahrez to transfer to Manchester City one year later.
The Warriors’ payroll does not come from their “one trade and no free agent beyond the minimum,” but rather spending more than any team in history has been comfortable spending to keep their homegrown talent on the roster. Even as team legends Stephen Curry, Klay Thompson and Draymond Green get older, the Warriors will still be on the hook for more than $122 million of guaranteed money for those three players alone. This, combined with massive extensions to Jordan Poole and Andrew Wiggins, have pushed the Warriors so far into the luxury tax — a mechanism designed to disincentivize teams from doing exactly this — that their projected bill for 2023–24 will be just over $500 million. That certainly seems like buying something to me.
Henry and the Red Sox have decided to steer in a different direction. So different, in fact, that they might as well have taken the team bus on Interstate 93 North and swept across three lanes of traffic to make an illegal U-turn across the divider. In the interview, he touts past success while swearing off spending that would make the team competitive in a league with essentially zero limits on payroll size. He hired Chaim Bloom, someone who has successfully built teams with lower payrolls (a strategy popularly known as Moneyball), all because he has no interest in competing if it is going to cost him $300 million. Earlier in the article, Henry chalked up fans’ dissatisfaction with this direction to a “false narrative,” but I think we have it right on the money.
The fundamental question both confront daily is this: to spend or not to spend? Lacob is operating on the premise that his team is competitive, and he should thus spend to keep it that way. Henry thinks his team wascompetitive, and that should be good enough for everyone. But long term competency is the goal of sports, not winning once every 20 years or so and selling some Rafael Devers jerseys. Hopefully, Lacob can buy Henry some overpriced coffee and explain to him how the world works. Maybe he’ll even throw in a croissant.
