Money Talks

Tuesday, March 11 2003 @ 02:16 AM EST

Contributed by: Jordan

In a story that's managed to fly under the radar in the Canadian press so far, the Blue Jays are trying once again to exact a monetary payment from Major League Baseball "to compensate for the weak Canadian dollar." The commissioner's office is reviewing six possible plans that would create a continuing contribution from MLB to the Jays to offset revenue disparities between the US and Canada. One would like to think the Expos would also benefit from this, but one would like to think a lot of things.

Anyway, it's an interesting effort by Toronto, and it might actually work: Paul Godfrey and Ted Rogers certainly talk Selig's language whenever he needs them to (e.g., labour issues), and getting some love from MLB on the currency-exchange front appears to be one of the benefits. Even if it does go through, however, I don't expect to see the team's payroll grow accordingly: at Rogers Inc., as at all big companies, this kind of rebate would go straight to the bottom line.

But this did put me in mind of a fascinating pair of discussions at Primer and FanHome that conclusively showed that this whole situation has very little to do with "currency exchange" or the like. It has to do with the fact that Canada is, in comparison to the United States, a noticeably poorer country.

The Baseball Primer thread started out from a throwaway comment in a Rob Neyer column that generated very interesting commentary, featuring a number of BB regulars. The link to the Fanhome discussion unfortunately no longer works, and I can't find the cache on Google either, but RickJay's summary of his article in the Primer thread expresses much of what was there.

The essence of the argument was that when the Blue Jays blame the exchange rate for the fact they lose a lot of money, they're being disingenuous. The problem isn't currency conversion, the problem is that Canadian money doesn't buy as much as American money in real terms. Our economy isn't as productive: we have higher tax rates on both personal and corporate income, we have much more extensive public funding for infrastructure (health care would top that list), and at the end of the day we don't churn out as much product as the Americans do.

Accordingly, things like local TV rights and season-ticket sales are bought in Canadian currency, while the American teams sell the same items and get paid in American dollars. But that's not the whole story, because the Jays usually charge $5 to $10 more per ticket in actual dollar amounts than, say, the Orioles and Indians do. So while the Jays would like people to think, as Godfrey has said in the past, that they're "earning in Canadian dollars and paying out in American dollars," that's not entirely true.

Now, this is as far as I'm going to summarize, because I'm an economics idiot, frankly, and I'm at the outer reaches of my understanding of the interplay between the US and Canadian economies right here. But I thought I'd lay this out there for people's edification and discussion. Enjoy.