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DrungoHazewood

Salary Perspective

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I bet the game would be about the same, pretty much. The main diff is that fans wouldn't have guaranteed contracts to complain about. But I don't think it would change the game much at all. I agree that guaranteed contracts are kinda silly. I think they are Exhibit A in proving the case that the owners are morons.

I realize it may be a bit of a reach, but it could get the dead weight out of the game and give more young players a chance. I.e. players like Jay Gibbons could be released and a player deserving of a MLB roster spot could take his place for 2008 which would make the product on the field a better one. But with the amount of money he's due on a guaranteed contract makes it unlikely that he won't be on the roster.

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From Joe Sheehan's recent column:

Still think ballplayers are overpaid? MLB players get a smaller slice of the pie than their NFL counterparts who're represented by a union that can't even get them guaranteed contracts.

If MLB matched the NFL's share of revenues going to payroll each team would have to bump up their outlays by about $20M a year.

You don't know the actual outlay to players. It's more than salary. When you hear those % rates for other sports it includes everthing from Per Diem to retirement contributions.

BTW, NFL players do get HUGE signing bonuses which are guaranteed and purposely enter into contracts hoping they'll be terminated ASAP so they can sign a new deal and get another signing bonus.

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From Joe Sheehan's recent column:

Still think ballplayers are overpaid? MLB players get a smaller slice of the pie than their NFL counterparts who're represented by a union that can't even get them guaranteed contracts.

If MLB matched the NFL's share of revenues going to payroll each team would have to bump up their outlays by about $20M a year.

You gave half of the argument against your point. Baseball players have much better deals than football players, becasue they have guaranteed contracts. They also make a lot more money - on average - because the roster size is 25 vs 51. Having said that - I don't think they're significantly over-paid.

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You gave half of the argument against your point. Baseball players have much better deals than football players, becasue they have guaranteed contracts. They also make a lot more money - on average - because the roster size is 25 vs 51. Having said that - I don't think they're significantly over-paid.

It begs the question - overpaid compared to what? According to Forbes, every team except the NY Yankees made an operating profit in 2006. And the Yankees, we know, hide their profit by charging below-market rates to the YES Network, which is owned by the same group of people who own the Yankees. So in reality, every team in MLB is turning a profit.

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It begs the question - overpaid compared to what? According to Forbes, every team except the NY Yankees made an operating profit in 2006. And the Yankees, we know, hide their profit by charging below-market rates to the YES Network, which is owned by the same group of people who own the Yankees. So in reality, every team in MLB is turning a profit.

Huh? I'm a little confused. I'm not sure how turning a profit is a bad thing. If I owned a baseball team, then I sure as heck would turn a profit.

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Still think ballplayers are overpaid? MLB players get a smaller slice of the pie than their NFL counterparts who're represented by a union that can't even get them guaranteed contracts.

No. On average, NFL players are paid less, have shorter careers, are more likely to have lifelong disabilities resulting from playing injuries, have less control over who they play for, and -- as someone else pointed out -- football players don't have guaranteed contracts. On the whole, baseball players have a better deal.

If MLB matched the NFL's share of revenues going to payroll each team would have to bump up their outlays by about $20M a year.

All of that is irrelevant without comparing the relative expenses of an NFL football team, compared to those of baseball teams. NFL teams only play 1 game per week, so many of their employees, such as league officials, stadium security, concession employees, custodians, etc. are part time employees who only work 20-24 days per year. They only make 10-12 road trips per season, so hotel, travel, and meal expenses are less. They utilize the colleges as their (primary) farm system, so they need fewer employees and coaching staffs.

Most owners of sports franchises made their fortunes in business and bought their teams as hobbies/ego trips. Thus, they are capable of subsidizing their team's losses for extended periods of time, and some have done so. Many operate closer to the break even point or accept a lower rate of return on investment (ROI) than they would in a conventional business enterprise.

I attempted to find Forbes data about the relative ROI between baseball and football franchises, but I didn't. Instead, I found an article about "Sports Billionaires". It turns out that two of their examples of owners becoming rich off their franchises were NFL owners and the third was a wealthy Russian who purchased an English soccer team, the value of which has increased 58% since purchase. (He was also pumping millions of additional investment into the team, so it was unclear if he was actually ahead or behind overall.)

Anyhow, here's what I found:

The National Football League is the most valuable and profitable team sport in the world. This year the average team is worth $733 million, a 17% increase over last year. Operating income (earnings before interest, taxes, depreciation and amortization) for the 32 teams came in at $851 million on revenue of $5.3 billion, an operating margin of 16%. Baseball teams come the closest in valuations to football, with an average value of $295 million (see: "The Business Of Baseball"). When we last looked at the National Basketball Association, the second most profitable sport, the league's operating margin was only 6.5% (see: "The Business Of Basketball").

Robert Kraft,... bought the [Patriots] in 1994 for a then-record $172 million,... these days worth $1.2 billion. The success of the team made Kraft a billionaire. The majority of his $1.4 billion fortune is wrapped up in the Patriots;

Dallas Cowboys owner Jerry Jones struck it rich in natural gas in the 1970s. He bought the then-junky Cowboys for $158 million in 1989.... Today they're worth $1.5 billion before debt.... Nearly all of Jones' $1.5 billion net worth is derived from the Cowboys;....

So, the NFL has an average operating margin of 16%, while the average operating margin of MLB franchises is less than 6%. Who are the real cheapskates?

I've downloaded the Forbes estimates for the individual MLB teams into a spreadsheet, which I'll post into a different thread once I've finished formatting it, but the crux is this. The average operating margin for MLB teams averages only 3.8%. Now, that's not the same as ROI because I don't know what any of the teams have invested, but it's not a very good rate of return at all. Those who keep pillorying the baseball owners for stupidity might be correct, but those who think the owners have been getting an unfair share of baseball revenue that should be going to the players generally are just revealing their own ignorance.

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Huh? I'm a little confused. I'm not sure how turning a profit is a bad thing. If I owned a baseball team, then I sure as heck would turn a profit.

You sure about that? Turning a profit means you have to pay more taxes. And MLB revenue sharing is tied to how much money you rake in, so you have every incentive to hide your revenues and make it look like you're losing money.

You'd probably be just like most MLB teams - making some money, using accepted accounting practices to make it appear you're losing a bit of money, and laughing all the way to the bank because of the steady increase in franchise valuations.

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You sure about that? Turning a profit means you have to pay more taxes. And MLB revenue sharing is tied to how much money you rake in, so you have every incentive to hide your revenues and make it look like you're losing money.

You'd probably be just like most MLB teams - making some money, using accepted accounting practices to make it appear you're losing a bit of money, and laughing all the way to the bank because of the steady increase in franchise valuations.

I understand what you're saying, but I didn't understand Frobby's comment about teams turning a profit. Also, I believe Frobby was talking about real profits and not reported profits for tax purposes (I think the analysis to which he referred is about real dollars made, not taxable profit). I was definitely referring to "real" profit, not taxable profit. I think it is unreasonable to assume that baseball teams and MLB as a whole should be losing proposition for owners. It's an entertainment business, not a public charity. And public dollars (e.g., stadium money) that is invested in the business is very similar to public dollars that are invested in other businesses via infrastructure, tax breaks, etc.

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