Tying Revenue Sharing to Attendance?

[bernie132000]

My fault. You're right, there is a difference between net revenues and just gate receipts. However, every team does indirectly get a share. Personally, I don't think revenue sharing should be linked to net revenue in the first place. If instead the amount of money shared was linked to marginal cost, then teams would still have maximum incentive to increase revenues. At the same time, teams in larger markets and/or teams that spend a lot are forced to share due to their larger costs. Then to give an incentive to put a competitive product on the field, there could be a tax on losses. The combination of these two taxes would give owners the incentive to field a That way an owner couldn't pocket money by fielding a minimum payroll team every year that loses 100+ games. winning team at a low cost, while at the same time maximizing local revenues through sponsorships, etc.

Edit: Obviously for this to work, there would have to be a way to get an accurate assessment of costs, including the costs of running a regional sports network if applicable.

If this was the case, then fans would stop coming. There is a great graph in Diamond Dollars showing revenue based on wins. It says that if a team has 3 consecutive seasons of wins less than 75 wins, then the baseline revenue decreases. One interesting note for the Orioles is that they have a very high baseline revenue(one of the top teams), but their marginal revenue, the revenue they get from winning, is in the middle. They are there with the Phillies, Dodgers, and Rangers. The Orioles have one of the lowest values for the 81st and are in the middle for their 90th win.

[square634]

If this was the case, then fans would stop coming. There is a great graph in Diamond Dollars showing revenue based on wins. It says that if a team has 3 consecutive seasons of wins less than 75 wins, then the baseline revenue decreases. One interesting note for the Orioles is that they have a very high baseline revenue(one of the top teams), but their marginal revenue, the revenue they get from winning, is in the middle. They are there with the Phillies, Dodgers, and Rangers. The Orioles have one of the lowest values for the 81st and are in the middle for their 90th win.

I don't quite understand what you're saying. I don't see why equating a tax to marginal costs instead of marginal revenues would stop fans from coming. Obviosuly, this would hurt teams like the Orioles, who manage to lose and have high costs. However, that would simply give an incentive to get good management. Also, taxing losses and costs pinches teams from both sides. The Steinbrenners of the world who only care about winning are taxed for their insane payrolls, while the Lorias of the world who are only interested in profit are taxed if they neglect to field a competitive product. Teams like the Diamondbacks, Indians, and Twins who win with a low payroll would be rewarded, which is how it should be.

[bernie132000]

I don't quite understand what you're saying. I don't see why equating a tax to marginal costs instead of marginal revenues would stop fans from coming. Obviosuly, this would hurt teams like the Orioles, who manage to lose and have high costs. However, that would simply give an incentive to get good management. Also, taxing losses and costs pinches teams from both sides. The Steinbrenners of the world who only care about winning are taxed for their insane payrolls, while the Lorias of the world who are only interested in profit are taxed if they neglect to field a competitive product. Teams like the Diamondbacks, Indians, and Twins who win with a low payroll would be rewarded, which is how it should be.

I was saying that teams don't have an incentive to pocket all the money and have a minimum salary. That would lead to a terrible team who no one would see. Owners who see owning a baseball team as a business would add players as long as their marginal revenue is greater than their marginal cost. If they have 3 consecutive seasons below 75 wins then they will lose revenue. My point was that up to a certain win total it is beneficial for teams to spend money on FAs in order to win more games and increase revenue.

[square634]

I was saying that teams don't have an incentive to pocket all the money and have a minimum salary. That would lead to a terrible team who no one would see. Owners who see owning a baseball team as a business would add players as long as their marginal revenue is greater than their marginal cost. If they have 3 consecutive seasons below 75 wins then they will lose revenue. My point was that up to a certain win total it is beneficial for teams to spend money on FAs in order to win more games and increase revenue.

Actually, if the owners are looking to make an easy profit, under the current system they absolutely do have an incentive to pocket revenue sharing money. They are guaranteed a share of national TV revenues and 34% of other teams' local revenues. I believe in 2005 the Marlins made more money in revenue sharing than their entire team payroll. The Devil Rays had a payroll a couple million more than what they received from revenue sharing. Needless to say, both teams had a much larger profit than most if not all other teams.

[DrungoHazewood]

Actually, if the owners are looking to make an easy profit, under the current system they absolutely do have an incentive to pocket revenue sharing money. They are guaranteed a share of national TV revenues and 34% of other teams' local revenues. I believe in 2005 the Marlins made more money in revenue sharing than their entire team payroll. The Devil Rays had a payroll a couple million more than what they received from revenue sharing. Needless to say, both teams had a much larger profit than most if not all other teams.

And like I said, that is exactly what you'd expect when you incentivize something other than winning ballgames. MLB gives teams an incentive to slash payroll and get guaranteed revenue sharing payments. Spending a lot of money to pay good players and then translate that into lots of wins and (hopefully) a revenue spike from making the playoffs is very risky. Almost 75% of teams don't make the playoffs every year, and most of those that do have been good for a long time.

Trying to be the 2006 Tigers only works occasionally. But if you have a $25M payroll you'll rake in the other teams' cash every single year no matter what happens on the field.

[RShack]

And like I said, that is exactly what you'd expect when you incentivize something other than winning ballgames.

OK, so if they got a handle on ALL the revenue (including each team's TV) and split all the revenue from each and every ballgame between the 2 teams who played in it, and if they split the revenue 60/40 (or whatever shares might make the most sense) for each and every game based on who won the game, is there anything wrong with that? (Apart from the fact that it will never happen, that is...)