Drungo's perception of MLB Salary issues

[Fan4Life]

Are corroborated.

http://www.boston.com/sports/baseball/articles/2009/08/02/at_end_of_day_no_halladay/?page=3s

Ben Bouma, a producer at ESPN and TBS and a former Pirates public relations manager, lives in Pittsburgh and is quite passionate about the Pirates’ plight. The Pirates, on pace for an American professional sports record of 17 straight losing seasons, have gutted their team of name players and decided to start anew, but in the process barely have a major league team on the field.

Bouma points out that in 1997, the Pirates’ payroll was $9 million, $1 million less than Albert Belle’s salary. The Pirates’ current payroll is $25 million, 25 percent less than what Alex Rodriguez is making this season.

“Four players in MLB make $20 million to $25 million and three of them play in that [Yankees] infield. [The Dodgers’ Manny Ramirez makes $23 million.] With 67 percent of the season gone, the Pirates are only on the hook for less than $9 million for the remainder of 2009,’’ Bouma writes in an e-mail. Bouma points out that the Pirates are the only team in the majors without a player making at least the MLB average salary of $3.26 million (Paul Maholm is highest at $2.5 million).

“Last year, the Pirates are believed to have received a revenue-sharing check of $27 million from MLB, based on figures leaked to the Wall Street Journal,’’ Bouma writes. “They receive close to $35 million from the national TV contracts. That is $62 million before anyone buys a ticket, sets foot in PNC Park on Opening Day and buys a hot dog, or watches or listens to a game on local TV and radio. Not to mention what they will receive from MLB for the MLB Network and MLB.com/MLB.TV and Extra Innings packages. On top of this, they let go many front-office people [some with 20 years of service] earlier this season.

This is no longer a problem of ‘how baseball is structured’ any longer. This is both fundamentally and ethically wrong . . . It is high time this [ownership] group is held accountable for the complete mismanagement of the franchise as their excuses have run out.’’

Kansas City was also viewed as an ownership playing this game. However they have spent some $$$ prior to the 2009 season. Didn't do much in the standings obviously.

[DrungoHazewood]

I don't think I have a unique perspective. A lot of people have come to the realization that MLB has put incentives in place that strongly push small and mid-market teams to minimize payroll.

You can take two kinds of risks if you're not in a huge market:

1) Develop your farm system and win on the cheap while collecting big checks from the Yankees. If you win you're a hero, and even if you fail you still turn a profit.

2) Spend a lot of money on the hopes that you win and drastically incrase your revenues. If you win, great, then you pray the revenues can match the expenses. If you fail you go begging Bud for a bailout so you can meet payroll, you lose tons of draft picks, and you get in a downward spiral of bad player development and no money to paper over the holes.

It's no mystery why a lot of teams choose #1.

I'd love to see MLB go to a system where they incentivize winning through market size based, comprehensive revenue sharing. Basically you get a baseline number at the beginning of the year, and if you win and bring in more revenues than you're expected to you get a bigger chunk of the pot. If you lose and/or fail to meet revenue quotas you get less, or none.

But I can see why the owners like having a fallback position of making a profit while not having to try to win.

[Miller192]

I don't think I have a unique perspective. A lot of people have come to the realization that MLB has put incentives in place that strongly push small and mid-market teams to minimize payroll.

You can take two kinds of risks if you're not in a huge market:

1) Develop your farm system and win on the cheap while collecting big checks from the Yankees. If you win you're a hero, and even if you fail you still turn a profit.

2) Spend a lot of money on the hopes that you win and drastically incrase your revenues. If you win, great, then you pray the revenues can match the expenses. If you fail you go begging Bud for a bailout so you can meet payroll, you lose tons of draft picks, and you get in a downward spiral of bad player development and no money to paper over the holes.

It's no mystery why a lot of teams choose #1.

I'd love to see MLB go to a system where they incentivize winning through market size based, comprehensive revenue sharing. Basically you get a baseline number at the beginning of the year, and if you win and bring in more revenues than you're expected to you get a bigger chunk of the pot. If you lose and/or fail to meet revenue quotas you get less, or none.

But I can see why the owners like having a fallback position of making a profit while not having to try to win.

Drungo, I've had the idea that MLB should keep revenue sharing in the division or perhaps a larger percentage of it.

What would your thoughts be on something like that?

[Can_of_corn]

“Last year, the Pirates are believed to have received a revenue-sharing check of $27 million from MLB, based on figures leaked to the Wall Street Journal,’’ Bouma writes. “They receive close to $35 million from the national TV contracts. That is $62 million before anyone buys a ticket, sets foot in PNC Park on Opening Day and buys a hot dog, or watches or listens to a game on local TV and radio. Not to mention what they will receive from MLB for the MLB Network and MLB.com/MLB.TV and Extra Innings packages.

Those numbers kinda make me doubt the veracity of the following report:

http://sports.espn.go.com/mlb/news/story?id=4381129

2009 opening day payroll: $ 81,579,166 estimated attendence 1.7 million. No way they were headed to a legitimate 16 million dollar loss.

[Skeletor]

The unforseen problem with revenue sharing is that teams no longer need to be competitive or have decent attendance to turn a profit. I understand there are expenses outside of MLB payroll, but when you are receiving 70 million a year or so from MLB per year, what is the benefit in spending 100M+ on players payroll. Like Drungo pointed out, there's a huge risk in that. They have to bank on attendance and concessions to turn a profit then. But if this number is correct, coupled with MASN, the O's are earning 100M a year before anyone buys a ticket. That's a sobering thought.

Edit: I promise next time I won't just skim the article and make the exact same points. Promise.

[DrungoHazewood]

Drungo, I've had the idea that MLB should keep revenue sharing in the division or perhaps a larger percentage of it.

What would your thoughts be on something like that?

Might help the Orioles but it perpetuates the myth that all divisions are created equal. The AL East could become even more of a superdivision, but they'd kill each other off. And once the playoffs roll around it'll still be a crapshoot where the wildcard and winners of the weaker divisions would still have almost the same shot at a championship as the team left standing in the East.

My preference is to fix revenue sharing across all of baseball so that every team has a fighting chance and expansion is possible. And have a balanced schedule with a single division per league, with the top four in the playoffs.

[DrungoHazewood]

The unforseen problem with revenue sharing is that teams no longer need to be competitive or have decent attendance to turn a profit. I understand there are expenses outside of MLB payroll, but when you are receiving 70 million a year or so from MLB per year, what is the benefit in spending 100M+ on players payroll. Like Drungo pointed out, there's a huge risk in that. They have to bank on attendance and concessions to turn a profit then. But if this number is correct, coupled with MASN, the O's are earning 100M a year before anyone buys a ticket. That's a sobering thought.

Edit: I promise next time I won't just skim the article and make the exact same points. Promise.

That's why they need to link revenue sharing and success. Like setting market-based revenue targets and rewarding teams that beat those by the largest percentage and win games.

The current revenue sharing system is just a thinly veiled attempt to limit salaries, with no incentive to win at all.

[olehippi]

Maybe the US Government should take over baseball. A Balanced Baseball Act (H.R.1984), combined with the current drift towards socialism, would lead to equalized wealth distribution to every team, balanced team talent, and at season's end, an exciting race to the pennant by every team in every division.

[Mad Mark]

While revenue is an easy target to fixate on--and we all know I have--it's merely part of the problem.

What baseball has become is six loosely related mini-leagues, featuring teams with vastly different revenues playing vastly different schedules. Baseball needs to get back to a situation where all AL teams play essentially the same schedule, as do all NL teams. It also needs to iron out the revenue situation.

So my program remains:

Equally shared revenues

No unbalanced schedule

No interleague.

[Skeletor]

I like the European football policy of sharing the gate 50/50 with the away team and being given a bonus by where you finish in overall record in your respective league. This would have to be coupled with a balanced schedule though.