Tuesday, December 1, 2009

The system is definitely effed up

For those of us out there confused about how, exactly baseball's revenue sharing/lack of salary cap system works, you are not alone. Until this article came out about 10 days ago from ESPN's Jayson Stark, it's really never been totally spread out in front of you.

As you know, (for better or worse), MLB has no salary cap. Teams like the Yankees can spend whatever they can, and that's just fine with Bud Selig. We all complain about it-- those of us that are fans of teams not located in the Eastern time zone or Orange County, CA-- but as Stark and Scott Boras point out, we need to look at these losers with the tiny payrolls.

Yes, Florida and Pittsburgh, we're looking right at you.

These teams make excuses to their fans about small markets, weak economies, small populations, etc.

The real truth of the matter is that the system is set up in a way that truly would benefit these teams if they wanted to succeed. They choose not to. These teams collect a fat check from the rich teams, lay around in a puddle of their own Triple A filth of a roster, and cry poor.

I encourage you to read this whole article on ESPN, but I'm gonna just have to copy and paste some of it here:

"Your team (Pirates/Marlins) collected more money this season -- before it ever sold one ticket -- than it spent on its entire major league payroll. In fact, it collected more than it spent on its major league payroll and its player-development system combined."

Stark goes onto explain:

• "Central fund (includes national TV, radio, Internet, licensing, merchandising, marketing, MLB International money): Each team, from the Marlins to the Yankees, gets the same central-fund payout. And that check comes to slightly over $30 million per team if you deduct the $10 million in pension and operations fees, or just over $40 million if you don't.

• Revenue sharing: Only income-challenged teams get a revenue-sharing check. But you should never forget that those checks are a lot larger than your average rebate check from Target. This sport shared $400 million in revenue this year -- more than the gross national product of Western Samoa. Now every club's payout is different. But the five neediest teams -- which we believe to be the Marlins, Pirates, Rays, Blue Jays and Royals -- averaged somewhere in the vicinity of $35 million in revenue-sharing handouts per team. And that still left over $200 million -- more than $20 million a club -- for the rest of the "payees" to divvy up.

• Local TV/radio/cable: Good luck getting these exact figures. But we know that 29 of the 30 teams make at least $15 million a year in local broadcast money, and no team rakes in under $12 million. Obviously, some clubs collect much, much more than that.

Add $30 million, plus $35 million, plus $15 million, and what do you get? That would be $80 million. At least. Before these teams spin their turnstiles once."

And as we know, there are about 12 teams last year that spent right at, or less than $80MM: Kansas City, Oakland, San Diego, Tampa Bay, Pittsburgh, Washington, Minnesota, Cincinnati, Arizona, Cleveland, and Baltimore. For those of you keeping track at home, that's 40% of the teams in baseball that are collecting checks for intentionally being non-competitive.

Each of those teams has its issues. With the A's, it's attendance and a horrific stadium. For the Rangers, it's their owner running out of money. For the Padres, it's an impending sale after an ugly divorce. The point of this whole thing is that there are huge checks being thrown these teams' way in order to make them competitive with the New Yorks and Bostons of the the world, and rather than seize that opportunity to bring a little joy into their fans' lives, they choose to cry poor and collect checks.

I was going to make an Obama socialist joke, but I decided against it. In fact, this socialist system in MLB under Selig is such a welfare state that it makes even the Scandinavians jealous.

As for the Giants, they officially had a payroll of about $94MM last year, good for 14th highest in the league-- ostensibly "middle of the road".

As the fans'/local media personalities' drumbeat to spend more money gets louder and louder, we must ask ourselves exactly why ownership cannot or will not spend more on free agents.

An "educated rumor" that I've heard (ie. second hand information from an unnamed someone by way of another unnamed someone in the organization) is that the Gyros lost close to $30MM this season. Now, to be fair, I didn't hear it directly from anyone in the organization, and I don't know if that number was before or after different revenue streams or lack thereof were factored in.

So regardless if that large number is real or not, I believe it.

The Giants get a significant amount of money from local TV and Radio deals. They have decent attendance and solid revenue streams from stadium concessions, etc.

The only possible way I see that they could've lost that kind of sum is from the following:

-- An annual mortgage payment on AT&T Park of $20MM+
-- Little or no revenue sharing check (not including money from the "Central Fund" that Stark described above

It's kind of like the Giants are too well off for a cut of Selig's welfare check, but not well off enough to be able to afford a $110MM payroll. Kind of like that family out there trying to get Financial Aid because they actually need it, but is told they make too much money, even though they have three college aged kids and live in Marin County.

At the same time, because the Giants have a legitimate revenue stream of our own (Stadium, tickets, concessions, TV/Radio), we're somehow at a disadvantage when compared to teams that don't.

Take the Reds as an example. They spent $72MM on their payroll in 2009. What do you want to believe that they were a prime candidate for a big revenue sharing check? Here's how they work out:

-- Central Fund: $30MM (40 minus 10 for pension, etc.)
-- Revenue Sharing: $25MM (Estimate)
-- TV/Radio deals: $15MM (Est.)

That equals $70MM. What was their payroll again? Oh yeah, $72MM.

So then, you factor in Cincy's 5 year old beauty of a ballpark with its 22,000 per game attendance, $8 Miller Lites, $20 parking, $35 Bronson Arroyo T-Shirt jerseys, subtract operating cost and minor league development, and I bet they doing no worse than breaking even.

With the Giants, they're stuck. We live in a big market. We don't get that extra $25MM from sharing like 'Natti gets. That $25MM right there is a mortgage payment, and nearly the exact amount of money they'd need to spend to land a precious bat like Holliday or Bay's and have enough left over to re-sign Juan Uribe.

I'll take a line from the movie Red Dragon:

"Now do you see?"

If I sound like a raving lunatic, please let me know, because I'm not sure anymore....


  1. Rev sharing is not fair to all the clubs. Some teams are already in a whole because they come from a small market. Whos knows if this will ever be fixed in time.

    ~King of Cali

  2. Good insight, I never really knew about that stuff...wow.. That was a good point with the college financial aid, because that's exactly where the Giants are stuck. I also believe the Giants DO have money to spend, but for some reason they don't want to go out and get one of those guys "Bay or Holliday". To be honest I was ready for a change in the FO, but we have to deal with Sabean for another 2 years, playing "Vets" that are over 34 years old coming off injuries...just like the guy they are looking at now...Mark DeRosa


  3. I find it hard to believe the Giants lost $30 milliion during a winning season. Since opening AT&T Park the Giants have consistently held a top ten spot for revenue. We also generate the most revenue per fan (and while your article noted we have "decent" attendence, I would venture we have good to excellent attendence, considering we have also had top ten attendnence since opening AT&T park). I agree that the revenue sharing system is broken, and I also agree with you assessment that the Giants are just at the spot where they are too well off to receive revenue sharing but are still in need of it.