the yankees are now paying as much on taxes and re

[smazza]

when you find out let me know

[GarySJ]

I've been trying to work up a comparison between NFL and MLB broadcast contracts. What I've realized is that it's an apples-to-oranges comparison.

In MLB, the vast majority of games are aired via team-specific broadcast contracts, as opposed to league-wide broadcast contracts. With 162 regular season contests per team, a very low percentage of them will make ESPN, Fox, or ABC. It makes sense for most of the regular-season schedule to be carried on team-specific, regional channels. (The same is true of the NHL and NBA.)

We in Florida have little interest in all three games of a midseason Indians-Royals series, and it isn't profitable for national channels to carry more than the occasional game of interest. Thus, MLB teams turn to regional channels like YES (Yankees), NESN (Red Sox), TBS (Braves), Fox Sports Whereveritis, and other such regional channels to carry the bulk of their team's games.

In the NFL, on the other hand, it makes sense for every single game to be part of the national broadcast deal, since there are only 16 of them. Unlike the D-Rays, the Buccaneers have no need to broadcast regular-season games on Sunshine, because all the Bucs games can be seen locally via the NFL's national broadcast package (blackout rules aside). Even if you follow an out-of-region NFL team, you can see all your team's games within the NFL's national TV contract via DirecTV/Dish network, or, at worst, a local sports bar.

Here's where I'm going with this: the MLB broadcast revenue-sharing plan does not speak to the nature of MLB broadcast arrangements. Yes, revenues from national TV games are shared leaguewide, but that is by far the smaller piece of the pie. The source of most MLB broadcast income is regional deals, which are not shared.

It makes sense for the NFL to equitably distribute its TV revenue, because all broadcast dealings are handled by the league office, not the individual teams. (Individual teams do make deals with local sports channels for coaches' shows, preseason games and whatnot, but those are small potatoes.)

The MLB's "luxury tax" attempts to mimic NFL revenue sharing, when their financial model is totally different from the NFL's. The vast majority of individual-team revenue isn't affected by what they're trying to put a "luxury tax" on. And the small part that is, can be easily circumvented via creative accounting.

Bottom line: MLB is trying to core an apple with an orange peeler. They need to come up with something that addresses the unique nature of their broadcast deals. This offseason's player movement in MLB makes it painfully obvious that the luxury tax is not achieving the intended effect of balancing team spending (and thus, competitiveness) league-wide.

[CyberBull]

I've been trying to work up a comparison between NFL and MLB broadcast contracts. What I've realized is that it's an apples-to-oranges comparison.

In MLB, the vast majority of games are aired via team-specific broadcast contracts, as opposed to league-wide broadcast contracts. With 162 regular season contests per team, a very low percentage of them will make ESPN, Fox, or ABC. It makes sense for most of the regular-season schedule to be carried on team-specific, regional channels. (The same is true of the NHL and NBA.)

We in Florida have little interest in all three games of a midseason Indians-Royals series, and it isn't profitable for national channels to carry more than the occasional game of interest. Thus, MLB teams turn to regional channels like YES (Yankees), NESN (Red Sox), TBS (Braves), Fox Sports Whereveritis, and other such regional channels to carry the bulk of their team's games.

In the NFL, on the other hand, it makes sense for every single game to be part of the national broadcast deal, since there are only 16 of them. Unlike the D-Rays, the Buccaneers have no need to broadcast regular-season games on Sunshine, because all the Bucs games can be seen locally via the NFL's national broadcast package (blackout rules aside). Even if you follow an out-of-region NFL team, you can see all your team's games within the NFL's national TV contract via DirecTV/Dish network, or, at worst, a local sports bar.

Here's where I'm going with this: the MLB broadcast revenue-sharing plan does not speak to the nature of MLB broadcast arrangements. Yes, revenues from national TV games are shared leaguewide, but that is by far the smaller piece of the pie. The source of most MLB broadcast income is regional deals, which are not shared.

It makes sense for the NFL to equitably distribute its TV revenue, because all broadcast dealings are handled by the league office, not the individual teams. (Individual teams do make deals with local sports channels for coaches' shows, preseason games and whatnot, but those are small potatoes.)

The MLB's "luxury tax" attempts to mimic NFL revenue sharing, when their financial model is totally different from the NFL's. The vast majority of individual-team revenue isn't affected by what they're trying to put a "luxury tax" on. And the small part that is, can be easily circumvented via creative accounting.

Bottom line: MLB is trying to core an apple with an orange peeler. They need to come up with something that addresses the unique nature of their broadcast deals. This offseason's player movement in MLB makes it painfully obvious that the luxury tax is not achieving the intended effect of balancing team spending (and thus, competitiveness) league-wide.

MLB's  baseball revenue sharing plan is not really all at fault here. The biggest cry we here from the fans and media alike is that the "rich are getting richer". Well that is not necessarily true.

The RedSucks, Yankees, and the other big spenders are not doing anything illegal. Their  free spending is allowed under the current agreement and the penalties in place for going over the unofficial "salary cap" should help subsidize the teams below them.

The problem I see is that the teams receiving revenue sharing money are not spending it on players. Instead I see a lot of teams dumping salaries. Instead of adding players to improve their ball clubs they are pocketing the cash and then crying about the inequity of the whole system.

What baseball needs to do is enforce a loose salary cap where there are harsh penalties for being for spending too much or not spending enough. The existing plan is not perfect but I never would of believed that baseball would ever go to any type of labor system that even hinted at a salary cap. They just need to tweak it a little more so a good system for baseball can be developed.

IMO, a better existing model to use as a comparison is the NBA revenue sharing formula.

Like MLB, the NBA allows it's teams to broker their own local television and radio deals. I'm not sure of all the specifics but the distribution of revenue is far more equitable than MLB. The lychpin to their plan is the salary cap which I doubt we will ever see while Marvin Miller and his protege Don Fehr are still alive.

[CyberBull]

See if you can find the details on that as it would be interesting to see how much the sox tv deal is for also.  I dont think the yanks could be making 250 million in revenue not including tv and then an additional 250 million with TV. I say there is no way they are taking in that much coin and if so not having to share with other owners. I think there is no way that could be happening.

There has never been more money in baseball.

I unfortunately closed the window before copying the url to reference the information below, but the amount of money baseball is making staggering.

Baseball revenues:

1990 - $1.0 billion

1995 - $1.6 billion

2001 - $3.0 billion

2004 - $4.0 billion

That is a lot money collectively. These are the kind of numbers that Marvin Miller and now Don Fehr arm the players with when they go to the negociation table. The owners are always going to cry that they are losing money but the numbers say otherwise.

Bud Selig not withstanding, they are like a bunch of car salesman. What is the favorite line of salesman when you try to haggle on price???  "I'm not making any money on this deal."

Yeah right....is what you and I would and it's the same thing the players are saying to the owners.

I have no problems with teams spending as much as they want. There should be some limits but the real problems are teams like the Devil Rays which are about $30-million under MLB average in salaries. That is a joke. Teams like the D-Rays should not receive any revenue sharing b/c it's quite obvious that they are not spending it on players.

BTW....if there are any Rays fans in the house....the buzz going around town is that the Rays are quietly trying to trade promising young slugger Aubrey Huff b/c they don't want to pay him the salary he would command on the open market.

If that happens I done supporting the hometown Rays.

[smazza]

i doubt there will be a salary cap in MLB in our lifetime

[GarySJ]

The RedSucks, Yankees, and the other big spenders are not doing anything illegal. Their  free spending is allowed under the current agreement and the penalties in place for going over the unofficial "salary cap" should help subsidize the teams below them.

The problem I see is that the teams receiving revenue sharing money are not spending it on players. Instead I see a lot of teams dumping salaries. Instead of adding players to improve their ball clubs they are pocketing the cash and then crying about the inequity of the whole system.

I agree heartily on both counts. The luxury tax is no deterrent to big spenders, and the luxury tax payouts are not encouraging smaller teams to spend money on talent.

What baseball needs to do is enforce a loose salary cap where there are harsh penalties for being for spending too much or not spending enough. The existing plan is not perfect but I never would of believed that baseball would ever go to any type of labor system that even hinted at a salary cap.

The baseball luxury-tax plan vaguely resembles a cap plan on a foggy day if you squint. But it is so weak it might as well not even exist. As discussed previously, it is little deterrent to big spenders and little incentive to lesser ones.

Which is why it got approved -- the owners will have no part of "revenue sharing" and the players will have no part of "salary cap," so they agreed on something that really does neither.

Baseball revenues:

1990 - $1.0 billion  

1995 - $1.6 billion  

2001 - $3.0 billion

2004 - $4.0 billion

That is a lot money collectively. These are the kind of numbers that Marvin Miller and now Don Fehr arm the players with when they go to the negociation table. The owners are always going to cry that they are losing money but the numbers say otherwise.

And I bet it's all merchandise. I couldn't find any figures for MLB, but the NBA claims ~$2B in gross revenue from merchandise sales annually; MLB's figures can't be too far off from this, and if so would account for most of the growth seen above -- not to mention a significant piece of MLB's total revenue.

I'm sure the union is using these numbers to argue their case. But do the players really deserve credit (and thus higher salaries) for this development? Looks to me like the high revenue figures have little to do with the game itself. MLB could fold tomorrow and people would still buy replica third-color Colorado Rockies jerseys. Will MLB collapse financially when the sports-clothing fad wears off? Forgive me for this brief digression, but I found it interesting.

Anyway, there's got to be something producing all this new money, because attendance and national TV ratings are stagnant at best, even with all the palatial new publicly-funded stadia.

Links of interest:

The IRS page on sports franchises -- http://www.irs.gov/businesses/page/0,,id=7095,00.html A little dry but interesting if you know about accounting.

http://www.econedlink.org/lessons/index.cfm?lesson=NN146 This appears to be an economics lesson for high school students. Interesting reading nonetheless.

[smazza]

it is all clear now