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Betwixt and Between: The Orioles and Revenue Sharing

Jayson Stark has brought revenue sharing among MLB clubs to the forefront this winter, with no small amount of backing from uber-agent Scott Boras. While the discussion thus far seems to focus on those on either end of the spectrum - the Marlins and Royals being paid millions that come from the Yankees and Red Sox - those in the middle face their own conundrum. Is it worth spending money on your club?

The Orioles find themselves exactly in the middle of this mess in the American League East division. Two clubs, the Yankees and Red Sox, pay heavily into the fund. Two others, the Blue Jays and the Rays, are among its greatest beneficiaries. Yet the Orioles neither pay greatly into the fund nor receive significant funds from it. They're damned if they do, and damned if they don't.

Of the 17 teams receiving money in 2005 (the last year for which numbers are generally available), five teams received $6 million or less, or about what the Orioles are paying a year for Mike Gonzalez for each of the next two years. The Texas Rangers paid about $35,000 into the fund, which is about the ice cream concessions from one day game at Arlington. Twelve teams paid in at least $10 million in 2005.

Where does that leave the Orioles?

Star-divide

Major League Baseball doesn't release revenue-sharing numbers. The Biz of Baseball has published what it believes are the only available numbers, for 2002, 2003 and 2005, from an unlinked Wall Street Journal story. Yes, the numbers are from five years ago, but I think the 2005 numbers tell an interesting story. Baseball teams were basically broken into two groups, the haves and the have-nots. Here are the have-nots:

Team

Amount received (millions)

Team

Amount received (millions)

Tampa Bay Devil Rays

$33.00

Cincinnati Reds

$16.00

Toronto Blue Jays

$31.00

Colorado Rockies

$16.00

Florida Marlins

$31.00

Arizona Diamondbacks

$13.00

Kansas City Royals

$30.00

Cleveland Indians

$6.00

Detroit Tigers

$25.00

Philadelphia Phillies

$5.80

Pittsburgh Pirates

$25.00

San Diego Padres

$5.70

Milwaukee Brewers

$24.00

Washington Nationals

$3.90

Minnesota Twins

$22.00

Baltimore Orioles

$2.00

Oakland Athletics

$19.00

For as much talk as there is about the evils of a salary cap and letting the free market rule, the Orioles are truly the only free market team in the American League East division. Two of its competitors are having revenue taken from them in astronomical numbers (The Yankees paid $76 million and the Red Sox paid $52 million in 2005, and those numbers have only increased in the four following seasons) and two of its competitors are subsidized by the League, with the Rays getting $33 million and Blue Jays getting $31 million, ranking #1 and #2 in amounts received.

Jayson Stark estimates that 10 teams - one-third of the League - receive in the neighborhood of $80 million in revenue sharing and guaranteed income now. Yes, $80 million. Not all of it comes from other teams, but think of it. Before the Rays and Jays sell one ticket, one hot dog or charge parking for one car in Spring Training, they've turned a profit for the year, based on projected payroll and operating expenses. They are truly playing with house money.

Stark's article details the sources of this shared and team revenue:

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. Or own their networks. Or both.

Stark thinks the problem can be solved with a minimum payroll. The League has already headed in that direction,with its unprecedented missive sent to the Florida Marlins earlier this month, basically demanding they spend more on payroll. Think that Josh Johnson extension was a coincidence?

Stark's thought on the matter is, establish a minimum payroll, and any teams that falls below it gets taxed. So if Florida wants to hog its cash from revenue sharing and run out a team that's total payroll equals Alex Rodriguez, they get taxed.

But what of those teams in the nebulous middle? Baltimore makes enough revenue to not be a great recipient of revenue sharing, yet doesn't have the cash to spend with the big boys in Boston and Toronto. So while Tampa will low-ball its players and trade them as they reach arbitration and bank revenue sharing cash, and Boston and New York seemingly have their own personal lines to the Treasury Department, where does that leave the Orioles?

Probably right where Andy MacPhail is leading us - get smarter about spending, but spend about the same amount. Unless the team is satisfied with making money (like the Marlins and the Pirates), it can't go the miser route - the MASN deal with the League and the natural lure of OPaCY just about guarantees the Orioles will never qualify for significant revenue sharing. Yet the revenue base isn't there to spend $150 million to compete with the Red Sox or Yankees. And all a salary floor tax does is force the Rays and the Blue Jays to use more of their free money on players. No help offered to the Orioles or Astros of the world. You're on your own.

So here the Orioles are in the middle - too good at making money to get any from the League like the Rays and Blue Jays, yet not good enough to compete financially with the Red Sox and Yankees. The salary tax hasn't appreciably slowed the Red Sox and Yankees' spending. And a salary floor won't help the Orioles improve one bit.

The Orioles will be the only AL East team truly fighting on an even playing field. Everyone else in the division will have it tilted in their direction.

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Comments

Display:

a) the Os can use their 2mil to pay wiggy his money

b) the stark article implied that large market teams are wringing their hands over small market teams’ inability to compete …… really? i need some proof on that. i’ve always assumed the revenue sharing is a safety valve for the big market clubs: they can say they’ve done their part while never really worrying about long term small market competition

"Whoooooooaaa Doggie!" -- Gary Thorne

by thewaywardO on Jan 31, 2010 11:03 AM EST reply actions  

Small markets

I think the large markets are more pissed that the owner of the Florida Marlins is basically stashing cash under his mattress.

"The moment you stop thinking you're the best, it's time for you to get out the game." -'King' Mo Lawal

by duck on Jan 31, 2010 11:11 AM EST up reply actions  

it's pretty funny

that they’ve won a WS this decade…

by O'sFan21 on Jan 31, 2010 10:52 PM EST up reply actions  

See, he piled the cash under his bed...

until he has enough, then spends it all in one year. Then has a fire sale to get rid of everybody expensive. Rinse, repeat.

"The moment you stop thinking you're the best, it's time for you to get out the game." -'King' Mo Lawal

by duck on Feb 1, 2010 9:24 AM EST up reply actions  

You have to pay and not rely on other.

Showing your front office, your team and mostly your FANS that you are committed to winning and willing to shell out bucks will go further than waiting on the back burner to have a check cut to you and going out and getting scrubs. Just go out and spend the money Peter Ange-joke.

PS My alma mater MD is playing tonight at 530, Tiger is on the menu

"On my tombstone just write, 'The sorest loser that ever lived.'"
Earl Weaver

by matman008 on Jan 31, 2010 11:17 AM EST reply actions  

M-A-R-Y-L-A-N-D!

Maryland will win!

"The moment you stop thinking you're the best, it's time for you to get out the game." -'King' Mo Lawal

by duck on Jan 31, 2010 11:23 AM EST up reply actions  

What duck said!

Don't give up, don't ever give up. - Jim Valvano

by BaltimoreSportsFan on Jan 31, 2010 4:29 PM EST up reply actions  

Modest Proposal

Revenue sharing should be adjusted based on the top spending team in one’s division. So long as the Os spent the sharing amount on payroll, they should get an extra amount to compensate for the fact that they are competing in a division with the highest spending club.

by BaltoBen on Jan 31, 2010 11:45 AM EST reply actions  

The Philadelphia Phillies

So in 2005 the Phillies received $5.8M in 2005? The self same Phillies that had a payroll north of $100M just a few years later?

This kind of stuff is so annoying. For all the kvetching small market teams do about the Yankees signing Teixeira, CC and Burnett, (understandably so), it is also disingenuous for teams to have payrolls south of $60M as well. It sucks being a fan of a team in the same division of big spenders like the Yankees and Red Sox, but then I look to all the money wasted on guys like Baez, Bradford, Gibbons, Huff, Ramon, etc.

And again, if a team can build a better mousetrap (better farm system, efficient use of free agent market), I’m not sure why they can’t compete say half the time with a club that has twice its’ payroll.

Librarians are hiding something

by dfa on Jan 31, 2010 12:21 PM EST reply actions  

This is well done. The Revenue sharing system does not seem to discourage the Yankees from spending whatever they want on whomever they want, and while it may have a stronger effect on the Red Sox, it’s tough to tell how big of a difference (especially with the Red Sox playing it smart with signings like the Adrian Beltre signing). On the other hand, the Rays and the Blue Jays are helped to stay competitive out of Revenue Sharing, making the marquee equalizing program of baseball a bad deal for the Orioles. The solution? Probably something that makes the big market teams take the restraints more seriously. I don’t mind the Rays and Blue Jays having a chance to comete, but we shouldn’t even out the bottom without evening out the top.

by math_geek on Jan 31, 2010 12:48 PM EST reply actions  

Good post, duck. Depressing but revealing. I wonder if PA thinks he's getting a sh*t deal in the middle.

Actually, PA prolly thinks he’s gets a sh*t deal by getting up in the morning. His classic observation on owning this team — “You don’t think I enjoy this, do you?” — makes whatever sympathy one might muster for his financial concerns realtive to those of the rest of the division dissipate really fast. Like almost before they get mustered. What a tool.

"Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning." Churchill,1942-- a rebuilding year.

by Titov on Jan 31, 2010 1:21 PM EST reply actions  

A new owner

If by some miracle the O’s should ever get a owner that has both money and a genuine love for the game then and only then will we be able to compete with not only the other teams of the AL East but the rest of Baseball as well. Without new ownership the O’s ship is pre-destined to sail the baseball world without a chart. And that is a very haphazard and unpredictable undertaking at it’s best.

by willsawa on Jan 31, 2010 4:05 PM EST reply actions  

This idea just won't die

I don’t like Angelos any more than the next guy, but ever since MacPhail took over things have certainly been looking up. Not every owner is a Steinbrenner, yet plenty of other teams seem to compete all the time. Sure, we’re in the AL East so it’s harder, but why don’t we see where this regime takes us before calling it a failure?

by daveh873 on Jan 31, 2010 4:40 PM EST up reply actions  

ditto.

people forget that our last postseason appearances were also under angelos.

"I doubt he could reach [second base]...mostly cuz his fucking arm was in Aybar's nuts." – twistedlogic

by zknower on Jan 31, 2010 4:53 PM EST up reply actions  

and

in 1998 we had the top payroll in the league, after a period being 2nd behind only the yankees

I think the idea of a minimum salary cap is stupid. if you’re a terrible team like the Pirates, good players aren’t going to want to join your team at market price – you’d have to significantly overpay them. that essentially forces those teams to sign mediocre players with bad salaries, while destabilizing the team (because now you have a guy who doesn’t want to play for your team, being paid a lot more than he deserves).

the Marlins are a pretty bad example, anyway, because despite not spending any money, they’re generally a pretty good team. they’ve had a winning record in 5 of the past 7 seasons, along with 1 WS title. compare that to teams like the Orioles and the Royals that have spent significantly more money, but have been less successful.

think about it this way. what’s better for baseball – the Marlins as they are now (pretty good but pocketing revenue sharing money), or the Marlins run like the O’s and the Royals used to be (terrible, but hey, at least they’re spending money!)?

by ugen64 on Jan 31, 2010 9:51 PM EST up reply actions  

almost forgot

I should add, rebuilding teams shouldn’t be spending money on their big league roster to begin with. if you want to force the Pirates / Marlins to do anything, you should force them to spend more money on player development, international signings, scouting, the draft, etc. forcing them to spend money on their big league roster actually hampers them in the long term.

by ugen64 on Jan 31, 2010 9:52 PM EST up reply actions  

Thankfully they don't

or Mr Wieters would not be playing with our guys.

by daveh873 on Jan 31, 2010 10:01 PM EST up reply actions  

Also...

Steinbrenner sucked as an owner until he decided to finally let go a little bit.

by O'sFan21 on Jan 31, 2010 10:55 PM EST up reply actions  

It would be interesting to hear some unintended consequences of a minimum salary rule. One possibility mentioned above is inflated salaries for mediocre players as teams still don’t to take the risk of committing to the higher salaries of the better players. The players union would be all for that.

Maybe instead of a minimum salary MLB ought to force the teams to let the fans in for free. Give the money to the fans of the (usually) crummy teams instead of the owners.

by drj on Feb 1, 2010 9:01 AM EST reply actions  

Subsidies should be public

First, all of this information should be in the public realm. We (the taxpayers) pay for the stadiums, so we should have access to a complete breakdown of league financial arrangements instead of guesses on 5 year old information.

Second, a salary floor really hurts mid-level teams like the Os because it will bid up the price of the kind of players they can pay.

The only real solution I see is go to a divisional system broken down by payroll (possibly with relegation like the European soccer leagues) or at least get rid of the unbalanced schedule so that we get to play more teams in the mid tier of revenues.

by henhoo on Feb 1, 2010 9:41 AM EST reply actions  

agree

Agree that the unbalanced schedule and being in the AL East hurts the Orioles competitively. But, the Os make a lot of money on the home Yankees and Sox games. I think that if we sequence things right, we can be competitive in cycles,

by BaltoBen on Feb 1, 2010 9:59 AM EST reply actions  

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