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Betwixt and Between: The Orioles and Revenue Sharing

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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?

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.