November 28, 200718 yr http://www.sportingnews.com/yourturn/viewtopic.php?t=311337 David Pinto Money can buy hope for all baseball fans Posted: November 28, 2007 In November of 2000, Bud Selig told Congress, "an increasing number of our clubs have become unable to successfully compete for their respective Division Championships, thereby making postseason appearances -- let alone postseason success -- an impossibility. ... At the start of spring training, there no longer exists hope and faith for the fans of more than half of our 30 clubs." But that hope is back, and it starts with increased revenue. The economics of the sport have changed. Every team can win, and the Rockies proved it by reaching the World Series. This month Major League Baseball announced a record year for revenue. The teams pulled in almost $6.1 billion on everything from tickets to Internet sales. That's a take of $200 million for the average team. With money comes hope that was missing for many teams in 2000. Amid rapid revenue growth, teams got smarter about how to spend what money they had. Even small market teams found new ways to become competitive. Some teams used long-term contracts to lock up their stars and maximize the top end of their payrolls; others used terms of the 2002 collective bargaining agreement to sign younger players and develop talent at lower costs. Best of all, teams that could never hope of holding onto that home-grown talent once prospects turned into stars now find themselves with enough revenue to at least try to hang onto fan favorites. Let's take a look back at 2002 to find out how baseball reached a place where the Rockies and Diamondbacks became contenders and the Twins might actually have a hope of holding onto Johan Santana. The story starts with cost control. Revenues soared since the signing of the 2002 collective bargaining agreement (CBA). The players aren't getting the lion's share of the windfall, however: MLB revenue and salaries in billions of dollars Year Revenue Salaries % of revenue 2002 $3.4 $2.02 59.4% 2003 3.9 2.13 54.6 2004 4.3 2.07 48.1 2005 4.7 2.19 46.6 2006 5.2 2.33 44.8 2007 6.1 2.48 40.7 Revenue rose at an annual rate of $500 million a year from 2002 to 2006, while salaries averaged an $86 million increase. The teams controlled costs extremely well, finally learning how to use the CBA to their advantage. Long-term contracts play a major role in this cost control. Take a look at the lengths of contracts for the top 10 hitters in terms of on-base plus slugging (OPS) from 2002-2007: Contracts for top 10 hitters, OPS, 2002-2007 Player OPS Contract Barry Bonds 1.233 2002-2006 Albert Pujols 1.045 2004-2010 (under reserve previously) Manny Ramirez 1.005 2001-2008 Todd Helton 0.996 2003-2011 David Ortiz 0.991 2005-2006, 2007-2010 Jim Thome 0.986 2003-2008 Alex Rodriguez 0.986 2001-2007 Vladimir Guerrero 0.975 2004-2008 Lance Berkman 0.967 2002-2004, 2005-2010 Chipper Jones 0.956 2001-2008 (reworked extension in 2005) (min. 2,000 plate appearances) The best hitters in the game had little chance to take advantage of the rise in revenue through free agency. On the pitching side, five of the top 10 leaders in ERA from 2002-2007 -- Santana, Oswalt, Webb, Peavy and Zambrano -- signed extensions before they tested the market. Teams are doing two things right to control costs: Identifying good players. Signing them to long-term contracts. These long-term contracts also served to set a ceiling on salaries. While superstars' salaries remained constant, other players up for re-signing couldn't leapfrog over them. How many players can argue they are better than Albert Pujols, Alex Rodriguez or Johan Santana? Another trend dampening the rise in salaries comes from teams building rosters with less-experienced players. The structure of the CBA causes salaries to rise as years of service accumulate. For three years, teams can pay players close to the minimum. Then three years of arbitration boost salaries, and finally free agency takes them over the top. The more seasons played, the higher the salary. Actual service time isn't available in public databases, but we can approximate it by looking at the number of seasons played previously. By this measure, average service time decreased over the last two seasons: Average previous seasons played Season Avg. experience 2002 4.52 2003 4.68 2004 4.72 2005 4.77 2006 4.56 2007 4.43 The Marlins, Diamondbacks, Rockies and Rays are all out of the business of trying to win with veteran free agents. They've each taken the tack of putting teams on the field that can grow together. With few years of major-league service, these players cost little. As they mature, however, they can turn into champions. Take a look at the average experience among the eight playoff teams from 2007: Average Previous Seasons Played, 2007 Playoff Teams Team Avg. Seasons Angels 4.0 Rockies 4.0 Diamondbacks 4.0 Indians 4.7 Cubs 4.7 Phillies 4.7 Yankees 5.3 Red Sox 6.0 Three teams fell to less-experienced opponents in the first round of the playoffs. And the 2007 playoffs won't be the end of success for these teams. The Rockies and Diamondbacks sit in an especially sweet spot. Winning teams attract fans and increase revenue. By keeping their costs low, these teams gain flexibility to add players that might put them over the top. Both teams now have the resources to take salary in a trade or opt for a free agent to fill a hole. With continued growth in MLB revenue, they can even keep their best players rather than let them go to free agency. That might be the best result of the increased money flow. Teams like Oakland and Minnesota are losing their reasons for sticking with the constant rebuilding strategy. The Twins, at the bottom of the revenue pyramid, saw their receipts go up $16 million from 2005 to '06 and likely will see a similar increase when the '07 numbers are calculated. One more jump like that, and the Twins can afford to keep Johan Santana, Joe Mauer and Justin Morneau. The potential exists for the Athletics to keep their next combination of Eric Chavez and Miguel Tejada or Tim Hudson and Mark Mulder. While constant rebuilding helps keep costs down, keeping a good core together provides advantages as well, as the Yankees and Braves can attest. The potential also exists for quick team turnarounds. A lack of cash no longer is a reason not to sign a free agent or trade for an expensive player. In the balanced National League, some team might increase spending to win. In 2007, the Cubs brought in a number of free agents that helped them to a division title. The Reds, which gave a huge contract (four years, $46 million) to closer Francisco Cordero, might be going the same route. American League teams might open their wallets to catch up to the Yankees, Red Sox and Angels. The Royals' signing of Gil Meche last year and their attempt to sign Torii Hunter recently show that small-market teams are now willing to go after big names. The sharp increase in MLB revenue coupled with a slower increase in salaries brings teams closer to the point where all can afford premium talent, not just the richest clubs. Baseball as a whole did an excellent job of containing costs related to player salaries since the signing of the 2002 CBA. That efficiency now provides the potential for more teams to compete for the best players. That will drive up salaries once again, but MLB positioned itself to absorb that increase. We should see more teams in contention, putting more fans in seats and fueling even more growth for the game. Writer's note: Thanks to Maury Brown at The Biz of Baseball for help with revenue numbers. The USA Today Salaries Databases provided the salary data. David Pinto writes and edits BaseballMusings.com and is a frequent contributor to Sporting News.
November 28, 200718 yr Makes me sad that the Marlins can not realize these revenues, and that in attaining the meager amount they do, they assume unnecessary costs from the lease.
November 28, 200718 yr That's pure bulls***. They are realizing these revenues. They're not realizing those revenues like the Yankees, Red Sox, or even a middle team like the White Sox. However, there is no doubt in my mind the team is raking in revenues of $100M or more. They're clearly making money.
November 28, 200718 yr That's pure bulls***. They are realizing these revenues. They're not realizing those revenues like the Yankees, Red Sox, or even a middle team like the White Sox. However, there is no doubt in my mind the team is raking in revenues of $100M or more. They're clearly making money. You guys need to remember, this is a business. Yes it's wrong that they are swallowing all the profit and not throwing any towards the team or stadium, but the only way this will change is what I have been saying all along: BUD NEEDS TO MAKE THESE TEAMS SPEND A PERCENTAGE OF THIS MONEY YEARLY OR MAKE THEM RETURN VIA EQUAL SPLIT AMONG THE OTHER 29 MLB FRANCHISES!
November 28, 200718 yr I haven't seen Loria trying to sell the Team (My Wildest Deam), I wouldn't believe Marlin's FO accounting if they brought out a slide ruler and did their numbers on Biscayne Blvd
November 29, 200718 yr That's pure bulls***. They are realizing these revenues. They're not realizing those revenues like the Yankees, Red Sox, or even a middle team like the White Sox. However, there is no doubt in my mind the team is raking in revenues of $100M or more. They're clearly making money. You guys need to remember, this is a business. Yes it's wrong that they are swallowing all the profit and not throwing any towards the team or stadium, but the only way this will change is what I have been saying all along: BUD NEEDS TO MAKE THESE TEAMS SPEND A PERCENTAGE OF THIS MONEY YEARLY OR MAKE THEM RETURN VIA EQUAL SPLIT AMONG THE OTHER 29 MLB FRANCHISES! agreed....Loria is evidently making money out of all of this if not he wouldn't have bought the team in the first place: it's not like the economic situation of this team has changed drastically during his tenure as owner.
November 29, 200718 yr That's pure bulls***. They are realizing these revenues. They're not realizing those revenues like the Yankees, Red Sox, or even a middle team like the White Sox. However, there is no doubt in my mind the team is raking in revenues of $100M or more. They're clearly making money. That's pure bulls***. From Forbes' figures (and MLB's released statements from earlier), the Marlins rank dead last in the majors in revenue. According to Forbes, the closest among division peers are the Nationals, playing in a park with scant amenities yet able to realize over $20M more. Those same sources point to the Marlins barely breaking even. $9M profit AFTER revenue sharing over 5 years.
November 29, 200718 yr That's pure bulls***. They are realizing these revenues. They're not realizing those revenues like the Yankees, Red Sox, or even a middle team like the White Sox. However, there is no doubt in my mind the team is raking in revenues of $100M or more. They're clearly making money. That's pure bulls***. From Forbes' figures (and MLB's released statements from earlier), the Marlins rank dead last in the majors in revenue. According to Forbes, the closest among division peers are the Nationals, playing in a park with scant amenities yet able to realize over $20M more. Those same sources point to the Marlins barely breaking even. $9M profit AFTER revenue sharing over 5 years. Your bias in favor of Loria is so staggering you come up with the most convoluted yet no less amazingly laughable drivel every day of the week. If you think the Marlins are only making a profit of $9 mil over 5 years...well, I dont really know what to say to that. You are just absurd.
November 29, 200718 yr from MLBtraderumors.com as per the Twins beat writer http://www.twincities.com/ci_7584709?sourc...;nclick_check=1 The amount of cash each club is getting this year for online media properties like MLB.com sites: $25MM. And don't forget the Twins get about $20MM in revenue sharing. Maybe that's why they have interest in Aaron Rowand. you have to figure the Marlins are earning at least as much as the Twins in revenue sharing -- so that's $45MM before they sell their first ticket or get money from the national & international TV package, MLB merchandise. This just from revenue sharing and online media. Last years payroll was around $30MM.
November 29, 200718 yr I read somewhere they got 30MM in 2006, so probably about the same this year. So, 50MM before making any of their own revenue. These guys are making about $120MM easily!
November 29, 200718 yr In '05 our revenue sharing was $30 million so now it should be much higher than that given that the revenue sharing pie has increased and our percentage share of the pie has also increased. When the '07 profit numbers come out look for Loria to break the $50 million mark. Cool!
November 29, 200718 yr Author Thank you for the edit. All I can say is that this shows that the art dealer and the lucky sperm cell do not have winning baseball games as a priority. Somehow they seem to have figured out a way to make more money with an unstable team that is the farming system for the big market teams rather than building a high-priced, stable team, with an identity, that has a stadium and competes for a championship most years. Why can't we get a guy that is about building quality products like Mark Cuban? He's begging to be a MLB owner.
November 30, 200718 yr Think about it this way say as an individual all your expenses you were ever to have through the year were covered before earnining even $1.00 and made $45,000.00 per year but you report that your expenses were $55,000.00. You can say that you lost $10,000.00, when in reality you made $100,000.00. That is how Loria's accounting for the Marlins operates. Nice! :banghead
November 30, 200718 yr Think about it this way say as an individual all your expenses you were ever to have through the year were covered before earnining even $1.00 and made $45,000.00 per year but you report that your expenses were $55,000.00. You can say that you lost $10,000.00, when in reality you made $100,000.00. That is how Loria's accounting for the Marlins operates. Nice! :banghead I don't think the math on that adds up.
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