This afternoon, we have a guest posting from one of the readers, Larry in California. Larry’s a self-described “aging, opinionated Yankees fan exiled in Southern California, practicing law and running a software business, with no expertise and only a fan’s interest in sports economics.” He doesn’t pretend to be an expert and notes that he “welcomes comments and additional facts bearing on revenue sharing and other means to promote competitive balance in baseball.” What you see below has not been edited (in terms of content; minor graphical/formatting edits have been made).

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About a week ago, IIATMS’s Jason posted a list of sensible ideas to improve revenue sharing in baseball, and I was foolish enough to post some of my own ideas. In response, Jason challenged me to develop a full-blown guest post, and he also encouraged me to do some research.

I wish he hadn’t done that. It’s easier to post when you’re not confused by the facts.

But the research is interesting. Here’s what I’ve learned. First, major league baseball is ALREADY sharing a lot of revenue. Second, additional revenue sharing will not substantially improve the ability of the poor teams to compete with the rich teams. Third, we can tweak the existing system of revenue sharing, so that it does a better job of improving the competitive balance in baseball.

Let’s look at the facts. In preparing the following, I’m indebted to the information posted at BaseballAmerica.com and BaseballProspectus.com.

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The Current System

Major league baseball has three different forms of revenue sharing. The sharing we hear most about is the Competitive Balance Tax, also known as the “luxury tax”. This tax is computed against the excess of a team’s payroll over a limit set by Major League Baseball. For 2010, this limit is $170 million. As you probably know, the Yankees’ payroll routinely exceeds this limit. The Yankees paid a luxury tax of over $25 million last year, and has paid nearly $175 million in luxury taxes over the last seven years. The luxury tax is paid by the Yankees and nearly no one else. The Red Sox paid an aggregate of about $14 million in luxury taxes between 2004 and 2007; the Angels and Tigers have paid the tax only once.

The luxury tax does little to help the poorer teams in baseball. Most of the luxury tax goes to pay player benefits; relatively little is paid to poorer teams. The luxury tax might discourage rich teams from spending money on player salaries, but that’s about all it appears to do.

The other two forms of revenue sharing are more significant. Baseball shares revenues from two different sources: central fund revenues and net local revenues.

Central fund revenues come from national radio and TV deals and merchandise sales. Depending on where you read, these central fund revenues are divided equally between the 30 major league clubs (BaseballAmerica.com), or they are mostly allocated to the poorer major league clubs (BaseballProspectus.com).

Net local revenues are the total local revenues earned by each team from ticket sales, television, merchandising and the like, minus the cost of operating the team’s stadium. Each team pays 31% of its net local revenues into a common pool, and the pool is then divided equally among the 30 teams. The wealthier teams pay more into the pool than they get back; the poorer teams get back more than they pay in.

(click “view full post” to read more)

This past weekend, NY Daily News columnist Bill Madden had a chat with Tito Francona, and came away with the distinct idea that the Red Sox’ rotation is better than the Yankees’ rotation.

Francona:

“This spring, I’ve got six proven starting pitchers that I like, even though it presents a bit of a problem for me.“

Madden:

“The fact that Francona is boasting about a five-strong rotation of Josh Beckett, John Lackey, Jon Lester, Daisuke Matsuzaka and Clay Buchholz, with 43-year-old Tim Wakefield, a first-half All-Star last year before he sustained back problems that required surgery, in reserve, should come as unsettling news to Yankee legions watching Joe Girardi conduct endless tryouts for the fifth spot in his rotation.“

Now, I personally thought that Bill Madden’s value, besides simply reporting news, would come in his analysis of the topics he was delivering to us, the public–analysis which is largely absent from this article. I’ve made my views on the two rotations fairly clear (along with stacks of statistics to back up my theories) before — notably here.

(click “view full post” to read more)

Good morning friends. I was away Friday through Sunday, arriving home to a house without power and flat out exhausted from a nearly 5 hour drive. No complaints; it was a great weekend but I saw/read little baseball. I’m playing catch-up, and here are a bunch of interesting links from this morning and over the weekend:

• Phillies GM Amaro denies swap talks: OK, plenty has been shared about this one, and like everyone else, I found it silly. In what universe would the Cardinals swap a same aged Pujols for Howard? To save a few dollars in AAV? Slim and none and slim left a long time ago. Buster notes the deal might make sense if the Cards decide they can’t afford Pujols, but they would be able to take on Howard, who will make $19m and $20m this year and next. How does that make sense?
• If Roger Clemens’ defamation suit against Brian McNamee moves forward Jeter, Rivera could testify: Sure, Pettitte might have something of value to say, but the odds on Jeter and/or Mo having anything to say besides “I knew nothing, saw nothing, heard nothing” are about as long as Pujols being traded for Howard.
• Speaking of Mo… Modern Yankee Heroes: From humble beginnings, Mariano Rivera becomes greatest closer in MLB history: Just another fun recap of Mo’s humble/poor childhood beginnings to his ascent to the top of the heap of closers in MLB history.
• Speaking of Jeter… Cuban SS Hechavarria will pass on Yankees for Blue Jays: Jeter’s possible heir apparent will bypass the Yanks’ loot for Toronto’s, citing Jeter’s likely extension as a reason why. This just in: Other teams are also successful in the pursuit of foreign players besides the big guys: Chapman, Hechavarria, etc.
• Red Sox prospect Ryan Westmoreland having brain surgery: Serious stuff here. We’re hoping that the surgery fixes this condition. We’re all baseball fans here first and foremost and while we root for and against different laundry, we’re hoping to see this kid back on the field as soon as he’s able.
• Nationals GM Mike Rizzo: ‘Money has nothing to do with who’s going to play’: National’s GM claiming it won’t be about the money. We’ll see. Though, I have to admit, he’s in a no-win spot with Strasburg. If he makes the club, Rizzo will be accused of rushing the kid to help the gate. If he keeps Stras in the minors, it’d be to slow the arb clock from starting (rather than “developmental reasons”).
• Mark Twain, Baseball Fan, Had an Eye for a Short-Stop: A bit of humor about Twain, baseball and history.
• Jose Reyes perfect example of why baseball needs HGH testing: “That’s why the players association needs to drop its tone-deaf opposition to HGH blood tests. If Reyes is indeed innocent, he’s precisely the type of athlete who could benefit from this screening.” Not sure if the testing is the answer; I still think storing the blood until there’s a better test is a better idea.
• ‘Cuse still lands a #1 seed. I was surprised, given their two late losses, including to the Hoyas on Thursday. Whatthehellsahoya, anyways?