Let’s set the background. First, as [edit. note: Attanasio responded thusly today:
"We do get a piece of revenue sharing. We appreciate it, and we need it, and we use it. We use pretty much all of our revenue-sharing dollars every year within our budget to put our team on the field. Our payroll is in the high 80 [million-dollar range].
“If you had access to the records, you would see that this organization spends its revenue-sharing dollars.”]
Contrary to what Neyer wrote, the Brewers are not permitted to use revenue sharing to pay for just any item that “eats” up their revenues. They are not permitted to use revenue sharing merely to stay afloat, to pay the rent and the electric bill and the payments on the company car. They are supposed to use the money to get better, to win more games. At least, they’re supposed to try.
Look, we’re a very understanding group here at IIATMS [edit. note: sometimes]. We understand that Attanasio wants more revenue sharing money and that Levine doesn’t want to pay it. No news there. If Levine was trying to argue that revenue sharing is inherently unfair, then we think he’s wrong, plain and simple. We also understand that revenue sharing does not put the Brewers on the same economic footing as the Yankees.
But we also understand that baseball DOES have a robust system of revenue sharing in place. In 2009, the rich baseball teams paid $433 million to the poor baseball teams. That’s a boatload of money. That’s about 7% of the $6.3 billion in revenue estimated for baseball in 2009, and about 95% of the combined net profits of the 30 baseball teams last reported by Forbes.
With this much money in the revenue sharing system, we must make certain that the money is being spent effectively. When we hear from John Henry of the Red Sox that the teams receiving revenue sharing are among the most profitable in baseball, we have to wonder if we’re getting the most bang for our revenue sharing buck. When Forbes reports that the Brewers have operating income of around $100 million over the last five years – a number that’s probably VERY close to the amount of revenue sharing they’ve received over this same time period – we have to wonder whether more revenue sharing would really lead to a better competitive balance in baseball.
This is what we understand Levine to be saying to Attanasio: If you want more revenue sharing money, you must account for what you’ve done with the money you’ve received so far. This is nothing more than the information already required under the collective bargaining agreement, noting more than the information that every business is required to provide to its investors, whether those investors live in New York, Milwaukee, Kansas City or Cincinnati. Levine is well within his rights to ask for this information.
Besides, Mr. Neyer, wouldn’t YOU like to see the plan submitted by your beloved Royals for the improvement of their on-the-field product. It’s just SITTING there, in some MLB file cabinet. Randy Levine just wants these plans to see the sunshine. He’s tirelessly fighting for your rights as a fan of a small market team.
Right, Randy?
This entire 'big market' vs. 'small market' debate has driven me crazy for years, almost right up there with 'tax payer funded' stadiums. Many of the teams that complain about being 'small market' teams have large population bases than some of the 'big market' monsters. http://www.mediainfocenter.org/compare/top50/#pop
Miami is a larger market than Boston!! Boston is the 10th largest market, and they are consistently grouped in with the Yankees, Mets and LA teams yet there are 9 other teams with a larger base to pull from.
Simply put, the Yankees run thier business well than the other teams. Baseball isn't the NFL where the largest stream of revenue is the league wide TV contract. Baseball is very local. It is amazing that revenue sharing has gotten this far to begin with.
Please notice, the recent explosion of attendence and revenue has coincided with the continued greatness of the Yankees, as well as the improvement and consistent greatness of the Red Sox.
Brilliant. I remember a report a few years back, Carl Pohlad was the wealthiest baseball owner by far and received revenue sharing for the “low market” Twins. I would have LOVED to get a full audit of where and what the money was used on. Kudos for the Mauer signing but what about Santana back than when the Twinkies were still a competitive team? How’s Carlos Gomez and the bag of baseballs working out over there?
Total agreement here. Disclose the plans, disclose the uses of revenue sharing. If the system needs tweaks or improvements, hey, I am ALL FOR IT, but let’s see why. It’s a guessing game now as long as there is not full disclosure. You could not be more correct in this post.
Anthony,
Using absolute market size is a mistake. "Boston", for example excludes the northern CT, RI, southern VT, NH, ME markets… all of which feed and support the more regional "New England" market.
Miami, on the other hand, can only gain size from the north as I don't think they can annex Cuba or Puerto Rico for their "market size".
You just can't look solely at the singular DMA from which a team resides.
I don't get it. Rob said, "Generally speaking, [the Brewers’ revenue sharing money has] gone to capital improvements, player salaries, bonuses for draft picks, and the two or three other items that eat the vast majority of a baseball franchise’s revenues." Don't these improve the teams on the field peformance?
Eddie, Anthony, great comments! Anthony, Jason has a good point about local versus regional media markets, but your point still stands. We just have to figure out the right way to measure the real size of these markets.
Lou, you're making a great point, and it's one I've made here before. Let's use a crazy example to illustrate your point. Let's say that the Marlins decide that the best way to improve their on the field performance is to repave the stadium parking lot. Maybe the parking lot is in such terrible shape that it's discouraging attendance. With a better parking lot, they'll put more bodies in the seats, increase revenue and have the money to sign the players they need. If that's the Marlins' plan to become more competitive, who am I to say that they're wrong?
I'm not trying to argue that teams should be forced to spend their revenue sharing money on payroll, or on player development, or on any other single category that you or I might think would improve their on the field performance. I'm even willing to consider that revenue sharing money might best be used by a team to reduce the team's debt.
But I think that the collective bargaining agreement requires teams to spend their revenue sharing money in accordance with a PLAN designed to improve their on the field performance. It's not good enough to say, after the fact, that the team used its revenue sharing to pay the electric bill because the team's UZR would have suffered if they had to play in the dark. I want to know, what plan did the team have in mind for team improvement when you received the money? How did the team implement the plan? How did it work out? What kind of improvements can the team make going forward to do a better job with the money it's receiving?
In other words, I want to ask the questions that people ask when they make ongoing investments in a business enterprise.