More MLB Cash To Go Around?

I’m always somewhat hesitant to introduce discussions on the various economic issues surrounding MLB and the disbursement of the revenues to the individual markets and the owners.  The reason being that the details are always missing thus the debate is always based on assumption and innuendo.  

As was the case with the various national television deals, the dollar amount we see is the total value of the contract and then the assumption is that the teams get that amount divided by thirty.  I don’t believe it to be that simple.

I had run an article from the Denver Post at the time of the TV signings which broke down what the Rockies share of that contract would be after various repayment to the league office and minus whatever was being allocated to the MLB central fund.  As I recall the Rockies received roughly $13M out of the $25M or so assumed to be going to the local markets.

This article, regarding the additonal Disney investment in MLB Advanced Media, does basically the same thing.  The calculations of the author has Bob Nutting and his brethren getting an additional $52M per club.    

I don’t know who gets what but I do know the game is awash with cash.  Take this info and form your own opinions.  The only thing I’m certain of is the discussion will be smart and civil.  Thanks for that.

Disney to give MLB another $1.58 billion for BAMTech. The players will see none of it.

Last year The Walt Disney Company bought a $1 billion stake in BAMTech, which is the streaming media unit created by Major League Baseball, originally used to power MLB.tv but since spun off into its own company and now used by multiple content providers both inside and outside of sports. That deal gave Disney a 33% share in BAM and put around $33 million into the pocket of every owner in baseball, give or take.

disney

Yesterday Disney upped the ante, announcing that it has agreed to purchase a majority stake in BAMTech, putting its ownership share at 75%. The price for the new shares: $1.58 billion, so there’s another $52 million per owner, again, give or take. Major League Baseball and its owners will retain about 15% of BAMTech, with other minority shareholders making up the rest. Disney, as is its wont, will monetize the living hell out of BAM. It announced yesterday that it is launching its own streaming service, for sports with ESPN-branding on top of the BAMTech platform, and for Disney content, setting them up as a rival for Netflix and Amazon.

That’s big, big news. For our purposes, however, it’s worth noting just how much Major League Baseball and its owners have made off of its technology venture.

In 1995, baseball’s total revenues were about $1.4 billion. That was for everything: gate, merchandise, broadcasting, beer, hot dogs, you name it. In the past 12 months baseball has raked in nearly double that from selling off shares of a side business that didn’t even exist until a few years ago. Remember that the next time a team owner cries poverty, claiming that he can’t pay for his own ballpark or ballpark renovations or that he can’t keep that star outfielder you like so much when he hits free agency.

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It’s also worth noting that the players aren’t seeing any of this money. Which on one level makes some amount of sense in that BAMTech is technically its own entity, legally no different than, say, a car dealership or a real estate firm in which a team owner has a controlling business. Reggie Jackson wasn’t given certified financial statements from George Steinbrenner’s ship building operation and when Ted Turner sold bison burgers and colorized copies of “Casablanca” it’s not like Jeff Blauser got a cut.

But that’s not a perfect analogy because BAMTech would not be a roughly $3.2 billion company if it had not had a wildly successful proof-of-concept phase via its successful streaming of Major League Baseball games. Baseball’s windfall is a function of it moving first and showing that its platform could handle live sports in heavy volume and that it could get people to pay to watch it, none of which was a given at the time. As such, it’s not unreasonable to say that, if it weren’t for the baseball games and the men who played them, they owners would not be raking in these Disney Billions now.

Which makes me wonder what, if anything, Tony Clark and the MLBPA intend to do about all of this.

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The union and its players are watching the owners rake in megabucks, in part, because of player labor. While the union may not have standing to explicitly demand a cut of this, it’s been pretty clear for a good while that the owners were making a lot of money off of digital media and would be making more in the future (the last CBA was negotiated after the first Disney buy in, with the second one predicted even then). How have they pressed the owners to get any of this money to trickle down, directly or indirectly?

Overall player share of baseball revenue has been more or less steady for a good while (many argue it has decreased, but let’s leave that aside for now) but, thanks to smaller deals for post-free agency players and a greater reliance on younger, cheaper players, major leaguers are actually getting less of it. The ratio has largely been propped up by big spending on international players and amateur bonuses. With the new CBA imposing restrictive caps on those bonuses, it’s not hard to imagine that the share will now, in fact, go down. And, as we learn more about the new CBA, we see that the owners are coming out on top in more ways than just revenue share. The owners have been cleaning the players’ clocks at the bargaining table pretty consistently of late.

coonelly_nutting

And now we get front page news about the biggest media company on the planet funneling billions to 30 guys who sign the players’ paychecks. Billions that would not be possible if it were not for thousands of streamed baseball games and the revenue therefrom showing Disney’s money men that buying BamTech would solve a lot of their problems. I imagine a lot of players are reading that front page news and are wondering if they are going to see any of that money, one way or another. I wonder what Tony Clark will tell them when they ask.

(Thanks to reader and commenter Bob S. for passing along this article)

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The less said about the Pirates game the better.  As Clint Hurdle says, “Wash off the stink and come back tomorrow.”

https://www.mlb.com/gameday/pirates-vs-tigers/2017/08/09/491802#game_state=final,lock_state=final,game_tab=wrap,game=491802

 

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114 thoughts on “More MLB Cash To Go Around?

  1. Kingham is absolutely dealing tonight. Between him, Brault, and Glasnow I still don’t get all the previous talk of the Pirates needing to add another starter. Their focus from now until 2018 OD should be a power bat to replace Kang and about 7 bullpen arms.

    Liked by 1 person

      1. None of those three have done much in the only league that matters and until one does the Pirates, like every other team in MLB, could use another starter.

        Liked by 1 person

        1. Taillon Kuhl and Williams didn’t accomplish anything either until they did lol. And while that’s definitely true, especially if it’s a TOR arm, but given that it’s unlikely the Pirates add someone like that a starting pitcher would well down the list of needs IMO

          Liked by 1 person

    1. It would be great if the Pirates could add a power bat but I’m not going to hold my breath. Power bats are expensive and overpriced. The Pirates won’t go there. Winning games 2-1 is a lot cheaper than winning them 6-5.

      Like

  2. Off topic but hey it’s the end of the day…

    Jason Macke has a nice article today in the Post Gazette on Matt Murray. The young Pens netminder comes off as pretty easy going and down to earth and very humble. He seems genuinely in awe of his situation and some of his star teammates and remains deferential to and almost apologetic regarding Fleury.

    I recommend reading it. Good perspective and may change some perceptions from those who consider him a bit arrogant.

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  3. Obviously I don’t know how this game will end given that Dr. JeCOLE and Mr. Hyde are pitching for the Pirates but it’s refreshing to see them hit a pitcher that would seem ripe for hitting.

    Haw many times have teams tossed out kids fresh from the farm and they seem to stymie the Pirates?

    Liked by 3 people

  4. Off topic, Don, feel free to delete.

    I heard the other day, that Steven Piscotty was sent to AAA and that it was the third player from their opening day lineup sent down this season.

    If St. Louis doesn’t draft and develop well like they’ve done in the past, they could be in trouble for the next 5 years or so. Between aging player contracts and their hesitancy to making free agent moves, they certainly can’t afford to miss on the D&D really any more than the Pirates can. Sure they have a better revenue stream just in the scope of their geographic footprint, than the Pirates do but as I said, they have some meaty contracts to deal with in the next few years.

    Liked by 1 person

    1. Not sure how much you can blame the Cards for Piscotty. He had two pretty good seasons, and fell off this year for whatever reason. I think it’s more on him than the development of the Cards. Maybe somewhat similar to Polanco.

      The Cards still have the 14th largest opening day payroll, so despite their market size they do spend. They did sign Dexter Fowler and Mike Leake to big contracts the last few years. I’d expect them to be active. I don’t believe their fans will stay quiet about them missing the playoffs.

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      1. The geographic footprint (and therefore revenue) of St. Louis, is quite a bit more than Pittsburgh. I consider the Cards as a lower high market team and not in the same boat as the Pirates, Brewers, Reds, et al.

        Th Pirates have 4 teams within 4.5 hours of Pittsburgh, not even including the other team in the state. St. Louis has 1. The market sizes of the metro areas (PGH and STL) are quite similar, but the pull of population is much greater for St. Louis, as there is far less competition for fans there.

        But I don’t want to go down this rabbit hole. You can have the last word on market sizes if you like.

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        1. Well, I don’t think people who are 4+ hours away from STL or Pittsburgh are routinely going to games. Sure some go, but I would expect most who go are within 1 hour of the stadium.

          STL does have much higher attendance, but winning and just being a baseball town do that. There is no doubt baseball is #1 in STL. In Pittsburgh baseball is #3.

          But, it’s always hard to figure this stuff out. STL could probably spend more. But, I’d love to see the Pirates spend to that level.

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            1. The Cardinals are consistently top third in revenue and, as you stated, middle of the pack in payroll.
              ————————————————————————————————

              Their fans have a reason to bitch too. lol

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          1. I wouldn’t expect them to drive 4 hours either, but people living two hours away have options.

            What if Cleveland, Cincy and Baltimore had no teams and Washington was the only competition for the Pirates? You don’tthink they would pull more fans from Ohio, Central PA and Maryland? Could you imagine what the TV contract might be worth if they were able to pull in a Cleveland viewership, half of Maryland, all of WV and half of Ohio?

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            1. Not sure. The Phillies, who yes are a larger metro area of course, but in a similar situation with other teams around them have a 2.5 billion 25 year contract.

              We’ve seen over the past few yeas if the Pirates win, attendance will go up. For me, the W/L record has more to do with attendance than metro market. Look at the Phillies for example. They were getting 3 million when they were winning. They’ll be lucky to get 1.8 this season. So just having a lot of people in close proximity doesn’t always mean high attendance. Yankees attendance was down the past few years as well. Just checked Tampa, in 2008 when they went to the WS, they had 1.8 million. They had 1.2 last year. Playing in an awful stadium impacts them but again it’s about winning and losing.

              As far as TV contracts though, I have no idea how those are negotiated. AT&T Pittsburgh has a very large coverage area and covers almost all of PA. They say they cover 5 states and 3 million households.

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    2. The Cardinals have a stunning recent history of young players excelling and then declining. Matt Adams, since traded, would be one of them, although he has played quite well since the trade. Others would be Grichuk, who has been sent to the minors three times in the past two seasons; Piscotty, who is currently in the minors; Diaz, who was the starting shortstop last year when he had an excellent offense of season; Wong, their starting second baseman, has been in the minors at least once in the past two seasons.
      Wacha is another guy who declined, although he seems to have found himself this season. Oh, their outstanding closer as a rookie last year, is another one in decline.

      Liked by 1 person

      1. Excellent point, Bob,that I had missed on.

        Perhaps their success can be tied to their ability to quickly replace those type players with new players that may end up doing the same. A young player breeding ground, so to speak.

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    3. The Cardinals have largely used that bigger revenue stream to be able to sign more of their home grown talent to long-term contracts extending team control at reasonable prices. If they don’t get the drafting and development right, they could still go into the market with that large revenue stream. Just don’t know if they will, and frankly I don’t care very much either.

      Like

  5. Since 2000, (see what I did there? Start of a new century, new millenium and not just a random year to bolster my argument) here’s a list of the different teams to win each league’s championship:

    NBA (capped) 5
    NHL (capped) 9
    NFL (capped)11
    MLB (uncapped) 11

    Now, how has a salary cap helped more teams win championships?

    Liked by 1 person

    1. The NHL has had 7 different winners since the Cap was put in place for the 05-06 season with 3 teams winning 8 since 2009, the Pens, Hawks and Kings.

      I don’t think a salary cap guarantees different winners, but it does help with parity and ensuring that smaller revenue teams are on equal footing with large ones.

      If you look at the markets who get into the championship games or even conference finals, it’s a much wider group or market size compared to MLB.

      I would also say that without a cap, the Pens probably wouldn’t still have Sid and Geno on the team nor would a team like Edmonton be able to resign Connor McDavid or Tampa resign Steven Stamkos.

      Like

      1. I would also say that without a cap, the Pens probably wouldn’t still have Sid and Geno on the team nor would a team like Edmonton be able to resign Connor McDavid or Tampa resign Steven Stamkos.
        ———————————-
        I agree with this, but the NHL was/is in a much different position than MLB is. Without the cap, Pittsburgh wouldn’t even have a team, much less a high caliber one. and being able to keep the likes of Crosby.

        I’m not anti cap, mind you. I’m saying its not the trip to playoff land for the Pirates as some think. There are cheaply/lousily run teams in both capped in uncapped leagues.

        In the end, Scott, I don’t think it’s anywhere close to happening. Additionally, with both sides awash in money, I don’t see a need to jeopardize that income stream with a long work stoppage. It’s not like the MLB is paying their players less per man than the capped leagues.

        A recipe for labor peace is riches for both sides, no matter the industry. The MLB has that. No reason to change it.

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          1. Yep and I’d guess the teams that some think would benefit most from a cap, are the teams less likely to want to open those books. Hence the very little whining from the small market teams during CBA negotiations.

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          1. Well, the KC thing had nothing to do with the salary cap. That was based on the ownership group wanting a new arena. But I suspect they would have kept the Penguins name.

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          2. To be honest with you, I think they would have moved to KC and then ultimately folded by now.

            I can’t imagine KC would be even an equal town to Pittsburgh in hockey support. The novelty would have worn off, Crosby wouldn’t be there anymore and the attendance would have dropped. Plus they would have a nearly empty arena collecting dust.

            If no salary cap, I’d guess the league would be down to 12-16 teams by now.

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            1. Not sure about that. They certainly support the Chiefs. I think they’d do fine in KC, especially with how good a team they’d be. Attendance is always driven by the W/L record.

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              1. Yes, they support the Chiefs, but they are only a two team city, right now. The Royals certainly deal with the same attendance issues the Pirates do.

                I’ll say it like this. I don’t think KC is any better or would be a better hockey town in Pittsburgh. Given that, with no cap, I think they would struggle to be profitable.

                Like

    2. I think it is easier to keep a team together in the capped leagues.

      The nature of the respective sports aids b this phenomenon as well. Easier for a player to dominate in those other leagues.

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        1. That is my contention.

          As you point out, the Penguins and much of the nhl would not exist without a cap. Instead they are the two time defending champs. And let’s just say the league did exist as is but with no cap. They would have no chance to keep a player like Crosby, let alone he and Malkin.

          Liked by 1 person

    3. I think that salary caps have allowed well-managed teams in small markets like Pittsburgh win Stanley Cups and Super Bowl trophies. You rarely see that in baseball. The NBA cap system is a soft cap and allows exemptions for drafted players and so forth, so that it’s not a true cap and it’s not accompanied by revenue sharing like NBA and NHL teams share.

      Like

  6. Today’s Lineup:

    1. Starling Marte (R) CF
    2. Adam Frazier (L) LF
    3. Andrew McCutchen (R) DH
    4. Josh Bell (S) 1B
    5. David Freese (R) 3B
    6. Gregory Polanco (L) RF
    7. Sean Rodriguez (R) 2B
    8. Jordy Mercer (R) SS
    9. Chris Stewart (R) C

    Like

      1. Good to see that the Lineup Police never rest.

        I believe Harrison has started six straight games. The last time he did not start was Aug. 3. I believe that was due to minor injury in the previous game.

        Since July 28, he is batting .183.

        Liked by 2 people

        1. Take it easy Bob, it was mostly for a laugh. I was curious if he tweaked something last night.

          Just out of curiosity, how many dates did you enter in your fields before you came up with that .183? Was it the first, second, tenth, fiftieth? Or are you gonna say you just picked that date out of thin air?

          I’m guessing that if you used July 27th, that figure was higher. July 29th was probably higher too.

          I just hate to see a guy wasting time creating the best SSS to defend his stance. Perhaps you could use typical markers, like starts of calendar months, return from DLs or All Star Breaks, instead of incessantly entering dates to find the best scenario to back you argument.

          Or just stop using SSS. Oh forget it. That ain’t happening.

          Like

          1. So you think the decision to not start Harrison was based on, say, his performances since mid-May? Or early April.

            I think it is perfectly legit to look for a short-team lack of production when attempting to understand why a player is not starting.

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            1. Of course it is legit, but I asked about how you came to that day and not about resting JHay. Did you purposely enter a bunch of dates until you arrived at the lowest number or did you pull July 28th from the random date tree?

              You see, you say he hasn’t had a day off in 6 days and I could say he’s had 4 off in 15 days. See how SSSs can be manipulated to defend the stance of the SSS user.

              That’s why I don’t use them very often.

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              1. Fish, after looking at his offensive performance over the past month and a half, might not be a bad idea to get him some rest. He’s just not hitting the ball.

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                1. I completely get it, Scott and as I told Bob, and even listed in my original comment, I was concerned he was hurt.

                  If he’s not hurt, to the rest point, this is his 4th day off in 15 days. Just saying.

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                  1. Not disagreeing. I do think Hurdle rests guys at times too much. Perhaps it is an injury. His offensive performance has really tailed off lately.

                    Like

          2. Bob’s math is perfectly legitimate. Slumps and hot streaks tend to occur over very short statistical periods of 7-15 games. He was pointing out that Jay-Hay is currently over the last two weeks in a bit of a slump, had a minor injury, and that his being held out is logical for both of those reasons. He’s not trying to cherry pick stats to make an argument just for argument’s sake.

            Like

      2. I don’t know if this is the case but when watching highlights from one of the games at PNC I saw Harrison limping noticeably after making a play in the field.

        If I had to guess I would suggest he’s still feeling the effects of the ankle sprain.

        Like

        1. I believe that the Pirates called the injury a mid-foot sprain and not an ankle sprain. Not sure it makes much difference for purposes of this discussion, but a mid-foot sprain can take longer to heal.

          Like

  7. I don’t care what MLB does with its money, how much profit the owners make, how high player salaries go, or what the level of a team’s payroll is. Win with the budget you are given.

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    1. What you say may be true, Richard, but I think it is only human nature for a fan to want what is best for his team. I try to stay away from financial discussions involving the Pirates because they are usually fruitless. However, the information provided in this article only serves to accentuate the fact that Pirates ownership is not spending as much as it might.

      Liked by 1 person

      1. I try to stay away from financial discussions involving the Pirates because they are usually fruitless.
        ———————————————————————————

        Well you could say then that everything we discuss about in here is fruitless. It isn’t like anything we discuss in here will change the way our sports teams do things, right?.

        Like

    2. That’s easy to say Richard, but if I’m correct there has been 2 small market teama win the WS in the past 20 years, the KC Royals and I suppose the Cardinasl so winning with the budget you have, isn’t easy.

      And there have only been 5 total small market teams even in the WS in that timespan, KC, Cleveland, Colorada, STL and Tampa.

      Basing small market on size of metro market.

      Like

      1. Calling the Cardinals “small market” is like saying Green Bay is a small market football team.
        Yeah, they may be in an undersized population center, but the number of people paying for and watching those games dwarf more than 1/2 the leagues they represent.

        Like

          1. Not sure if should have added the Cards but by metro market they are small. They are usually mid pack in payroll as well.

            I thought going by size of population center made sense. If you take out the Cards though, it’s really shows a small market team has almost no chance of winning.

            Liked by 1 person

  8. If I’m Tony Clark, I’m telling my players to start saying your money. Looks like a prolonged labor stoppage is coming. The players will argue, and rightfully so, that they are the product and should therefore get a cut of the action.

    My only hope is that as a result of this labor stoppage, there will be a salary cap put in place.

    Like

    1. I hope for a salary cap as well. However, I doubt that enough owners have an incentive for a cap. I think with other leagues one-for-all thinking grew out of common financial concerns. I just don’t see that in MLB.

      Liked by 1 person

    2. Maybe the only way to solve the big market/little market inequities is a season long (or at least a prolonged) work stoppage like NHL had in 2004-05. Then maybe both sides would “see the light” install a salary cap (and floor) and a better MLB could be the result. It seemed to work in hockey. Certainly put the Pens in a better position. Not to mention, it got them Sidney Crosby in the revamped draft format that year.

      Like

      1. It is my understanding the current CBA does not expire until after the 2021 season. So talk of a work stoppage is premature, to say the least.
        There is a huge difference between the NHL of 2004 and MLB of 2017. The very existence of the NHL was in danger. It absolutely had to act. MLB is awash in profit. It has no reason to act.

        Liked by 3 people

      1. Yes the excuses change with the era’s.

        The Yankees won the WS a LOT more often before free agency. Thats just a fact.

        And everyone in the media is practically throwing a party for the Dodgers this year. Doomsayer’s moan that they are buying it.

        Hey, they might actually win it this year, for the first time in 29 years.

        But they haven’t won it yet.

        Like

  9. NL Central since the break, Cubs 16-9, Cards 15-11, Bucs 14-11, Brewers 9-16, with the Cards hottest of the bunch, as of this morning anyway.

    Like

  10. I have a few questions and I do not have any idea about the proper answer so here goes: Does the Pirates (or any major league team) own, pay or financially support their minor league system? If I recall, the Pirates have a Rookie League team, 2 class A teams, 1 AA team and 1 AAA team, plus they have a Dominion Republic facility / organization. Do they pay the salaries, expenses, and operating costs for all those teams? Do they also pay teams / players that play in Winter League and Instructional League ball? Do the players who are assigned to play in Winter League ball get paid by the team or by the some other organization?
    If the major league team (in this case the Pirates) pay these expenses, doesn’t that make the Major League roster expenses somewhat distorted when talking about the teams payroll expenses?

    Like

  11. All I can think is, was it really the MLB Player’s Union that didn’t want to negotiate a salary cap system in baseball? Because, these days, it certainly seems that the owners have absolutely benefited by the decision not to have one in place. With no necessary “player share” of revenues, these teams are raking in some cash.

    The next CBA negotiation should be interesting.

    Liked by 1 person

    1. I’d imagine he is always worried about a boycott from a handful of folks who live hundreds and thousands of miles away from Pittsburgh.

      That kind of stuff can make the happiest man stress and fret.

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      1. Just basing it on the picture of him and Coonelly that’s been repeatedly posted Bob.

        Don’t get yourself all riled up. Relax.

        Like

  12. It would be hard for me, a sports fan at heart, to own a team, knowing I could make more money losing than I could by trying to win. I would want to win more than I’d want another $50 million in my pocket (especially if I were already a billionaire). After a decade, I would probably bankrupt myself chasing the dragon. I’m not a businessman. Winning comes before profit at all cost, because I hate to lose.

    But a businessman, who has no emotional investment in his product, who is guaranteed profit above his wildest dreams just to put out the bare minimum, but risks cutting into that profit by chasing victory…and is risk-averse to begin with…would have no qualms whatsoever with putting out the bare minimum to “be competitive”, let losses pile up, and pennantless seasons approach infinity; or at least eat up the great majority of my natural life span. His victory is not championships; or high numbers in the win column, but wealth accumulation and high numbers in the profit margin.

    Thanks Don, for the cheery thought this morning! That and a raging thunderstorm were wonderful to wake up to!
    LOL

    Liked by 1 person

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