$140 million for Jon Lester??
$325 million for Giancarlo Stanton???
We are seeing teams throw some silly dollars at free agents this offseason...and we can expect the madness to continue for a long time.
Actually, it's not so mad considering how flush the league has become with television money. As I've been saying for years, television dollars are surging for sports teams and everyone is getting rich off it.
You'll notice there haven't been any teams claiming "losses" in recent years - instead, they've changed the messaging on new stadiums to "the rich teams are demanding we make more profit...or else."
So the big problem isn't a lack of profits - it's that the league isn't sharing them like its counterparts in the NFL, for instance.
Which is why Bud Selig's real lasting legacy is competitive imbalance. The money is pouring in, but it's not getting distributed equitably. And the discrepancies will only get worse as the league - and its biggest owners - get richer.
Joe Henderson just wrote about the impact of salary inflation on the Rays:
It won’t be long before a player who costs $7 million a year now will cost $12 million or more. It doesn’t take too many of those to eat into the profits.The Providence Journal also addressed the issue this weekend, actually suggesting great parity across the league, with television contracts as an equalizer. Not sure I believe any of it, but Cubs GM Theo Epstein was quoted as saying Chicago's next TV deal in 2019 would be "the magic bullet, the paradigm-shifter."
The brightest light at the end of the tunnel for the Rays is that Selig's successor, MLB C.O.O. Rob Manfred, is intimately familiar with the revenue sharing problem and could take steps in future bargaining sessions to close the gap. It won't fix the plight of the middle-market team, but it certainly will help.
Regarding Joe Henderson's comment:
ReplyDelete"It won’t be long before a player who costs $7 million a year now will cost $12 million or more. It doesn’t take too many of those to eat into the profits."
And why are $7 million per year players common, and $25 million per year players becoming increasingly common? Because the MLB owners pay for less than 40% of the stadium costs. It is even worse in the NFL (less than 30%). The taxpayers pick up the other 60%+ for MLB. When you are paying less than half the cost for your factory you can afford to pay exorbitant salaries. This is a national problem that does not look like it is going to go away anytime soon. It will be interesting to see how the Giancarlo Stanton's contract plays out. Marlins ownership certainly would not be offering up a $325 million contract if they had not already ripped off South Florida taxpayers for $500 million face value ($1 billion when it is all said and done) for their new stadium.
The TV contracts are reminding me of the baseball in the 90's prior to the revenue sharing and luxury taxes. The haves started dominating and it became clear that the have nots could not field competitive teams and keep any of their talent. We're probably another 10-20 years away from the league looking to balance out the TV contracts, which will be very challenging with so many teams with their own stations, and cable companies owning teams.
ReplyDeleteBTW Noah, your previous article about a new stadium not being enough to keep Friedman or Maddon. It seemed like you're taking a why bother approach to a new stadium. I can't help but parallel that to a 450 lb man saying, I couldn't pull Jessica Alba anyway, so why bother eating healthy, going to the gym, consider basic hygiene, I'm just going to sit on this futon, and wait for the massive coronary, and the paramedics to come fork lift me out through a window.
I think that's an oversimplification, David! But a new stadium really isn't about creating 10 or 20 extra million a year for the Rays....it's about preventing another city from poaching them away.
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