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Articles Tagged Revenue Sharing 

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A look at whether the Dodgers' new regional sports network will help them avoid revenue-sharing duties.

It went under the mainstream radar, but an article by Bloomberg News this past week raised the debate about economic parity within the league. The story centers on the lucrative television rights deal that the Dodgers are nearing as part of a potential regional sports network (RSN) and a “secret agreement” that would allow them to “cap income subject to revenue-sharing.” The article’s thrust is that somehow the Dodgers one-upped MLB and have figured out a way to get an advantage over all the other clubs as part of the sale that brought them out of bankruptcy.

From one standing on the sidelines, you’d have to think all the signs were there. After all, Frank McCourt had been sucking funds out of the Dodgers to fuel his lifestyle and sunk the club into bankruptcy. Shortly after the $2 billion sale of the club and an associated $150 million land deal, the team took on $262.5 million contract dollars in the trade with the Red Sox that brought Josh Beckett, Carl Crawford, Adrian Gonzalez, and Nick Punto to LA. This, of course, came on top of their other big acquisitions: Yasiel Puig, Hanley Ramirez, Randy Choate, Shane Victorino, Brandon League, and Joe Blanton.

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A brief history of revenue sharing, from Bill Veeck to Randy Levine.

A little over a week ago, Yankees president and designated apoplectic pit bull Randy Levine decided to divert attention from his team's pitching woes by going after a new target: Rangers owner Chuck Greenberg. Five days earlier, the Texas honcho had asserted that it was his team's efforts to sign Cliff Lee that had stalled the Yankees long enough for the Phillies to enter the picture with their ultimately winning bid. Levine, hearing these as fighting words, lashed out by calling Greenberg a welfare case:

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November 16, 2010 9:00 am

Prospectus Q&A: J.C. Bradbury, Part I

3

David Laurila

The baseball economist discusses market value, revenue sharing, and a player's value to various teams.

J.C. Bradbury is the author of The Baseball Economist and the newly-released Hot Stove Economics: Understanding Baseball’s Second Season. An associate professor at Kennesaw State University, Bradbury has a Ph.D. in economics from George Mason University.


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August 26, 2010 8:00 am

Prospectus Perspective: Acting Like Thieves or Rational Agents?

35

Matt Swartz

Are the Pirates not trying to be competitive by making a profit or just being good businessmen?

Many fans were outraged last weekend when the Associated Press, which had leaked some of the team's financial statements, reported that the Pirates had earned a profit while receiving money from Major League Baseball via revenue sharing while spending less on player payroll than nearly every other team in the sport. Apparently, fans are shocked that the people who charge them $5 for a hot dog are more interested in their money than their happiness. However, this is exactly what a system like MLB's revenue sharing is bound to do. It creates an incentive for small-market teams to earn more money by not investing in the product on the field.

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August 12, 2009 11:33 am

The Biz Beat: A Revenue-Sharing Re-Think

30

Shawn Hoffman

One man's argument for how the dichotomy between big- and small-market teams be resolved to everyone's satisfaction.

"We've gone as far as we can go with revenue sharing at this point."
-Red Sox owner John Henry (SI.com)


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How is the luxury tax changing in the new CBA, and what will clubs be able to do with money received? Maury's latest article on what the CBA means for baseball.

Today, I'll look at two more pieces of the CBA puzzle that are designed in place to bolster better competitive balance. As I previously noted, this look at the CBA comes without a ratified CBA in hand. You can guarantee that BP will be going over the finalized agreement with a fine-tooth comb, once it is made public.

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November 3, 2006 12:00 am

On the Margins

0

Neil deMause

Now that some of the details of the new CBA are coming to light, Neil's able to look at a few of the finer points of how teams will now receive and spend money.

For anyone trying to analyze the new deal, though, the way it was announced was less revolutionary. All that MLB and the MLBPA signed last week was a "memorandum of understanding" sketching out the broad strokes of the deal--and what was released to the press was even less than that, effectively a summary of a summary. As a result, most of the reporting thus far has necessarily been a mix of incomplete facts, rumor, and guesswork. Maury Brown began to untangle the CBA's new revenue-sharing rules on Monday. My job today is to take a deeper look at some of the implications of the new system for how teams will actually be receiving--and spending--money.

First off, a quick recap of the rule changes, as we understand them so far. Under the old system, as Maury explained, revenue sharing consisted of two separate pieces: A "straight pool" that skimmed off 34% of every team's revenues and divided equally among all 30 teams, and a "split pool" that was levied only on the top-revenue teams and redistributed to the lowest-revenue ones. (This two-headed system was a compromise put into place during the last labor talks in 2002, when the owners wanted a straight-pool plan, and the players a split one.) The overall effect was that several hundred million dollars a year was shuffled around, mostly from the rich teams to the less-rich, but with the odd effect that teams at the top of the economic ladder actually got to keep a bit more of each dollar of new revenue (giving up 39%) than those at the bottom (who gave up 47%).

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Maury begins a savage journey to the heart of the new CBA by tackling how revenue sharing will look from 2007 on.

The CBA hasn't been ratified yet, and what has been released about it doesn't show the details that the final version will. Still, researching and interviewing several sources that have seen the details has painted a pretty clear picture.

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February 16, 2006 12:00 am

Bronx Bummer

0

Neil deMause

Neil deMause responds to Andrew Zimbalist and the Yankee Stadium financing debate.

Now that Zimbalist has issued his rebuttal, though, I'm glad for the opportunity to get to the bottom of the question of just who'd be paying the $1.8 billion tab to replace Yankee and Shea Stadiums. As I've been stressing for months now, it's not as straightforward a question as it sounds, what with the current craze for financing agreements that are more complex than the save rule.

As Zimbalist correctly observed on BP Radio, I'm a journalist, not an economist--though I do consult with economists and other sports business experts on a regular basis, to check both my reasoning and my Excel skills. That said, he's an economist, not a journalist, and may not have all the information on the nuances of the New York stadium deals. So I've spent the last couple of weeks digging through the public record, and the not-so-public record, to clear up the facts of the matter. The result is going to take a bit to explain and will delve in places into economic minutiae, but try to keep your eyes from glazing over for just the next few minutes--this is worth getting right, not just for the sake of New York taxpayers, but because it's an excellent lesson in the difficulties of ferreting out the true costs of modern stadium deals.

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January 31, 2006 12:00 am

Amazin' Mail

0

Neil deMause

Neil deMause responds to some reader mail generated by his column on the proposed Mets stadium.

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If there's one thing George Steinbrenner has always been good at, it's hiding his money. Whether it's starting his own cable network to keep his broadcast revenue out of the reach of his fellow owners, as he did in 2002, or paying himself a "consulting fee" to negotiate his own cable contract, as he did in the 1980s, The Boss has always been at the cutting edge of creative accounting, helping him evade attempts by fellow owners to force him to share the bounty that comes from operating the most lucrative franchise in baseball. With his recently revealed plan to build a new $750 million stadium in the Bronx, though, Steinbrenner may have hit upon the biggest scam of his life.

With his recently revealed plan to build a new $750 million stadium in the Bronx, though, Steinbrenner may have hit upon the biggest scam of his life. If the early reports of the plan to tear down the House That Reggie Remodeled and replace it with a new one across the street are accurate, Steinbrenner looks to have figured out a way to build a new playpen for the Yankees, replete with extra luxury suites and food courts and all the other gewgaws that he's been slavering after for decades...and force baseball's other 29 teams to pay nearly half the cost.

(We now pause for Larry Lucchino's head to explode.)

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[Just after midnight Eastern time Friday morning, the Prospectus staff starts discussing the coming agreement] Derek Zumsteg: It appears that if the owners gave in right now, just said "sure, we'll take your last offer", they'd have won more in this negotiation than in any previous one since free agency. Why did the players move so far? Are they that afraid of the NLRB and implementation? Do they believe that if they give in this time, they'll be able to win it back in four years when it's apparent none of this did any good for competitive balance? I'm baffled.

[Just after midnight Eastern time Friday morning, the Prospectus staff starts discussing the coming agreement]

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