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Articles Tagged Revenue Sharing 

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August 16, 2002 12:00 am

Bridging the Gap

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Doug Pappas

The owners' current offer calls for all clubs to share 50% of their local revenues, and for high-payroll clubs to pay an additional "luxury tax" of 50% on the portion of payrolls over $98 million. The players oppose the luxury tax and have proposed revenue sharing at a level of 22.5%, with a higher percentage of the shared money going to the lower-revenue clubs.

If, as the owners insist, the combination of revenue sharing and a luxury tax is necessary to improve competitive balance, then a key question to ask is whether their proposal will actually improve competitive balance. It won't. A fundamental flaw in the owners' revenue sharing formula almost guarantees that if adopted, it would increase the number of teams that "can't compete."

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August 15, 2002 12:00 am

The Zumsteg Plan

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Derek Zumsteg

According to Mike Jones' market-size research, Kansas City is the smallest market with a major-league team. Jones pegs it as the 39th-largest market in the country, based largely on information from Nielsen. Using the latest data from the Census Bureau (which operates one of the most data-intensive sites you'll ever find at www.census.gov), there were about 1,756,000 people in the Kansas City Metropolitan Statistical Area in 1999, as compared to New York's 20,197,000.

K.C. has one team. New York has two. Forbes estimates that the two New York teams took in $384 million in revenue last year. Kansas City? $85MM. If the total revenue pool of a city is divided evenly by the teams in it (This may not be the case. I've seen it argued that instead of splitting a market, adding a second team only causes the first team's revenues to drop by .8, which is attributed to increased interest in baseball, rivalries, and so forth), a third team in New York would make $125MM. That's a cool $40MM more every year.

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I was wrong, of course, and in the process of being wrong learned a lot about labor relations, economics, and how those things apply to baseball.

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I'm the new owner of the Angels. Disney kept the team from leaving Anaheim, but their tax break was mostly expended, and running the team took energy the company wanted to spend persecuting peer-to-peer file sharing. The franchise didn't come cheap, mind you, but I think it will be worth the money. Now, I'm Bud Selig's worst nightmare, because I'm going to derive millions of dollars through his proposed revenue-sharing plan and field a team that's going to thrash his precious Brewers for the foreseeable future.

(Ed. note: Derek Zumsteg and the voices in his head will be occupying this space every Thursday.--JSS)

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Selig insisted that liabilities under the 60/40 rule have always included the value of salaries for future years, and any suggestion to the contrary was "just bullshit."

Something about this column struck a nerve at Major League Baseball. Two days after it was posted, Rich Levin, MLB's Senior Vice President-Public Relations, called the SABR office to get my phone number. Two hours later, an efficient-sounding woman left a voice mail in which she said that Commissioner Bud Selig wanted to speak to me. She invited me to call him back at his office in Milwaukee.

What the heck, it was a slow day at work. I grabbed a pad and pen.

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One of the most complex and bedeviling problems in baseball today is understanding to what extent large-market teams have an competitive advantage over small-market teams.

One of the most complex and bedeviling problems in baseball today is understanding to what extent large-market teams have an competitive advantage over small-market teams. Many people have proffered solutions despite not analyzing the problem thoroughly, with most of the plans featuring some sharing of revenues between large- and small-market teams. These plans have generally suffered from one or more problems:

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March 28, 2002 4:46 pm

The Daily Prospectus: Truth

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Joe Sheehan

Today was supposed to be my AL preview, with the NL following tomorrow. I'm pushing those back a day each to Friday and Saturday because I want to run through the used-car salesman's "Town Hall Meeting" from Tuesday afternoon. Well, not just that. First, let's deal with the announcement by Bud Selig that the owners will not lock the players out through the World Series. This was a shameless, transparent attempt to curry favor with fans and media, an announcement with absolutely no meaning whatsoever.

Today was supposed to be my AL preview, with the NL following tomorrow. I'm pushing those back a day each to Friday and Saturday because I want to run through the used-car salesman's "Town Hall Meeting" from Tuesday afternoon.

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Well, not just that. First, let's deal with the announcement by Bud Selig that the owners will not lock the players out through the World Series. This was a shameless, transparent attempt to curry favor with fans and media, an announcement with absolutely no meaning whatsoever. It's like me saying I'm not going to watch any women's basketball, and expecting that to be treated like a sacrifice.

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March 20, 2002 7:06 pm

March Madness

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Doug Pappas

The second week of March may have marked a permanent change in Commissioner Bud Selig's status. He's no longer simply an incompetent, lying, permanently conflicted embarrassment to an office once held by judges and senators. Unless the owners who hired him wake up in time to stop him, Czar Bud will have become an active threat to their own wallets and a walking advertisement for the repeal of MLB's anti-trust exemption.

The second week of March may have marked a permanent change in Commissioner Bud Selig's status. He's no longer simply an incompetent, lying, permanently conflicted embarrassment to an office once held by judges and senators. Unless the owners who hired him wake up in time to stop him, Czar Bud will have become an active threat to their own wallets and a walking advertisement for the repeal of MLB's anti-trust exemption.

Give Selig credit for planning his coup. Last November 27, just days after announcing that under his leadership MLB had purportedly lost $519 million in 2001, Selig called a meeting for the sole purpose of giving himself a raise and a three-year contract extension. He forced out MLB President Paul Beeston, widely seen as a moderate on labor issues, replacing Beeston with his own personal lawyer. Selig also broadened the owners' traditional gag rule on labor issues, enforceable through fines of up to $1 million per incident, to bar clubs from discussing labor matters with one another.

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March 20, 2002 12:00 am

March Madness

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Doug Pappas

Give Selig credit for planning his coup. Last November 27, just days after announcing that under his leadership MLB had purportedly lost $519 million in 2001, Selig called a meeting for the sole purpose of giving himself a raise and a three-year contract extension. He forced out MLB President Paul Beeston, widely seen as a moderate on labor issues, replacing Beeston with his own personal lawyer. Selig also broadened the owners' traditional gag rule on labor issues, enforceable through fines of up to $1 million per incident, to bar clubs from discussing labor matters with one another.

Think about that for a minute. In a multi-billion-dollar industry whose largest investors include Disney, News Corp., AOL Time Warner, and the Tribune Company, a car dealer from Milwaukee not only dictates labor policy, but forbids his employers from discussing the wisdom of his chosen course among themselves. The Iraqi Parliament has more freedom.

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February 4, 2002 12:00 am

The Numbers (Part Six)

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Doug Pappas

Part One
Part Two
Part Three
Part Four
Part Five

At last we've reached the bottom line. The table below ranks the 30 major league clubs from most to least profitable, net of revenue sharing.





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