Think of this as a supplement to today’s article. The current revenue sharing system isn’t the easiest thing to understand, but I’ll try to break it down as simply as I can.
There is a “straight” pool and a “fixed” pool. The straight pool is actually pretty simple: each team’s “net local revenue” (total local revenue minus stadium expenses) is taxed at 31%. So if your team makes $110 million from ticket sales, television, merchandise, and the like, and they spend $10 million operating their stadium, their net local revenue is $100 million. They would then have to pay $31 million into a league-wide pool.
Once every team pays their share, the pool is divided equally amongst the thirty teams. So let’s say each team gets back $50 million; the team that paid $31 million would come out as a payee, collecting $19 million net. A team that put $90 million into the original pool would be a payer, as they would have come out behind by $40 million.
Then there’s the fixed pool, which is a bit more complex, so stay with me. Essentially, MLB takes a portion of its national revenue, and distributes it unevenly amongst the teams, with small market teams getting more and large market teams getting less. What percentage each team gets is determined at the start of the CBA period, based on their previous revenue figures — this can only change if a team moves into a new stadium, or shows significant and sustained growth. Hence the name “fixed” pool.
To determine how much money gets distributed by this fixed pool, MLB figures out how much total money would be distributed, if there was only a 48% straight pool. They then use that figure and subtract what was actually distributed using the 31% straight pool; the difference is what is paid out through the fixed pool.
This is why 48% is the effective rate of revenue sharing, and the only one that teams really care about.