Inflation calculators are interesting, but I doubt that the fact that "a dollar buys less than it once did, and so people want more of them in exchange for services" is quite the reason why AROD wants $350M this time instead of $250M. You get to a certain point, and there just aren't enough services in the world to match your income, no matter what kind of clubs you like to frequent.

Far more relevant to me is the fact that the players now take home 41% of revenue as opposed to 56%. If the teams could afford 56% in '01 they can probably afford it now, and there's every reason for AROD to see if he can get his cut. Nobody's paying that revenue to ballclubs to watch Bill Bavasi or Pat Gillick, after all.

First off, the minimum needs to be raised probably to the half million range with a 50% increase in the minors from top to bottom as well.

Second, I suspect we are going to see some saber rattling from the players if this continues. 41% is much too low in my opinion. Most of the pro leagues are around or above 50% (I believe) and I think that neighborhood will be where the players and owners are happiest (relatively).

Pretty soon, we're all going to have to chip in and buy Repoz a new ellipsis key for his keyboard.

More evidence that the small market, "we can't afford our players" teams are just pulling our leg.

First off, the minimum needs to be raised probably to the half million range with a 50% increase in the minors from top to bottom as well.

Second, I suspect we are going to see some saber rattling from the players if this continues. 41% is much too low in my opinion. Most of the pro leagues are around or above 50% (I believe) and I think that neighborhood will be where the players and owners are happiest (relatively).

No good reasons were presented here to make the case that "41% is too low." Just because the NFL/NBA/NHL do it does not mean that MLB has it wrong. Why is 41% too low?

Remember, MLB is just about to pass the NFL in total revenues. I suppose this would shock most observers. I must say, MLB has done a masterful job in growing on-line revenues and getting their core fan to spend more money on the game they love, much better of a job than the NFL. Geez, the Packers v Cowboys, play the best game of the season in a few weeks, nobody will see it. Tell me that is a good business model?

As a fan, I would like to see the owners invest as much money as possible into the franchise. Sometimes that means paying more for players, other times this means spending more money on stadium improvements or increasing variable pricing options. Improving youth baseball programs, so on...

I would never sit here and say 41% is too low, for no good reason.

I'm pretty sure the NHL spends about 55-60% of its revenue on the players.

From the blog post title, I was sort of hoping that Blossom had a new gig.

I'm pretty sure the NHL spends about 55-60% of its revenue on the players.

Yeah but $20 doesn't go as far as it used to.

Looking at my textbooks, I see that the in economy as a whole, the compensation for labor is about 60%. But that's an old number.

Yeah but $20 doesn't go as far as it used to.

Especially if it's 20 American dollars.

MLB has done a masterful job in growing on-line revenues and getting their core fan to spend more money on the game they love, must better of a job than the NFL.

I think that's just because the NFL "core fan" already spends most of his money with casinos, not the league.

Second, I suspect we are going to see some saber rattling from the players if this continues. 41% is much too low in my opinion. Most of the pro leagues are around or above 50% (I believe) and I think that neighborhood will be where the players and owners are happiest (relatively).

I don't think the union has the muscle (read: unity, consensus) to pull this off anymore.

Best Regards

John

I think that's just because the NFL "core fan" already spends most of his money with casinos, not the league.

Hahahaha haha ha ha ha!

The blossom joke was made the last time that Bialik's wsj.com column was linked here, by backlasher among others i believe :)

More evidence that the small market, "we can't afford our players" teams are just pulling our leg.

What they're pulling is a wagonload of free "revenue stealing" money back to their palatial estates. Oh, but the December meetings are almost upon us, they'll be breaking out the traditional barrel-and-suspenders like they always do.

Michael Lewis in today's New York Times:

"Last year the average N.F.L. team had revenue of about $200 million and ran payrolls of roughly $130 million: 60 percent to 70 percent of a team’s revenues, therefore, go directly to the players."

The hockey strike was settled when the players, in an abject defeat, agreed to a salary cap of 54 percent of revenue.

The NBA salary cap guarantees the players 57 percent of leaguewide revenues, but that's for salary and benefits. Not sure if benefits are part of the conversation for any of the other sports.

I just watched Curb Your Enthusiasm and Blossom was on it and my roomate (guy) called it right away.

they'll be breaking out the traditional barrel-and-suspenders like they always do

Tom Hicks's yacht was expensive. One can't expect him to spend wildly on pants too.

Reflecting on this a bit, I would expect that, all else being equal, baseball players would get a smaller share of their league's revenues than in other sports. After all, baseball faces higher sunk costs (there's little else you can do with a ballpark, at least compared to other sports venues). I don't think that justifies a 41% share, though.

"Last year the average N.F.L. team had revenue of about $200 million

I would expect that the standard deviation in revenue among NFL teams is significantly smaller than that of MLB teams, given the differing TV situations, merchandising agreements and so on, so averages make more sense when discussing football. One thing I would be interested to see is what every MLB team's breakeven point is in terms of revenue to see how much every team really "could" afford to pay, and when they start going into pure profit. That is the point after all.

After all, baseball faces higher sunk costs (there's little else you can do with a ballpark, at least compared to other sports venues).

That might make sense if the owners owned or paid for most of the parks, instead of it coming out of taxpayer revenues.

The only reason revenues are at 41% is that they have grown so fast in the last few years. That also explains why everyone was so shocked at the free agent contracts last year -- and are going to be even more shocked this year. They will spend the money. They just won't spend it very wisely.

What about the expense of running and operating the minor league systems? Players salary, expenses, travel and equipment are typically covered by the MLB franchise.

Also, there has to be more game day employee dollars being spent in baseball than the other sports combined(although usually subcontracted). The cost of running 81 events is more expensive than 8 or 41.

I believe the article sort of addresses this. In 2001 56% of the baseball revenue went to major leaguers. Last year only 41%. So basically either minor leaguers and staffers got a hell of a lot more expensive or teams are pocketing more money.

That might make sense if the owners owned or paid for most of the parks, instead of it coming out of taxpayer revenues.

Well, you got a point there. But don't owners pay for an (admittedly small) share of parks?

I think the teams in baseball have inherently more power than in other sports. In the other sports, if all the best players left and formed a new league with new teams, people would follow that new league. If all the best baseball players left and formed a new league with new teams, I think most people would stop following baseball altogether. The history of the league and the specific teams is much more important in baseball relative to the game itself.

Beano asked the question I have. Only hockey has any kind of real minor league (and it's only one affiliate at that I think) to take care of (do NFL teams send money to the University of Miami??). Do the minor league teams mostly fend for themselves? The former Mr. Jessica Simpson owns a part of the Rainiers down the 5 in Tacoma. What payments is he responsible for? I agree that it seems baseball has a much larger amount of "things" to pay for/worry about. Overseas/out of country training/scouting, multiple affiliates, employees at 81+ events...I'm hoping there's a real economist amongst us.

In 2001 56% of the baseball revenue went to major leaguers. Last year only 41%. So basically either minor leaguers and staffers got a hell of a lot more expensive or teams are pocketing more money.

I missed that. *slaps self*

I believe the article sort of addresses this. In 2001 56% of the baseball revenue went to major leaguers. Last year only 41%. So basically either minor leaguers and staffers got a hell of a lot more expensive or teams are pocketing more money.

Yes, but some people are suggesting that baseball at 41% should look more like the NFL at 55-60% for example. I am suggesting that baseball does have other costs and just because it was once 56% does not mean the economic landscape is the same.

Either way, I'd like to see baseball sign away more of the athletes that consider football with all of this extra money. Imagine if Carl Crawford and Grady Sizemore decided to pass on baseball? I know there are dozens more athletes that passed on football, but there has to be dozens that didn't.

Well, I like to think of myself as a real economist. #23 made a good point: It's not so much about the level of compensation, but about the trend. Has all the extra stuff gotten so expensive that it has not only surpassed growing revenues, but also reduced players' relative compensation by 15%?

Going into another train of thought.... what happened between 2001 and today? Moneyball. The message of looking for undervalued players (whether by looking for undervalued skills or simply getting pre-FA guys) spoke loud and clear to owners. I'm also curious about the effect of signing arbitration players to long-term contracts.

I believe the article sort of addresses this. In 2001 56% of the baseball revenue went to major leaguers. Last year only 41%. So basically either minor leaguers and staffers got a hell of a lot more expensive or teams are pocketing more money.

Sure this is a good point but it is also an oversimplification.

As a fan, I would like to see the owners invest as much money as possible into the franchise. Sometimes that means paying more for players, other times this means spending more money on stadium improvements, scoreboard, or increasing variable pricing options. Improving youth baseball programs, so on.....

I would like to bet that a lot more investment on other things within the organization increased by a significant percentage. Sure the owners pocketed more, but not all of the difference.

MLB is constantly expanding and adding new businesses, these things cost money, they also generate additional revenue streams. Give the union time to understand where all of this money is comming from.

what happened between 2001 and today? Moneyball. The message of looking for undervalued players (whether by looking for undervalued skills or simply getting pre-FA guys) spoke loud and clear to owners

This does not explain current contracts for center fielders in the Los Angeles metropolitan area :)

what happened between 2001 and today?

Among other things, MLBAM apparently became a very valuable property, owned by the teams.

Which reminds me -- whenever you see baseball revenues referenced, assume that they are undercounted, because of "sweetheart" deals with Regional Sports Networks, and other bookkeeping shenanigans, which hide the profits in different pockets.

As a fan, I would like to see the owners invest as much money as possible into the franchise. Sometimes that means paying more for players, other times this means spending more money on stadium improvements, scoreboard, or increasing variable pricing options. Improving youth baseball programs, so on.....

Except a lot of what you just described is paid for by the city or state. For instances the Brewers got the counties to pony up the 5 million dollars to put in the video scoreboards.
Secondly we know for sure that revenue didn't go down. It wasn't like a teams revenue went from 80 million down to 60 million.

So yes what is happening is rather simple. MLB is in a growth spurt in terms of revenue and as usual employee compensation lags behind. MLB is bringing in 6 billion dollars. In 2001 it was 3.5 billion. In 2001 they shelled 1.96 billion in player compensation. This year it was 2.46 billion. So revenue increased by 171% while salaries increased by 26%. There is about 900 million dollars being left on the table or 30 million for each team. Has the cost of doing business above and beyond players reached such heights that it is 30 million dollars more expensive year in and year out? I doubt it.

So yes what is happening is rather simple. MLB is in a growth spurt in terms of revenue and as usual employee compensation lags behind. MLB is bringing in 6 billion dollars. In 2001 it was 3.5 billion. In 2001 they shelled 1.96 billion in player compensation. This year it was 2.46 billion. So revenue increased by 171% while salaries increased by 26%. There is about 900 million dollars being left on the table or 30 million for each team. Has the cost of doing business above and beyond players reached such heights that it is 30 million dollars more expensive year in and year out? I doubt it.

All good points indeed. With so much money, an incredible amount of money, have we entered an era where baseball teams will be financing the vast majority of there own stadiums? Seriously, at this point with such revenue streams, making loan payments would be easy for 80% of teams.

In addition, I offer that teams should prefer to do everything on their own in order to have much more control over location, design and revenue streams. Many teams "settled" for 2nd and 3rd tier locations for their new stadiums merely because of the free money. If they "DIY" (do it yourself) these teams ought to be able to secure only the best locations that pump the greatest revenues into team coffers.

Finally, who would stand for majority public financing after looking at these books?

All good points indeed. With so much money, an incredible amount of money, have we entered an era where baseball teams will be financing the vast majority of there own stadiums? Seriously, at this point with such revenue streams, making loan payments would be easy for 80% of teams.

Yes I think they could do it but two points. 1. nobody is going to pay for anything out of their own pocket when you got the government giving it to you for free. 2. Most of the stadiums have gotten built or will be built. What do we have left? 2 or 3 teams? Rays, Marlins. . . anyone else?

Well, Rogers Centre will be over 20 years old by then. Just sayin'....

don't owners pay for an (admittedly small) share of parks?

I assume most pay rent, which they presumably do in NFL and NBA as well.

some people are suggesting that baseball at 41% should look more like the NFL at 55-60% for example. I am suggesting that baseball does have other costs and just because it was once 56% does not mean the economic landscape is the same.

What has changed since 2001? The minor leagues were developed? Teams started scouting internationally? Oh, I know, it's the extra security patting down bags since 9/11. I get so angry when I see those fingers covered in diamonds trying to find my bomb.

Yes I think they could do it but two points. 1. nobody is going to pay for anything out of their own pocket when you got the government giving it to you for free. 2. Most of the stadiums have gotten built or will be built. What do we have left? 2 or 3 teams? Rays, Marlins. . . anyone else?

Ooooh. I think you way underestimate how quickly "new" stadiums will get replaced. The Ray's play in a ballpark is just 20 years old, Camden Yards for example is 15. The Metrodome in Minny was just 16 years old when they were talking about new stadium, it has taken about 10 years to get that deal done.

Unless you have a landmark, a serious landmark. I say 30 years is the max teams will tolerate not getting a new stadium. Most of the cookie cutter stadiums from the 70's were slated to be replaced before this 30 year mark. I say this timeline will get even shorter.

We have "new" comiskey already on the receiving end of a major, major renovation. That was built, what, 17 years ago?

I say in 10 years, we will have no less than 5 teams with "new" stadiums talking seriously about getting a, yet another, new facility. Possibly the new template will be what Oakland is considering, creating an entire lifestyle center, with office space, condos, hotels and entertainment districts all in one.

The cycle will begin sooner than you think and run through nearly all 30 teams once again.

EDIT: Consider the cycle of NBA stadiums. It is absurd how many new arenas have been abandoned for even newer facilities. Charlotte opened 2 new stadiums for hoops in a span of 17 years. San Antonio did the same, in 9.

There is about 900 million dollars being left on the table or 30 million for each team. Has the cost of doing business above and beyond players reached such heights that it is 30 million dollars more expensive year in and year out? I doubt it.

McCoy, do you have access to Mr. Boras' notes?

I assume most pay rent, which they presumably do in NFL and NBA as well.

Back in the 80's the Feds changed the rules regarding bonds and civic improvements. Basically they changed it so that the only way to get the bonds is to set it up at a loss or close to it. They only wanted the bonds to be issue to build parks and such (not ballparks but ones with trees and stuff). They thought for sure that the local politicians wouldn't be crazy enough to use them for such huge projects like ballparks. They were wrong. They kept right on issuing the bonds even though it forced them to make the deals even more in favor of the owners.

In some cases the government pays the team. For instance the White Sox for years got I believe 5 to 10 million a year from the government for "maintenance fees". Then on top of that the government agreed to buy tickets if after so many years the White Sox attendance fell below a certain point, I believe it was 1.6 million tickets or something like that.

you way underestimate how quickly "new" stadiums will get replaced

You know Mr Hicks is looking across the road at the Cowboys Stadium going up in Arlington and thinking "I want one of those."