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Salaries, Agents, and Baseball Finances
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Post by Oregon Norm on Jan 2, 2014 22:40:13 GMT -5
To my point a few posts back: what percentage is a fair take for the players? It's been dropping for a while and is now down to 43% I believe. What is fair? Do they deserve at least half the revenue? The ability of the owners to shell out for unknown talents, such as Tanaka, is living proof of the money they've got in hand. That's one issue.
I also have a much larger one, allowing owners to flood the political system with some of that money, bribing their way to those tax breaks, parking concessions, stadium revenues, and so on. We can include many of the stadiums themselves in that "take", the ones that taxpayers foot the bill for. It's a microcosm for a much larger problem, of course. Baseball has always reflected the existing societal values, both good and bad, and this is no exception. We need to call this what it is, corruption.
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Post by jmei on Jan 2, 2014 22:47:46 GMT -5
Aside from the entire moral discussion (which is very complex and fundamentally personal, and thus a waste of time IMO), I'm generally pro-player for two simple reasons: the owners have structural advantages in collective bargaining (a lot easier to coordinate 30 owners than hundreds of union members; the union will often screw future members (see draft changes) while owners look out for their long-term interests) and already have numerous deeply embedded anti-competitive advantages like the first-year draft, international spending limits, six years of cheap player control, the qualifying offer, etc.
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Post by Oregon Norm on Jan 2, 2014 22:56:58 GMT -5
Aside from the entire moral discussion (which is very complex and fundamentally personal, and thus a waste of time IMO), I'm generally pro-player for two simple reasons: the owners have structural advantages in collective bargaining (a lot easier to coordinate 30 owners than hundreds of union members) and already have numerous deeply embedded anti-competitive advantages like the first-year draft, international spending limits, six years of cheap player control, the qualifying offer, etc. I agree for the most part. But since this is where it was headed, I thought I'd get it out of the way with a short-circuit right to that personal place. As for the complexity, the question itself is a very simple one: what is fair for ballplayers and for taxpayers? The answer is where we bring in the lawyers.
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Post by soxcentral on Jan 3, 2014 7:28:39 GMT -5
To my point a few posts back: what percentage is a fair take for the players? It's been dropping for a while and is now down to 43% I believe. What is fair? Do they deserve at least half the revenue? The ability of the owners to shell out for unknown talents, such as Tanaka, is living proof of the money they've got in hand. That's one issue. Pretty sure that is only player revenue based on the wording. And is has been dropping since 2002 according to the linked article, it was at 67%. Some other costs I'd assume are taken out before owners get their 42.8%: All other coaches, front office, field maintenance salaries Utility costs Legal/accounting/other professional fees Payroll Taxes Insurance Advertising and marketing I get that major league owners appear greedy and have everything just handed to them, but is there no value to being the one to put up the investment to make this sport we all love function well? Their take for funding the operation is likely about 10-15%, which to me would be fair.
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Post by moonstone2 on Jan 3, 2014 13:53:52 GMT -5
Aside from the entire moral discussion (which is very complex and fundamentally personal, and thus a waste of time IMO), I'm generally pro-player for two simple reasons: the owners have structural advantages in collective bargaining (a lot easier to coordinate 30 owners than hundreds of union members; the union will often screw future members (see draft changes) while owners look out for their long-term interests) and already have numerous deeply embedded anti-competitive advantages like the first-year draft, international spending limits, six years of cheap player control, the qualifying offer, etc. I reflexively agree with this post . I would add that with some exceptions the owners are people who had more advantages in life. This is less true in baseball than in other sports, but athletes tend to come from poor or middle class families and owners tend to come from rich ones. Owners are also less likely to have been hindered by racism. There are some comments in this thread that bother me. It's been implied that that the players don't work hard, and/or don't deserve to have have a passionate advocate for their interests, which is all Boras is. Everyone deserves to have someone who will passionately advocate for their interests even if they happen to be making much more money than you. Believe me the owners are throwing plenty of money at people to passionately represent their interests. Further professional athletes work very hard. It's a year round job that involves a massive amount of travel, a massive amount of time, and a massive amount of pressure.
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Post by jimed14 on Jan 3, 2014 14:06:16 GMT -5
This conversation could be applied to the history of the world. Some things never change, especially that the people at the top are always going to be making thousands of times more than their lowly serfs.
In this case though, the lowly serfs are still making millions so it's ridiculous to pity them.
Where I side is with the fans who are (generally) so miserable in life, they feel the need to spend a ridiculously huge percentage of their income to escape it for a few hours at a time. And the 1% needs something to spend their money on, make that luxury boxes for millions per year or $10,000 box seats.
At the very least, stop spending tax dollars to benefit any of them. I know, wishful thinking.
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Post by moonstone2 on Jan 3, 2014 16:22:22 GMT -5
Right that was my other point. The players are paid by a revenue stream that exists via the fruits of their labor. I don't pity them, but I do empathize with them and believe that as a group, they deserve and are worth every dime they receive.
Many of the owners on the other hand demand stadiums that in the end line their pockets and nobody else's on our dime.
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Post by brianthetaoist on Jan 3, 2014 16:37:26 GMT -5
A lot of the economics of baseball (all sports) are built on a basic con: a for-profit entertainment company manages to position itself as representative of a region and the people in it, tapping into that sense of identity and making money off of it. I mean, it's ridiculous in a way that I "root" for the Red Sox, that their success is tied up in my identity as a New Englander and Bostonian, that I get annoyed with New Yorkers when the Yankees win, etc, etc. I look the other way because it's fun for me, and I really enjoy baseball. But to me, owners manipulate that con more explicitly and self-consciously to line their pockets with taxpayer goodies and cheap marketing stunts, which drives me crazy. Players are sorta in on the deal since they're making good money, but they're really just innocent bystanders to the whole thing. I think some people subconsciously are the reverse; when players leave for "the highest bidder," people feel like they are getting played as rubes and betrayed, and I get that. The whole thing is sort of a little twisted, but I just side with the players because, in the end, they just want to play baseball and get paid for it. Who wouldn't? It's the owners who really know what they're doing ...
Yeah, clearly a moral take on my part, I know, but a different angle on it ... and my real point is that it's just a Rorschach test. I think most of the negative feelings are people reacting in different ways to the basic bull**** underlying the whole premise, but we're just approaching it with our own biases.
Maybe that's all too cynical about the whole enterprise, but there ya go. You should hear me talk about the NFL ... or college football. Awful.
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Post by jimed14 on Jan 3, 2014 17:10:59 GMT -5
A lot of the economics of baseball (all sports) are built on a basic con: a for-profit entertainment company manages to position itself as representative of a region and the people in it, tapping into that sense of identity and making money off of it. I mean, it's ridiculous in a way that I "root" for the Red Sox, that their success is tied up in my identity as a New Englander and Bostonian, that I get annoyed with New Yorkers when the Yankees win, etc, etc. I look the other way because it's fun for me, and I really enjoy baseball. But to me, owners manipulate that con more explicitly and self-consciously to line their pockets with taxpayer goodies and cheap marketing stunts, which drives me crazy. Players are sorta in on the deal since they're making good money, but they're really just innocent bystanders to the whole thing. I think some people subconsciously are the reverse; when players leave for "the highest bidder," people feel like they are getting played as rubes and betrayed, and I get that. The whole thing is sort of a little twisted, but I just side with the players because, in the end, they just want to play baseball and get paid for it. Who wouldn't? It's the owners who really know what they're doing ... Yeah, clearly a moral take on my part, I know, but a different angle on it ... and my real point is that it's just a Rorschach test. I think most of the negative feelings are people reacting in different ways to the basic bull**** underlying the whole premise, but we're just approaching it with our own biases. Maybe that's all too cynical about the whole enterprise, but there ya go. You should hear me talk about the NFL ... or college football. Awful. I definitely get where you're coming from. I'm one more strike away from giving up on sports altogether. I was away from baseball for quite awhile after 94.
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Post by bluechip on Jan 4, 2014 7:37:14 GMT -5
Players capture the "value " of their DNA, their upbringing, their trainers, their family, etc. Owners make money - they sell the product. I can't see how one is morally superior. They are splitting a pie that continually grows; that's all. Owners never benefit from what family they were born into or their upbringing? I'd say family resources and upbringing correlates more at an ownership level than a player level. There are players from all different backgrounds, I can't say the same about owners. It's rather ignorant to say that all of the owners got their start because of their parents rather than hard work. Peter Angelos was a criminal defense attorney who built his practice around abestos litigation. John Henry's parents were soybean farmers for instance.
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Post by moonstone2 on Jan 4, 2014 11:56:22 GMT -5
Owners never benefit from what family they were born into or their upbringing? I'd say family resources and upbringing correlates more at an ownership level than a player level. There are players from all different backgrounds, I can't say the same about owners. It's rather ignorant to say that all of the owners got their start because of their parents rather than hard work. Peter Angelos was a criminal defense attorney who built his practice around abestos litigation. John Henry's parents were soybean farmers for instance. I am glad to see I am not the only one this is happening to. He didn't say that all owners got their start from their parents nor did he say that owners didn't work hard to build their wealth. He said that the owners tend to have had more advantages in life than the players do and he's correct about that. Yes there are some owners who grew up poor and there are players who come from wealthy families, but you can't tell me that many of these owners weren't helped by whom their parents were.
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Post by bluechip on Jan 4, 2014 19:06:11 GMT -5
It's rather ignorant to say that all of the owners got their start because of their parents rather than hard work. Peter Angelos was a criminal defense attorney who built his practice around abestos litigation. John Henry's parents were soybean farmers for instance. I am glad to see I am not the only one this is happening to. He didn't say that all owners got their start from their parents nor did he say that owners didn't work hard to build their wealth. He said that the owners tend to have had more advantages in life than the players do and he's correct about that. Yes there are some owners who grew up poor and there are players who come from wealthy families, but you can't tell me that many of these owners weren't helped by whom their parents were. No he said "There are players from all different backgrounds, I can't say the same about owners." Which is saying that owners do not come from different backgrounds, or to simplify, he is saying that owners only come from one background. That is what I disagree with.
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Post by thelavarnwayguy on Jan 4, 2014 19:50:45 GMT -5
The new Philly TV deal indicates a retrenchment of sorts from the TV revenue growth expectations recently indicated by the Dodgers and Angels deals. The big FA signings are still dominated by the teams with the big TV deals. Seattle at 115 mil a year, the Yanks at $90 mil per year, the Rangers at $150 mil AAV per year. Is there much doubt LA will be major players for Tanaka when the TV deal is a projected $340 mil per year, on top of their parking fee and stadium revenues? www.fangraphs.com/blogs/dodgers-could-be-last-team-to-strike-gold-with-local-tv-deal/
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Post by beasleyrockah on Jan 4, 2014 20:21:29 GMT -5
I am glad to see I am not the only one this is happening to. He didn't say that all owners got their start from their parents nor did he say that owners didn't work hard to build their wealth. He said that the owners tend to have had more advantages in life than the players do and he's correct about that. Yes there are some owners who grew up poor and there are players who come from wealthy families, but you can't tell me that many of these owners weren't helped by whom their parents were. No he said "There are players from all different backgrounds, I can't say the same about owners." Which is saying that owners do not come from different backgrounds, or to simplify, he is saying that owners only come from one background. That is what I disagree with. I should've said relative to the players, I just thought it was obvious we were comparing the two groups (owners and players) directly given the context. I didn't mean to insinuate every single owner came from an identical background, that's literally impossible, which is why I phrased it the way I did. My response was to a poster who was suggesting players benefited from their family DNA and upbringing yet failed to acknowledge how important that dynamic is for the owners. Players come from a more diverse pool than the owners do. There are only 30 principal owners at any given time compared to a huge pool of players and I understand that difference too. Another difference is owners actively control who can and can't buy a team while players can't block a certain type of person from becoming a professional athlete. EDIT: On second read, no. By saying the owners don't come from all different backgrounds doesn't mean I'm saying they ALL come from the SAME background. Even just in a racial context not every background is represented at an ownership level. The fact is one has to grasp at straws to claim any racial diversity whatsoever. Not every owner is white but historically it really helps to be white if you want to own a professional baseball team. That is only one of many common links shared by the large, large majority of owners…like I said it correlates at a much higher rate at the ownership level than the players level.
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Post by p23w on Jan 4, 2014 20:45:44 GMT -5
Current owners run the gamut with respect to their backgrounds. The same can be said of minor league owners. Bill Murray and Cal Ripken made there wealth via the entertainment industry and shrewd money management. Both own several minor league teams. Both had the state of florida falling over themselves to make sure that both marquee names had a successful franchise experience. The key for both minor and major league owners is marketing. Television produces insane revenues. Broadband has made tv ubiquitous, mobile as well as extremely profitable. Being in the right place at the right times helps a lot too MLB grew by orders of magnitude once games were broadcast via radio. Again with the advent of night games, another spike came when baseball was broadcast visually. Broadband is the latest source for growth. Growth and profitability are now functions of worldwide distribution. I don't begrudge entrepreneurs from taking advantage of technology anymore than players signing million dollar contracts. I am however amused by both the owners attempts to "police" themselves and by the medias' attempts to "report" on the games and the off field exploits of the players. FWIW the oriole owner, Angelos got "seed" money not only from asbestos litigation but he "won" the right to litigate al Federal tobacco litigation for the state of Mary;land. He got $250M upfront. I always think ARod when Angelos is mentioned.
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Post by thelavarnwayguy on Jan 5, 2014 1:44:09 GMT -5
Which teams are best positioned going forward, in terms of projected revenues? I think a strong case could be made for the Dodgers at #1 and the Redsox at number 2.
The Yanks only own 25% of the Yes network. Henry's group appears to own 80% of NESN. Correct me if I'm wrong but this is what I believe I've found out after a little research. I haven't lived in New England for many years but the Bruins are involved some also aren't they?
Of course the Yanks have a bigger market and get $90 mil from their TV deal as compared to $60 mil per year for the Sox but those profits appear to be piling up at NESN for Henry anyway. At a higher rate currently for NESN potentially. Even after factoring in for the bigger market size. That's just a guess but 80% of 100 mil would be more than 25% of 200 mil.
How do I get there? Look at the Rangers current deal where they own only 10% of their network but the team value from that deal is $150 mil per year. Texas is obviously a much smaller market that NYC but the Yanks also have the Mets in their market but let's just roughly estimate the real value of the Yankees share of local TV revenues would be over $200 mil if sold today. That is probably a conservative number in my view, but they only own 25% of the network so they are seeing a small cut from their Network's growth. As compared to Henry's group with 80% ownership.
If it was worth over $150 mil for the Rangers a couple years ago it would clearly be worth more than $200 mil for the Yanks right? But they only get $90 mil and that continues to be a relatively small share for many more years under the current contract. In other words, the Rangers get more from their TV deal overall than the Yanks do. Apparently quite a bit more.
The Rangers deal at $150 mil per year AAV is a reason they are signing Darvish, Choo....etc. They are bidding to become "America's Team". Going the global branding approach. Obviously many teams are trying that approach but that revenue stream is changing everything for the Rangers. The Yanks still have other advantages like vastly different ticket sales revenue but going forward the Rangers should be able to compete with the Yanks economically even though they were almost bankrupt just 2-3 years ago.
Seattle signing Cano was done in large part because of their $115 per year regional TV deal.
Look at the Angels signings which appear to be related to their TV deals.
Teams with big TV deals in place are spending big bucks for FA signings of marquis players. The Redsox have a big payroll but their TVdeal is essentially enough already to potentially pay for their entire payroll. Just my guess but look at the numbers. If the Rangers TV deal is worth $150 mil plus a 10% share of the channel itself then NESN current market cap should be worth even more.If NESN were sold today straight up, it's value to the Redsox should be worth well over the $150 mil the Rangers got. Per Year AAV.
All this explains the push to aquire Liverpool and the race car deal ...etc. They are positioning NESN as an international brand. And marketing it globally. The revenue projections are clearly there. The returns of that are just in the seminal phases today but as Roku, Apple TV, Netflix, Hulu, Chromecast...etc all grow watch out. NESN revenues will grow exponentially.
There will continue to be tremendous incentives for Henry's group to keep a competitive team on the field and the revenues should be there to do that. After 2016, when revenue sharing will no longer be available for Boston, I think they will blow right past the luxury tax threshold.
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Post by thelavarnwayguy on Jan 5, 2014 2:00:17 GMT -5
Basically I'm saying that NESN should be worth roughly $180 to $200 mil per year AAV if sold today. If we look at the deal in Philly, it is important to note that in addition to their $100 mil AAV they also get a share of the ad revenues generated. That Philly deal is bigger than what is currently being reported. A lot depends on the ad revenue cut of course. And the Phillies are not even currently a winning team. I've seen the Yankees share of Yes as being from 20% to 34% but that still is a lot less than 80%. The Redsox could use a new ball park badly and that would increase the value of the franchise a lot potentially but if the main revenues are from TV possibly the Fenway mystique increases overall value even more going forward. Note that the Yanks current deal lasts until 2042. They are stuck with that deal for a long time. And the comparative revenue growth between both teams should actually flip flop in my view. At some point the Redsox will be a richer team than the Yanks and that may have already taken place. That is contrary to what we read in the financial pages but look at the TV deals. Their franchise values might well flip flop. www.mlbtraderumors.com/2014/01/impact-of-phillies-new-tv-deal.html
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Post by moonstone2 on Jan 5, 2014 17:33:54 GMT -5
You are absolutely right and you shouldn't have to say this explicitly. It's clearly implied that you meant your comment in a general sense.
I see this happening a lot. Everyone here is smart enough to realize that very few things are ALWAYS true. Saying that something happens occasionally does not refute an argument about general occurrences.
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Post by moonstone2 on Jan 5, 2014 17:37:46 GMT -5
Current owners run the gamut with respect to their backgrounds. The same can be said of minor league owners. Bill Murray and Cal Ripken made there wealth via the entertainment industry and shrewd money management. Both own several minor league teams. Both had the state of florida falling over themselves to make sure that both marquee names had a successful franchise experience. The key for both minor and major league owners is marketing. Television produces insane revenues. Broadband has made tv ubiquitous, mobile as well as extremely profitable. Being in the right place at the right times helps a lot too MLB grew by orders of magnitude once games were broadcast via radio. Again with the advent of night games, another spike came when baseball was broadcast visually. Broadband is the latest source for growth. Growth and profitability are now functions of worldwide distribution. I don't begrudge entrepreneurs from taking advantage of technology anymore than players signing million dollar contracts. I am however amused by both the owners attempts to "police" themselves and by the medias' attempts to "report" on the games and the off field exploits of the players. FWIW the oriole owner, Angelos got "seed" money not only from asbestos litigation but he "won" the right to litigate al Federal tobacco litigation for the state of Mary;land. He got $250M upfront. I always think ARod when Angelos is mentioned. With respect to minor league franchises the main difference is that minor league players are not unionized and hence haven't seen their real wages rise since the 80s. Minor League baseball has grown too, but minor league owners have recaptured 100% of that growth.
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Post by thelavarnwayguy on Jan 18, 2014 16:08:27 GMT -5
Something I had missed before. Is this year's revenue sharing deal closer to $40 mil for each team? According to this fangraphs article it implies that the deal should increase by $25 mil per team from the year before alone. This would seem to be a lot of incentive to stay under the luxury tax limit. Even more than I had anticipated. www.fangraphs.com/blogs/the-new-national-tv-contracts-and-2014-payrolls/
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Post by ancientsoxfogey on Jan 18, 2014 17:36:51 GMT -5
And all that is being discussed here is why I have seen fewer major league games than minor league games in person over the past 20 years (and not that much of either), and actually enjoy watching and helping to coach my grandson's little league baseball team more than watching pro baseball.
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