I was furious. I practically lived at the ballpark prior to then. After the strike, I didn't watch a game for 5 years. Since then my participation has been considerably less than it was prior to the strike. The current financing of MLB is criminal and allows teams like the As or Reds or Royals to play on the cheap and field uncompetitive teams while still reaping millions in local sharing revenues, while other teams can outspend by a factor of 10 making half the league irrelevant. Meanwhile the NFL has come close to parity where any team in any market can become successful - teams considered in baseball to be in "small markets" like Kansas City, Buffalo, Cincy, or Green Bay can be hugely successful while literally 300 yards away in KC, the Royals flail around year after year blaming the same market. It's BS. Viewership in baseball declined for 15 straight years and WS and ASG viewership has cratered while the NFL gains popularity in the same span. MLB cannot be saved until it has a salary cap AND floor like the NFL, otherwise it will slowly circle the drain - and the owners, the commissioner AND the players are complicit.
Like you I'm a long suffering KC fan, went to my first Royals game in 1973. Saw the great years of the 70s and 80s, only to watch it implode after free agency, revenue sharing and other idiocy wrecked it. I've written extensively on the America's Pastime FB page about the criminality of the current MLB financing but few care to understand it.
The NFL is far from perfect, but it's crazy that any other pro sports wouldn't follow their lead on basic things like a salary cap/floor. Of course, the players union is far more powerful in baseball, and while I get that it's hard to convince players to limit their earning potential, it's always felt like such a short-sighted policy to me. In the end, it will cost them. And you're right about small markets. It's incredibly frustrating to see the disadvantage the Royals are at when the Chiefs are dominating the NFL. It shouldn't be that hard. Plus, when you add things like the public-funded stadium circus currently going on in KC and the mighty Dodgers manipulating payroll to get even stronger, it makes it hard to see a bright future for the game without significant changes. I try not to be a doom and gloom guy when it comes to sports- baseball is supposed to be fun, after all- but nothing about its recent history makes me optimistic that those changes are coming anytime soon.
The lack of cap/floor isn't MLB's only problem. The entire financing structure borders on criminal. The NFL only counts certain elements of income as shareable, and then shares equally among all teams, regardless of market. In MLB, there is a market size penalty and by rule any team above the median market size cannot be a net recipient of local revenue sharing. This means any team below the median will always be a recipient of sharing, regardless of what they put into the pot - therefore teams like the Royals or Reds can spend little to nothing on payroll, have 12 fans in attendance, and still reap 10s of millions in local revenue sharing. This scheme actually incentivizes losing. To compound this, stadium debt is a deductible expense, so gaining a new stadium further INCREASES your sharing portion, but does nothing to provide incentive to increase payroll or win. This is why there is zero correlation between a new stadium and a winning team or increasing attendance. Attendance will increase for a couple years until the novelty wears off, but in many cases will drop to LESS than it was before the new stadium was built because a new stadium increases the cost load to the casual fan. Hence the new design by the Royals to increase luxury suites and decrease regular seating in a downtown stadium - the local casual fan is neither needed nor desired, it's an annoyance. They want to pair with local hotels and conventions to sell more boxes and keep a steady stream of tourist revenue, while actual local butts in seats isn't needed because that's not the prime source of income. The prime source of income for most teams is the broadcast and merchandising licences, followed by corporate/luxury suites. A paid-for box that seats 40 but is empty is worth more than 40 butts in the seats, because those butts in seats require concessions and toilets whether they use them or not or whether they even show up. The empty box requires no such thing if no one shows. This is why each game attendance is overstated because it includes empty but paid-for boxes and large blocks of secondary broker season tickets. Probably 10-15% of each in-game attendance is empty seats, at the least.
Teams above the median market size thus are always net payors regardless of how well they perform. This means they MUST win every year to keep the income in the black. They do this by investing in payroll, and with no caps, there is no limit as to what they can purchase. The only limitation is to how much they can sell the broadcast license for to recoup that investment. This is how we end up with the huge disparity in payroll between top and bottom teams - in 2022 on the 26-man roster, the disparity was 15x. In the NFL it's only 1.5x - because with the salary floor, every team must spend at least 87% of the average salary cap over the previous four year period. In 2022 the Orioles only spent 29% of the AVERAGE MLB payroll, and only 16% of the Dodgers.
Here's another dirty little secret. Typically all local revenue goes into the "taxable" revenue sharing pot, while some expenses, like stadium debt and maintenance, does not. But what's not known is that if a team owns a greater share of their broadcasting network, that revenue is NOT shareable. The Dodgers own 100% of their broadcast network, so NONE of the money they receive through sale of their broadcast license is sharable. The Royals own 0% so ALL of the money they receive is sharable. This means the Dodgers can keep more of the money they earn, and thus spend more on payroll than other teams, further increasing the payroll disparity. Other teams own varying portions.
This exposes another dirty secret, which is the real reason for the incentive for the A's to move from Oakland to LV. I've already talked about how a new stadium can increase revenue sharing to a team because stadium debt is deductible from a team's receipts. The As were right on the median market size, which means they received little to no local revenue sharing by rule. By moving to Vegas, which is a much smaller market by MLB's definition, the team stands to vastly increase their local revenue sharing portion without spending a dime on payroll, AND increase their share with the new stadium debt, AND increase their attendance because most of the people there will be wanting to see the other team AND they'll pair with local hotels and casinos to increase sales of luxury/corporate boxes. The A's will rake in 10s millions more without lifting a finger to field a winning team, which isn't even required or needed. If the A's increased payroll to field a winning team, it would actually LOSE them money. That's the criminality of MLB financing.
Since its peak 35-40 years ago, World Series viewership has dropped by 80%. 80%! That should spell financial disaster. Instead, MLB doubles down with stupid rule changes and juicing the baseball in lame attempt to increase viewership instead of fixing the actual problem, which is that half the league is irrelevant due to the payroll disparity and the inability or desire of below median market teams to want to field a competitive team. In the same span the Super Bowl has increased viewership by 42% (26% post-covid and the kneeling debacle), keeping in line with population growth at the very least. Meanwhile MLB chirps about how much attendance increased this past season, claiming the pitch clock was the reason - ludicrous. If not for the post-covid drop, that 2023 attendance level should be where they are now simply by population increase. The 2020-2021 attendance levels were disastrous, all 2023 did was get some of that back. But the facts are, attendance dropped for 15 straight years along with batting averages and offense, and increasing number of fans tuned out and tapped out due to increasing costs and a shoddy on-field product. And that is the fault of the commissioner, whose job is to make the sport financially viable, the players union, and the owners.
Mark, the picture you paint isn't particularly rosy, and I wish I could call you a crackpot and tell you you're way off-base, but I can't. Some of the points you highlight I was aware of, others I wasn't, and still others I knew a little about and you provided more detail. You definitely know your stuff and make a compelling, if not slightly depressing case. Unfortunately, I think you're probably right that it would mostly fall on deaf ears since a lot of people don't want to think about this kind of stuff- an inclination I totally get, though it won't make the problem go away- otherwise I'd suggest you start your own newsletter to write about these issues in depth. I might be wrong on that- finding an audience is not an exact science, and quality writing always has a chance to catch on. If I was in any position to pay or offer any kind of compensation, I'd invite you to guest-write a series on the subject for PBN, but I'm not. That said, I have no idea if you have any interest in writing your own newsletter on these issues, but if you did, I'd subscribe.
Thanks Patrick, enjoy your break and looking forward to your next piece in a few months. Agree totally with issues regarding how MLB is running their business. Would love to see it ran more like the NFL...
Quality, not quantity, right? After doing this for the last year, I have immense respect for anyone who produces anything at all when it's not their regular, full-time gig.
I was furious. I practically lived at the ballpark prior to then. After the strike, I didn't watch a game for 5 years. Since then my participation has been considerably less than it was prior to the strike. The current financing of MLB is criminal and allows teams like the As or Reds or Royals to play on the cheap and field uncompetitive teams while still reaping millions in local sharing revenues, while other teams can outspend by a factor of 10 making half the league irrelevant. Meanwhile the NFL has come close to parity where any team in any market can become successful - teams considered in baseball to be in "small markets" like Kansas City, Buffalo, Cincy, or Green Bay can be hugely successful while literally 300 yards away in KC, the Royals flail around year after year blaming the same market. It's BS. Viewership in baseball declined for 15 straight years and WS and ASG viewership has cratered while the NFL gains popularity in the same span. MLB cannot be saved until it has a salary cap AND floor like the NFL, otherwise it will slowly circle the drain - and the owners, the commissioner AND the players are complicit.
Like you I'm a long suffering KC fan, went to my first Royals game in 1973. Saw the great years of the 70s and 80s, only to watch it implode after free agency, revenue sharing and other idiocy wrecked it. I've written extensively on the America's Pastime FB page about the criminality of the current MLB financing but few care to understand it.
The NFL is far from perfect, but it's crazy that any other pro sports wouldn't follow their lead on basic things like a salary cap/floor. Of course, the players union is far more powerful in baseball, and while I get that it's hard to convince players to limit their earning potential, it's always felt like such a short-sighted policy to me. In the end, it will cost them. And you're right about small markets. It's incredibly frustrating to see the disadvantage the Royals are at when the Chiefs are dominating the NFL. It shouldn't be that hard. Plus, when you add things like the public-funded stadium circus currently going on in KC and the mighty Dodgers manipulating payroll to get even stronger, it makes it hard to see a bright future for the game without significant changes. I try not to be a doom and gloom guy when it comes to sports- baseball is supposed to be fun, after all- but nothing about its recent history makes me optimistic that those changes are coming anytime soon.
The lack of cap/floor isn't MLB's only problem. The entire financing structure borders on criminal. The NFL only counts certain elements of income as shareable, and then shares equally among all teams, regardless of market. In MLB, there is a market size penalty and by rule any team above the median market size cannot be a net recipient of local revenue sharing. This means any team below the median will always be a recipient of sharing, regardless of what they put into the pot - therefore teams like the Royals or Reds can spend little to nothing on payroll, have 12 fans in attendance, and still reap 10s of millions in local revenue sharing. This scheme actually incentivizes losing. To compound this, stadium debt is a deductible expense, so gaining a new stadium further INCREASES your sharing portion, but does nothing to provide incentive to increase payroll or win. This is why there is zero correlation between a new stadium and a winning team or increasing attendance. Attendance will increase for a couple years until the novelty wears off, but in many cases will drop to LESS than it was before the new stadium was built because a new stadium increases the cost load to the casual fan. Hence the new design by the Royals to increase luxury suites and decrease regular seating in a downtown stadium - the local casual fan is neither needed nor desired, it's an annoyance. They want to pair with local hotels and conventions to sell more boxes and keep a steady stream of tourist revenue, while actual local butts in seats isn't needed because that's not the prime source of income. The prime source of income for most teams is the broadcast and merchandising licences, followed by corporate/luxury suites. A paid-for box that seats 40 but is empty is worth more than 40 butts in the seats, because those butts in seats require concessions and toilets whether they use them or not or whether they even show up. The empty box requires no such thing if no one shows. This is why each game attendance is overstated because it includes empty but paid-for boxes and large blocks of secondary broker season tickets. Probably 10-15% of each in-game attendance is empty seats, at the least.
Teams above the median market size thus are always net payors regardless of how well they perform. This means they MUST win every year to keep the income in the black. They do this by investing in payroll, and with no caps, there is no limit as to what they can purchase. The only limitation is to how much they can sell the broadcast license for to recoup that investment. This is how we end up with the huge disparity in payroll between top and bottom teams - in 2022 on the 26-man roster, the disparity was 15x. In the NFL it's only 1.5x - because with the salary floor, every team must spend at least 87% of the average salary cap over the previous four year period. In 2022 the Orioles only spent 29% of the AVERAGE MLB payroll, and only 16% of the Dodgers.
Here's another dirty little secret. Typically all local revenue goes into the "taxable" revenue sharing pot, while some expenses, like stadium debt and maintenance, does not. But what's not known is that if a team owns a greater share of their broadcasting network, that revenue is NOT shareable. The Dodgers own 100% of their broadcast network, so NONE of the money they receive through sale of their broadcast license is sharable. The Royals own 0% so ALL of the money they receive is sharable. This means the Dodgers can keep more of the money they earn, and thus spend more on payroll than other teams, further increasing the payroll disparity. Other teams own varying portions.
This exposes another dirty secret, which is the real reason for the incentive for the A's to move from Oakland to LV. I've already talked about how a new stadium can increase revenue sharing to a team because stadium debt is deductible from a team's receipts. The As were right on the median market size, which means they received little to no local revenue sharing by rule. By moving to Vegas, which is a much smaller market by MLB's definition, the team stands to vastly increase their local revenue sharing portion without spending a dime on payroll, AND increase their share with the new stadium debt, AND increase their attendance because most of the people there will be wanting to see the other team AND they'll pair with local hotels and casinos to increase sales of luxury/corporate boxes. The A's will rake in 10s millions more without lifting a finger to field a winning team, which isn't even required or needed. If the A's increased payroll to field a winning team, it would actually LOSE them money. That's the criminality of MLB financing.
Since its peak 35-40 years ago, World Series viewership has dropped by 80%. 80%! That should spell financial disaster. Instead, MLB doubles down with stupid rule changes and juicing the baseball in lame attempt to increase viewership instead of fixing the actual problem, which is that half the league is irrelevant due to the payroll disparity and the inability or desire of below median market teams to want to field a competitive team. In the same span the Super Bowl has increased viewership by 42% (26% post-covid and the kneeling debacle), keeping in line with population growth at the very least. Meanwhile MLB chirps about how much attendance increased this past season, claiming the pitch clock was the reason - ludicrous. If not for the post-covid drop, that 2023 attendance level should be where they are now simply by population increase. The 2020-2021 attendance levels were disastrous, all 2023 did was get some of that back. But the facts are, attendance dropped for 15 straight years along with batting averages and offense, and increasing number of fans tuned out and tapped out due to increasing costs and a shoddy on-field product. And that is the fault of the commissioner, whose job is to make the sport financially viable, the players union, and the owners.
Mark, the picture you paint isn't particularly rosy, and I wish I could call you a crackpot and tell you you're way off-base, but I can't. Some of the points you highlight I was aware of, others I wasn't, and still others I knew a little about and you provided more detail. You definitely know your stuff and make a compelling, if not slightly depressing case. Unfortunately, I think you're probably right that it would mostly fall on deaf ears since a lot of people don't want to think about this kind of stuff- an inclination I totally get, though it won't make the problem go away- otherwise I'd suggest you start your own newsletter to write about these issues in depth. I might be wrong on that- finding an audience is not an exact science, and quality writing always has a chance to catch on. If I was in any position to pay or offer any kind of compensation, I'd invite you to guest-write a series on the subject for PBN, but I'm not. That said, I have no idea if you have any interest in writing your own newsletter on these issues, but if you did, I'd subscribe.
Thanks Patrick, enjoy your break and looking forward to your next piece in a few months. Agree totally with issues regarding how MLB is running their business. Would love to see it ran more like the NFL...
Thanks, Ed!
Nothing wrong with a break every now and then (says the guy who hasn't written anything since...October?).
Quality, not quantity, right? After doing this for the last year, I have immense respect for anyone who produces anything at all when it's not their regular, full-time gig.