Revenue Sharing

I think we could increase it from 10 percent just to make it a little more even and try to bridge the gap between the small market teams and the Yankees who are going to be a money making machine for years to come. I thought I'd start a thread to generate discussion....

jcclemen2's essay on revenue sharing:

I've been tinkering with a spreadsheet that I think addresses this. It includes the following, all of which could be adjusted/deleted:

2 tiers of revenue sharing...

tier 1 for all teams over league average for team revenue (currently 97.5 million), tier 2 for all teams over a certain dollar amount (in my current version I have this set at 150 million).

Payroll tax. I currently have this set at a payroll tax for teams spending 40% more than the league average of payroll. Current avg payroll was just under 72 million, so 40% above this is currently just over 100.5 million. So right now only 3 teams would be affected. (this brings up another point… each team is averaging 97.5 million in revenue but spending 72 million. That means that a large amount of money is being stockpiled, and it’s probably by large market teams.)

This can all be done pretty easily. I would even volunteer to track this once the details are figured out such as what date to look at revenue/payroll/etc and when and how to distribute the money. When I mention numbers below here’s what I used: revenue from 2007 and payroll as of July 31, 2008. I don’t know if those are the best dates to use, and I don't know when you would actually distribute the money, but it’s what I had to work with. In addition when I talk about adjusted revenue I mean the following: 2007 total revenue + or – the money taken or given to the teams through payroll tax and revenue sharing. Because of the size of what I’m suggesting below I realize this would have to probably be fazed in over a 2-3 year period.

Here is my thought on what should be done. I know a case can be made for keeping it true to life, but to make the league better/more entertaining for everyone a considerable revenue sharing plan needs to be put in place. When I put my spreadsheet together my goal was to come up with something that could be adjusted. What I tried to do once I did this was get it so each teams available revenue after payroll tax/revenue sharing was between 75 million and 150 million (roughly). I think there’s no reason not to shrink this gap further, but I wanted to start with a middle of the road number.

Here's what I think such a large revenue sharing plan does. It still keeps the small market/large market feel of things. My current plan would leave us with the following after payroll taxes and revenue sharing based on the revenue and payroll numbers I mentioned above:
6 teams In the 70-79 million revenue range, 5 teams in the 80-89 million range, 7 teams in the 90-99 million range, 7 teams in the 100-109 million range, 2 teams in the 110 –119 million range, 2 teams in the 120 – 129 million range, and 1 team (guess who) at 150 million. Like I said this can be adjusted to shrink this gap or widen it if desired. In fact it probably wouldn't take much to get it to a low 80s - 140 million range.

So yes this is a big amount I’m talking about redistributing… it’s basically 140 million from the Yankees and 110 million from 14 other teams (Only 4 other teams would lose more than 10 million, while 10 would gain more than 10 million). One of my main reasons for saying this needs to be done is profit. THERE IS NONE!!! What I mean is no money is being taken after expenses and used to buy property or put in owners personal savings. All money generated in the game has to stay in the game. My concern is in 5-10 years large market teams are eventually going to build up huge reserves of cash… 100’s of millions of dollars in fact. They will be able to buy any player, or trade for any player because money really has no meaning to them. This will only get worse with time. Small market teams will be less and less likely to compete over time. Basically the value of a dollar needs to be maintained. What I mean is a team with 200 million of cash doesn’t care if they have to include 10 million in a deal, whereas to a team with 40 million of revenue and 3 million in cash this would be huge.

A plan such as this will make all teams more competitive. It will make the good owners stand out. Those making good trades/signings will excel. It will be easier to make all teams attractive to new owners, and keep people more involved. A bad move by a large market team will have more consequences than before, and a bad move by a small market team will not be as devastating as before. Salaries for players should increase, as more teams will be able to bid on top/mid tier players. With the large market teams having less money to spend it will spread talent out to more teams. There may actually be more than 5 or 6 teams in each playoff race!

I’m sure I could go on but I’m getting long winded. I’m sure each person has their own agreements for or against something like this, so maybe it’s best to let others express their opinions and go from where those discussions lead this topic. For now I don’t know how to post a file. If someone who does know how will contact me I’ll forward my spreadsheet and have them post for me.

I know a plan involving 10% from everybody being put in a pool has been discussed. The 2nd tab on my spreadsheet shows how little 10%, 20%, and even 30% actually does. Just my opinion but if nothing else if that’s the way you decide to go it can be used to help determine the %. Even 30% only gets the range to 57 - 233 million though.

Theres really only on large market team thats doing very good and thats the Yankees.... I don't see a huge problem right now (I have a 130+ mil payroll and I'm in second to a team with like a 40 mil payroll)

Well an increase in revenue sharing percentage would just bring the Yankees a little more back to earth and help the small market teams.

Yes, Florida (probably wouldn't mind extra revenue judging by their upcoming free agents or arb eligible players) and Tampa Bay have done well at 80-35 and 68-48 with about 50 million each. But if you look at the records of the 12 teams generating the least revenue here are their records...
Washington 56-60 83 million
Cleveland 46-69 80 million
San Diego 45-69 75 million
Oakland 45-70 75 million
Chicago A 41-74 70 million
Cincinnati 40-76 63 million
Milwaukee 50-65 53 million
Pittsburgh 36-80 55 million
Colorado 55-62 43 million
Florida 80-35 52 million
Tampa Bay 68-48 51 million
Kansas City 41-74 39 million

YANKEES 5 bench players 39 million
YANKEES minor leagues 34 million

If the playoffs started today:

Yankees (291 million) vs Twins (100 million)
Tigers (107 million) vs Mariners (99 million)
Marlins (52 million) vs Cardinals (129 million)
Cubs (102 million) vs Diamondbacks (89 million)

As far as the Mets statement that only 1 large market team is doing very well and that's the Yankees....
Yankees 70-45
Mets 70-45
???????????

There is 1 large market team is struggling somewhat and that's the Red Sox at 50-66 and 140million in revenue last year. There are 2 somewhat large market teams that are struggling, and they don't or didn't have an owner until recently.... those are the Giants at 52-64 w 110 million in revenue and Houston at 41-74 and 113 million of revenue.

If it helps this discussion here is a list of revenue per team last year and their record this year....

70-45 New York A 291.3
70-45 New York N 165.2
60-55 Los Angeles N 140.8
50-66 Boston 140.7
81-35 St. Louis 129.2
41-74 Houston 113.5 no owner
57-58 Atlanta 106.1
55-59 Toronto 110.3
52-64 San Francisco 110.8
36-78 Texas 99.8
85-30 Detroit 107.4
68-47 Seattle 98.8
88-28 Chicago N 101.7
63-53 Philadelphia 104
77-39 Minnesota 99.9
60-56 Los Angeles A 85.6
48-67 Baltimore 90.7
66-49 Arizona 88.7
56-60 Washington 83.9
46-69 Cleveland 79.9
45-69 San Diego 74.7
45-70 Oakland 75.2
41-74 Chicago A 70.4
40-76 Cincinnati 62.5
50-65 Milwaukee 52.7
36-80 Pittsburgh 55.2
55-62 Colorado 43.4
80-35 Florida 52.3
68-48 Tampa Bay 51.1
41-74 Kansas City 39.4[b]

In addition since I keep reading arguments on other items in the offseason discussions that mention "that's how/not how they do it in the real MLB" ..... I found this from an article written last May:

The following is a breakdown, based on the plan outlined above for those that are payors into the system. To place some context behind this, these 13 clubs moved $312 million to the 17 lower revenue clubs.
Team Amount paid
(millions)
New York Yankees $76
Boston Red Sox $52
Chicago Cubs $32
Seattle Mariners $25
New York Mets $24
Los Angeles Dodgers $20
St. Louis Cardinals $19
Chicago White Sox $18
San Francisco Giants $14
Houston Astros $11
Los Angeles Angels $11
Atlanta Braves $10
Texas Rangers $.035


Here are the payees under the revenue sharing system:
Team Amount received
(millions)
Tampa Bay Devil Rays $33
Toronto Blue Jays $31
Florida Marlins $31
Kansas City Royals $30
Detroit Tigers $25
Pittsburgh Pirates $25
Milwaukee Brewers $24
Minnesota Twins $22
Oakland Athletics $19
Cincinnati Reds $16
Colorado Rockies $16
Arizona Diamondbacks $13
Cleveland Indians $6.0
Philadelphia Phillies $5.8
San Diego Padres $5.7
Washington Nationals $3.9
Baltimore Orioles $2.0

I think we can definitely do more to share revenue between the ball clubs. It is just a little too much of a gap in my opinion. The spreadsheet that I saw from the Orioles looked good and there is a possibility we could compromise on some stuff. I think a better revenue sharing plan will also make this league more attractive when we have holes to fill as far as club owners.

I think we should just raise the percentage 5% or so... we haven't even calculated what teams are going to get THIS year.. (at 10%)

We haven't calculated but we've estimated....

The estimation was about 10 mil per team being paid out of the pool so the the Yankees lose just over 10 mil in this plan with other teams gaining or losing just a few.

Agh, work out an exponential payment plan placing a higher pressure on teams like the Yankees and a higher amount of money going to teams like Tampa...

if somebody would sent me an IM that knows how to post a link to a spreadsheet I think that would help. My spreadsheet includes a seperate tab showing what pooling 10% -30% would do.... as i mentioned even 30% doesn't do as much as you'd think.

jcclemen2 wrote:

if somebody would sent me an IM that knows how to post a link to a spreadsheet I think that would help. My spreadsheet includes a seperate tab showing what pooling 10% -30% would do.... as i mentioned even 30% doesn't do as much as you'd think.

The thing is that I don't like to see Tampa making as much, if not more, revenue thanks to revenue sharing.

why not though? why not try to make it a more level playing field? It wouldn't be perfectly level of course but I see no reason to give such teams such a small budget.

ok, admin told me how to post this. Hopefully it works...

http://www.megaupload.com/?d=UDAO0AP0

Why not? Why not activate equalize cities and end this entire argument? How is it fair that a team lesser of than another due to popularity and population has a superior financial ground than a team with a well founded financial base?

Who is to say a team won't tank and work for one big world series?

I have no problem with augmenting the budget of smaller market teams, but with some teams it would be rewarding the stupidity of an owner. This league is dominanted by lower market teams in terms of numbers.

Personally, we should ditch revenue sharing and have a Luxury tax and a Cash Tax.

The luxury tax would take the league average payroll (roughly 73mil right now) and have any team over it be fined 17.5% for first time offending, 25% for 2nd, 40% for the third. This money would be distributed as Baltimore has suggested for the revenue sharing. The Yankees would pay 29.7mil or so if the season ended now. If it was 40% right now, the Yankees would pay 78.8mil and the Mets would pay about 26.8mil. That massive sum GREATLY discourages high payrolls.

The cash tax would tax standing cash. Any team over 15mil would be taxed. Every million dollars on hand over the 15mil would add a 3% tax, capping at 50%. For example, if a team had 30million dollars it is 15mil over the limit. 45% of the 15 is 6.75mil. If the season ended right now, the Yankees would pay 22.5mil.

Once the 40% luxury tax hits the Yankees would have probably taken the hit and dropped their payroll considerably. Thusly, their budget can be decreased to a more reasonable level. This plan also attacks teams who are going to use revenue sharing to stock up on cash exponentially (until they hit the 50%, that is) and make a single playoff run with their tanked up cash.

Once the highest budget teams have had their revenues reduced the overall payroll would drop, thusly making more and more teams under attack for the payroll tax. At this point, the harsh 40% tax has done its job and can be safely lowered to a number more around 15-20% and act as a revenue sharing replacement.

In the end, this plan would have dropped down the average payroll down to roughly 65mil and put a heavy tax on tanking teams. The disparity between Florida and the Yanks would have dropped considerably. The smaller amount of shared money should do fine with the lessened disparity.

In short...

A luxury tax similar to the MLB's, except with a harsher threshhold. The money would go to teams rather than other areas, unlike the MLB.

A tax that taxes the amount of money a team is hoarding exponentially until 32mil, whereas it caps at 50%.

I know I'm biased, but I realize that small market teams can do whatever they want in a voting process due to the fact that there are 20 some small market teams and 10 large market teams, where some large market teams aren't really even active...

looking at the league without considering its affect on your own team what pros and cons do you see for revenue sharing or something similiar?

Pros: Balances league

Cons: VERY Extreme
For people who wanted a challenge and chose a small market team, it becomes easier (good and bad)
The Yankees are going to scream and shout.

Honestly, I don't mind Rev sharing so much as I can manage it, but a new system cannot be implemented for a FEW SEASONS though...

The Yanks can't dump 130 mil worth of contracts in one offseason, I can't dump 36 mil of contracts in one offseason... this doesn't include staying competative....


Just an issue I thought up of... its like cutting the budget of a project halfway through even though you already spent all the original budget...

I'm pretty sure it would be phased in and not immediate so it's not like you'd have to cut contracts right away.

The Yankees won't scream and shout. Are they ever around to even say anything?

I agree it can't be done at once. I would suggest deciding on whether this is something people want first of all, then to what extent. If nobody really thinks it's a good idea there's no sense working on all the details that would be involved.

If it's something people think makes for a better league then a smaller group needs to work on the actual details. This includes figuring out how to implement such a plan, how long to get there, when to look at the revenue/salary/cash #'s used in the calculations, when to actually make the payment to/deduction from each team, and what can be done to help the top 5-6 teams that will be paying out the most.

I don't think it's as difficult as you say though in you having to cut 36 million or the yankees 130 million in one season. A majority of the largest market teams have already built up some cash reserves. Yankees have 56 million already, Mets have 42 million. Plus I'd say part of the plan would be something like "for each 'x' million in revenue sharing you are responsible for you are allowed to cut one player without paying the contract buyout". In addition the Yankees have 4 contracts that run out this year totalling 30 million in their minor leagues alone.

I know another issue being brought up is teams receiving revenue sharing then not using the money and saving up for one big season. I agree this needs to be watched, but I think teams should be able to set money aside to some extent. An example of this is the Marlins... they have low payroll currently but Fielder, Barfield, Encarnacion, Crawford, Santana, and Ramirez are all up for arbitration or new deals this year. They shouldn't be penalized for building a great team with a fairly low payroll, but revenue sharing and being allowed to stockpile some of that money would give them the option to resign several of those players and keep that great team together.

Any other thoughts on this before the vote comes up? Seems like this is potentially the biggest issue to be voted on so thought I'd bring it up again.

Also how will the vote be done? As two seperate votes, 1st for yes or no on revenue sharing, 2nd vote for the way it's done. Or will it just be a vote for no and a yes vote for a certain way of doing it?

We already have rev sharing so I guess its yes or no for how its done..

OK, since we're starting the offseason how much revenue sharing money will I have? This would be nice to know for signing free agents

Yeah I need to know how much money I'm losing in revenue sharing so I know how much I can spend.