After being halted in 2020 due to the pandemic, Major League Baseball’s revenue-sharing system between bigger-market and smaller-market teams will return in an altered form in 2021, The Athletic’s Evan Drellich reports (subscription required). Smaller-market clubs will only receive half of the normal amount of funds this year, with the other half coming in 2022. The league itself will be covering the 2021 payments in a loan deal, with the larger-market teams expected to eventually pay MLB back.
“Expected” may be a loaded term, however, as Drellich notes that there are still several details about this plan that are unclear, or are open to interpretation based on comments from executives from different teams. One exec from a large-market team believes MLB’s loan is just for the sake of optics (“They can say whatever they want for politics, the understanding is it’ll never be paid back“), while a league source insists otherwise.
There also isn’t much clarity on when exactly big-market teams will have to pay back the league, or the other 50 percent of the 2021 payments directly to the smaller-market clubs, as commissioner Rob Manfred purposely “retained the ability to change payment schedules and the amounts paid based on economic conditions.” It is also possible that the next Collective Bargaining Agreement could change the revenue-sharing system significantly, so the loan repayment plan could be adjusted after the current CBA expires in December.
Revenue-sharing is often a combative issue even in the best of times, and in the words of one executive, there was “a big fight” amongst owners over how (or even if) the system should be restarted in 2021 and beyond. While an increasing number of markets are expecting to have some fans in the stands on Opening Day, the continued uncertainty about the state of the coronavirus pandemic has naturally left all teams wary about how much revenue they can expect to generate this season.
We already saw how the loss of revenues impacted several teams in all market sizes this offseason, as various clubs looked to limit or cut payroll expenditures. Smaller-market teams had less money on hand due to the lack of extra revenue-sharing dollars, while larger-market teams might have saved on those sharing payments but lost more in terms of pure dollars overall.
Exact numbers involved in revenue-sharing aren’t made public, and the total teams pay or receive can differ significantly from year to year. But for 2019, Drellich reports that the Dodgers (roughly $90MM), Red Sox (slightly less than Los Angeles), Cubs (roughly $70MM) and Yankees (over $60MM) were the teams who had the highest revenue-sharing bills. On the other end, the Marlins received around $70MM in 2019, and the Rays received somewhere in the $50MM-$60MM range each year from 2017-19. How small-market teams use those funds is another point of contention, as both the MLBPA and even some larger-market owners take a dim view of small-market teams who don’t reinvest the money into improving the on-field product.
How can there be anything to share at all after allegedly losing billions collectively?
The MLB soap opera continues…
didn’t someone say mlb had no money? it must be one of the most corrupt organization in the country.
i dunno, theres stiff competition for that distinction. can we call Washington an organization?
More like a corporation.
There are now SIX families in NY. Welcome to “the organization” MLB.
MLB isn’t an organization Vizionaire, please understand how companies work. 30 separate corporations. Paying competition to survive, in any business world.. Instead of going under is ludicrous.
Can say all day and night these companies are/are not making money. Fact that some shouldn’t even exist makes a folly of the entire argument.
You know what he means by “organziation”
each teams don’t have monopoly protection. mlb has it it can certainly called a organization representing 30 owners.
John silver – If the goal of MLB teams was to put other teams out of business, who would the “survivors” play?
It’s like this GB.. Markets (some) are not viable for a product, just like in any business. As for “who the survivors would play?” That’s not a very good query.. I remember when the league had just 20 teams. Those which had lousy local support had NO problems pulling up stakes and moving (KC A’s, Washington Senators etc)
Folding outright is also a company which cannot make ends meet. As of right now? Oakland, Tampa and several others are in handout mode to survive. Call it need a stadium (oakland), crappy location and stadium (tampa), just no support at all (miami). Various teams which either need relocated, or gone and PLENTY of teams left to play each other, more than the 20 which existed in the early 60’s after weeding out the leech franchises.
Why? Microsoft paid to keep apple afloat through the 90s…
What part of “loan” did you not understand?
Huh? You can lose lots of money and still have some left.
It’s the wording. MLB plays the victim card. I know (generally) how it works, I was just poking a little fun.
Not where I’m from
seamaholic
Huh? You can lose lots of money and still have some left.
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Are you trying to be sarcastic, or do you not know the difference between assets and income?
Suppose you went to the local card game with $100. You lose a lot, say $75. You still have $25 left over.
No revenue sharing for 2020. Y’know, last year, when they lost money. This is about 2021, where they hope to have fans in the stadiums and thus, be able to have revenue to share.
Robbing Peter to pay Paul?
When did they claim to lose billions on the 2021 season, the season that this post is actually talking about? Snide comments generally work better when you know what you’re commenting on.
It’s “revenue sharing”, not “profit sharing”.
Revenue would be television money, ticket sales, etc.
Costs are employees, players, rent, etc.
They share some of the revenue, not the costs.
If getting rid of Revenue sharing means that Sternberg, Fisher and Nutting aren’t being handed money they don’t deserve and can’t use their teams as cash cows anymore then I’m all for it. Hopefully it forces them to sell to people that actually care about the on field product.
Basically, the Rays don’t need fans since revenue sharing can cover their payroll. They should be moved.
Exactly. It doesn’t mean anything to the Rays if they win or lose….it makes it easier, and likely contributes to their success. Not that they don’t do a phenomenal job, but there’s no pressure.
I’ve been saying for 2 years that Revenue Sharing is the giant elephant in the room for the new CBA; all the other stuff is just filler (nobody really cares about the universal DH).. With the Golden Age of franchise increase probably over (what’s left? Gambling? That’s about it), the big boys may be losing their generous natures. It’s easy to give away crumbs when you’ve got 10 loaves of bread; but those big boys may now only have 5 loaves. They’ll want to keep the crumbs.
Which will come back to bite the game long term. Currently football fans in Pittsburgh expect to beat the Giants and Jets of NY on a yearly basis. They are on equal economic footing but are better ran. Same for fans in Green Bay.
If we turn baseball into the franchises with means vs. the franchises without, there will be a huge disengagement of the fans in smaller markets. Why even bother being a KC or Cincy fan if you can’t really compete?
IMO, the best thing to do is put some teeth into the revenue sharing language that forces the franchises who receive funds to spend them on player payroll and development. No more Nutting getting $1118 million in revenue sharing then kicking out a $91 million payroll like he did in 2018. The big market owners put $27 million of their money straight into his pocket.
Pete Rozelle knew that the NFL could never succeed unless fans in Green Bay could expect their team would be a s competitive as fans in NY. MLB owners were still fighting about televising their games, because it might hurt attendance. Talk about “Neanderthals”.
No one doubts that SOME form of RS is necessary. But the abuses are so rampant on BOTH sides; the Red Sox, e.g. hide a considerable amount of their revenue from NESN, etc. And many small teams just don’t spend where they should.
Ultimately, it decreases the MLB brand. You can just about pick the playoff teams for 2021 already. Yes, we all know the Jacksonville Jags will be lousy next year; but I’ll be watching Trevor Lawrence.
MLB doesn’t have that luxury.
The NFL gets billions from TV that is why they can have the system they have. MLB is not that lucky
Yes. One can admire the Rays for their efficiency but also recognize their management style is a problem because it does little to expand the game within its market, cultivate young fans, and grow the game overall.
There are of course other costs for a franchise besides their player payroll.
Agreed. Stadium deals are different, it cost more to fix a lighting fixture in NY than it does in TB, etc. The REAL disparity is that some teams are so reversely integrated, that much of their revenue is profit. Other teams share, share and then have to share some more.
So can we talk about the real abuser of this system over the years?
THE A’s!
A quick glance at their payrolls and revenue sharing incomes shows a disturbing trend of only investing as much money as they can get for free from the league and obviously no real investments in any other part of the team, as evidenced by their god awful stadium.
There has to be a change in the language of how teams can use their RS money to prevent these Mel brooks “the producers” style con jobs.
Oakland would have at least one ring in the past 30 years if they were forced to actually pay to field a team instead of being payed just to exist, these are f’ng billionaires we’re taking about here for the love of pete, not small business owners!
“These guys were removed from revenue sharing two years ago! PROOF that the current system doesn’t work!”
P.S: They didn’t own a single seat up until 6 months ago when they bought out the counties’ half. Why is it they are to blame for the state of the coliseum, and not the city/county who remodeled it for the Raiders?
I believe the A’s can thrive in a new location. They have a fanbase. I’m not convinced that’s the case with the Rays. The issue is MLB has allowed both the Rays and A’s situation to continue unchecked, and it’s hurting the sport overall. The Indians, btw, are huge abusers too. MLB has created a structure where teams can operate at low payrolls that are paid for by the national TV contracts that only exist because of the large market teams, and revenue sharing from the large market teams. The Dodgers operating a high payroll is not what’s hurting the sport. It’s these small teams who are doing little to expand the sport long term. The owner of the Rays constantly complains about his lack of revenue, but that’s a lie. He has revenue. He also said he has no intention of selling his team. Why? Because his payroll is funded by the large market teams and he knows the value of his franchise is increasing. He has a great deal and little incentive to change. He’s making money. They are more a symbol of the problem. Not teams like the Dodgers.
There were revenues in 2020 if only in the form of national tv contracts. That’s what they will share. But teams claim to have operating loses and cash flow issues. That’s what mlb will cover. The actual pay out. Low revenue teams defer half so mlb doesn’t have to pay the whole thing.
Even the national tv contract did not provide pay for games not played. Even that income was a fraction of the previous year.
I agree that some of these notoriously cheep cheep owners don’t deserve a dime in revenue sharing.
There needs to be conditions and punitive actions against teams that abuse the revenue sharing system.
The A’s, Marlins and Rays can move and be the expansion teams. Teams can save money not paying for Welfare.
[11] comments, [three] of which are utterly clueless.
A’s don’t get revenue sharing anymore, that ended after 2019.
(Nice edit there, HalosHeaven)
Thanks. I’d forgotten the A’s were off the list.
That they got it before was a joke
The biggest problem with revenue sharing is that many clubs don’t spend it on payroll.
Teams put in 48% of local revenue then each franchise takes out an equal 3.3%. In 2018 that figure was $118 million yet a dozen teams didn’t have payrolls of $118 million.
So the players don’t benefit and the big market teams are just lining the pockets of the owners of the small market teams. Put some teeth into the next CBA to force the Pirates and Reds of the world to spend that money on payroll.
just a joke of a system. all of these teams are owned by billionaires and make well enough more then to cover costs each year. if not then they aren’t being well enough run and should be sold/moved.
Yes, exactly Darkside! No more baseball welfare. The argument one uses for money disparity can be used for talent disparity, which can also be used for coaching disparity. You will never have complete parity in sports – if you’re a fan of a team that doesn’t coach well, doesn’t spend well, and doesn’t own well, choose a different team. That’s how business works.
There should never be a guarantee that a MLB team is automatically successful, at all costs, because a billionaire was approved to buy it by other billionaires.
Why should the bigger market team have to pay “loans” or whatever colloquialism they want to assign for welfare in MLB?
Why should the talented people be limited in their ability to make money? Mookie, Trout, Tatis, Lindor, etc would never make what they have/will with a cap, so that won’t work either.
Just for the record, I hope you realize that not every team can be an above-.500 team. Double every team’s payroll, and half the teams finish below .500. Have a $100M floor, and half the teams finish below .500.
It is a common misconception, especially among writers, that every team should be competitive.
A former GM said “if you’re going to lose, you might as well lose cheap.”
A salary floor would really be whacky in a sport full of tanking.
but again tanking disengages casual fans and hurts the game’s popularity.
pdxbrewcrew
A former GM said “if you’re going to lose, you might as well lose cheap.”
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It’s probably a much better business model, if the fans buy the concept.
If you are KC, for example, and can manage a $100M payroll over ten years., you are better off with three years of $80M, while rebuilding, then upping it to $120M when you are competitive.
It was a former KC general manager that said that.
Halo- Tanking would still be done under a floor situation, it would just be done more affective and speeding up the process for those ballclubs …
At the end of the day, isnt that all we want as fans if in those situations? This ofc, barring savvy FO, which are ever changing so the illusion of hope always exist
Trade market would be fascinating as well. It would be like the NBA where tanking teams could absorb bad contracts to hopefully kick start better days. Only the strong can travel that road today . There would be a helluva lot more action as well in here as all 30 teams would hold stock
The thing is they don’t do it like that, Tampa for example is in a good position to compete , but they decide not to invest, they could have signed cruz, oddorisi and Walker for 35M and have a very good team , better than last year, ozuna, Kluber and oddorisi ?
A salary floor could just as easily slow down a rebuild. The only free agents a team that is rebuilding should sign would be ones that are willing to sign one-year deals, and can be traded at the deadline. No point in signing a multi-year deal if you are rebuilding. Basically, pillow deals. And looking through the free agents that signed one-year deals this offseason, most signed with contending teams. Paxton. Quintana, depending on how you feel about the Angels, but they didn’t sign him just to trade him at the deadline. After that, it’s down to the $5 MM a year guys like Adam Duvall. And those types of players ain’t gonna get a decent prospect at the deadline.
@Darkside
Doesn’t matter who owns them, businesses aren’t trying to take losses. They want to break even or make money. Payroll is a percentage of sales. That’s a basic of business. The team with lower income will have a lower payroll. You assume a Billionaire owner will operate the team like a toy, and not a business. That’s just not reality.
being billionaires means they know how to run a business properly. if you cant run even a small market baseball team with a mid-tier payroll andbe generally good then one wonders how you managed to get all that money.
Lot of these billionaires come from Daddy’s Daddy side of the family from yesteryear
Not all are billionaires, and I wouldn’t necessarily equate money to running a successful MLB franchise or brainpower for that matter either
Like Joe said above, if everybody should be able to be generally good how does the W/L support that theory come end year every year across the 30 team sample size?
I wasn’t even aware that this was what “revenue sharing” was. So you’re telling me that the Rays can be a WS contender, carry a minuscule payroll, and get handed free money? Not fair imo.
What I’ve been saying on here for a long time and getting it thrown back at me…. it’s inexcusable.
Why is it unfair? Your position is that, since TB is smarter than everyone else, they should get penalized,
The Rays should be penalized on some level, but not for being smart and for taking money that’s given to them. They should be penalized because they are part of a select group of 30 teams that comprise MLB. All these teams are responsible for expanding the sport. The Rays model does nothing to grow the sport in their market, or cultivate young fans, which is the lifeblood of the game long term. Young fans quickly learn that any good player will be gone. See you in San Diego, Blake,. Thanks for the Cy Young two years ago. Wander Franco has yet to play a single game for the Rays, but he’s already a goner. They’ll be no lifetime contract. Spreadsheet financial baseball is not appealing to young fans. Baseball is a passion. There’s no passion in Tampa Bay. They’re taking the money and they’re not growing the market.
”The Rays model does nothing to grow the sport in their market, or cultivate young fans.” Care to explain?
Its not fair that TB was given a small market to sell to while NY, LA, and Bos have much bigger markets. That TB has been a contender with no payroll shows why their employees are constantly raided by other teams to run their front offices.
And a market with competitors’ footprints already there when it was established.
The Marlins got $70M in 2019. A few years after the public subsidized their stadium. Any serious question as to why franchise values are as high as they are, even for teams in difficult markets? And, why some teams choose not to compete? Yes, the industry had a hard 2020. But there’s plenty of value there.
MLB continues to operate poorly as a major sports entertainment biz and why NFL will continue to leave then in the dust. MLB continues to think that they are better served when a select few teams succeeding and now we have youth in many markets who could care less about the sport! Change of the entire structure is needed to create a competitive league for all markets to enjoy!
the NFL does better because people like football better
Really? And here I thought it was due to a hard cap, non-guaranteed contracts, and sharing of ALL tv revenue.
The NFL does a much better job than any American sport for producing a quality affordable product for its viewers. For 1 competitive balance across all markets. We don’t see a market not trying to win cause they all have a fair chance each year. Also it uses a college sports for its training grounds that helps is so many ways. As a matter fact one can argue college football is 3 most popular sport in America. But most all fans win win win when it comes to a properly run sport
The NFL has significantly better accessibility to the product. NFL games are broadcast regionally if there is a team in your market, and nationally. People get to experience multiple teams via broadcast on Sunday versus MLB’s archaic accessibility rules due to their deals with RSNs. Let’s not even get into the postseason broadcast debacle of individual games within series being broadcast on separate networks.
Wait, so NFL has more parity? Lololol. Uh, can you really look back and say that without laughing at yourself?
Non-guaranteed contracts work, cap won’t. Baseball is different than football. The two are incomparable. NFL has been declining in revenue, while MLB was at an all-time high (pre-COVID).
Good luck with your “parity”
I’ll continue to stay with “dust” as you call it. You keep watching football until they can’t tackle anymore….
After they sign their (imminent) next round of TV deals, the NFL will likely generate 3 times the revenue that MLB does. Probably more.
Amazon is now paying a billion dollars for that awful Thursday night game alone.
That one TV deal (their least lucrative) alone is more than 10% of MLB’s total revenue.
Just FYI.
They have more players and coaches to feed. And their ratings are higher still which means added revenue. Your point doesn’t mean MLB should adopt the same rules as the NFL. Fairly certain players do not want to be cut in baseball.
And what exactly does that have to do with the discussion here? The NFL is a national game, heavily subsidized by gambling. MLB is a regional sport, with teams driving more revenue off of their local TV deals. The NFL’s model is different and can’t be replicated in MLB because they are different sports and entertainment values.
BTW The NFL has many of the same issues as MLB, such as the increasing age of its fans and audiences that have many other viewing choices. Most fans never even attend an NFL game. There are fans of the game who have never stepped foot in an NFL stadium and never will. Baseball is a sport that does depend on concessions, ticket sales, and local TV ratings. Stop trying to compare the two or think the NFL model can be replicated easily in MLB. MLB remains lucrative, generating significant income and skyrocketing franchise valuations.
It can be improved, it should be improved, but it’s not the doom-and-gloom many here want to present. The NFL being more popular in some ways than MLB is not an issue.
NFL does some things better, particularly revenue sharing.
NFL does some things worse, particularly the huge amount of criminals in the league.
No. MLB is a very successful major sports entertainment business. The NFL being an even more successful major sports entertainment business is not a negative to MLB, but it is a positive to the NFL. Both can be true. Both can be successful.
Marlins get revenue sharing despite having a recently new stadium. Yet mlb takes away the Oakland a’s revenue sharing since 2019 and their competitive balance draft pick, meanwhile the tigers and cardinals keep theirs. Yes the A’s owner is a billionaire cheapskate, but also the assumption was A’s would get a stadium at some point. But still tons of hurdles and the pandemic has pushed that timeline probably to 2025 or so, but ive been waiting 20 plus years for a new stadium, not just endless artist renderings that go nowhere
The Cubs and RS have stadiums that have been in existence longer than your team has been in existence. And they still sell out regularly.
Exactly my point about the Trop. If you’re a fan of a team, you’ll go see them regardless of the venue. Those who are more into esthetics probably wouldn’t become long-term attendees versus those who are engaged with the product.
So you’re admitting that the Rays don’t have a fan base. Acceptance is the first step toward recovery.
Revenue sharing seems to work pretty darn well for the NFL. And NBA. And NHL. But, whatever…
Just move 15 teams to NY and the other 15 to LA. Free market solution. Problem solved.
Expansion. Two teams. Nashville is committed to make it happen. Find a second location with a buyer. They should have made this decision 10 months ago. Injection of new money to 30 teams plus a balanced schedule of 4 divisions of 8 teams, including new and renewed rivalries prior to 1998.
Something new rather than something borrowed.
Vegas
Yep. Vegas would work.
How “revenue sharing” works.
48% of all local team revenues, including local TV and radio fees and ticket sales (concessions and parking is fuzzy; sometimes yes, sometimes no) from all 30 teams goes into a pool. That pool is then divided equally back to the 30 teams.
So teams with high local revenues, especially high TV fees, pay more into the revenue sharing pool than they receive back, and vice versa for teams that have lower local revenue.
Exactly. Per BB-Ref in 2018 each team pulled $118 million from that pool and still had 52% of their local revenue to themselves.
Pretty hard to justify some teams rolling out $75 million payrolls when they got $118 million in funds.
That $118 MM doesn’t include the national deals. The same report from Bb-Ref has that amount at $91 MM per team. So each team gets basically, $209 MM plus half their local revenue.
Although I wonder about that estimate. The Braves are 8th in MLB in local TV revenue. Take the average ticket price in 2018 times the attendance for that season, half again for concession/parking and the amount the got in local TV, and 48% of that total would have the Braves receiving more than they paid into revenue sharing if they got $118 MM.
I acknowledge my number is likely flawed, but it’s probably within shouting range. I doubt many fans would consider the Braves to be a franchise that is “poor” enough to get back more than they put in.
The simplest solution is the free market. No draft, no revenue sharing, no ceiling and no floor. If teams cannot cut it, then they can move or go out of business.
It’s only a free market until Rich Guy has to face Richer Guy, then there are regulations.
Really? Good, we can keep eliminating “weak” via a “free” market until we have only the Yankees left in the AL and the Dodgers left in the NL. Except for inter league games, there would be no one else to play. Weak is a relative term as wealth and power are concentrated.
I mean the pirates broke the draft by signing josh bell
I’d love for an investigation on how these funds are used
And you’ll never see it. All these teams are doing fine.
Just dreaming of a day a family of 4 could go to hand full of games and enjoy a similar quality product and root for their home team as a winner (management aside) every so often for same or similar price across all markets. Wow this sport would care about its product and deliver it to the largest possible market that it could. Genius right? NFL does
NFL games are affordable for a family of four?
And why has their parity been worse than MLB with their revenue sharing?
Do you mean if I can same ticket in Tampa as in NY (10 game pass) 4 field box 3b tickets $670 with free parking? Also get the same quality product in both? No mlb economics are so whack and it’s always David vs Goliath
The Jacksonville Jaguars beg to differ
Interesting. So basically MLB’s version of “I will gladly pay you tuesday for a hamburger today”
This is the beginning of the end for modern MLB. It will be contracting and many small market teams will be gone in 10 years. MLB’s popularity is cratering. Ot was a nice run but the youth just don’t care about it.
first thing that needs to be to done is to force owners of the pirates rays a’s out of league then all tv money generated at each game be split evenly between those two teams playing not perfect but a lot better and force each team to have a minimum salary based of those revenues generated per game no more nuttings wallet, A’s or Rays situations. no more Nuttings using baseball revenues to cover 7 springs