How Local Revenue Sharing Can Affect Bottom Dwelling Teams

Mar 1, 2013 by

Revenue SharingThree of baseball’s worst teams last year — the Miami Marlins, Houston Astros and Cleveland Indians — are among the franchises that will be most aided by baseball’s revenue sharing system under the latest collective bargaining agreement.

From a pure on-the-field perspective, the Marlins and Astros have handled their offseason situations similarly. But you wouldn’t know it based on the narratives surrounding those teams.

The reaction on the Indians offseason, surprising and confusing at first glance, hasn’t been as polarizing.  But maybe Cleveland deserves a bit of extra credit for having the drive to spend a chunk of money coming their way through revenue sharing.

The background of revenue sharing, especially as it relates to how teams will actually manage their operating budget, is changing even more, as Wendy Thurm from FanGraphs explains.  All clubs equally share 34% of total net local revenue, made up from anything besides a central fund.  The central fund gets split equally, comprised of national TV contracts, licensed merchandise, MLB.tv, and more.

There’s also a supplemental plan that ends up rewarding a lot of the lower income generating teams, accounting for an additional 14% hike in net local revenue sharing.  The Yankees, for instance, pay a certain percentage into the pool based on how much money they earn.  It’s a sliding scale, so a “poor” team like Miami ends up receiving a sizable portion.

And that’s where part of the frustration directed towards the Marlins comes from.  They signed a bunch of pretty good players last offseason and one great player to add to a club that already had a decent amount of talent.  But their 2012 season bottomed out, as way too many things (injuries, players hitting the low end of their projections, Ozzie Guillen running his mouth) went wrong.  Miami finished in last place, then totally nuked their team (again), shedding just about any player making seven figures.  They head into 2013 as the favorites to be the NL’s worst club.  Yet the Marlins and owner Jeffrey Loria are going to make a lot of money, mostly because they’re barely spending any, but also because other teams are going to be deepening Miami’s pockets through local revenue sharing.

But that’s not where most of the actual fuel for negativity comes from.  That outrage is rooted in the hate for Loria and the way he’s generally operated business since he got into baseball.  Craig Calcaterra sums it up pretty nicely here, painting a picture of all the lies, corruption and overall disingenuity that makes up Jeffrey Loria. It’s hard to separate that from the actual baseball-rooted decisions the Marlins have made. Reality says the team wouldn’t have been able to compete with the Nationals and Braves.  And the return Miami received from offseason trades wasn’t that terrible even if they didn’t get back a future superstar. It’s a stretch to say the system in place could form the basis of a future contending team, but Mike Stanton (projected to be the best hitter in baseball this year by ZiPS) will surely be traded as soon as he hits the arbitration jackpot in a year or two, likely infusing the organization with major prospects.

But you can look at a team like the Houston Astros, who have blown up their team as well, and you just won’t see much hate directed their way.  Actually, most of what I’ve read has been overly complimentary of team’s strategy (in terms of the major league roster), which really isn’t all that different from the Marlins, history aside.  Houston didn’t have as high a payroll as Miami did, but the Astros did get rid of just about every single millionaire player.  Their system, like Miami’s, isn’t that top heavy, as they’re building a bulk of projectable serviceable players to come up in a few years. And like Miami, they are going to reap the benefits of local revenue sharing.  Houston has the added advantage of playing in one of the largest markets in baseball — if and when they do start winning, they’re going to be rolling in their own big bucks to go along with the boost they receive from other teams.

One of the reasons the Astros are getting credit is because they’re spending a good chunk of their money on drafting. They kind of have no choice though, as Houston had one of the worst drafting periods a franchise can imagine from 2005-2009. As Joe Sheehan writes:

The Astros just failed at an enormous aspect of team-building for five years …  Add up salaries, travel, bonuses and everything else, and the Astros basically set, what, $100 million on fire over five years? That’s why the 2012 Astros lost 107 games, and why the next two years will bring another 200 losses as a nearly-unwatchable team now takes on what might be the toughest division in baseball.

The Astros are hanging a white flag for at least the next three years. Playing in that division, full of perennial powerhouses and well-run franchises, has a ton to do with it.

The AL Central, however, is a much different story.  Its strongest team, Detroit, is top-heavy and an injury or two away from being vulnerable.  The rest of the division is a confusing clutter that will probably end up producing at least three subpar teams.  The Indians, with that as the backdrop, went out and committed $100+ million in new contracts to be competitive, and have more than a puncher’s chance at making the playoffs. If Michael Bourn, their prize offseason trophy, stays healthy and doesn’t fall off a cliff, the Indians are going to improve a lot.

The collective bargaining agreement, with its new rules for supplemental draft picks, to go along with local revenue sharing, laid out Cleveland’s vision — adding cash to their budget and lowering the market value on Bourn. Cleveland, unlike Houston, already had some major pieces they could build on, so the moves they made were more than justifiable.  The Astros got bonus points, at least from what I gather has been written on them, for infusing money into their farm system.  It would be nice to see Cleveland get more bonus points for putting their money on the major league field.

And if everything goes wrong for the Indians next year, there’s always a chance they could go full-on Marlins, blow up their core and “steal” a bigger piece of the revenue sharing pie.  As long as they’re prepared for the backlash, it’s all in the game.

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  1. Lukman Ahmed

    I’d love to see the Tribe do well. Great city, great franchise. Both of their times may have passed. At least that’s my narrative. If you like Omar’s character on “The Wire” then I think you’ll also like Chalky White on “Boardwalk Empire.”

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