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The Nats are going to break the revenue sharing system

Oct 2, 2009, 9:25 AM EDT

The big teams like the Yankees and Dodgers bite their tongues and pay their revenue sharing money out to the Pirates and Royals of the world because, well, that’s the system we have.  They may not bite their tongues much longer, though, because they really, really don’t like paying a large-market team like the Nationals — which Forbes Magazine rates as the second most profitable team in baseball — that kind of scratch. Tom Boswell:

As Washington’s obvious promise has been thwarted by its gruesome
won-lost reality, resentment toward the way the Nats do business,
already prevalent in Washington, is now spreading through the game . . . “You’re probably going to see revenue-sharing reform pretty soon,” an
American League executive said. “It’s usually small-market teams like
Pittsburgh that are the issue” . . . But the Bucs have an excuse: Their metropolitan market — like Denver,
Baltimore, Cincinnati, Cleveland, Kansas City and Milwaukee — is less
than half Washington’s size (No. 9 in the United States).

Given the financial disparities in the game, some form of revenue sharing is essential. But a system that rewards a team with huge welfare checks for keeping its payroll lower than its market and revenue would rationally dictate (and losing tons of ballgames in the process) is not a sustainable one.

I suspect that the “revenue-sharing reform” Boswell’s source is talking about would take the form of requiring any teams receiving checks to spend the money on players as opposed to simply pocketing it and declaring a profit like the Nats and Pirates do every year. Such a thing might be hard to implement and could lead to a huge battle between baseball’s high payroll and low payroll teams.  It’s a battle worth fighting, however. Because if the high payroll teams win it, more teams will be putting more resources into their product on the field. In that case, we as fans win too.

  1. george - Oct 2, 2009 at 9:53 AM

    how does this surprise anyone. this has been going on for years- and specificially with this franchise. the Expos were SO terrible that they had to be moved- this with one of the lowest payrolls in baseball at the time- how shocking was that- *low payroll=crappy team* oh but at least jeffrey loria was able to perform a sanctioned raping of the system as his ROI for his Expos investment was through the roof. and that final Expos season- did you know that they had no september callups? why? because when they were at that time owned by MLB, the profitability factor was more important than having a competitive team- shocking. but at least MLB was able to kill the Expos and put them in a better place- you know, one with a new stadium that was privately funded… has sellout crowds all the time… and yet another NL East pennant… all this in only 5 years! here’s to another Washington Nationals pennant!…
    the absolute bottom line- salary cap- and salary floor. tell me why this isn’t implemented?

  2. aweb - Oct 2, 2009 at 10:05 AM

    This could certainly be shown as a large concession to the players in the next round of talks, rather than the owners solving it themselves beforehand. If the crappy teams were suddenly required to spend money on payroll, a lot of players would do very well. And the logisitics of a “floor” wouldn’t be easy to figure out for a team well under. Is it better to get one expensive guy, or several? A salary dump to a team like the Pirates would be great to see.

  3. Grant - Oct 2, 2009 at 10:59 AM

    Beware the Law of Unintended Consequences. If teams HAVE to spend money that will probably result in a lot of mediocrities receiving multi-year big-money deals. Do we really want that?

  4. Craig Calcaterra - Oct 2, 2009 at 11:06 AM

    I bet you could craft a system in which money has to be used, broadly speaking, for competitive development. Because you’re right, if a team is truly in tear down mode, they should be allowed to go to the bone, salary wise in order to play rookies and kids.
    Perhaps teams should be required to create a fund in which their revenue sharing money can be invested and which they can later use to retain their homegrown players as they start to get more expensive? Or maybe, rather than salaries, require that the money be used for amateur talent, international development, scouting, and maybe even team marketing? Because really, all I think we’re trying to avoid is the KC/Pittsburgh/Washington scenario in which money is cut to the team with absolutely no strings and then finds its way immediately into the owner’s pocket.

  5. Dan - Oct 2, 2009 at 11:35 AM
    Selig seems to think that the Pirates are spending their revenue checks wisely. It was either this article, or another that I read, that says the Pirates have greatly increased their spending in draft bonuses and international signings since Revenue Sharing was introduced.
    This situation reminds me of NY: The Governor signed an initiative to help underprivileged families buy school supplies for their kids. Unfortunately, they decided the best delivery method was to just cut the parents a check for $200 dollars. Naturally, liqueur and electronics sales spiked in the following weeks and several retailers selling school supplies were complaining that the families were spending the money on luxury items and not pencils and notebooks.
    If free money is being given out for a purpose, we need to make sure that the money HAS to be used for the intended purpose. If Revenue Sharing is supposed to help the small market teams stay competitive, the league needs to make sure that’s what the money is being spent on.

  6. dcfan-1212450 - Oct 2, 2009 at 11:38 AM

    The Nationals and what MLB has done to them is a travesty right now. First off, MLB raped DC on the deal to get the team. Then they sell the team not to the highest bidder, but to the best business man. Then, after an 81-81 season and a new owner, the team promises to spend money. In other words offer Mark Texeira a contract they know he wont take, and grab Adam Dunn as the only real key offseason free agent. The hire the cheapest manager possible, Mana Acta, and never sign a single decent free agent. Hell, the Brewers, Rangers, Orioles, Athletics, and even the Devils Rays have signed bigger free agents in that span. And dont forget, the farm system was gutted by MLB. Only prospect we have are the 2 first round picks from the last few years. I mean we are years away from being competitive. But we pose a profit. Which MLB loves, which the Lerners love, so who cares right…

  7. Joey B - Oct 2, 2009 at 11:41 AM

    I’m not sure how they calculate the revenue sharing, but there should be some input based on MMA. Some of the MMA data is skewed, since MMA is developed by the gov’t, and some of the MMA is not nearly accessible for attendance purposes, and accessibility varies depending on local roads, mass transit, etc. Also, price levels need to be considered. The average salary in KC is no doubt less than in NY or LA.
    Still, there is no reason that successful franchises should have to share their success with less successful teams of equal market. Why should StL and Boston have to shazre simply because they are better at what they do than Washingotn and BA???

  8. JBerardi - Oct 2, 2009 at 2:38 PM

    You know, for all the bitching you hear about the Red Sox and Yankees outspending everyone, consider for a moment that those teams could be making more money for their owners if they ran them the same way that some of these poor, downtrodden small market teams run. Both could easily trim their payrolls back considerably, still be good enough to put asses in the seats, and take the difference to the bank. I’m not saying that the revenue disparity between baseball’s richest and poorest isn’t important, but just throwing more money at teams that are happy to simply take that money to the bank instead of re-investing it in their product isn’t going to solve anything. There has to be some kind of accountability in the system.

  9. smsetnor - Oct 2, 2009 at 2:46 PM

    There is more talent in the Nats system then people give them credit for. I think, at least. Signing Harper is going to cost some money. I like where they’re heading. Who knows? Maybe they sign a corner outfielder to smart contract this year. Maybe they get a pitcher next off-season. They don’t need to spend their money on garbage just because they have it.
    Kudos to the Nationals front office, marketing and game day staff for putting something together that profits. They’ll be better next year. No doubt.

  10. Jeffrey Kissner - Dec 8, 2009 at 9:45 AM

    Thank you soooooooooooooooooo much for this great article. this is just what I needed to see.

  11. Rex Knollenberg - Feb 10, 2010 at 9:14 AM

    Hey I love your writing style I will subscribe for your feed please keep posting!

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