Dec 1, 2009, 3:30 PM EDT
We civilians have been talking a lot recently about the injustice of the big market teams paying revenue sharing money to small, losing, but otherwise profitable teams. Today an actual big market owner — the Red Sox’ John Henry — speaks up:
Red Sox principal owner John Henry is calling for Major League Baseball’s revenue sharing system to be overhauled and replaced with a “competitive balanced payroll tax” in an effort to create competitive balance in baseball.
“Change is needed and that is reflected by the fact that over a billion dollars have been paid to seven chronically uncompetitive teams, five of whom have had baseball’s highest operating profits,” Henry responded in an e-mail. “Who, except these teams, can think this is a good idea?”
Henry added, “While the Red Sox are in the 16th largest media market we’ve found a way to be very competitive even though we are funding other teams . . . a system that directly impacts competition has to replace the current system, that hoped to, but ultimately did not cure competitive imbalances.”
The short version: Henry prefers a system where payroll — rather than revenue — is taxed and the money goes to teams who need revenue to meet a minimum payroll that is imposed on anyone who accepts shared dollars. Wanna cut things to the bone? Great, but the rest of the league is not going to subsidize you. Which is fine, because it does prevent the problem of the Marlins or the Royals or whoever hording money and not spending it on players.
But let’s not pretend that Henry is offering this plan up out of the goodness of his heart. The Red Sox, perhaps more than any other team, have a hell of a lot to gain by payroll, as opposed to revenue, being taxed. They have tremendous revenue advantages over everyone but the Yankees, and they still would even if they cut their payroll in half. Henry’s system would protect all of that dough in ways that it isn’t protected now.
Henry acknowledges this by suggesting that the players be guaranteed a fixed percentage of total revenues, thereby making what any one team does with payroll irrelevant in the aggregate. I’m suspicious, however, if for no other reason than that the owners have always been really protective of their revenue data. It’s easy to hide revenue. It’s easy to launder it, for lack of a better term, to.
For example, right now the money Henry realizes as a result of the Fenway Sports Group isn’t counted as baseball revenue, even though a lot of it is made by slapping Red Sox logos on things like race cars. Is that going to be off limits to the players too? If Henry’s comments about the size of the Red Sox’ media market are any indication they will be, if for no other reason than they prove that he likes to downplay the team’s power and money (Boston is not the 16th largest media market. According to Neilson it’s the 7th, and that’s just the city itself. If you take into account that the Sox basically have all of New England to themselves it’s even bigger).
At any rate, if you key player salaries to some overall revenue bogey, people will argue about what that revenue truly is, and that will lead to more labor strife, not less. Just ask the NFL.
All of that said, talking about the problems inherent in the current revenue sharing system is a good beginning. Ultimately, however, it seems like keeping the same revenue sharing system in place, but simply building onto it some sort of controls that prevent teams from simply pocketing the dollars would be a better bet than totally burning it down and starting with Henry’s new payroll tax idea.
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