Post by PB on Apr 16, 2008 2:03:59 GMT -5
Breaking news:
Financial burden is taking ahold of many competing Major League Baseball franchises. A silent organizational killer, many GMs have failed to see or react to the financial losses inflicted upon their teams. Within a year or so, if none action is taken, as many as 12 MLB teams could see their debts climb to the millions of dollars. Why this sudden financial panic?
Competitive GMs and recent big Free Agents signings have driven the price up of many of baseballs stars (the Dice-K and Pedro offers)?. Although it is good to remain competitive, only a few organizations, mainly the Yankees, that can maintain payrolls exceeding 90M and still turn over profit. The salary juggernauts of todays game include:
1 RF Vladimir Guerrero NYY $25,000,000
2 P Pedro Martinez LAA $20,000,000
3 SS Edgar Renteria Tex $19,000,000
4 3B Alex Rodriguez WAS $18,287,500
5 1B David Ortiz NYM $16,000,000
6 1B Derrek Lee Ari $14,000,000
7 LF Manny Ramirez Bos $13,606,250
8 CF Carlos Beltran NYM $13,500,000
9 SS Derek Jeter NYY $13,037,500
10 LF Garret Anderson NYM $13,000,000
The rest of the competitive MLB has been left baffled as to why their continuous winning seasons and sub 90M payroll is failing to turnover profit.
The Washington Nationals have chained together two 105+ win seasons and have a modest payroll of 83M, and yet they have lost a combined 14M in the past two seasons. The Arizona Diamondbacks, San Diego Padres, and Colorado Rockies are other successful franchises that has been plagued with financial woes. These teams have amassed two successful seasons and yet the have tens of millions in the past few years.
There are also several teams that are in millions in debt or headed in that direction. The Cincinnati Reds will have a debt of 18M and the Cubs of Chicago not too far behind with 12M. The Houston Astros, New York Mets, and Los Angeles Dodgers/Angels are all competing franchises that will also be in dangerous financial waters. These franchises all fell under the trap of heavily spending on FA, resigning good talent, and going from pretenders to contenders before their fan interest and financial markets could mature to the capacity of big market organizations. If this situation is not remedied, all of these organizations will be financially handicapped for seasons to come. The Angels are a prime example of this for they spent heavily to put together a winning ball club. For three seasons the Angels have led their division. Yet with each progressive season, as salary has increased, the Angels' financial losses have roughly doubled each season, to the point where they could be faced with a debt of 45M at the end of 2007.
One key and critical aspect of team finances, aside from fan loyalty and market size, is Broadcasting Revenue (BR). Just having an extra 5M in BR can come a long way over the span of a decade. On average it seems to be that only teams with Broadcasting Revenues that exceed 30M will be able to consistently field a team with a 85M+ profit and still turn over profit. This is why teams like the Cardinals (32M BR), the Red Sox (40M BR) and especially the Yankees (44M BR) can continuously retain the highest talent, compete, and make profit. Unfortunately for teams like the Nationals, whose broadcasting revenue is too small to compete with the bigger organizations, after a few successful high payroll seasons, money will be dry. Even worse is the situation of the Devil Rays. Being in a tough division, the Devil Rays have consistently been a .500 team, had payrolls sub 40M and yet they have lost money and fan interest fluctuates at a snails pace.
After all of my investigative reporting I have come to the obvious, yet annoying conclusion that in order to continuously be a profitable franchise, you are just going to simply play with the cards you are dealt with. The Phillies have truly mastered this concept. Although it may take years, if not decades, some franchises will have to put their egos aside and make small baby steps at increasing their market size, fan loyalty and ultimately, broadcasting revenue. In unison, slowly developing these three attributes is what it takes to transform a pesky small market organization, into a fierce money making giant. If waiting for this type of expansion is not your forte, then Major League GMs are going to have to realize that maintaining a 90M payroll is near impossible and that league wide salaries and payrolls are going to have to go down. Only then will this crisis be averted and baseball will return to its former prosperity.
This is investigative journalist Rick Moranis reporting from the field
Financial burden is taking ahold of many competing Major League Baseball franchises. A silent organizational killer, many GMs have failed to see or react to the financial losses inflicted upon their teams. Within a year or so, if none action is taken, as many as 12 MLB teams could see their debts climb to the millions of dollars. Why this sudden financial panic?
Competitive GMs and recent big Free Agents signings have driven the price up of many of baseballs stars (the Dice-K and Pedro offers)?. Although it is good to remain competitive, only a few organizations, mainly the Yankees, that can maintain payrolls exceeding 90M and still turn over profit. The salary juggernauts of todays game include:
1 RF Vladimir Guerrero NYY $25,000,000
2 P Pedro Martinez LAA $20,000,000
3 SS Edgar Renteria Tex $19,000,000
4 3B Alex Rodriguez WAS $18,287,500
5 1B David Ortiz NYM $16,000,000
6 1B Derrek Lee Ari $14,000,000
7 LF Manny Ramirez Bos $13,606,250
8 CF Carlos Beltran NYM $13,500,000
9 SS Derek Jeter NYY $13,037,500
10 LF Garret Anderson NYM $13,000,000
The rest of the competitive MLB has been left baffled as to why their continuous winning seasons and sub 90M payroll is failing to turnover profit.
The Washington Nationals have chained together two 105+ win seasons and have a modest payroll of 83M, and yet they have lost a combined 14M in the past two seasons. The Arizona Diamondbacks, San Diego Padres, and Colorado Rockies are other successful franchises that has been plagued with financial woes. These teams have amassed two successful seasons and yet the have tens of millions in the past few years.
There are also several teams that are in millions in debt or headed in that direction. The Cincinnati Reds will have a debt of 18M and the Cubs of Chicago not too far behind with 12M. The Houston Astros, New York Mets, and Los Angeles Dodgers/Angels are all competing franchises that will also be in dangerous financial waters. These franchises all fell under the trap of heavily spending on FA, resigning good talent, and going from pretenders to contenders before their fan interest and financial markets could mature to the capacity of big market organizations. If this situation is not remedied, all of these organizations will be financially handicapped for seasons to come. The Angels are a prime example of this for they spent heavily to put together a winning ball club. For three seasons the Angels have led their division. Yet with each progressive season, as salary has increased, the Angels' financial losses have roughly doubled each season, to the point where they could be faced with a debt of 45M at the end of 2007.
One key and critical aspect of team finances, aside from fan loyalty and market size, is Broadcasting Revenue (BR). Just having an extra 5M in BR can come a long way over the span of a decade. On average it seems to be that only teams with Broadcasting Revenues that exceed 30M will be able to consistently field a team with a 85M+ profit and still turn over profit. This is why teams like the Cardinals (32M BR), the Red Sox (40M BR) and especially the Yankees (44M BR) can continuously retain the highest talent, compete, and make profit. Unfortunately for teams like the Nationals, whose broadcasting revenue is too small to compete with the bigger organizations, after a few successful high payroll seasons, money will be dry. Even worse is the situation of the Devil Rays. Being in a tough division, the Devil Rays have consistently been a .500 team, had payrolls sub 40M and yet they have lost money and fan interest fluctuates at a snails pace.
After all of my investigative reporting I have come to the obvious, yet annoying conclusion that in order to continuously be a profitable franchise, you are just going to simply play with the cards you are dealt with. The Phillies have truly mastered this concept. Although it may take years, if not decades, some franchises will have to put their egos aside and make small baby steps at increasing their market size, fan loyalty and ultimately, broadcasting revenue. In unison, slowly developing these three attributes is what it takes to transform a pesky small market organization, into a fierce money making giant. If waiting for this type of expansion is not your forte, then Major League GMs are going to have to realize that maintaining a 90M payroll is near impossible and that league wide salaries and payrolls are going to have to go down. Only then will this crisis be averted and baseball will return to its former prosperity.
This is investigative journalist Rick Moranis reporting from the field