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Thursday, July 6, 2017

Detailed Breakdown - Why Most Sports Teams Do Not Sincerely Try

~ Tropicana Field in Tampa during a ballgame.. Such pretty blue seats

We wanted to take a much needed break from talking about the President, the media and all that same ol' - same ol' that never seems to end

Instead today we're going to be sports journalists.

Not sports reporters, commentators or ass-kissers like you see on your local news or read when you open up the sports pages

No, we're going to be journalists which means we're going to do something you will rarely if ever find in local or national sports media
We're going to explain honest and objective why the vast majority of sports teams do not sincerely try to win championships, and how those who do are continually punished financially for it.

It begins and ends with one word..   Incentive

For about 90% of the owners of professional franchises in sports leagues, they will never come even close to attempting to 'break the bank' to acquire a genuine blue chip superstar to make them a perennial winner
Quite content to acquire players through the draft when they're cheap and controllable commodities and then hope something blossoms into a 2 year run at a trophy before its time for everyone to re-up and seek more money

But we'll touch on that a little later

All professional sports leagues in the US are not capitalistic in spite of the vast amounts of money the teams make
They are actually socialist systems where the 'haves' (there's really no such thing in sports as 'have nots') are continually financially enriched by the 'very haves' and thus really have no motivation or desire to be 'very haves' themselves because that would mean giving up revenue to other 'haves')

To keep this complicated topic as simple as possible, we'll limit ourselves to baseball

In 2016, Major League Baseball (MLB), with its 30 teams, generated around $9 billion in total revenue, almost twice the revenue generated ten years ago
On average each team generated almost $300.9 million U.S. dollars.

The New York Yankees were the highest-earning team in Major League Baseball with $526 million in revenue in 2016, while the Tampa Bay Rays were the team with the lowest earnings with revenues at around $205 million

Last year, the Yankees' payroll was at $227 million while Tampa only spent a total of $71 million which in sports terms is minuscule.
How did the Rays get their payroll so low?

They traded pretty much all their quality players for minor leaguers to ensure that for the 2016 season, only one person on the team would make more than $4 million (which in professional sports terms is not a lot)

So how did a franchise that spent only $71 million and finished 68-94, dead last in the AL East end up with $205m in revenues, meaning after salaries were paid to its ballplayers, $134 million to pay misc costs and the rest in pure profit?

Simple --  Socialist-Communist revenue sharing.
Almost 30% of the total league-wide revenue is earned from gate receipts (ticket sales) which are divided 60/40 meaning if the Rays play the Yankees in Tampa and only 18,000 show up, Tampa gets 60% of the gate with the rest to NY but when they play in the Bronx to 40,000 fans, they get 40% of that cut

So the Rays can make money by basically piggy-backing off the high priced stars other teams put on their roster when opposition comes to town or they go to the other teams' ballparks.

TV and media rights constitute another important stream of revenue.
In 2012 MLB reached agreements on new broadcasting deals with Fox, TBS and ESPN, that started with the 2014 season and bring in an estimated total of $12.4 billion in revenue through 2021.

This revenue is equally shared among all 30 teams, an average of $52 million per team and season even if a team like Tampa was never ever to be shown nationally because they were so bad.

So in 2016 before a single ticket was sold, Tampa recouped $52m of its $71m salary expenditure making them on the hook for just $19m before the first pitch was thrown to start that season.
Next is merchandising..

In 2015, MLB merchandising generated $3.4 billion..  That's all the caps, jerseys and keychains, etc.. of which 12% or $400 million went back to MLB to be distributed evenly among its 30 teams

Each team including Tampa got $13.3 million even if the Rays did not sell a single item..

So take that $19m we mentioned before and subtract the $13.3m and now Tampa was only in the red for $5.7 million before Opening Day 2016

Then of course there's local advertising, sponsorships, seat licenses for premium seats for season ticket holders (in some cities), parking, concessions and so on which each team keeps 100% for themselves..
Now we didn't forget gate receipts..

The average standard ticket cost $28.94 in 2015 while the standard premium ticket cost $96.84. with 13.7% of tickets being premium and 86.3% are standard

To keep the math very simple, we'll just pretend every ticket to every Rays game in 2016 was $28.94

Over a million people attended Rays games in 2016..

1,286,163 to be exact...
So multiply it by $28.94 and then divide by 60% for home team's cut and the Rays generated $22.3 million just on home gate

Then there's the other 81 away games they got 40% of the cut which admittedly is too detailed to break down

You add everything up (and probably some things we the public are not privy to) and you have a Tampa team that generated $134 in revenue after salaries while fielding a last place ball club and being dead last in 2016 in attendance
So where's the incentive to really try?

Where's the motivation for Tampa to go after a big name free agent?

Tampa like 25% of MLB is a farming system for the 'big boys' or the equivalent of an Independent league team

Works like this:  Tampa drafts Billy Bob Roberts, they pay him a minor league salary for a few years then once they call him up, his 7 years of team control begins...

If you ever wonder why teams do not call genuinely talented young up for the first time until a week into the new season, it is because of a rule which allows them to extend control an additional year
So they pay him a couple hundred thousand a year for 3 years with the player unable to arbitrate then the next four years annual arbitration unless a deal is worked out..

Let's say Billy Bob is a superstar and its clear that by the end of those 7 years, he will be asking for a ton?    

Simple - Trade him before contract ends to a team seeking to win in exchange for blue chip minor leaguers that will be very cheap and easily controllable for next few years

Then sell the public on rebuilding for the future (again)

Ta Daaa!!
The Yankees always try to win and in 2016 they actually had to pay $27.6 million in luxury tax for the effort

In other words, the baseball 'system' is set up that if you want to win Too much and are willing to spend what it takes, you will be taxed heavily i.e. punished for it with that revenue going to the bottom feeder teams (yes, Tampa got a portion of that money)

And if let's say Tampa finished in 1st place last year, they still would have been rewarded for having such a low payroll, thus NY would be partially financing a team that beat them in their division

How screwed up is that!
In a capitalist system that never happens

In each sports league there really is only 2-3 owners who sincerely want to win at all costs and another 2-3 owners who have good teams for a short duration because their crop of super cheap rookies and young players panned out

Then once its time to get a better deal, those teams always have firesale salary dumps and the teams with winner owners usually gobble them up, then pay more luxury tax down the road
That's MLB for you and really professional sports in general

So if you're not rooting for a front runner, expect years and years of frustration while your team (well its not really 'your' team since its a privately run corporation that just borrows your hometown name) and local media lie to your face how great it is to experience a rebuild or 'youth movement' is

Sports in 2017 is just horrible & only getting worse