Wednesday, December 26, 2007

Luxury Tax Figures, Is Revenue Sharing Working?

Luxury tax figures were released the other day. The Red Sox owe $6.06 million this year. The only other team that owes any money, is the New York Yankees, who owe $23.88 million.

Since luxury tax was instated in 2003, only one other team, the Los Angeles Angels, has ever paid the tax. Over the years, the Angels have paid a total of $927,059, the Red Sox have paid a total of $13,860,000 and the Yankees have paid a total of $121,600,000 million.

It would appear that revenue sharing is working. There have there be seven different World Series winners in the last eight years. In addition, Major League Baseball hasn't seen a 100-game-winning team in two years, and it's seen only one 20-game-winning pitcher over that same time span.

Still, revenue sharing is clearly a flawed system. There need to be regulations as to how lower salary teams spend the money. Teams like the Florida Marlins get $30 million in revenue sharing, and an additional $30 million in shared profits from mlb.com. That's $60 million before you even factor in the money they make off of ticket sales and merchandising. Yet, the Marlins are expected to have a payroll which could be as low as $15 million next year.

9 comments:

Anonymous said...

looks like revenue sharing is working to me, its cost the yankees $100 million

Anonymous said...

you know what I love about the Marlins, is the fact their scouts, the foundations of that franchise, work for nothing.

I assume they do, otherwise the revenue sharing vs payroll figures everyone quotes are meaningless.

Ethan Michaels said...

Well the Marlins do have actual tickets and concessions sales, in addition to merchandising and television rights. Even though the team has struggled, merchandise sales have reportedly tripled since 2002. You'd think those would offset their minimal franchise costs.

The revenue and mlb.com profit sharing are meant to provide low market teams ADDITIONAL money to those other sources of income, so that they can go out and spend more money on payroll. That way, the level of competition throughout baseball would be more even.

Anonymous said...

the Marlins are a joke

Peter N said...

Hello Ethan....happy 2008 yet to come. It's hard to believe it's already Thursday. I read your blog every day...thought you might like to know! Peter

redsoxocd said...

the marlins are not a joke...it just seems like they dont know how to manage a team. It seems as if everytime they get good young talent, they trade it away...i mean...they seem like a minor league team for all of MLB. They develope players...and then let them go. They dont make much since to me.

The Man said...

wrote this at my blog after reading your article..
metsprospectus.blogspot.com

~I have to agree the system is very much flawed. Look at owners like Jeffrey Loria, who don't do anything to help the team with the money they receive. You could say "We'll he doesn't get much profit in ticket sales" Well maybe that's because he doesn't put a presentable team out there. Believe me, if the Marlins put a GOOD team on the field with a couple of superstars and they contend, within 2-3 years they will have gotten that fan base back. You have to show the people you care, and that is something owners like Jeffrey Loria don't do. So he'll continue to get his profit, while putting a shitty product on the field, and MLB won't do a thing about it.


On the other hand the Mets haven't once had to pay revenue Sharing, basically riding right underneath the belt for the last couple of years, and I wonder if Fred wants to make sure he doesn't have to pay it. IN NO WAY am I comparing Fred Wilpon to Jeffrey Loria, I'm not on the Fred "Coupon" bandwagon, but it's just something to keep in mind.. Figure signing 1-2 big time players at the current payroll would put them over, and would force them to pay the tax.

Ethan Michaels said...

Thanks Peter, I read your blog quite often as well!

Ethan Michaels said...

I'm glad to hear I inspired some thought on the matter The Man. I'll be checking our article out at some point today. Have a good one!