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Free agency and spending E-mail
Written by Pat Lackey   
Friday, 20 November 2009 12:29

Free agency kicked off last night at midnight. The Pirates have not signed John Lackey yet, and so I'm going to picket PNC Park when I'm home over Thanksgiving. OK, I'm being dramatic. Neal Huntington says he's going to move slowly, and that's the right approach for a team in the Pirates' position. Here are the position players and here are the pitchers that are free agents.

First off, here's the full list of minor league free agents. Maybe the next Garrett Jones is on there. Probably not, but maybe. More likely, there's one or two useful relievers on there.

Next up, I see a lot of people talking about Jayson Stark's story yesterday, in which he estimates that even the Pirates start every year with $80 million in pocket when you combine revenue sharing, the central fund, and local TV contracts (warning: annoying autoplay video at link). I won't dispute his math, which guesstimates about $30 million from the central fund, $35 million from revenue sharing, and $15 million as the low-end from the local TV contract. My question is this; how much are the high end TV deals? How much do teams that own theithe Yankees make from YES or do the Red Sox make from NESN or the Mets from SNY? This article from 2007 puts the Yankees profits from YES at $60 million, but that's only assuming the Yankees own a third of the network. Wikipedia says that both the Yankees and YES are owned by the same holding company (think the Sheinhardt Wig Company from 30 Rock), which means that Yankees' owners (Steinbrenner et al) might end up with three times that. The Red Sox own 80% of NESN, so their deal is likely similar while the Mets own an unspecified amount of SNY.

I'm not disputing that the Pirates should work towards a higher payroll, but small market and large market clubs have to operate in pretty different fashions to keep themselves from losing money. For the Pirates, the $60-$65 million they get from revenue sharing and the central fund is a huge part of their entire revenue for the season, while it's an incredibly small fraction of what other teams pull in. Obviously we're not going to know the real numbers, but most of the guys that own these teams didn't get rich from being free-spending idiots who flush tens or hundreds of millions of dollars away on their baseball team ever year. From Hank and Hal Steinbrenner to Bob Nutting, they're all trying to cut some kind of profit; the nature of the sport dictates that they do it differently.


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Comments (7)add comment

w.k. kortas said:

...
The notion of cable revenue is something that Bill James wrote about in one of the editions of the Historical Abstract. Right now, who knows how many tens of millions of dollars separate, say, the Yanks and Jays in cable revenue. Now, if the Yanks and Jays play a September game on YES, that's likely to be a big game, with a huge effect on the pennant race--but the Jays pretty much don't see a dime of that money, which is nuts. As James said, teams in markets like Tampa, Minnesota, and Pittsburgh need to figure out that the enemy is not the players and the MLBPA; it's the big-market owners who strangle them through the disparity in TV revenues.
 
November 20, 2009
Votes: +0

Erik H said:

...
Another thing worth mentioning is that many teams get a big chunk of revenue from parking. The Pirates are one of the few teams to generate no revenue from parking, and this is yet another financial factor that's often overlooked when comparing teams.

There's often more than meets the eye, and I find the financial debates in baseball tend to center on revenue sharing and major league payroll and ignore other costs and sources of revenue (like cable packages).
 
November 20, 2009
Votes: +0

azibuck said:

Where Have You Gone, Lamar Hunt?
Should sports team owners be businessmen or sportsmen?

“When I knew the AFL was going to make it was after the first year of the AFL, and someone went up to Lamar’s dad, H.L Hunt, and said, ‘Your son, with this new league, has lost $1 million,’ and Lamar’s dad said, ‘Well, at that rate, he can only go another 100 years.’ "


Lamar Hunt would not have risked his (family's) entire fortune for the AFL. But he invested enough and was willing to lose a certain amount of his own money to make his team and league better.

(Like Jim Tracy) Do I have a point? I don't know. I think it's that the Yankees are run differently than the Pirates for many reasons. One is that what the Yankees mean to Steinbrenner is different from what the Pirates mean to Nutting.

I believe they both want to win, but Steinbrenner places no terms and conditions on winning. Nutting (and many other owners) wants to win within certain financial parameters.
 
November 20, 2009
Votes: -1

matt w said:

Eh
Steinbrenner places no terms and conditions on winning. Nutting (and many other owners) wants to win within certain financial parameters.

I haven't seen Steinbrenner's books, but my guess is that he gets back every dime he puts into the Yankees. Would he continue spending at the rate he spends if it meant he'd lose money? I doubt it.

Now I wouldn't be surprised if other owners were using their teams as a cash cow -- again, I couldn't say what Nutting does -- but I'm not sure that Steinbrenner is risking his own money. I'd guess he isn't making as much of a profit as he could, so that's something.
 
November 20, 2009
Votes: +0

matt w said:

Jayson Stark
Stark manages to draw three conclusions before getting around to making the point (grudgingly, through a quote) that teams have other expenses besides payroll, and then waves it off by saying they have other revenue streams too. So that would add up to... we don't know how much their revenue may exceed their expenses. Not super impressed, there.
 
November 20, 2009
Votes: +0

klingston said:

luigi vs mario
this is not really relevant to the discussion but i was on the baseball reference site comparing andy at age 25 to adam at age 25, and their numbers arent all that different...andys was 252/330/401, adams was 259/320/455...basically, andy got on base a bit more due to his better walk rate, while adam hit for a bit more power (20 HR's as opposed to andy's 12)...to me, its not completely out of the question that andy eventually parallels his brother in terms of offense (or at least comes close), which at the 2B position, would put him above average. just something to think about....
 
November 20, 2009
Votes: +0

Hamburger said:

...
Is the Stark story really something new? Forbes has been putting out their revenue and profit estimates for years and they seem pretty much consistent with his numbers. They have the Pirates taking in about $144 million in total revenue despite only $25 million in ticket sales, and their profit for 2008 at $15.9 million. Adding that to the $48 million payroll means that they would have broken even at around $64 million in payroll. Anything over that would have put them in the red. $15.9 million didn't rank in the top half of the league in 2008.
 
November 21, 2009
Votes: +0

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