Creativity can help radio play-by-play From the Field of Intellectual Property From The Executive Editor: Bill Heinz Cartoon: Pick up the pace Cartoon: Fallen Angel From The Executive Editor: Heard at WCOS What marketers can learn from baseball Sutton Impact: On the elevator Cartoon: Tiger's impact From the Field of Fan Engagement
Upcoming Conferences and Events
Readers sound off on salary caps, MLB Net distribution
Published February 2, 2009
The theory that small-market baseball owners are getting ready to propose a salary cap once the next collective-bargaining agreement expires is more a public relations move than an actual threat because the owners have too much to lose.
Three of the four major sports have some type of salary constraints in place. In 2008, the NFL cap was $116.2 million, the NBA’s cap is $58.68 million and the NHL is set at $56.7 million for this season. The Yankees, Tigers, Mets, Red Sox, White Sox, Angels, Cubs, Dodgers and Mariners all had 2008 payrolls higher than the NFL’s cap of $116.2 million. Looking at these numbers you would think MLB would want a salary cap to control spending? But wait, there’s more to consider. With a salary cap comes a salary floor. Every NFL team was forced to spend approximately $100 million this season, the NBA’s floor was $44.01 million and the NHL required teams to spend at least $40.7 million during the 2008-09 campaign.
Both the NFL and MLB have revenues around $6 billion and they both spend approximately 50 percent of their revenues on salaries. There are two reasons why MLB owners don’t want a cap. Reason one has to do with the salary floor. If you take the revenue-sharing formula the NFL has and applied it to baseball you can assume that the salary floor in baseball would also have to be at or near $100 million, the same as it currently is in the NFL. Of the 30 MLB teams, 19 of them did not have payrolls over $100 million. So why would the owners want to be forced to spend revenue on players instead of pocketing the extra money? Four teams — the Pittsburgh Pirates, Oakland Athletics, Tampa Bay Rays and Florida Marlins — didn’t even spend half of what the league minimum could be.
As you read this it makes you think “WOW!” the players are crazy for not wanting a salary cap if each team would be forced to spend at least $100 million, but the big difference between the NFL and MLB is how local revenues are shared. In the NFL, local broadcasting revenues — television and radio — are split equally. This is not the case for MLB. I can’t image any situation where teams like the New York Yankees would be willing to give up their local broadcasting revenues so teams like the Minnesota Twins could use it on players who would be competing against them on the field. By excluding this money, MLB revenues would be less than the NFL’s $6 billion, thus giving MLB a lower salary cap and floor than what is currently in place in the NFL. The players’ union would never agree to a cap, unless the owners are willing to share more of their revenues with each other.
Things are great for baseball. Revenues have been increasing yearly, there has been a greater diversity of teams reaching the playoffs and World Series since free agency started in 1975 and the greatest tell all is attendance. Fans haven’t stopped going to the games, so they apparently don’t have a problem with the current system.
The current system is fine for most teams like the Pittsburgh Pirates and Kansas City Royals. These teams figure out how much money they are guaranteed through the national television contract, Internet, revenue sharing, etc. Then they figure out their business expenses, making sure not to go far over their revenues, and anything extra is a profit … if they win and sell more tickets, the more money they would make. If the team plays below expectations there aren’t any worries financially because the team didn’t overextend themselves. If the New York Yankees want to try to buy a championship and report a loss financially, more power to them.
You and I have the right to make as much money as the market is willing to pay us, so why should athletes be any different? The players aren’t the ones who can’t control the spending, so why should they be the ones to suffer via a cap?
I just read your column on “Cable Marketing 101?” (SportsBusiness Journal, Jan. 12-18) and wanted to relate my recent experience with the new MLB Network and Comcast.
In the pre-launch publicity for MLB Network, much was made of its availability on expanded basic, or digital basic cable tiers, to 50 million U.S. homes. Since I have a Comcast digital basic package, which Comcast calls Digital Starter, I thought that I was in great shape for MLB Network’s Jan. 1 launch.
I verified this on MLB Network’s Web site FAQ, “If your video provider is affiliated with MLB Network, you will need to subscribe to digital cable at the ‘digital basic’ or equivalent level of service.”
Well, when Jan. 1 rolled around, my TV screen showed that MLB Network was “not authorized” for me.
My area has three levels of Comcast Digital Cable tiers (from lowest cost to highest): Digital Starter, Digital Classic, and Digital Preferred. I have the Digital Starter package, with a digital box. Sounds like digital basic to me.
In multiple contacts with Comcast (both telephone calls and ComcastCares on Twitter), I have asked if my Digital Starter package is the expanded basic or digital basic or its equivalent.
The answer from phone calls and ComcastCares: “No, it is not the equivalent, but we would like to look into getting you the package that includes MLB.” Per Comcast, I would need to choose a higher-cost tier of Digital Classic or Digital Preferred.
After more researching on Internet baseball fan forums, I found that I am not alone. Other Comcast customers, throughout the country, have the same access issue with MLB Network.
Why don’t I upgrade my Comcast package to watch MLB Network? I certainly might do that, of course. But first, I would just ask MLB Network and Comcast to deliver what they promised about digital basic carriage. Somewhere between their press releases and my TV, Comcast and MLB Network have dropped the ball.
Does MLB Network have a distribution problem with Comcast? Does my example call into question MLB Network’s claim of 50 million cable and satellite homes?