Sunday, March 11, 2001
The importance of revenue-sharing
Each of the 30 major-league baseball teams receives an equal share of about $18 million from their national TV contract. But local TV revenues are not shared equally. They are shared on a limited basis (along with some other local revenues) in a complicated formula that may give the Reds as much as $10 million in revenue-sharing this year.
That can't begin to close the gap between the Reds' $44 million payroll and the world champion New York Yankees $121 million payroll.
How can the Yankees afford a payroll that high? They are presently negotiating a $100 million local TV contract for this year; they will be giving away only some of it under the present limited revenue-sharing plan.
By comparison, the Reds have local radio and TV contracts with Fox Sports Ohio cable and WLW-AM radio valued at $6 million.
What is needed, says Commissioner Bud Selig's Blue Ribbon Panel on Baseball Economics, is significant revenue-sharing: up to 50 percent of local revenues after ballpark expenses. Under such a formula, the Reds' share might double or triple, and the richest clubs' takes would be cut substantially thereby making the playing field more even. Small-market teams would be able to field more good players; big-market teams couldn't hog them all.
But, to make this happen, the owners need to convince the richest clubs and the players' union (it's a collective bargaining issue) that there is something in it for them a new prosperity.
The union has exercised its option to extend the present major league baseball agreement through this season, which means no changes in baseball's basic economic structure are possible before 2002.
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