MLB’s Better Way Forward: Revenue Sharing (Part 4)

The last post outlined the competitive structure of the MLB League Championship, which I will simply call the League or “league play.”  In forming one 30-team championship format separate from the playoff structure, the concern is that teams out of the MLB Cup Elites tier will lose interest, destroying fan attendance and franchise profitability.

Before we proceed further, let me suggest a few reasons why that might not be the case.

Regional is better.

The unbalanced regional schedule offers more geographically-relevant matchups.  That means more (or at least the same) local rivalries, where those exist (Cubs-White Sox, Yankees-Mets, Yankees-Red Sox, etc.), and more matchups within the same time zone.

For instance, the Giants play at least one road series against NL East teams in a given year, with perhaps one such road interleague series, totaling 21 or so East Coast road games starting at potentially awkward times for West Coast TV.  In the new regular season schedule, they would play 15 at most, unless they are lumped into the eastern group for cup purposes.

When the Giants are in contention, fans will almost certainly show up, but if they’re not, there will be fewer awkward TV times and more games against regionally relevant teams like the A’s and Angels (along with existing division rivals like the Dodgers and Padres).  Regional games would seem to be a win both for fans and TV, not to mention the travel schedule.

More winnable/competitive games.

Another win for the fans is having more games against teams of a similar talent level.  In a cup competition with the likes of Houston, San Diego, Arizona, and Kansas City, the Mariners have a competition in which they will be competitive in 2011, not to mention a few years from now when Pineda and Ackley will be in their respective primes.  All of a sudden, this becomes a team that can reasonably expect to play at least .500 baseball at home, and fans can react accordingly.

For more competitive teams like the Phillies, it’s an embarrassment of riches to see a schedule filled with games against the Mets, Yankees, and Red Sox, even if it is a very tough schedule to play through.  The Blue Jays, still stuck in a tough division for scheduling purposes, can hope to contend on a league-wide basis and use their cup competition as a springboard to future success.

Revenue Sharing

The last of these reasons is a new proposal for MLB’s existing revenue sharing system.  I’m not a huge fan of MLB’s revenue sharing in general, as there is no reason that the Pirates should be able to rake in the profits without having seen on-field success since the Barry Bonds era.

The current revenue sharing system, as I understand it, works like this: 31% of all team revenues go to a shared fund which is then redistributed equally among teams.  The primary result of this practice is lower player salaries, since it artificially creates lower marginal returns for investing in players.

What I propose instead is that teams are awarded revenue sharing dollars on the following bases:

  1. Total player salaries, coach salaries, and player development expenses — in other words, money spent on improving the on-field product.
  2. League standing and cup finish relative to major league player salaries — succeeding on the field on a per-dollar basis.

The system can still be based on team revenue, but at least there will be an incentive for owners to reinvest in the product quality year after year, rather than simply pocket other teams’ profits.  Set a minimum requirement for both of the above criteria, and you have a firm incentive for continued success.

If possible from a legal standpoint, I would try to enforce this with a further opt-out requirement for owners who fail to invest in their teams.  Put more simply, kick out the owners who remain in the MLB Cup Regulars Tier for an extended period of time (say, seven years).  Owners should be able to collectively agree on this provision, since the other owners’ poor management devalues the MLB product overall.

With this as a backbone for revenue sharing, teams in all tiers will have to focus on their league result, or they will risk falling further behind their rivals.

Tomorrow, I will wrap up this series with a summary of advantages and disadvantages to the entire realignment proposal.


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