Money stuff

The best team money can’t buy

The most expensive car? The Ferrari LaFerrari, which you can own and drive for a modest $1.13 million. The Tibetan Mastiff is the world’s most expensive dog. One of those puppies recently sold for a cool $2 million, presumably house-trained. And the flawless, 59-carat Pink Star is the most expensive diamond, purchased last year for nearly $87 million.

Not that I can relate to being a consumer of these products, but you’d suspect the new owners are fairly well satisfied with their acquisitions. Or at least that they came with a bags-of-money-back guarantee.

The 2014 Los Angeles Dodgers are the most expensive team in the history of baseball.

The Dodgers’ payroll  of $241 million is $30 million higher than the #2 Yankees’, $60 million more than the #3 Phillies’ and in excess of double the Reds’ $112 million payroll. Eight of L.A.’s players earn at least $15 million this year (the Reds’ highest paid player makes $12 million) and that doesn’t count Clayton Kershaw who has to get by on $4 million this year but whose salary jumps to $30 million/year in 2015.

In excess, indeed.

You may need to read the next two sentences twice, because your mind won’t want to comprehend and it needs to.

(1) The Reds receive $30 million in local TV revenue this year.
(2) The Dodgers receive $330 million in local TV revenue this year.

Local media contracts are the fundamental source of inequality in major league baseball. Apparently not-scandalous-enough newsflash: The field of dreams isn’t level.

However, if the season ended today, the Dodgers wouldn’t even make the coin-flip game playoff for the post-season. They could throw an expensive Irony Party to watch the Miami Marlins and their $47 million payroll. The Yankees and Phillies would be invited and available.

Today, the Dodgers half-stumble, half-stride into Great American Ball Park for four games. Since the Reds played them in L.A. two weeks ago, the Dodgers lost home series to the Pirates and White Sox and find themselves barely over .500, trailing the San Francisco Giants by 9.5 games in the NL West.

At the start of the season, the sharpies gave Don Mattingly’s Dodgers the best odds of any team to win the World Series. To say the boys in Dodger Blue have been a costly disappointment would be a Puig-sized understatement. That’s a $241 million expense without a money-back guarantee. And none of them, not even Dee Gordon, can reach 100 mph in under three seconds.

On the other hand, the Los Angeles Dodgers were in a similar position last year. In fact, they were 12 games below .500 as late as June 21, before their $223 million payroll went on a historic 42-8 tear and cruised to the NL West title.

As my high school debate coach used to say, whether you’re rich or poor, it’s good to have money. Wise lady, she was.

34 thoughts on “The best team money can’t buy

      • Because they don’t make enough money off one of the largest geographic fanbases in pro sports. The Reds have a giant fanbase with top t.v. ratings. They couldve done better than the peanuts they get now.

    • do we know exactly where the Reds stand in ML baseball in TV deals before we go calling it horrible?

  1. Steve writes;”In fact, they were 12 games below .500 as late as June 21, before their $223 million payroll went on a historic 42-8 tear and cruised to the NL West title”. This “run” also coincided with the return of Hanley Ramirez and the addition of Puig to the starting line up. Question, Does the local TV money include Nationally broadcast games (Fox, ESPN, MLB).

    • No. National broadcast and other MLB revenues, like online platforms, are divided equally among all 30 teams.

      • National TV Deals and MLB Advanced Media
        by Wendy Thurm – December 23, 2013, Fangraphs.com
        Starting in the 2014 season, and continuing through the 2021 season, ESPN, Fox Sports, and TBS will pay a combined $1.5 billion for MLB’s national broadcast rights. That figure is nearly double what the networks paid the league each season from 2006 through 2013 for essentially the same broadcast package.
        Money from the TV deals is paid into MLB’s Central Fund, and then distributed equally to all 30 teams. The same goes for other league-wide revenue like sales of all MLB-licensed merchandise, All-Star Game festivities and everything from MLB Advanced Media. MLBAM operates MLB Network, the At Bat app, and MLB.tv. In October, Bloomberg estimated that MLBAM had yearly revenues approaching $600 million.
        But the Central Fund is more than a pass-through. The Commissioner’s Office decides how much of the Central Fund to distribute to the teams. Colorado Rockies owner Dick Monfort recently told the Denver Post that he doesn’t expect the Commissioner’s Office to share all of the new national TV money with the teams, at least not in the first year.
        Nevertheless, the new national TV contracts, when combined with growing revenue from MLBAM, is likely to result in at least $20 million more in revenue for each team next season. That doesn’t mean $20 million more in spending on players, of course. Unlike in the NBA and NHL, MLB owners are not obligated to spend a certain percentage of revenue on player salaries.

        If I am interpreting this correctly the Reds will have the money to cover Votto’s new contract when it starts and also get the increase in Local TV revenue from FSO.
        Should we really be worried about having the money to sign the pitchers?

        • I’ve been writing about this for years. Baseball, including the Reds, is awash in new money. I projected two years ago, back when the Reds were spending about $80 million/year on payroll, that if the Castellini family followed through on their pledge to return new revenues back to the team, that conservatively they’d be able to spend about $150 million/year on payroll by 2017. And so far, they’ve increased spending from $80 million in 2012 to $112 million this year and I don’t think they’re done. That’s why I’ve written that the Reds can afford nice things, including signing one or two more of the big pitchers.

          I believe they have already been factoring in the new national revenues (broadcast and online) into their budget, which is why we have seen the increase. The local TV revenues won’t come in for a couple more years, so that’s the part that will allow the increase in the future, whether it’s from FSO or some other bidder like Comcast.

        • This is also why I don’t always believe the “we don’t have the money” excuse offered sometimes by Walt Jocketty and more often by some of the local reporters who don’t seem to appreciate the new revenue developments. If you’d listened to them, there wasn’t enough money for Votto, Phillips or Bailey. Yet, here they are.

          That doesn’t mean the Reds can spend their money foolishly (Broxton, Ludwick) but it also means that there is room in the budget to add on mid-season if the Reds stay competitive.

        • The benefits the players, but not individual teams. It raises the bar, but not the inequity…

  2. Anyone know when the Reds current TV deal expires and what the terms of the next deal may look like?

    • The look of the next local TV contract will depend on competition for alternatives, including ownership inclusion of the Reds, available. The Reds certainly don’t want to get locked into a contract like the Dodgers where a significant portion of Reds fans are blocked from watching the games within their local market.

    • 2016 although it’s not unheard of for them to be renegotiated early. It’s hard to draw close parallels to the Reds situation. On the one hand, Cincinnati itself is a small market. On the other hand, if you include Indianapolis, Dayton, Lexington, Louisville, parts of West Virginia and part of Columbus, it’s a decent sized viewing area. And the Reds ratings are one of the highest (used to be second to Detroit, but I haven’t checked lately).

      But a rough guess, based on cities like Cleveland and San Diego, might be an increase from $30 million to $60 million/year, with some team equity thrown in. The equity part is important because revenues earned that way don’t have to be shared under the league agreement because they are considered media income not baseball income.

      Key variables include whether a second channel (Time Warner/Comcast most likely) will emerge to bid against FSO. Signing players like Votto and Bailey (and presumably a couple of Latos/Cueto/Leake) make the broadcasting rights more valuable. I expect the Castellini family to play hardball on this since the current contract has been extremely favorable to FSO.

  3. Income equity and renue sharing are feasible nor desired, but how the money is spent is controllable, at least from a quantity control. Up to this point, no commisioner has been willing to stand up to the big 6. The majority of the remaining team ownership has also been willing to unite and stand up to the big 6. From the Old Cossack’s perspective, such competative inequity is absurd and counter-productive, but the Old Cossack is also on the down side of such inequity.. While I would welcome a hard salary cap, a hard cap is not at all feasible or fair from a players perspective and probably undesirable (not to mention undoable under the CBA). The soft cap represents a good alternative, but the dosft cap must have teeth that will ‘take a bite’ out of the inequity spending without prohibiting the spending. The playing field doesn’t need to be even, just not so absurdly uneven. All foreign FA signings must be included in the cap and the foreign player signings also need to be controlled either through a draft (difficult to manage) or with MUCH steeper penalties for exceeding available pool use.

    The Dodgers this year are a classic example (just as the Yankees in years past) of excessive spending not guaranteeing ultimate success, but it certainly provides an unfair competative advange.

  4. Offensively, you look at the Dodgers’ stats, and for what they are being paid, other than Puig and Gordon, I don’t think I’d take any of them over what the Reds already have in place. It just wouldn’t be wise to take on any of those contracts, even for LF (Kemp, Ethier, Crawford). I’d definitely take 3B/SS Justin Turner though to backup Frazier and platoon with Cozart. He looked like Brooks Robinson in that last series with the Dodgers in LA.

    • I’d take on Hanley Ramirez’s contract and play him at SS. He’s a free agent at the end of the year. Given how badly the Reds need more offense, I’d take the hit on defense and put his bat in the lineup for $16 million/1 year. Agreed on the OF. As badly as the Reds need a LF, those contracts (Kemp, Ethier) are way too long-term.

      • Steve lets fix left field 1st. No to LA outfielders, injury prone, bad investment. A good fix there would more than make up for Cozart’s offensive shortcomings. Joc Pederson in the Dodger AAA system.

    • And we had him..he’s a Reds draftee who was traded in the Ramon Hernandez deal. He’s been available multiple times…the Reds apparently don’t agree with us on his value.

  5. Steve writes;”there is room in the budget to add on mid-season if the Reds stay competitive”
    I believe we will have a better handle on “competitive” by the end of June. There seems to me that there is a growing need for a “closer” with some of the current league leading teams and the “wananbes” If Broxton can continue his current effectiveness, who knows, the Dodgers may want him back, salary and all. Joc Pederson would be a nice addition to our Reds.

    • If anyone should be shopping for a closer, it’s the Detroit Tigers. My oh my. One has to wonder what they might give for Chapman.

      • Charlotte; They don’t have anything in AAA or AA to offer and they are 1 injury away from losing the season with the position players on the major league roster. They might have the “want and need” but we need quality back for the future and I do not see that in their system. The Pirates, Dodgers and Nationals are the teams with real opportunity for acquiring young players.

    • The Dodgers are not going to trade Pederson, it makes no sense unless you get a frontline starter, some one who could grow into a superstar. The Reds bullpen does not need to be subtracted from, but bolstered. NONE of the Dodgers OFs, aside from Puig, can stay healthy. I am sure that the Dodgers would love to get something for the other guys. The Dodgers will not give up their top prospect for a Closer.

  6. So if the local TV deal doubles from $30m to $60m, then add $50m from the national TV share, and $20m from merchandise and such.. that’s $130m not counting attendance/concessions and such.

    So $150m seems easily possible in a year or two (that’d be less than $10 per attending fan at 2 million attendance), but they need players actually worth spending $150m on. Not more Ludwick/Phillips/Marshall/Broxton contracts (yes, regardless of his ERA this year, relief pitchers aren’t worth 3yr/$21m in my eyes).

    • Exactly. Attendance is a relatively small piece overall. Maybe an increase of $10 million. That’s not nothing. But people over-estimate its overall importance. I’m not sure how much the Reds earn from parking and concessions. I know there are subcontracts there.

      Can’t spend all the new money on major league player salaries, but more than half, I’d think. But there are other raises, ball park improvements, minor leagues etc.

      But yeah, even when the Votto contract is $25 million, it will be a lower percentage of the Reds payroll than CoCo Cordero’s salary in 2011, or Aaron Harang’s in 2010. Larkin in 2002 and Griffey in 2001 were much higher percentages than Votto. And by that time (2018), Phillips will be off the books.

      • I died a little bit inside when I read “And by that time (2018), Phillips will be off the books.”… such a terrible contract.

        • Sports and terrible contracts go hand in hand no matter the sport or teams. There isn’t a team in professional sports that don’t have or haven’t had “terrible” contracts at some point. You just try to limit the numbers and right now I only see one with the Reds and it’s not overally bad.

  7. Just in case I assumed that Reds fans know about Joc here is little bit from Sports Illustrated;
    “He’s slicing up pitchers in the PCL, .351/.454/.638 line with 13 steals. The PCL is a hitter-friendly league, yes, but Pederson is also the fifth-youngest position player in the league, and he’s dominating it. Against lefthanders, but he’s hitting .292/.378/.492 against them this season. Pederson is waiting. He sees L.A.’s outfield situation — four players (Yasiel Puig, Matt Kemp, Carl Crawford, Andre Ethier) for three spots — and realizes that there’s no clear path for him, but he also knows that everything could quickly change. “Realistically, the way I see it, something has to happen where they have to make a move,” he said. “They might have to make a deal. I know they have some problems with their infielders, who knows what they need. But they might make a deal”. (http://sportsillustrated.cnn.com/mlb/news/20140523/joc-pederson)

    • Joc Pederson and Darnell Sweeney for Chapman. Sold. The addition of a changeup he can throw for strikes might be able to get Yimi Garcia too, if not, throw some Reds minor leaguers in the mix for him. Need some good young/cheap/controlled bullpen pitchers for the Reds.

      Would get a young OF, 2B, and Bullpen coming through the pipelines for the Reds.

      • Toddalmighty says,” throw some Reds minor leaguers in the mix for him. Need some good young/cheap/controlled bullpen pitchers for the Reds”
        We do have the last part in our system now but as to the first part some our potentially best position players are still in “A” ball or high “A” ball. If The Reds cannot use them with our current roster I am not sure that we can offer them to another team that will ask that same question. If we can’t fill our current roster holes at SS, LF, and 2nd with our AA and AAA folks how does that look to other teams. just a thought. :)

        • Nah, they’d be like the fancy miniature plants placed around a steak at a nicer restaurant. You’re not expected to actually eat them, but they are supposed to make the steak (Chapman in this analogy) look more tempting.

  8. Since Bob has taken over the team, has their been any reason to believe that if both he and Walt and scouts/manager believe player X is worth it they haven’t paid them? Both Bronson and Choo left and got paid way more then their real value and we had younger cheaper alternatives ready to go. Until I see players walk because the Reds don’t have the monies, I won’t worry.

    • Wow Drew, solid reasoning.

      Votto, Broxton, BP, Marshall, Bailey=worth it, because the Reds thought they were worth it.

      Choo, Arroyo=not worth it, because the Reds didn’t think they were worth it. Everyone else just overpaid and the Reds had a cheap alternative.

      • Sometimes it’s just that simple, it’s not something that has to be over thought. In Bob’s tenure he has shown he will spend when in mag’t view it’s a good spend. Neither Choo or Arroyo were a good spend given what they got. Bob will have the monies for others when the time comes.

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