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dougdirt
11-26-2012, 01:40 PM
Word is that Fox Sports and the Dodgers are working on a 25 year, $6-7B deal. That would give the Dodgers, before selling a single ticket, concession, advertisement or jersey, $240-280,000,000 per season.

The Reds aren't making $10M per season right now. The Dodgers are about to get 24-28 TIMES as much as that.

How are small market teams supposed to compete with things like this?

kaldaniels
11-26-2012, 01:47 PM
Word is that Fox Sports and the Dodgers are working on a 25 year, $6-7B deal. That would give the Dodgers, before selling a single ticket, concession, advertisement or jersey, $240-280,000,000 per season.

The Reds aren't making $10M per season right now. The Dodgers are about to get 24-28 TIMES as much as that.

How are small market teams supposed to compete with things like this?

My quick math puts that at 1.7 Million per game (assuming every game is televised - in real life probably 90-95 percent will be). I don't know what production costs ends up being but lets say 300k to make it easy which means each game costs 2 million for FS. Is that profitable? 25 years ago was 1987...look where we are now. What if cable doesn't exist in 2037? This is crazy.

MikeThierry
11-26-2012, 01:47 PM
Word is that Fox Sports and the Dodgers are working on a 25 year, $6-7B deal. That would give the Dodgers, before selling a single ticket, concession, advertisement or jersey, $240-280,000,000 per season.

The Reds aren't making $10M per season right now. The Dodgers are about to get 24-28 TIMES as much as that.

How are small market teams supposed to compete with things like this?

See the Tampa Bay Rays as a model. This trend of large TV deals is going to continue in baseball. The Cardinals, for example, only get 14 million per season with their TV contract. Forbes has estimated that they could get 3 or 4 times that much once they get a new tv deal in a couple of years. Until baseball goes the NFL route with it's TV deals, it's something that we are going to have to live with.

dougdirt
11-26-2012, 01:49 PM
Baseball isn't going to ever be able to go the route of the NFL because every year another team is signing a 10-20 year TV deal.

dougdirt
11-26-2012, 01:51 PM
See the Tampa Bay Rays as a model. This trend of large TV deals is going to continue in baseball. The Cardinals, for example, only get 14 million per season with their TV contract. Forbes has estimated that they could get 3 or 4 times that much once they get a new tv deal in a couple of years. Until baseball goes the NFL route with it's TV deals, it's something that we are going to have to live with.

Tougher to even go with the Rays model now that there is a cap on how much you can spend on players in both the draft and internationally. Teams can't just spend on the best players over and over anymore because they see it as a market inefficiency. It is now against the rules to do that. But if team A wants to spend $300M in the Majors, well that is allowed. Want to spend $15M in the draft? Sorry about your luck. Want to spend $7M on international free agents? Sorry, no way Jose.

MikeThierry
11-26-2012, 02:00 PM
If the Padres can get a 1.2 Billion TV deal, I'm sure the Reds can string something together. The way TV deals are going now, I don't think many teams will be able to cry poor in the near future.

MikeThierry
11-26-2012, 02:02 PM
I really don't have a problem with the Dodgers getting this kind of money. 6 Billion seems realistic for the market size and the media market it has.

dougdirt
11-26-2012, 02:07 PM
If the Padres can get a 1.2 Billion TV deal, I'm sure the Reds can string something together. The way TV deals are going now, I don't think many teams will be able to cry poor in the near future.

We will see. But even still, we are talking 20% of what others are getting.

While they can't cry poor, they can cry "poorer", and really that is what matters. If you can't compete with other teams for free agents, what does it matter?

traderumor
11-26-2012, 02:09 PM
I really don't have a problem with the Dodgers getting this kind of money. 6 Billion seems realistic for the market size and the media market it has.While the playing field has been leveling for some kind of "pay no attention to that man behind the curtain" reason in the last few years, new TV deals like this are going to tilt the scales again where there is severe disparity in revenue that once again creates the small market blues. These developments seem to be a step backward in the "level playing field" saga.

MikeThierry
11-26-2012, 02:09 PM
We will see. But even still, we are talking 20% of what others are getting.

While they can't cry poor, they can cry "poorer", and really that is what matters. If you can't compete with other teams for free agents, what does it matter?

It's a matter of being smart. Developing talent along with getting impact free agents when you can. I've seen it for over a decade here where I live. There is a model for small market teams to win. GM's of those teams just have to be as smart or smarter than their big market counterparts.

kaldaniels
11-26-2012, 02:11 PM
It's a matter of being smart. Developing talent along with getting impact free agents when you can. I've seen it for over a decade here where I live. There is a model for small market teams to win. GM's of those teams just have to be as smart or smarter than their big market counterparts.

It's one thing for the Reds to lock up a Votto in today's market. However if the Dodgers can easily top an offer by 20 million a year if they choose, that's another story.

dougdirt
11-26-2012, 02:12 PM
It's a matter of being smart. Developing talent along with getting impact free agents when you can. I've seen it for over a decade here where I live. There is a model for small market teams to win. GM's of those teams just have to be as smart or smarter than their big market counterparts.

Tougher to be smart when baseball limits your spending both in the draft and in international free agency, where smart teams were able to spend a lot of money. Now things are tiered to being "fair" with young talent, but for established talent it isn't even close to being fair. We are going to start seeing the rich just get richer because of these new "young talent" spending rules while the established talent spending is an open market to the highest bidder. So unless some team comes out and starts paying all of their minor league coaches like Major League ones, it is going to be real tough to gain an advantage by simply being smarter than other people when it comes to developing cheap talent.

MikeThierry
11-26-2012, 02:17 PM
It's one thing for the Reds to lock up a Votto in today's market. However if the Dodgers can easily top an offer by 20 million a year if they choose, that's another story.

I still think though that teams cannot buy championships. They can buy their way into the ability to be competitive but when the Yankees when on their run in the 90's, a good chunk of their team was home grown talent. After a while, they started to get the big name free agents and they haven't been as successful. The thing is about spending all of this money on free agents is that the players that are in free agency are generally on the downslide of their career. The big market teams will never really get the kind of production from a given player that the same player gave to another team. If the Dodgers want to spend 40 million per year on an aging player, by all means let them do it.

MikeThierry
11-26-2012, 02:20 PM
Tougher to be smart when baseball limits your spending both in the draft and in international free agency, where smart teams were able to spend a lot of money. Now things are tiered to being "fair" with young talent, but for established talent it isn't even close to being fair. We are going to start seeing the rich just get richer because of these new "young talent" spending rules while the established talent spending is an open market to the highest bidder. So unless some team comes out and starts paying all of their minor league coaches like Major League ones, it is going to be real tough to gain an advantage by simply being smarter than other people when it comes to developing cheap talent.

It's a double edged sword. The reason why the Yankees have had, as of recent years, a top 5 to top 10 farm system is because they could outspend everyone in the draft and international signings. Now, I think you will see other teams be able to compete with the Yankees with the new rules. I see your point but on a whole I think it's a good thing.

MikeThierry
11-26-2012, 02:40 PM
The other thing I would like to point out is that as these large market team's payrolls expand, so too will the money available in revenue sharing. If the Dodgers spend 280 million on payroll, that means they will have to pay a significant amount for revenue sharing. That means along with these small market teams getting big tv deals (like The Fathers did), so too will their share of money from revenue sharing. Maybe this will be tweeked further down the road to make big market teams pay more but the way it's set up, the big market vs small market scenario will be essentially the same as it is today except with more overall money involved.

Crumbley
11-26-2012, 02:48 PM
Word is that Fox Sports and the Dodgers are working on a 25 year, $6-7B deal. That would give the Dodgers, before selling a single ticket, concession, advertisement or jersey, $240-280,000,000 per season.

The Reds aren't making $10M per season right now. The Dodgers are about to get 24-28 TIMES as much as that.

How are small market teams supposed to compete with things like this?
How does someone born to parents who worked at a gas station compete with the children of CEOs? Work harder, smarter, social progams (revenue sharing) fall into some luck, etc. It's a steep, steep hill to climb, but isn't impossible.

RedsManRick
11-26-2012, 02:50 PM
This is why the Reds gave Joey Votto a 10 year extension. In a few years, $20MM/yr is going to look awfully cheap.

REDREAD
11-26-2012, 02:52 PM
Tougher to even go with the Rays model now that there is a cap on how much you can spend on players in both the draft and internationally. Teams can't just spend on the best players over and over anymore because they see it as a market inefficiency. It is now against the rules to do that. But if team A wants to spend $300M in the Majors, well that is allowed. Want to spend $15M in the draft? Sorry about your luck. Want to spend $7M on international free agents? Sorry, no way Jose.

Honestly, I think the new draft rules help the small market teams more than they hurt it.
Before the caps, you had the Yankees and Rangers spending an insane amount of money on amatuer draft and international FAs. At least the playing field is leveled on the draft now. With the cap, I doubt you will see small market teams punting draft picks, or drafting to save money (which was pretty common for Cincy and Pittsburg in the early 2000's). IIRC, part of the new agreement also forbids giving Major League contracts to draftees, which helps everyone out.

The new draft rules are one step towards parity/fairness.. Sure, there's a lot more work to be done, but at least they fixed one facet that they could.
Because if they didn't fix that, Cincy might spend 10 million on the draft, but LA would spend 100...

kaldaniels
11-26-2012, 02:54 PM
Once the ink is dry on this deal, what could the new owners of the Dodgers flip the franchise for?

MikeThierry
11-26-2012, 02:57 PM
Honestly, I think the new draft rules help the small market teams more than they hurt it.
Before the caps, you had the Yankees and Rangers spending an insane amount of money on amatuer draft and international FAs. At least the playing field is leveled on the draft now. With the cap, I doubt you will see small market teams punting draft picks, or drafting to save money (which was pretty common for Cincy and Pittsburg in the early 2000's). IIRC, part of the new agreement also forbids giving Major League contracts to draftees, which helps everyone out.

The new draft rules are one step towards parity/fairness.. Sure, there's a lot more work to be done, but at least they fixed one facet that they could.
Because if they didn't fix that, Cincy might spend 10 million on the draft, but LA would spend 100...

You explained this better than I did. I agree with pretty much all you said here. The Yankees should never have a top 5 farm system in the position they consistently drafted at. For much of the 2000's though they did have a top 5 farm system with the International signings and the amount they spent in the draft. The way it is now, it could potentially hurt small market teams but on a whole it drastically changes the way large markets can approach the draft. To me, it will hurt big market teams more in the long run than small market teams.

I also think the new rules will bring the cost per draft choice down. I don't see Scott Boras getting the kind of money he used to get for Strasburg and Harper. The cost to do business in the draft will eventually start to fall.

REDREAD
11-26-2012, 02:59 PM
The other thing I would like to point out is that as these large market team's payrolls expand, so too will the money available in revenue sharing. If the Dodgers spend 280 million on payroll, that means they will have to pay a significant amount for revenue sharing. That means along with these small market teams getting big tv deals (like The Fathers did), so too will their share of money from revenue sharing. Maybe this will be tweeked further down the road to make big market teams pay more but the way it's set up, the big market vs small market scenario will be essentially the same as it is today except with more overall money involved.

Excellent point. I hadn't even thought of that.
As far as I know, the luxury tax threshholds have not changed. That seems to be throttling the spending of many large markets now.

Also, I think the owners are not going to let salaries escalate as quickly as they have in the past. We can see the trend in the last 5 years or so. The Cy Youngs and MVPs get the 20-25 million/year (which is about what Arod got from Texas as a high water mark a long time ago), but the payscale for the average/above average player has not gone up much over the past 5-10 years.

I'm not calling it collusion, but I think the owners now have an almost unspoken agreement not to overpay for the non-superstars.

MikeThierry
11-26-2012, 03:03 PM
To expand on my previous point, I'll give the example of Robinson Cano. The Yankees spent a pretty decent amount to get him at the time in 2001. Now, all the teams are on the same level playing field to get a Cano type player. The Yankees or any of the large market teams can't come in there is throw their weight around. It's a huge reason why I love the new rules, on a whole.

MikeThierry
11-26-2012, 03:09 PM
Excellent point. I hadn't even thought of that.
As far as I know, the luxury tax threshholds have not changed. That seems to be throttling the spending of many large markets now.

Also, I think the owners are not going to let salaries escalate as quickly as they have in the past. We can see the trend in the last 5 years or so. The Cy Youngs and MVPs get the 20-25 million/year (which is about what Arod got from Texas as a high water mark a long time ago), but the payscale for the average/above average player has not gone up much over the past 5-10 years.

I'm not calling it collusion, but I think the owners now have an almost unspoken agreement not to overpay for the non-superstars.

This is probably why I'm more laissez-faire on this issue than most people are. Revenue sharing has gone a long way to making things more competitive. If we didn't have revenue sharing, my opinion might be different on this issue. You have seen teams like the Yankees try to streamline their payrolls a bit in recent years. I think revenue sharing has a lot to do with it.

traderumor
11-26-2012, 04:02 PM
It's a matter of being smart. Developing talent along with getting impact free agents when you can. I've seen it for over a decade here where I live. There is a model for small market teams to win. GM's of those teams just have to be as smart or smarter than their big market counterparts.The equalizer is getting out of the hole caused by wrong choices. The team with the big budget can buy their way out of poor decisions, whereas the team with the fraction of available funds will be faced with years to recover. Revenue sharing is a crock, you still have the same spending patterns, its more likely due to cycles than anything that some of the big boys are suddenly vulnerable. They'll turn over their roster and be right back in it while other franchises try to build with cheap talent. They better be right, though. Sorry, that's not a fun part of the game for me. It's a fixable inequity that just continues to get swept under the rug in the name of capitalism.

westofyou
11-26-2012, 04:18 PM
More of the same.

Big Markets drive larger cars with a bigger cushion for mistakes, the only thing that kills them is poor management and the dollars involved allow a quicker rise from being dead.

First it was quality parks in a metro area that was not stagnant, then radio contracts, then moving to larger markets and then TV contracts, then free agency, then superstations now decade long contracts with huge payoffs not spread thin payoffs.

It's been and always will be a harder hill to climb for the teams in the smaller markets.

Not fair, but a reality in this games makeup and certainly nothing new.

traderumor
11-26-2012, 05:20 PM
More of the same.

Big Markets drive larger cars with a bigger cushion for mistakes, the only thing that kills them is poor management and the dollars involved allow a quicker rise from being dead.

First it was quality parks in a metro area that was not stagnant, then radio contracts, then moving to larger markets and then TV contracts, then free agency, then superstations now decade long contracts with huge payoffs not spread thin payoffs.

It's been and always will be a harder hill to climb for the teams in the smaller markets.

Not fair, but a reality in this games makeup and certainly nothing new.Maybe they'll sign Kevin Brown and Darren Dreifort to long-term deals.

westofyou
11-26-2012, 05:25 PM
Maybe they'll sign Kevin Brown and Darren Dreifort to long-term deals.

Or sell their team to a crazy nobody!

MartyFan
11-26-2012, 07:48 PM
Really good thread and this hits at my sweet spot...I'm in the media and I love baseball...so yipppeee!

The reds have been operating in the new baseball economy and the other "small market" teams that are still on their heals are going to be the ones dusted in this.

Someone mentioned the new media deal is why the Reds signed Votto to the deal they did and that is EXACTLY right, getting Votto for tha amount will seem like chump change...BP deal is the same way and DO NOT be surprised if the Reds SPEND on Broxton, Madson a corner OF like Swisher and/or a 3B like Wright...I am not kidding...with the money that is coming in from media they are going to lock up STARS for 5-10 years with contracts that are in the 12-20 million dollar range annually and they will be ahead of the pack (at first).

The economy of baseball changed with the Padres and Cubs being sold...not the Dodgers...things are about to get really fun.

We are about to see some MAJOR shifts in the game and the players (not on the field but who is involved in the business of baseball) that are making things happen...All this said...when the Reds do their new deal I would bet that it isn't for a penny LESS thank $3billiion...not kidding...the farm is in pretty good shape, they have invested in real talent at the big league level and have had some recent success that says they like it and will continue to grow their fanbase again...teams like the dbacks, indians, royals, marlins, mariners, astros who haven't been part of the divisional conversations for a while are the ones who will have the most ground to make up...to score a "big deal" or what is considered a big deal now.

I would say that the league actually may contract a few of these teams OR move them to other countries in Europe, Asia or more specifically China..I could see a day when the Japanese baseball league and MLB become affiliated to the point that it becomes another AL and NL setup...the teams in that/those leagues will be able to play in the WS...there will be regular season games in Japan and other countries and so on...I could even see a team in the Middle east, obviously south Ameerica, China...Cal Ripken has been working with the Chinese for several years to learn baseball....so this is just the tip of the iceberg for this sport and the league and the money that is about to come into it!

I know I went off track (a little) but the reason the media deals are so big is because the media dollars are about to go through the roof because of international dollars being spent, not just national dollars.

bucksfan2
11-27-2012, 10:22 AM
This is why the Reds gave Joey Votto a 10 year extension. In a few years, $20MM/yr is going to look awfully cheap.

ARod signed his massive contract back in 2001, 11 years ago. From that point most of the top dollar contracts have stayed stagnant. You would have expected inflation to kick in, but Joey Votto will make similar money to the contract ARod signed 11 years ago.

For the most part MLB execs have gotten smarter, almost NFL like. They are signing their good young players to contracts early. Each and every team can afford to spend top dollar on their young talent. Just look at what they Rays did with Longoria, a $20M/season guy now. IMO its fools gold now to chase championships. The Yankees succeeded on time in doing it. Most good teams now are built from within with good young players. The Dodgers will be a case study going forward on how easy it is to "buy" a championship. If they succeed then you may see the Yankees and Red Sox open up their pocket books. If the Dodgers struggle I think you will see most teams operate the way they have over the past 5 years or so.

REDREAD
11-27-2012, 12:02 PM
Maybe they'll sign Kevin Brown and Darren Dreifort to long-term deals.

Well, Carl Crawford and Josh Beckett is potentially a start :)

Always Red
11-27-2012, 12:18 PM
Really good thread and this hits at my sweet spot...I'm in the media and I love baseball...so yipppeee!

The reds have been operating in the new baseball economy and the other "small market" teams that are still on their heals are going to be the ones dusted in this.

Someone mentioned the new media deal is why the Reds signed Votto to the deal they did and that is EXACTLY right, getting Votto for tha amount will seem like chump change...BP deal is the same way and DO NOT be surprised if the Reds SPEND on Broxton, Madson a corner OF like Swisher and/or a 3B like Wright...I am not kidding...with the money that is coming in from media they are going to lock up STARS for 5-10 years with contracts that are in the 12-20 million dollar range annually and they will be ahead of the pack (at first).

The economy of baseball changed with the Padres and Cubs being sold...not the Dodgers...things are about to get really fun.

We are about to see some MAJOR shifts in the game and the players (not on the field but who is involved in the business of baseball) that are making things happen...All this said...when the Reds do their new deal I would bet that it isn't for a penny LESS thank $3billiion...not kidding...the farm is in pretty good shape, they have invested in real talent at the big league level and have had some recent success that says they like it and will continue to grow their fanbase again...teams like the dbacks, indians, royals, marlins, mariners, astros who haven't been part of the divisional conversations for a while are the ones who will have the most ground to make up...to score a "big deal" or what is considered a big deal now.

I would say that the league actually may contract a few of these teams OR move them to other countries in Europe, Asia or more specifically China..I could see a day when the Japanese baseball league and MLB become affiliated to the point that it becomes another AL and NL setup...the teams in that/those leagues will be able to play in the WS...there will be regular season games in Japan and other countries and so on...I could even see a team in the Middle east, obviously south Ameerica, China...Cal Ripken has been working with the Chinese for several years to learn baseball....so this is just the tip of the iceberg for this sport and the league and the money that is about to come into it!

I know I went off track (a little) but the reason the media deals are so big is because the media dollars are about to go through the roof because of international dollars being spent, not just national dollars.

Thanks for posting this, MartyFan; after reading this, I feel better about the future of the Reds in this smaller market than I have in a long time. :beerme:

MikeThierry
11-27-2012, 01:36 PM
Does anyone see the Reds getting a $3 billion TV deal like MartyFan believes? If we're talking about those kind of numbers, it makes my eyes pop thinking about the kind of numbers my team will get when it signs it's new deal.

_Sir_Charles_
11-27-2012, 02:43 PM
MLB's deal is 12.4 billion/8 years. (worth 51.6 million per year for each team)
Padres was 1 billion/20 years. (50 million per year)
Dodgers is 6 billion/25 years. (240 million per year)
Rangers 3 billion/20 years (150 million per year)
Angels just over 3 billion/20 years (roughly 150 million per year)

So even if the Reds version is closer to the Padres version, there's still a ton more money flowing in than most fans realize. That MLB deal seems to get overlooked quite often. And with revenue sharing, it equalizes it even more for the smaller market teams. So yeah, the Reds have money to spend.

----------------

Some more info. Since the revenue sharing system currently in place makes all teams put 31% of their local tv income into the pot to be divided among all the teams, this means that the Dodgers deal, for example, is putting 74.4 million into the collective pot each year and the Reds get 2.4 million of that each year. But in a few years (2016 I think) the 15 biggest market teams won't be eligible for revenue sharing. They'll still have to ante up every year, but they won't get a check from the pot. So that would effectively double the annual income for the Reds from revenue sharing. 4.8 million a year from the Dodgers alone. Or from the few I listed above, 12.2 million per year from just those 4 clubs.

Also, teams are required to spend at least 25% more on payroll than they receive in revenue sharing. So if the Reds get say 50 million in revenue sharing, they'd have a minimum payroll of 62.5 million.

Yep, the money is there folks. And then some.

dougdirt
11-27-2012, 04:23 PM
Also, teams are required to spend at least 25% more on payroll than they receive in revenue sharing. So if the Reds get say 50 million in revenue sharing, they'd have a minimum payroll of 62.5 million.

Yep, the money is there folks. And then some.

But everyone else is also getting the money. There is more money to spend for everyone. It doesn't really level the playing field, it just means that players are going to get more money from everyone.

The Reds may be able to now offer someone like Latos $3-4M more per year. But it also means that the big market teams can offer him $6-8M more per year.

_Sir_Charles_
11-27-2012, 04:39 PM
But everyone else is also getting the money. There is more money to spend for everyone. It doesn't really level the playing field, it just means that players are going to get more money from everyone.

The Reds may be able to now offer someone like Latos $3-4M more per year. But it also means that the big market teams can offer him $6-8M more per year.


Yet. It doesn't level the playing field yet. In 2016 the top 15 market teams won't be eligible to get revenue sharing income. They'll have to pay into the kitty, but only the smaller market teams get the money...and larger portions of it as well.

And don't forget the luxury tax that puts a soft cap on the payroll of those big market teams. Sure, they'll have more money to spend, but for every penny they go into that luxury tax bracket it's just more money to the little guys to even further level the playing field. It's far from perfect...but it's certainly a BIG step in the right direction (the draft changes too).

REDREAD
11-27-2012, 04:49 PM
Yet. It doesn't level the playing field yet. In 2016 the top 15 market teams won't be eligible to get revenue sharing income. They'll have to pay into the kitty, but only the smaller market teams get the money...and larger portions of it as well.


Thanks for all the detailed info you posted.
I didn't realize this.
In all honesty, when I look at this, I have to say that the owners are making huge strides at closing the gap in payroll disparity.
I love the fact that teams are required to spend at least 25% more than the make in revenue sharing.. That alone will help parity a lot.

_Sir_Charles_
11-27-2012, 04:56 PM
Thank Doug. If it wasn't for him starting this thread, I never would've looked all that stuff up. And I did just find one thing I misunderstood, the luxury tax...the money collected from that...it doesn't go back to the general revenue sharing fund. It goes towards other purposes for MLB overall.

klw
11-27-2012, 07:18 PM
Just how much money the Dodgers have at their disposal may become apparent once Greinke ends up being signed.

\http://www.mlbtraderumors.com/2012/11/zack-greinke-rumors-tuesday.html


Yesterday, we learned that the Dodgers have started asking about Zack Greinke and the rival Angels already view them as their biggest threat to sign the hurler away. Here's the today's news on the right-hander with the latest up top..

One person involved in the talks believe that Greinke's deal will eclipse C.C. Sabathia's seven-year, $161MM deal, according to Buster Olney of ESPN.com (via Twitter).

Matt700wlw
11-27-2012, 07:29 PM
Major League Baseball could pay off the National Debt lol

RBA
11-29-2012, 02:26 AM
It's one thing for the Reds to lock up a Votto in today's market. However if the Dodgers can easily top an offer by 20 million a year if they choose, that's another story.

So with my powerball winnings, I buy the Reds for $500million and than turn around and sell Votto's contract to the Dodgers for $1 Billion.