Since the supposed team financial reports for the Rays, Marlins, Mariners, Angels, and Pirates were released on Monday, there has been lots of scuttlebutt flying around the web. Who leaked them? How come? What sort of impact will these reports have? Were they released by an agent? By someone trying to impact the collective bargaining this winter? There are a million and one questions that you can ask and very few answers.
As Maury Brown notes, though, one of the biggest debates created by these articles is about revenue sharing. In short, should teams be getting as much money as they do? From the Biz of Baseball:
The leak of the documents, with three of the clubs being low-revenue makers that have had a history of low player payroll, have created a swirling debate around MLB's revenue-sharing system. For the years in the leaked documents all three are shown to make profits, with the Marlins showing a net income of over $29 million in 2008.
When a team is making over $40M in revenue sharing and then pulling in a $30M profit at the end of the season, yes, that's disgusting and doesn't seem fair. These papers make the Marlins look pretty suspicious, to say the least, but we shouldn't let the Marlins speak for all low-revenue teams. Just because they're thumbing their noses at revenue sharing doesn't mean that some teams don't need it.
Take a look at the Rays in Maury's recent post on FanGraphs. They brought in around $35-40M in revenue sharing in both 2007 and 2008, which is supposed to help defray the cost of player development and major-league salaries. For all the other teams on the list, revenue sharing and "central funds" (i.e. national television money, revenues from MLB properties - money every club gets) is more than enough to cover all that they're spending on player development and on their major league payroll. The 2008 Rays, though, still had a $20M gap they needed to fill with their own revenue.
It's not even that the Rays were spending too much. They had a $56M major league payroll in 2008 and only spent $20M on player development (the lowest figure for any team on the list), yet they received very little in central funds and so they still had a large gap. I don't know why they received less central funds - bad television contract, maybe? - but the fact remains that the Rays need that revenue sharing to keep themselves out of debt.
According to the documents, the Rays only made $4M profit in their World Series season of 2008; the Marlins, with their 84-77 record, made a $30M profit that year. Oh, and that $4M profit was only possible because of the $17M in profit that the Rays made during the postseason. If these reports are to believed - and from all accounts, they are - the Rays need help. They're not making a large profit off revenue sharing like the Marlins; they're just trying to keep their heads above water.
From the looks of it, we're not going to see another $70M payroll with the Rays until/unless they have a new stadium and their revenue increases. Heck, it looks risky enough for the Rays to have a $50M payroll. We all knew that payroll was going to get slashed this off-season, but this drives the point home with a bang.