Major League Baseball executive vice president Rob Manfred responded strongly to revenue sharing figures thrown out by Scott Boras at last week’s general managers’ meetings indicating that Boras’s numbers “have no basis in reality” and that Boras is living in “fantasy land.” Manfred reacted to the uber-agent’s suggestion that there are Major League teams who receive up to $80 million from a baseball central fund before they even sell a single ticket.
Manfred responded to Boras’s comments in the Sunday Globe.
Here’s what Boras said:
“We heard a lot last year about the impending doom of the economics of baseball and they had another record year of revenues, $6 billion again this year and the economy is better. So the real truth of baseball right now is a lot of teams are starting to identify their ownerships from the following perspective — that they have an ownership that’s going to pay off their debt by getting the revenue sharing and money they’re getting from central baseball — $80-$90 million a year and they’re going to turn around and draw 1.5-2 million, make 40 or 50 dollars a head. All of a sudden, they’re sitting there with $200 million in revenues and they’re spending $50, $60, $70 million on players. Those are obviously owners that are going to have to be looked at.”
Boras indicated that from 1990, baseball revenues have increased from $1 billion to more than $6 billion:
“We’ve seen a number of teams that are just sitting back. We have clubs who aren’t successful, getting $80 million before they ever sell a ticket. The question is always going to be in the end, what are they doing with that money? For most of them they’re paying off their debt to purchase the franchise. So they become owners, debt-free but they have not done a lot to contribute to the success of the game. Those are the things as an industry, certainly the fans have to look at it and realize that kind of revenue is available. The other part of it is I think we’ve proven time and time again that investment in players produces revenue streams and success points for franchises. Even in an economy where many businesses are struggling in our industry, as I said last year, we’ve been able to keep revenues at a record level.”
Manfred, however, indicated that Boras’s revenue sharing numbers were grossly out of whack and that the five largest recipients of revenue sharing are “25-35 percent” lower than the figure Boras referenced. Manfred also said there were only 10 teams with $200 million or more in revenues.
Boras said last night that his numbers came from an August 16 article written by Bill Madden in the New York Daily News, numbers which he said he was able to corroborate.
In that story, Madden writes:
“Last year, Major League Baseball transferred approximately $400 million in revenue sharing and luxury tax — a little more than 25 percent of that coming from the Yankees alone. The Indians received slightly more that $20 million and the Pirates — despite their beautiful, eight-year old taxpayer-funded stadium — received over $40 million. This is how MLB rewards incompetent ownership. In addition to that, all major league teams received stipends of $35 million from the MLB central fund, which includes revenue from licensing, properties, national TV and advanced media. So going in, the Indians had approximately $55 million in the bank offset by their $81 million payroll – a deficit of about $25 million before they sold one ticket. The Pirates had about $75 million in the bank, offset by their $48 million payroll, which means they had a profit of $35 million before they sold one ticket. And this doesn’t even include what these teams additionally reap from their local TV and radio rights and in-house concessions, advertising, signage, parking, etc.”