Philly Front Office

Baseball fans have been put in a bad and uninformed position. That’s not uninformed in a derogatory sense by any means, rather we have been purposefully left in the dark about the finances of the owners of our favorite teams. From memory I can tell you the contract of almost everyone on the Phillies and probably a good chunk of the rest of the league too. If I can’t remember, there’s Spotrac.com and a slew of other websites to give me every single contract number I could ever need. These details are released within minutes of the first rumblings of a signing. Does anyone have any idea how much money our favorite teams make? Nope, there’s no website for that. That isn’t an accident.

So How Much are the Teams Making?

We don’t have all the info, but let’s break down the few things we do know. MLB national broadcast rights deals distribute about $60m per team off the top each season. Though local media rights have been thrown into flux lately because of the Diamond Sports debacle, most teams are getting at least $50m from their local broadcast deals with many hovering around $100m. 48% of that local TV money is pooled and then redistributed to all the clubs equally. At an estimated $2.5b, that local TV money comes to about $40m per team (on top of the 52% they keep). Teams that go over the luxury tax also pay a penalty that is distributed in very secretive ways to the bottom feeders. For those counting at home, even the poorest teams make more than $126m before they sell a single ticket. Oh right, I forgot, people actually go to these games. Aside from tickets, people spend money on concessions, parking, and merchandise too. Let’s be conservative and say that averages $75 per person in total. 71m people attended games in 2024. That’s an average of $177.5m per team. All told, a team could make revenue of over $300m. This doesn’t even consider sponsorship and licensing sales!

Wait, don’t some teams have way better attendance than other teams? Yes, they absolutely do. Teams like the Marlins, A’s, Rays, White Sox, and Pirates routinely put out crap rosters with bare bones payrolls. No one wants to shell out money to see their games. In an incredibly not shocking comparison, the teams at the bottom/top of the attendance list last year also had the lowest/highest payrolls (BTW, that retained amount is how much they are showing on their books that they were responsible for but didn’t finish the season on the team):

Just for fun, Colorado was 15th in spending and 15th in attendance and they were absolutely atrocious last year with a 61-101 record. It’s almost like the teams will draw more fans if there are players worth watching!!!

What Does This Have to do With a Salary Cap?

If your team is making over $300m a year right now (or at least has that potential) and isn’t spending it on your team, I have two questions for you: 1, Where is it going? 2, What makes you think they are going to spend it if there is a salary cap?

The answer to the first question is easy, they keep it. Despite the whole league sharing money because some teams cry poor, they are not obligated to spend that money on players. Sure, the player’s union can file a grievance if they do not spend 1.5x their revenue sharing money on payroll, but that is obviously not much of a threat considering it has yet to happen. They are simply not investing that money in the team.

The second question is the point of this article. It is pretty well accepted that any potential salary cap would have to come with a salary floor and vice versa. The players are not going to put a lid on their possible wages without a guarantee that the owners will actually spend their money. What would those cap/floor numbers be?

The other 3 major sports leagues in the US have salary caps and floors. In the NFL, the cap this past season was around $255m with a floor of 89% of the cap (over a 4-year average). The NBA allows teams to go over their $140m soft cap, but the floor is steady at 90% of the cap number. In the NHL, there is a hard cap of $88m and a floor of $65m. We have a high gap of 90% and a low of 75%. What would each look like in the MLB?

I hate to keep going on tangents, but we have to take a look at the owners first. It needs to be understood that even though in the end, the owners will vote unanimously to lock out the players in any labor dispute, they are definitely not in lock step. Throughout labor history, the real fight is rarely between just the owners and just the players. Instead, it usually starts with some of the owners crying poor and the other owners saying, “tough shit” (this is where we are at currently). Once enough owners cry poor, then they have to devise a plan to extract more money from the players somehow. Once this scheme is hatched, then the players are forced to negotiate ways for the richer owners to still be able to spend money on them but also allow the less rich (none of them are poor) owners to make more money too. The process is that silly. Do you think the Dodgers, Yankees, Phillies, and Mets hate spending money on their players? They do it because they want to. Not everyone wants to.

Knowing these owners, we need to come up with cap numbers that make the less-rich owners happy but also the more-rich owners and players happy too. Total baseball payroll last year was $4.9b. That means an average payroll of $163m per team (with a high of $307m and a low of $62m). Are the Marlins going to agree to a $163m floor? Are the Dodgers, Phillies, and Mets going to agree to that as cap? The big spenders are all over $300m in payroll for 2025 with multiple long-term deals on the books. We are not even close with this number.

Despite being wildly unacceptable for everyone, that $163m number is important because it represents the amount spent on player salaries. We have to stay close in comparison to this number because owners are not going to spend a significant amount more next season on salary. Let’s say cap and floor numbers of $173m/153m? That’s an 88% floor, would that work? Nope. How about $193m/$133m? That’s not better. $223m/$103m? What’s even the point of this? We are right back to where we started except probably worse off. The gaps are just too much. It’s easy to say teams should have to spend between $200m and $300m, but that would mean owners agreed to spend an average of $2.5b more on player salary. Not just any owners either, it would be coming from the bottom tier teams. No chance in hell they do that!

Who are the Villains Here?

Because we know exactly how much each player makes, it is easy to label them as the villains. Bunch of greedy millionaires make too much money to play a game is the type of thing you hear all the time. This is more optics than anything though. No one ever counters with greedy billionaires are the ones profiting from overcharging me. It is always frustrating to see people side with the billionaire owners over the millionaire players.

Lately people see what the Dodgers are doing and hate it. “They are ruining baseball!!!” is the common refrain. Are they though? I admit that the deferred contract shenanigans (especially with Ohtani) is not a good look but also not against the rules. Any team can do this. Most of what they have done though was because of other team’s failures. The Red Sox traded them Mookie Betts because they didn’t want to pay him. The Angels absolutely failed Ohtani and Mike Trout for years. Freddie Freeman never wanted to leave Atlanta, but they low balled him. Anyone could have signed Blake Snell last year or this year. Most of the rest of the guys are homegrown, came over in trades, or were signed to fair contracts. Other teams could have signed Tanner Scott, Kirby Yates, and Teoscar Hernandez, but they chose not to.

So who is saying the Dodgers are ruining baseball? Is it the low payroll teams? The Marlins traded away Tanner Scott last year, are they mad they didn’t extend him? They traded away Jesus Lazardo to the Phillies because they didn’t want to extend him either. Jazz Chisholm was the face of the team still on his entry contract, sold him to the Yankees. Not to mention the slew of MVPs they have divvied up around the league. How about the Pirates? Were they in the market to sign Blake Snell to pair with Paul Skenes, Mitch Keller, and Jared Jones? Nope. That would have been a hell of a rotation. How about the White Sox trading away Garret Crochet while angling for a new stadium and alienating their whole fan base through one of the worst seasons ever? It didn’t need to be like this. I understand that these teams are rebuilding. Fine. Except they seem to always be rebuilding. What exactly are they building?

How about the middle teams looking to contend like the Cubs, Orioles, and Guardians? The Cubs are one of the biggest money making clubs in the sport and are wildly popular. Despite this, their payroll ranking has been 7, 11, 14, and 14 over the last 4 seasons. The Orioles have a ton of young talent but just lost out on their incumbent staff ace Corbin Burnes and let 40+ homers walk to Canada. Burnes received a reasonable contract from Arizona while Anthony Santander only has a $13.7m AAV in Toronto. For years they have been profiting from FAR below average payrolls. Could some of that money have been used on Snell or Burnes? Absolutely. The Guardians have been a low budget success over the years. They even got Jose Ramirez to accept below market value to stay. But what about Francisco Lindor? How many kids in Cleveland would like to have worn his jersey their whole childhood? Sure, they received Andres Gimenez for him, but he was just traded to Toronto while Lindor was second in the NL MVP race. All of these teams profited greatly over the last 5 years but simply decided to not pay their stars.

What about the other big budget teams? I wish the Phillies signed Scott. The Mets could have also used him, but they paid two elite salaries for Juan Soto. The Yankees basically bought Cody Bellinger from the Cubs and Devin Williams from the Brewers because those teams didn’t want to pay them. Their fans seem more jealous than anything that the Dodgers have more talent, but their $300m payrolls aren’t that different from the Dodgers’ $350m.

So, the smaller budget teams weren’t trying, the middle budget contenders simply chose not to spend, and the big budget teams are just jealous. Honestly, this seems more like getting mad at someone for asking a girl out first when you didn’t have the balls to open your mouth. It’s easy to get mad at that person, but what did they do that you couldn’t have done? You might think the Dodgers are ruining baseball, but they are simply going for it. Other teams should give that a try.

Solutions

One possibility is the owners agree to pool all of their local TV revenue. This comes to $83m per season. Combined this with national revenue and we are up to $143m for each club and the Dodgers gargantuan TV coffer is drained. This means team profit will be basically up to attendance and local licensing. You could have a steadily increasing salary floor starting at $163m and keep the luxury tax payments in place, maybe even make them tougher. Right now, the tax starts at $241m and increases in intervals of $20m (up to $301m) with extra penalties for repeaters. The NBA has instituted draconian penalties for going too far above the salary cap which could be effective here. The NBA also forces teams under the salary floor to share the excess money amongst the rostered players. The NFL allows any money not spent in one season to carry over into the next, allowing for spending orgies. One of those situations would have to happen.

Seems nice right? Well, in practice the teams with the richest owners would STILL be able to do what they want, it would just mostly come out of their own pockets. None of this is stopping Steve Cohen or the Dodgers conglomerate from blowing a free agent’s doors off. The bottom feeder teams would just be floated up to a respectable level and pocket whatever excess they can like they are doing now. I don’t know if the bigger teams want to be penalized for being more popular and better run than their greedy constituents. The owners that don’t spend now will comparatively not spend in the future either.

MLB has an ownership problem, not a player salary problem. A cap seems like a Flex-Tape like solution to MLB’s gap between the Haves and Have-Nots but that misses the actual problem: owners treating their team like a business not a baseball team. A fan sees their team stink, their favorite player traded, and all of the money they poured into hats and jerseys while the owner says they can’t compete. “Baseball is broken” they claim and blame the Dodgers. The fans accept this for the most part as a fact of living in Pittsburgh, Cleveland, and Miami. But if the team can’t compete and the owner is losing money, why don’t they sell the team? Well, as I was writing this Forbes reported that baseball just had record revenues of $12b. This is a precursor to their regular team valuation report which last year had the least valuable team, the Marlins, coming in at $1b and the average team worth $2.4b. Not only do these teams not lose money, but they gain value every year. They are purposely leaving money, fans, and wins on the table simply because they want to profit the most while doing the least. Baseball doesn’t have a Dodgers problem; it has an Orioles, Pirates, and Marlins problem.