Please check out my interview with The Hardball Times. I owe a big thanks to John Beamer for giving me the opportunity to express my thoughts in such an extended format. Aside from hopefully making a good argument about how much reasonable people can deduce about a MLB team’s finances, even without actually having access to their financial statements, I believe I make a good case about how MLB can address their revenue sharing problem – see the excerpt below.
Beamer: The Marlins don’t use revenue sharing for its intended purpose. Is this a problem and any idea how it can be fixed?
Costales: The issue of how to deal with teams which don’t use revenue sharing [RS] monies for their intended purpose is a problem for MLB. It undermines the entire revenue sharing structure which most would argue has served MLB well. Whatever “on-field performance” has come to be interpreted as in order to meet CBA provisions is almost irrelevant; it clearly was meant to help low-revenue teams compete by allowing them to increase their payroll beyond their normal means—MLB’s version of the ‘keep hope alive’ mantra.
The 2008 Florida Marlins are making an argument against a salary base. The fact that no salary base was part of the new CBA probably means that it had some support, but not enough votes this time around. But not wanting teams to profit from RS monies received is a two-part equation. Salary expenses are only one side of it. The other is revenues.
Why not limit RS receiving teams revenues by forcing them to refund a certain amount of the RS monies received back to their fans? Begin with season-ticket holders and other fans which have purchased ticket packages. Reduce ticket prices dramatically for defined periods.
The mechanics can be worked out obviously, but the philosophical rationale is straightforward—eliminate the incentives for teams to pocket their RS monies. That way, those teams who wish to go with young players and minimum salaries can do so, but without the full MLB welfare check. What is it we say in business: a principle is not a principle until it costs you something.
This idea would address MLB concerns about teams pocketing RS monies, avoid a salary base which limits a team’s independence, create goodwill among their loyal fans and likely increase attendance. It probably won’t happen, but someone please tell me why it shouldn’t happen?