The Sports Professor Rick Horrow, in conjunction with promotional partner Northern Trust, reviews the baseball business at the 2006 Championship Series.
The Yankees, Dodgers, Twins, and Padres were quickly dismissed on the field – with television executives lamenting the fact that only 14 of the potential 20 Divisional Series games were necessary. However, the New York and Oakland/San Francisco markets appearance through the next round provides at least the hope of some national interest through Halloween. Once again, baseball focuses on its most positive business aspects over the next three weeks (while, at the same time, entering into the next round of Collective Bargaining Agreement negotiations):
Revenues approached $5 billion; compared to less than $1.6 billion a decade ago
Forbes pegs the average franchise value at approximately $382.2 million, up 14 percent from last year
Commissioner Selig predicts the net profit for this year will exceed $450 million, up 50 percent from the $300 million last year, and well above the $418 million operating loss in 2001
Officials predict that at least 20 of the 30 teams are profitable, compared with only five profitable franchises in 2001
As a result of these numbers, both sides approach this Fall’s Collective Bargaining negotiations with substantial optimism and an apparent obligation “not to wound the goose that is laying the egg that is about to become golden again.”
Baseball Business Overview
Good news for players: the average salary for a Major League Baseball player this season was $2,866,544, up 8.9 percent from last year. From a team perspective, revenue sharing seems to be working – as the 16 teams that received revenue sharing income spent $1.6 billion more on payroll, scouting, and player development than they received in revenue sharing and central fund income. Though hard to fathom, payrolls moved closer together (albeit sluggishly). The Yankees opening day payroll dropped from $206 million last season to $198.7 million this year – though those numbers clearly did not help. In some ways, the result has been unprecedented parity. The Philadelphia Daily News study of teams reaching the “Final Four” in each respective sport from 2001 to 2005 provides some interesting results: baseball increased its number from 10 to 13 teams, while the NFL teams reaching the championship games dropped from 16 teams to 12.
Look at “payroll parity” of the Final Four (based on opening day numbers):
New York Mets $101 million payroll (5th) $1.0 million per win (97 wins) Pedro Martinez top paid player ($14.9 million) Average salary $3.74 million No change in payroll from 2005
St. Louis Cardinals $88.4 million payroll (11th) $1.07 million per win (83 wins) Albert Pujols top paid player ($14 million); average salary $3.29 million Payroll decrease from 2005 – 3 percent
Detroit Tigers $82.3 million payroll (14th) $870,000 per win (95 wins) Magglio Ordonez top paid player ($16.2 million) Average salary $2.95 million Payroll increase from 2005 – 20 percent
