Sunday, November 11, 2007

It pays to be the Devil Rays...

I came by a piece in the NY times that covered Revenue Sharing;

"The problem is that the teams receiving payments have come to use them as a primary source of income — rather than to build winning teams. The most extreme example has been the Tampa Bay Devil Rays. In 2006, this team had a payroll of about $35 million, $42 million less than the 2006 league average. Not surprisingly, it won only 38 percent of its games and filled less than 40 percent of its seats for home games. It also collected more than $30 million in revenue-sharing transfers. This past season, the team reduced its payroll to $24 million and had about the same level of success"

The basic premise covered in the article is if you are guaranteed the money coming from revenue sharing you can actually soundly predict more profits by spending less on payroll. What the author suggests is tying some portion of revenue sharing to attendance figures, therefore giving smaller market teams some incentive to try and run a better business. Interesting idea, worth a read.

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