MLB admonishes the Marlins on revenue sharing

So this was big news yesterday.

The following joint statement was issued today by the Major League Baseball Players Association, the Office of the Commissioner of Baseball and the Florida Marlins:

The Basic Agreement requires that each Club use its revenue sharing receipts in an effort to improve its performance on the field. This requirement is of obvious importance to all players, Clubs and fans of the game. In recent years, the Union has had concerns that certain Clubs have not lived up to this requirement, and has consulted regularly with the Commissioner’s Office about those concerns. The Florida Marlins are one of a number of Clubs that have been discussed.

After extensive discussions, the three parties are pleased to announce that they have reached an agreement regarding the Florida Marlins’ continued compliance with Article XXIV(B)(5)(a) of the Basic Agreement.

This more or less gets to the heart of a matter that many Marlins fans have been complaining about for years. Ever since revenue sharing became a part of the collective bargaining agreement earlier in this decade, complaints have come out from parties that some organizations, such as the Marlins, were pocketing the money rather than using it to improve the on-field content. Agents, particularly super agent Scott Boras, had recently brought up these claims, pointing out that teams could definitely afford to pay more and were artificially lowering the market price.

We’ve heard this sort of talk for some time, but I never expected to see the Players Association actually nab a team, along with MLB, on this very issue. And yet it seemed destined that if a team were to be taken in for not putting enough revenue sharing money into the team, it would be the Marlins.

How it works (generally)

Here’s how the system generally works. Teams pay into the revenue sharing system using 31% of their team revenue. That 31% is split evenly among all 30 teams. In addition, the MLB Central Fund pays out a small amount inversely based on market size/payroll, such that the “poorer” teams receive more money from the fund, capped a certain amount.

What does it do for the Marlins?

For the lower market teams such as the Marlins, the combination of the central fund and revenue sharing generally garner the Marlins money. According to the Basic Agreement of the CBA, that money is intended to go towards improving the on-field quality, but the Marlins’ payroll has not increased significantly since the period of revenue sharing. The organization’s stance has been that, from 2003-2005, the team lost a lot of money maintaining a payroll from $40+M to around $60M in 2005. Thus, the “market correction” occurred in 2006 and the team has been in penny pinching mode since.

However, because of this recent agreement, it seems an uptick in payroll is to be expected.

MLBPA Executive Director Michael Weiner said:

“In response to our concerns that revenue sharing proceeds have not been used as required, the Marlins have assured the Union and the Commissioner’s Office that they plan to use such proceeds to increase player payroll annually as they move toward the opening of their new ballpark.

To which I say “poppycock.” Payroll data is clearly in the public domain, in that teams generally publish payroll information and databases of this info are commonly formed. We should be able to see whether the team will increase payroll. However, this statement does not make any mention of by how much payroll will increase, and by how much MLB is looking to have payroll increase. This additional line makes it all particularly sketchy.

MLB Executive Vice President, Labor Relations Rob Manfred added:

“The Basic Agreement contains confidentiality provisions that preclude the parties from publicly discussing the specifics of the Marlins’ finances.

Of course, it’s a totally understandable agreement, but it makes us fans on the outside even more wary of any actual change. Sure, the Marlins could bump payroll by $5M over the next two years, leading into the new stadium. It would fulfilled any promises made to the public without presumably doing much different than the organization’s normal business practices.

What does it mean for this season?

There’s been talk that this recent public backlash from a higher source (MLB) should convince the Marlins to spend more on this season’s payroll. Names particularly discussed are the obvious Dan Uggla and Josh Johnson. The Marlins were already planning on keeping Johnson, and the pivotal point for keeping him is a fourth year, not necessarily money. With Uggla, the case is different, in that he has his own issues to deal with for next season; there’s no doubt that even with the Marlins increasing payroll, there would be no way the Fish would pay $12 – $15M for Uggla in 2011. So in the case of these two players, I doubt it matters all that much.

Who will it matter to? Players like Ricky Nolasco offer a good example as to what the Marlins plans will be. Nolasco is in his second arbitration year and is a prized commodity despite his awful 2009 ERA. Teams are definitely checking in, and the Marlins know for sure that they have an interesting player. The old standby would be to trade him, preferably before 2010 ends. The new option, if the team was planning on increasing payroll, would be to offer a team-friendly four-year deal that ties Nolasco through two years of free agency, just like the one the Marlins are looking to keep Johnson on. Of course, this plan seems impossible right now, as the team has already signed Nolasco to a deal. And next year, don’t count on such a thing happening with Nolasco one year away from free agency.

Ultimately, this provision may force an extra deal or two for the Marlins, perhaps push them to make an ill-advised veteran signing for $3M to plug a hole (and plug some payroll). It may all be for naught. It all remains to be seen, but I maintain a skeptical view of all this.

By the way, check out Maury Brown’s take on the situation and what it may mean for all parties involved. It’s over at his excellent site, The Biz of Baseball.

Topics: Dan Uggla, Josh Johnson, Miami Marlins, MLB, MLBPA

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  • Moti

    Jayson Stark said that the marlins receive about 80mil dollars in revenue sharing+MLB Central Fund+TV money before they sell a single ticket to start the year. How can they possibly justify a 40 mil dollar payroll?!

    I knew they received money, but the reported 80 mil before a single ticket is sold has me outraged. I also cannot agree with you more about your comments, the agreement basically changes nothing.

    Baseball is obviously a business, but this is ridiculous. As a season ticket holder, I feel betrayed. I am as loyal a Marlins fan as you will see. Am I wrong about how I am feeling?

  • Michael Jong

    Moti,

    If that figure is true (and Stark can’t claim it’s anything more than a “back-of-the-envelope” type of calculation, since the figures are confidential to MLB), then it’s absolutely unacceptable. But that’s part of why the MLBPA nabbed the Fish on it. I’m happy that the MLBPA stepped up and said something, but as I mentioned, at the same time I feel skeptical that any real change will result.

    In other words, you’re not wrong to feel this way, and we should be a good deal outraged. Maury Brown mentions in the linked article that MLBPA must have had something on which to file a grievance, otherwise MLB and the Marlins would not have agreed on such a joint statement. Clearly they’re doing enough of something wrong to get caught were it to go to an arbiter, so the team chose this option instead. Let’s see if it makes significant change at all.

  • Moti

    The irony is that this is actually a very positive development for Marlins fans. However, I still find myself almost lamenting the non-moves the past 2 years. Jayson Stark was quite adamant in his tone when discussing the figures. Assuming he is at least in the ballpark with his figures (no pun intended) I think every single REAL fish fan has a right to be upset.

    Most of the people who complain about the marlins do not attend games, or even watch the games to TV. I feel as though the real marlins fans are the ones who are really getting screwed. Nevertheless, overall this is good news. We shall wait and see, it has been a very entertaining offseason to say the least.

    • Michael Jong

      Moti,

      I agree that it probably is at best good news. It certainly can’t be bad publicity, as the team already has the reputation that this indictment brings on.

      I wouldn’t doubt that it’s a figure above our payroll, but I can’t imagine it being such a large number. In 2005, the Marlins received around $31M in rev. sharing. If the figure is around $60M or so in total, I would not be surprised. $80M seems like a stretch, though I suppose it could be higher.

  • http://www.allucanheat.com Lane
    • Michael Jong

      Lane,

      Thanks for the link, I listened in to the interview. As Stark mentions, he wrote an article earlier as part of Rumblings and Grumblings on ESPN.com, reporting similar figures. I can’t say I believe entirely that they’re as high as he says, but it could very well be the case. If so, Marlins fans have a right to be a bit peeved. Would it surprise anyone if it were the case? I think not, given how sleazy David Sampson and Jeffrey Loria come off to most of the fans and general MLB reporting public.

  • Moti

    We signed JJ!!!!!!!!!!!

    4 years 39M!!!

    Yesss!!!

    • Michael Jong

      Moti,

      I’m so happy right now. Big step forward for this organization, congrats to everyone who got it done!

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