Yankees, Marlins, Payroll, and Revenue: A look at Opposite Ends of the Spectrum

Sep 24, 2013; Miami, FL, USA; Baseball fans sit in the upper deck during the ninth inning of a game between the Philadelphia Phillies and the Miami Marlins at Marlins Park. Mandatory Credit: Steve Mitchell-USA TODAY Sports

I’ve made no secret of my bias against baseball “East of the Hudson river,” as I like to call it. The Yankees, Red Sox, and Phillies are my favorite teams to root against. My bias comes from three factors:  Huge payrolls, a national media table tilted heavily in their favor, and a fan base that bears a chilling similarity to the Borg. However, a recent, thought-provoking article by David Harsanyi at The Federalist has shaken my convictions about the first of the three factors.

The premise of the article is that the fan rage at the Yankees’ Engulf & Devour, Inc. practice of using the All-Star game as a farm system might be a little misplaced. Harsanyi argues that the Yankees have been out of the top five in huge offseason contract spending for a while, and that their payroll expressed as a percentage of revenue has actually been dropping for the last ten years or so. He also points out that across baseball, revenues are rising at a faster rate than payrolls. Huge TV rights deals are driving the massive growth in revenue, with the Astros up next for the giant payday. With that in mind, Jacoby Ellsbury’s payday is huge, and probably for too many years, but it’s not the outrageous outrage that Mike Lupica makes it out to be in his NYDN piece. It’s actually closer to the historical norm when looked at as a percentage of revenue. Furthermore,  per The Atlantic’s Matthew O’Brien, MLB pays its players about 45% of revenue, as compared to the 48% and 50% figures for the NFL and NBA, respectively.

So maybe the Yanks aren’t as inherently evil as I’ve believed. What about the Marlins?  Now that I’m rethinking the Yanks, what do I see when I look through a similar lens at Jeffrey Loria and a low payroll, low-revenue team at the opposite end of the spectrum?

Last season, the Marlins were 29^th in payroll across MLB at just under $36m, ahead of only the Astros, who spent $21m to pay 25 players.  Lots of league-minimum salaries in Houston last year. This year, the Fish are reportedly looking to spend around $10m more than last year.  Early successes have sewn up the second-best free-agent catcher and a plus middle infielder, without trading away the pitching staff that is critical for any hope of October baseball in Miami in 2015 or 2016.

On the revenue side, Major League Baseball is set to cut a new deal that will raise the per-team TV revenue to about $52m for 2014, but the Marlins don’t get to renegotiate their local-market deal for another six years. The Sun-Sentinel’s Craig Davis, writing for The Huffington Post believes that the mega-deals for local TV rights are a bubble that will have popped by 2020, leaving the Marlins high and dry. Overall, out of the 30 teams in the MLB, the Marlins are ranked 26^th in overall value, according to this analysis at Forbes. A rosier revenue picture will start to get painted if the Marlins can make it to June of 2014 without rocketing to the bottom of the standings.  Miami fans are notoriously fickle, but there’s a strong yearning for good baseball here, and a good run this season will increase fan revenues, freeing up more money for one or two big-name players in ’15 or ’16.

It’s a lot of information to digest, but in the long run, it makes it harder to hate the Yankees, and makes it easier to understand why the Marlins’ payroll stays on the low side.