How does revenue sharing work in mlb

Such revenue disparities accelerated in the s as bigger-market teams began setting up their own Regional Sports Networks on cable TV, profiting directly from subscriber fees and ad sales while other teams began to benefit form the first wave of new stadiums, notes Andrew Zimbalist in May the Best Team Win.

Under the latest version , in effect through , all teams pay in 31 percent of their local revenues and that pot is split evenly among all 30 teams. Revenue sharing makes some franchises significant payers and others recipients. Under the first version of revenue-sharing from through , some low-revenue teams seemed to be gaming the system.

While revenue-sharing money is supposed to be used to improve on-field performance, some teams appeared to be using the shared revenue to enhance profits while failing to invest in higher payrolls.

Indeed, for low-revenue teams, there was previously a disincentive to fielding a better team and raising revenue — under the — revenue-sharing plan, more money coming in from tickets meant less money coming in from the shared pool of MLB revenues. Lower-revenue teams paid a marginal rate of 48 percent of local revenues into the shared pool, while high-revenue teams paid 40 percent. The current deal seeks to fix that disincentive, with all teams contributing 31 percent.

However, the thresholds are set so high that this tax typically only affects the top-spending New York Yankees and Boston Red Sox. Sort of. The same goes for the payroll ratio between the seven biggest-spending teams and the seven smallest.

It was a ratio of 3. However, the formula for the plan is not as simple as multiplying this figure by a constant rate. A hypothetical calculation is detailed in the model link above and outlined below. Net Transfer Value Tab 1 in model. Those with a negative value are payors. Those with a positive value are payees. The sum of either amount is the NTV, which, for each payor, is also expressed as a percentage of the total.

For this exercise, Forbes net revenue is used. However, that figure includes post season revenue and revenue sharing transfers, so, though the NTV of the plan should be accurate, individual team contributions or receipts may be under or over stated.

Keep in mind, however, these figures are not the actual amounts each team will either pay or receive. NTV is merely the first step in a longer formula. This method is used to smooth out year-to-year variance in revenue. As with the NTV, the Blended Net Local pool yields a transfer amount for each team that is expressed as a percentage of the aggregate, but this time for both payors and payees.

However, that figure includes post season revenue and revenue sharing transfers, so, though the transfer value of the Blended Net Local Revenue pool should be accurate, individual team contributions or receipts may be under or over stated.

Revenue Sharing Calculation Tab 3 in model. Press 'Enter' to see all results. Most Recent Stories. Log In Subscribe. AFC East. AFC North. AFC South. AFC West. NFC East. NFC North. NFC South. NFC West. AL East. They agreed to be paid on a pro-rated basis in their previous agreement on March 26, which granted players a full year of service time if no season is played. Teams will have the option of hosting spring training 2. According to the two people, the traditional two-league- six-division structure will remain, but teams will only play opponents in their division and the corresponding geographical division from the other league.

The owners have also agreed to expand the postseason from 10 teams to 14 teams, adding an extra wild-card round, the two people said. If teams are unable to play in their home ballparks, at least at the outset of the season, they could choose to share a major-league facility with another team or play at their own spring-training complex.