A Snapshot of Team Finances: Top Tier

Unless you make it a habit to read FanGraphs only on Fridays (and if you do, what’s up with that?), you’ve likely read Part 1 and Part 2 of this series. So you know the score. We’re taking a look at team financial health as we head into the 2013 season. You also the know which teams are in the top tier, because you’re smart and can figure that out for yourself. But we’ve come this far, so we’re going to complete the exercise. We’re nothing if not true to our word.

The top tier teams, in alphabetical order by team name.

Los Angeles Angels of Anaheim

2012 Attendance: 3,061,770
Local TV AAV: $147 million
Estimated 2013 Payroll: $146 million

When Frank McCourt was running the Dodgers into the ground in 2010, Angels owner Arte Moreno stepped into the breach in the nation’s second largest city. He negotiated one of the first mega local TV deals that will pay the Angels nearly $150 million per year. He signed Albert Pujols and C.J. Wilson to expensive free-agent contracts. And then he watched while the Dodgers were sold for more than $2 billion, attendance in Pujols’ first year slipped from 2011, and TV ratings flat-lined.

No need to shed tears for the Angels, though. The local TV deal will keep the cash flowing through 2028. Fans will continue to buy anything and everything with Mike Trout’s name on it. Oh, and Pujols and Josh Hamilton undoubtedly still have special things left to do on the field.

St. Louis Cardinals

2012 Attendance: 3,262,109
Local TV AAV: $15 million
Estimated 2013 Payroll: $112 million

The St. Louis metro area has fewer than 3 million people and yet the Cardinals drew more than that to Busch Stadium last year. And the year before that. And the year before that. The last time the Cardinals recorded attendance under 3 million was 2003. The Cardinals also boasted one of the top three local TV ratings among MLB teams for the 13th consecutive season, despite a ratings dip in 2012.

So, despite a paltry local TV contract, the Cardinals’ consistent success at the turnstiles and on the field have fueled a payroll over $100 million — and pushed St. Louis into the top tier.

Chicago Cubs

2012 Attendance: 2,882,756
Local TV
AAV: $50 million (estimated)
Estimated 2013 Payroll: $105 million

The Cubs are in rebuilding mode but this is not your Astros kind of rebuilding. Chicago has more major-league talent to work with and a loyal fan base that brought nearly 3 million fans to Wrigley Field last season when the team posted its worst record since 1981. The payroll is down significantly from the Jim Hendry years, but still hovering above $100 million thanks to contracts that can’t be moved (I’m looking at you Alfonso Soriano).

Rebuilding or not, the Cubs do not lack for financial resources. The Ricketts family purchased the team in 2009 for $845 million and is prepared to spend $500 million of its own funds to renovate Wrigley Field and develop a hotel and public plaza right outside the ballpark. The Cubs also hope to cash in soon on local TV rights when their contract with WGN expires after the 2014 season.

Los Angeles Dodgers

2012 Attendance: 3,138,626
Local TV
 AAV: $280 million
Estimated 2013 Payroll: $220 million

The Dodgers details are well known. Bought for more than $2 billion by investors led by Mark Walters/Guggenheim Group and Magic Johnson. On the verge of a $7 billion deal with Time Warner to launch a new, Dodgers-only network called SportsNetLA. A mega-trade with the Red Sox that pushed the payroll close to $200 million for this season before the Zack Greinke signing.

The only uncertainty about the Dodgers’ financial hegemony is how much of the expected $280 million in local TV rights fees will be subject to revenue sharing. During the Dodgers’ bankruptcy proceedings, the judge ruled that the value of the team’s new TV deal would be capped at $84 million per year. MLB contends that SportsNetLA should be treated the same as other RSNs owned by MLB teams, such as the Yankees’ Entertainment and Sports Network (YES) and the Red Sox’ New England Sports Network (NESN). Those teams contribute their full annual rights fee to revenue sharing. The investment income they receive as a result of their equity stake is excluded from revenue sharing because the teams bear the risk of the equity’s performance.

As the deal is currently structured, the Dodgers would not bear any financial risk with SportsNetLA. Therefore, MLB argues, the Dodgers should contribute the full $280 million rights fee to the revenue-sharing program. The difference for the league’s revenue-sharing coffers would be substantial. Each team contributes 34% of its locally-generated revenue to the revenue-sharing program. The difference to the revenue-sharing fund between an annual rights fee worth $84 million and one worth $280 million is more than $66 million per year. Over the 25-year life of the deal, that’s more than $1.6 billion.

San Francisco Giants

2012 Attendance: 3,377,371
Local TV
 AAV: A mystery
Estimated 2013 Payroll: $136 million

Two World Series titles in three years will do wonders for the bottom line. Increased attendance. Panda hats and Romo fake beards flying off the shelves. Solid local TV ratings.

The last part is key, as the Giants have an unusual arrangement with Comcast Sportsnet Bay Area, their local broadcaster. The Giants own an equity stale in the network and receive a percentage of CSNBA’s total revenue (advertising revenue, carriage fees, etc.) in lieu of a set local rights fee. The Giants have been cagey about how much they’ve earned on a year-over-year basis but President Larry Baer says San Francisco will be able to “keep up” with the Dodgers.

For the moment, the Giants don’t feel the need to keep up with the Dodgers’ $220 million payroll. The 2013 squad will look a lot like the 2012 World Series winning team and cost about the same.

Philadelphia Phillies

2012 Attendance: 3,565,718
Local TV AAV: $35 million
Estimated 2013 Payroll: $155 million

The Phillies ended 2012 with an 81-81 record — their worst finish since 2006 — but ranked first in attendance with 23,000 or so more tickets sold than the Yankees. Still, cracks in the Phillies’ ticket-cash machine started to emerge with the end of their consecutive home game sell-out streak. And the team appears to be selling at least partial season-ticket plans on their website. On the flip side, the Phillies’ payroll is at its lowest level since 2009, even with Cole Hamels‘ new contract. And good news is on the way, as the Phillies’ local TV contract expires after the 2014 season. There are rumors of a Phillies’ owned regional sports network in a partnership with Comcast.

Texas Rangers

2012 Attendance: 3,460,280
Local TV AAV: $80 million (begins in 2015 season)
Estimated 2013 Payroll: $122 million

The Rangers kick started the local TV money bonanza in 2010 with it’s 20-year/$1.7 billion deal with Fox Sports Southwest. The annual $80 million fee doesn’t start flowing until the 2015 season, but the deal included a one-time $100 million signing bonus. In that same time, the Rangers have seen their attendance increase by more than one million fans — the largest three-year increase in the league.

Salary raises for Adrian Beltre, Ian Kinsler, Nelson Cruz, and Yu Darvish held Texas’ payroll steady heading into 2013, even with the departures of Josh Hamilton and Mike Napoli, and the trade sending Michael Young to the Phillies. And the payroll could have been higher if the Rangers had outbid the Dodgers for Zack Greinke. But even a team as well-financed as the Rangers has its limits, even if the Dodgers are operating without one. For now.

Boston Red Sox

2012 Attendance: 3,043,003
Local TV AAV:
$60 million
Estimated 2013 Payroll:
$155 million

On the field, the Red Sox may still be a year away from contending. Off the field, things are just fine. Attendance held steady after a tumultuous ending to the 2011 season and a frustrating 2012 which saw Boston post their first losing season since 1997. The Red Sox’ regional sports network — NESN — has a full and diverse slate of programming. And the front office has begun to trim the fat in Boston’s payroll.

Detroit Tigers

2012 Attendance: 3,028,033
Local TV AAV: 
$40 million
Estimated 2013 Payroll: 
$145 million

Tigers’ owner Mike Ilitch surprised the baseball world in 2012 with the 9-year/$214 million contract for Prince Fielder. That deal pushed the Tigers’ payroll to $133 million, a franchise high. But the Tigers raised the bar further this winter with deals for Torii Hunter and Anibal Sanchez and now boast the sixth-highest payroll in the league. Tigers fans rewarded Ilitch’s player investments by pushing 2012 attendance over the 3 million mark for the first time since 2008. They’ve found a winning formula on and off the field. Of course, Ilitch’s personal fortune, estimated at more than $1.5 billion, doesn’t hurt, either.

New York Yankees

2012 Attendance: 3,542,406
Local TV AAV: 
$90 million
Estimated 2013 Payroll: 
$210 million

Much ink has been spilled over the Yankees’ plan to lower their payroll for the 2014 season below $189 million in order to avoid the luxury tax. Many fans were frustrated this winter when the team resisted any free-agent signings that would put the 2014 plan in jeopardy. But the luxury tax penalties for serial offenders are much steeper under the CBA that went into effect last season. If the Yankees do stay under $189 million, they’ll likely save upwards of $50 million. Even for the Yankees, that’s still a big chunk of change.

At the same time, the Yankees are making every effort to fill the stadium with fans willing to pay the highest ticket prices in the league. The Yankees opted out of MLB’s new contract with StubHub because the secondary-ticket seller wouldn’t agree to a price floor. The Yankees are creating their own secondary ticket market site with Ticketmaster that will impose a price floor. And now the Yankees are suing StubHub to keep it from operating a store front near Yankee Stadium where fans can pick up tickets sold through that website.

All in all, the Steinbrenner family appears to be focused on maximizing team profits. That may not translate directly to on-field success this year. But if history is any guide, the Yankees will be using those profits to build a championship-caliber team sooner than later.

Wendy writes about sports and the business of sports. She's been published most recently by Vice Sports, Deadspin and NewYorker.com. You can find her work at wendythurm.pressfolios.com and follow her on Twitter @hangingsliders.

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10 years ago

Any idea when the Cardinals can expect a new Local TV deal? And any estimates on how it would affect total payroll?

10 years ago
Reply to  MSom13

Their current contract negotiated 2007 started in 2008 and ends after the 2017 season.