But the biggest story is the effect revenue sharing is having on the league's economic landscape. Most of the money comes courtesy of the New York Yankees, which paid a record $77 million toward baseball's revenue sharing system. The Boston Red Sox, baseball's No. 2 revenue sharer, paid only $51 million. Such generosity by Yankees owner George Steinbrenner, required by the league's rule that teams pay 34% of their net local revenue to help make poorer teams more competitive, is the reason why the Oakland Athletics, Minnesota Twins and Kansas City Royals increased in value by more than 20%.That revenue sharing put the Yanks $50 million in the red in operating income last year; the Red Sox ($-18.5 mil), Mets ($-16.1 mil), Marlins (-11.9 mil) and Angels (-$2.6 mil) were the only other teams to post losses in that department. Overall operating income of the 30 teams shot up from $132 million to $360 million in just a year, so the next time an owner tells you salaries are increasing too fast as compared to revenues, they'll be talking to the hand.
For example, a visit by the Yankees can increase a home team's ticket sales by as much as 25%. And the Yankees account for 27% of all league merchandise sales, the profits of which get shared equally throughout the league to the tune of more than $3 million per franchise. In effect, much of the league operates as subsidiaries of the Bronx Bombers.Anyway, the stuff may seem dry, but it's also fascinating at a certain level. Since Forbes is much more credible than any of the team owners, this report is an essential tool to combat the propaganda spread by Bud Selig and many of the game's other owners on teams' financial states; remember that as private entities, teams aren't required to report their finances, and many of them will dispute the numbers published here.
But don't feel bad for the Yankees or the Red Sox. They sit atop our rankings, worth $1 billion and $671 million, respectively, thanks to the revenue generated by their ownership stakes in regional sports networks. Steinbrenner's $62 million in cable money from the YES channel was by far the most in the league. Moreover, the Yankees will have a new cash-rich ballpark by 2009--perhaps adding another 20% to the team's valuation.
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