1. The Business of Major League Baseball
FEI Colorado Chapter
April 20, 2017

2. Baseball is too much of a sport to be called a business and too much of a business to be called a sport.
--Phil K. Wrigley
Cubs owner ( )

3. League Revenues (Billions) National Football League $13.0
Major League Baseball
National Basketball Association 4.8
National Hockey League
“Big Four” Leagues $31.0

4. Average Team Values (Millions)
National Football League $2,388
Major League Baseball ,537
National Basketball Association 1,355
National Hockey League
Average Team Value ( ) 11.5%

5. “Baseball is in the middle of a golden age in which its popularity and financial position have never been more secure.”
Stanford Economist Roger Noll

6. Growth of Major League Baseball Attendance, Revenues & Player Salaries Club Averages (1982-2017)
EST % of
26 clubs clubs Revenues
Attendance ,714, ,438,500
Local revenues $14,909, $184,000, %
National revenues ,114, ,000, %
Total revenues ,024, ,000, %
Player salaries $7,738, $129,000, %

7. On Baseball Economics, July 2000.
The goal of a well-designed league is to produce adequate competitive balance. By this standard,
Major League Baseball is not now well designed. Proper competitive balance will not exist until every well run club has a regularly recurring reasonable hope of reaching postseason play.
The Report of the Independent Members of the Commissioner’s Blue Ribbon Panel
On Baseball Economics, July 2000.

8. Major League Baseball Franchises Postseason Play (Wildcard Era- 10 clubs advance) 2012-2016
Los Angeles (NL)
St. Louis
Baltimore
Detroit
Oakland
Texas
Washington
Pittsburgh
San Francisco
Boston
New York (AL)
Toronto
Cleveland
Kansas City
New York (NL)
Atlanta
Cincinnati
Chicago (NL)
Tampa Bay 2013
Los Angeles (AL) 2014
Houston 2015
Minnesota
Chicago (AL)
Seattle
Miami
Philadelphia
Milwaukee
Arizona
Colorado
San Diego

9. --NFL Commissioner Paul Tagliabue (Sports Illustrated, Sept. 10, 1990)
Free market economics is the process of driving enterprises out of business. Sports league economics
is the process of keeping enterprises in business on an equal basis. There is nothing like a sports league. Nothing.
--NFL Commissioner Paul Tagliabue
(Sports Illustrated, Sept. 10, 1990)

10. Average Major League Baseball Club Revenues Stadium Revenues – 60%
Tickets (62%)
Advertising & Sponsorships (15%)
Concessions (12%)
Suite Rental (9%)
Parking (2%)
Local TV & Radio Revenues – 18%
Central Office Revenues – 21%
MLB Central Fund
MLB Revenue Sharing
MLB Properties
MLB Advanced Media (MLB.com)
MLB Network
Other Local Revenues – 1%
Spring Training
Retail Stores

11. MLB Revenue Sharing (Since 1994)
Base Plan – 34% of Net Defined Local Revenue (NDLR)
Sample Club
$250,000,000 Total Revenues
(100,000,000 less National Revenues less Stadium Expenses
Equals $150,000,000 Net Defined Local Revenue (NDLR)
$51,000, % of NDLR
$55,000,000 – 30 Club average
$4,000,000 Revenue Sharing to Sample Club
Net transfer $345 million to 14 clubs
Range: $80 million payor - $50 million recipient

12. Major League Baseball Player Contract System
MLB Debut
0 to 3 Years of Major League Service
League Minimum: $535,000
e.g. Kyle Freeland (rookie), Chris Rusin (2.092)
6 Years of Club Control
Arbitration
4 to 6 Years of Major League Service
Player salary can be determined via Arbitration System
Average Arbitration Salary: $3,425,000
e.g. Nolan Arenado (3.155) signed two year contract ( ) $29.5 MM
Arbitration eligible- Blackmon, Chatwood, Lyles, McGee
Last Rockies player- Wilin Rosario $2.8 MM ($3.3 MM player demand)
Free Agency
6 or more Years of Major League Service
Player salary determined via free agent market
Average Dollars Per Win: $7,500,000 (Salary/WAR)
Ian Desmond, Mike Dunn, Greg Holland, Alexi Amarista - $97MM commitment (17-22)

13. Major League Baseball
2017 Team Player Payrolls
(in millions)
1 Los Angeles Dodgers $225
2 Detroit Tigers
4 San Francisco Giants
16 Colorado Rockies
29 San Diego Padres
30 Milwaukee Brewers

14. Major League Baseball
2017 Team Valuations
(in millions)
Value Revenue
1 New York Yankees $3, $526
2 Los Angeles Dodgers 2,
5 San Francisco Giants 2,
23 Colorado Rockies ,
29 Oakland Athletics
30 Tampa Bay Rays

15. MLB Ballpark Development Cost Summary
Ballpark Opening Year Original Cost Public % Marlin Park (Mia) 2012 $525,000,000 70% Target Field (Min) 2010 $544,000,000 72% Yankee Stadium (NY) 2009 $1,300,000,000 17% Citi Field (NY) 2009 $600,000,000 27% Nationals Park (WDC) 2008 $611,000, % AT&T Park (SF) 2000 $357,000,000 4% Coors Field (Den) 1995 $215,000,000 78% Average - 23 parks ( ) $384,000,000 34%

16. A Tale of Two Cities San Francisco Giants Colorado Rockies
1883 (1958) First Season
$2.65 B Team Value $1.0 B
Charles Johnson Owner/CEO Dick Monfort
$100 M Purchase Price $95 M
Year Purchased
$428 M Revenue $248 M
$78 M Operating Income $26 M
0% Debt/Value %
$193 M Player Expenses $127 M
$180 M Gate Receipts $61 M

17. A Tale of Two Cities San Francisco Giants Colorado Rockies
4.6 M Metro Population M
41,546 (4th) Avg. Attendance ,129 (11th)
AT&T Park Venue Coors Field
Team Owner Stadium District
Year Opened
41, Capacity ,398
$357 M Cost to Build $215 M
Centerplate Concessionaire ARAMARK
$ Avg. Ticket Price $24
$ Revenue per Fan $50
(8) World Series Champs

18. Author, The Entertainment Economy
Entertainment– not autos, not steel, not financial services– is fast becoming the driving wheel of the new world economy.
--Michael J. Wolf
Author, The Entertainment Economy

19. could one day afford to buy a baseball team.
What happens is that all your life you operated businesses in such a way that you
could one day afford to buy a baseball team.
And then you buy the team and forget all the business practices that enabled you to buy it.
--George Steinbrenner
Yankees owner ( , )

20. Questions?

21. The Business of Major League Baseball
FEI Colorado Chapter
April 20, 2017