Like the Marlins, the Pirates are another example of what is wrong with MLB's revenue sharing. But, one thing I didn't see in the article and which has definitely played into the profits, recent sale, and the even more recent firesale is that MLB permits teams to take the cost of the stadium and expense it over 8 years, with year 8 only having a marginal benefit to net local revenues. With all that cost being written off, it shrinks net local revenues, which is a boost to revenue sharing receipts. The team was sold a couple years ago just before year eight, and right after year 8 had a firesale to cut payroll and sent every player with any potential packing.
Revenue sharing is going through a massive and unintended flux, with the Yankees and Mets being able to write off their stadium costs right now. The Yankees and Mets have historically been #1 and #3 contributors to the revenue sharing pool, accounting for nearly 41% of all revenue sharing contributions. Even though net local revenues for the Marlins had declined again, their revenue sharing is expected to be cut by 40% - 60% (revenue sharing from last year is just now being distributed). There are some who speculate that with the stadium write-offs that the Yankees could become revenue sharing recipients this year. Base on published reports of the cost, the Yankee are allowed to write off $180 million of the stadium costs last year, which cuts their revenue sharing contribution by $55.8 milion this year, and each of the next two years, with the write-offs then dropping to $120 million before down to $60 million in the 8th year after opening. Based upon 2008 numbers, the $180 million would make the Yankees borderline revenue sharing recipients, though the increase in ticket revenue could change that. Further, the first year in a new stadium, the team additionally receives a discount from net local revenues of 10% of the local GROSS revenues. If the Yankees ticket sales did not grow by 10% from 2008 to 2009, they will likely be net recipients.
The main point is that revenue sharing collected - every team pays in 31% of its net local revenues, with the bottom feeders (usually the bottom 19 teams) getting back more than they pay in - is going to be down substantially for the next few years as the total net local revenues are down due to Selig's unusual accounting standards, which just happened to be established coinciding with the original planned opening of Miller Park. Selig waited & took advantage of writing off 60% of the total stadium costs over its first four years after opening before selling the Brewers.
The CBA expires after next year, and revenue sharing is bound to be a big issue. I anticipate more fighting among the owners themselves than between the owners and the unions. With MLBs knack for timing (strike the year after Marlins came into existence), there is bound to be a major problem before the opening of the Marlins new stadium in 2012. If Loria doesn't get his stadium breaks (any stadium not opening in 2011 does not get the bennies in the current CBA even if the agreement was in place prior to the expiration of the CBA), the Marlins will open up a new stadium with yet another firesale.
