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Forbes has released its annual study of MLB’s financial landscape, and the results indicate the sport is enjoying many more fiscal peaks than valleys. According to the data, MLB added approximately 7% to net revenue and almost 10% in operating profit, while the league’s 30 franchises topped a combined valuation of $38 billion, or more than double just four years ago. Cable TV and the internet continue to be drivers of the league’s financial strength, but branding expansion has also played a role. Between increasing rights fees, the success of MLBAM, and brand leverage, the prospects for future growth are as bright as ever, assuming, of course, the players and owners are smart enough to peacefully negotiate a new CBA after the 2016 season.

MLB Financial Snapshot, 2003-2015
Forbes Snapshot
Note: Revenue for each team is net of stadium debt and revenue sharing.
Source: Forbes.com

Every team has participated in MLB’s decade-long expansion, but in 2015, the biggest benefactor was the Houston Astros, which led all franchises in terms of valuation, revenue and EBITDA growth. The Mets also posted impressive growth in all three categories, thanks in large part to their World Series run, which could translate to an even bigger financial bonanza in the year to come. Although the Dodgers once again ranked second in terms of franchise valuation and revenue, the team’s status as the game’s biggest spender took its toll on profit. Los Angeles’ EBITDA plummeted to a $73 million operating loss, which easily ranked as the lowest in the game, placing the Dodgers at the opposite end of the rival Giants’ profit of nearly the same.

Top-5 and Bottom-5 Teams By Valuation, Net Revenue, EBITDA
Forbes MLB charts
Note: Revenue for each team is net of stadium debt and revenue sharing.
Source: Forbes.com Continue Reading »

(This updated post was originally published on February 16, 2011)

For 20 years, Tampa has been the Yankees’ spring training home, but it still seems like just yesterday when the team’s camp was located down the coast in Ft. Lauderdale. I am sure most fans who grew up in the 1970s and 1980s still reflexively harken back to those days of yore, while the real old timers’ memories take them all the way back to St. Petersburg, where Yankees’ legends from Ruth to Mantle toiled under the Florida sun.

Over the years, spring training has evolved significantly. Once upon a time, it was a pre-season retreat designed to help out-of-shape ballplayers shed the pounds added over the winter. In the early part of the last century, before even reporting to camp, players would often attend spas in places like Hot Springs, where they would purge their bodies of the iniquities from the offseason. Then, games would either be played among split squads (in the old days, the camps would be split into teams of veterans and hopeful rookies, the latter often called Yannigans) or against local minor league and college ball clubs. Finally, the teams would barnstorm their way back up north before finally kicking off the regular season.

Today, spring training is more big business than quaint tradition. Thanks to the growing competition between cities in Arizona and Florida (each state now hosts 15 major league clubs), teams have been able to extract sweetheart stadium deals, allowing them to turn the exhibition season into a significant profit center. Still, at the heart of spring training is hope and renewal as teams begin the long journey that is the baseball season.

The Yankees’ spring history has been a journey all its own. Below is an outline of some significant mileposts along the way.

Yankees’ Spring Training Homes Since 1901
yankees-st

Continue Reading »

Aroldis Chapman has been officially named the new Yankees’ closer, replacing Andrew Miller, who just so happened to be last year’s top fireman in the American League. Of course, a strong argument could be made that Dellin Betances is the best of them all, which bodes well for a Bronx Bombers’ bullpen that will feature three of the most dominant relievers in the game today. Clearly, relief pitching will be a relative strength for the 2016 Yankees, but where does the team’s dynamic trio rank all time?

Before jumping into the exercise, it’s important to remember that the philosophy of bullpen usage has changed significantly over the years. Before the emergence of stoppers like Mike Marshall, Rich Gossage, and Rollie Fingers, it was rare for teams to have one dominant reliever, much less three.  For that matter, many earlier teams didn’t even have three pitchers perform a regular relief role. So, having a dominant trio relievers is really a more modern phenomenon, and any ranking should be understood in that context.

Since 1901, there have been over 9,000 relief seasons of 30 or more innings, with nearly two-thirds coming during the division era (1969 to present). In the same time span, there have been 1,655 teams who have had at least three relievers meet the 30-inning threshold. It is from among these teams that the following rankings have been derived.

In order to put Chapman, Miller and Betances in historical context, it was first assumed that each reliever would replicate their 2015 performance. Then, the projected output was compared to the three best relievers on every team in terms of ERA, hits per nine innings (H/9) and strike outs per nine innings (K/9). The rankings for each category appear below.

Top-10 MLB Bullpen Trios, Ranked by ERA, 1901-2015
top10bullpentrioERA
*2016 Yankees figures are based on 2015 performance of each pitcher. The cumulative ERA of 1.70 would rank 18th among all trios, as defined below.
Note: Includes all pitchers with at least 30 innings pitched in relief. Teams without three relievers meeting that threshold were excluded, even if their innings totals were comparable to those in the ranking. The top-three relievers for each team were based on ERA (i.e., the three relievers with the lowest ERA were included in the trio).

Source: Baseball-reference.com Continue Reading »

The 2016 Hall of Fame election was a case of less being more as the smaller BBWAA electorate helped boost support for just about every nominee. However, only two players were enshrined, leaving several deserving candidates unfulfilled amid an increasingly crowded ballot.

Headlining the results was Ken Griffey Jr., who not only earned a widely anticipated first ballot induction, but did so with the highest vote percentage aside from Lou Gehrig’s unanimous enshrinement via special election. Only three out of 440 voters left Junior off their ballot, giving him a 99.3% stamp of approval. As a result, Griffey surpassed Tom Seaver’s top mark of 98.8%, which had withstood all comers since 1992. Interestingly, that election had a similar number of participating voters (430), suggesting that the relatively smaller electorate probably had a significant impact on Griffey’s close call with unanimity. Would Griffey had been just as popular without the Hall of Fame culling the BBWAA flock? Perhaps, but with over 100 fewer ballots, running the gauntlet this year was undoubtedly an easier task. Viewed in that light, the most impressive vote total probably belongs to another Junior. In 2007, Cal Ripken Jr. received 98.5% of a whopping 545 ballots cast, giving him the second highest raw vote total in BBWAA voting history.

Top-10 Hall of Fame Vote Percentages, Since 1966
Top Vote Getters
Note: Data is as of 1966, when BBWAA started conducting annual ballots.
Source: baseball-reference.com and BBWAA

Mike Piazza’s election was also numerically historic, but in a much more trivial way. Despite seeing a 13% jump in his vote percentage, the slugging catcher become the first Hall of Famer to get inducted with a lower vote total than he had received the year before. Once again, this footnote was the result of the smaller electorate, which allowed Piazza to earn enshrinement despite losing 19 votes.

Year-over-Year Voting Comparison, 2015 vs. 2016
YY HOF VOTE
Source: baseball-reference.com and BBWAA Continue Reading »

The Yankees have added a big arm, a giant headache, and a world of possibilities.

There’s no point burying the lead. Aroldis Chapman’s pending investigation under MLB’s new domestic violence policy is just as relevant to his acquisition by the Yankees as the lefty’s ability to light up the radar gun. After all, if not for the allegations, Chapman would likely be a Dodger, and the Yankees would have had no chance to acquire him for such a modest package of prospects. Put more bluntly, Chapman is a Yankee because of, not in spite of, baseball’s ongoing domestic violence investigation.

Because of the uniqueness of the situation, the Chapman trade has a rare ethical component. In recent years, the off field behavior of athletes has come under increased scrutiny, with domestic violence garnering particular attention. As a result, some have argued that by trading for Chapman, the Yankees are sending “the wrong message”. However, it’s unclear what message is being sent and to whom?

Yesterday’s trade does not change the fact that Chapman is still the subject of an ongoing investigation. His acquisition by the Yankees doesn’t absolve him of any alleged wrong doing, nor grant him any favors in the process. Professional critics are always eager to weigh in on controversy, but there are three possible outcomes for the Chapman inquiry, and each one deserves a different reaction. For that reason, it’s not only premature to condemn Chapman, but also too early to heap scorn upon the Yankees. Continue Reading »

Forget about Dodger Blue. Green is the new primary color in Los Angeles.

The Dodgers may have come up empty handed in the postseason, but it wasn’t for lack of trying. In 2015, the organization spent over $290 million on player costs, which, combined with a luxury tax bill of nearly $44 billion, easily made Los Angeles the most aggressive spender in the game, according to figures obtained by the Associated Press. The Dodgers also broke their own record for the costliest payroll and surpassed the 2005 Yankees for the highest luxury tax bill.

Top-20 Final Team Payrolls, All Time
top20 payroll 2015
Note: Final payrolls represent actual amounts spent (salaries, benefits, earned bonuses and pro-rated shares of signing bonuses), but not AAV valuations used for luxury tax purposes.
Source: bizofbaseball.com and MLB releases published by AP

Year-by-Year Luxury Tax Payments by Team
Year by Year Lux Tax Bills
Note: Baseball’s first luxury tax was in force from 1997-1999. The current system was instituted in 2003.
Source: bizofbaseball.com and MLB releases published by AP

Los Angeles’ record setting payroll represented a year-over-year increase of nearly 14%, or about double the league average. However, the Dodgers weren’t the only team that opened its wallet last season. Eleven teams  recorded a higher increase than Los Angeles, albeit off a smaller base, including the Astros and Cubs, whose payroll costs rose by over 40%. At the other end of the spectrum, the Phillies and Diamondbacks spent over 20% less in 2015, while the Yankees’ payroll inched up by 2.5%.

Year-Over-Year Payroll Changes (Final), 2015 vs. 2014
2105 final payroll
Note: Based on base salary of contract year plus pro-rated items, earned bonuses, and defined benefits of $12,626,624.
Source: MLB releases published by AP Continue Reading »

Opt out clauses have become the baseball equivalent of a pre-nuptial agreement. Before committing to a team, high profile free agents are increasingly using their leverage to negotiate favorable terms for a potential early divorce. But, are these contractual caveats as one-sided as often portrayed?

The criticism of opt outs has ratcheted up as the practice has become more prevalent. Even the MLB commissioner is scratching his head over the increasing use of these agreements. In an interview with Ken Rosenthal, Rob Manfred wondered aloud about why teams would be willing to extend such uneven terms. “The logic of opt-out clauses for the club escapes me,” Manfred confessed, but is the commissioner really that confounded?

If Manfred really wanted to know why his bosses were engaging in such a counterproductive practice, he could easily ask them. So, why did he take his concerns to the media instead? Probably because he already knows the answer. The teams offering opt outs are doing so because it’s in their best interest.

All baseball contracts are guaranteed, so whenever a long-term deal is signed, an inordinate amount of risk is heaped upon the team. This imbalance isn’t unfair; it’s by design. In exchange for years of team control, owners have agreed to a free agent system the eventually shifts the burden to them. The question for clubs then becomes how best to mitigate the risk associated with long-term contracts. Deferred money, back-loaded contracts, and insurance policies have traditionally been some of the most common ways to manage risk, but, now, opt outs have been added to the owners’ arsenal.

Opt outs provide obvious benefits to the player. If, for example, David Price were to excel in the first three seasons of his new deal with the Red Sox, he could opt out and hit the free agent market again in 2018, when, presumably, a new bidding frenzy would drive his salary even higher. On the other hand, if Price were to flop, or suffer an injury, he could simply remain under the terms of his current deal and live happily ever after in Boston. Because this contrast is so stark, it’s easy to see why so many believe the benefit is one-sided. Continue Reading »

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