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First Pitch: Are Teams Really Spending the New TV Revenues?

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One of the biggest topics in baseball this year is how teams will be getting $25-27 M per year due to the new national TV revenues. That originally led to a lot of assumptions that teams would go crazy with the new money. As far as individual teams, it led to “they have $18-27 M extra to spend”, with the variance depending on how much you believed MLB was holding back from teams.

I took the same approach early in the off-season. I looked at where the Pittsburgh Pirates ended up last season (around $74 M). I added the $20 M in payroll, plus added revenue from the playoffs and ticket sales, and assumed they could spend up to $100 M with all of the new revenue. That doesn’t mean they should spend that amount. Just because you have money to spend, doesn’t mean you have to spend that money.

Throughout the off-season, I’ve been waiting for the Opening Day payrolls to be released. I wanted to see the difference between what teams spent last year, and what they spent this year, to see how many teams increased payroll. Baseball-Reference has updated payroll charts for every team, which means we can take an early look without having to wait for the payrolls to be finalized.

The figures below will change. There are still guys out there like Kendrys Morales, Nelson Cruz, Ubaldo Jimenez, Ervin Santana, and of course A.J. Burnett. I still plan to take a look at the final figures on Opening Day. For now, here are the projected Opening Day salaries, compared to Opening Day from last year, and the difference. All prices are in millions.

Team 2013 Payroll 2014 Payroll Difference
Arizona

86.3

99.2

12.9

Atlanta

90.0

90.9

0.9

Baltimore

92.2

82.8

-9.4

Boston

154.6

165.7

11.1

Chicago AL

118.9

85.9

-33.0

Chicago NL

106.8

77.8

-29.0

Cincinnati

106.9

105.5

-1.4

Cleveland

80.6

82.7

2.1

Colorado

74.0

90.8

16.8

Detroit

148.7

161.0

12.3

Houston

26.1

46.5

20.4

Kansas City

81.9

90.9

9.0

LA Angels

137.3

147.3

10.0

LA Dodgers

216.8

215.9

-0.9

Miami

50.5

40.1

-10.4

Milwaukee

88.8

95.4

6.6

Minnesota

82.0

82.5

0.5

NY Mets

93.7

84.9

-8.8

NY Yankees

228.1

195.5

-32.6

Oakland

62.0

78.4

16.4

Philadelphia

160.0

159.5

-0.5

Pittsburgh

66.8

70.0

3.2

San Diego

68.3

81.1

12.8

San Francisco

137.0

154.0

17.0

Seattle

84.2

82.4

-1.8

St. Louis

116.8

109.0

-7.8

Tampa Bay

61.9

72.2

10.3

Texas

125.3

129.8

4.5

Toronto

119.3

134.8

15.5

Washington

118.3

130.3

12.0

Average

106.1

108.1

2.0

Median

93.0

90.9

-2.1

So far, on average, teams are basically spending the same as they did last year. There are teams that are spending more. The Pirates are one of those teams. There are 12 teams that are seeing an increase of $10 M or more, and the Pirates aren’t one of those teams. Some of this spending is just normal spending. For example, the Houston Astros were in the $60-70 M range with their payroll. They reloaded the team, dropped to a $26.1 M payroll last year, and saw that increase $20 M this year. I don’t think that has anything to do with the new revenues. The Detroit Tigers have increased their payroll this year, but have taken steps to shed salaries, such as the lopsided Doug Fister trade, and the deal that sent Prince Fielder to the Rangers.

Things can change between now and Opening Day. As of right now, the ideas that the new money would lead to increased spending across the board look to be incorrect. And that makes a lot of sense for several reasons.

1. Why does a team need to spend that extra money each year? The revenue comes in at $18-27 M per year, but do teams have to spend that as it comes in, or can they treat it like any other asset and spend it when they need it?

2. This off-season had a weak free agent market. The only good players required draft compensation, and most of them are still un-signed as a result of that compensation and their high asking prices.

3. The Rockies opened the books on how they would spend this year. In the process they noted that they project less revenue in 2014 than 2013, and would be using part of the money to cover those losses. I’d imagine every team is doing the same. No team is going to take a loss, then give the full amount of the new revenue to the players.

4. Kind of a take on number one, but some teams might be spending the money in future years. The Pirates didn’t add any payroll when they extended Charlie Morton for 2-3 years. The Rays signed James Loney to a three year deal, which pays him more in years two and three. Fans look at budgets one year at a time. Teams look at long-term budgets when planning for an individual year.

5. There could be some cases where teams were spending at an unsustainable rate in 2013, and that rate now becomes more sustainable with the new revenues.

It will be interesting to see what the final numbers look like on Opening Day. For now, I’d imagine people will be surprised that the current projections show almost no increase on the average team spending. There are teams that are increasing payroll due to the new TV revenues, whether that’s small amounts or bigger amounts. But the idea that payroll would shoot up across the league just isn’t happening.

As a side note, if you’ve got suggestions for how to view this process come Opening Day, I’d love to hear it. I don’t think tracking spending is as simple as “2014 payroll minus 2013 payroll”, but that’s pretty much the approach everyone takes. I did try a few different methods (the usual range for a team over the last few years, the average of the last three years, the max over the last three years), but they came up with roughly the same figures. Some of those actually came up with teams spending less on average in 2014 than 2013. Leave any suggestions for this process in the comments.

Links and Notes

**The 2014 Prospect Guide is now available. You can purchase your copy here, and read about every prospect in the Pirates’ system. The book includes our top 50 prospects, as well as future potential ratings for every player.

**We have been releasing our top 20 prospects for the 2014 season, and this week we conclude the countdown with the top five. Today the countdown resumed with #2 – Jameson Taillon.

Tim Williams
Tim Williams
Tim is the owner, producer, editor, and lead writer of PiratesProspects.com. He has been running Pirates Prospects since 2009, becoming the first new media reporter and outlet covering the Pirates at the MLB level in 2011 and 2012. His work can also be found in Baseball America, where he has been a contributor since 2014 and the Pirates' correspondent since 2019.

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