Discussion on Payroll/Market Size

[harfman77]

I hear a lot of people say that the Sox should be spending more because of the market size that they are in, being the third (or if you group the Bay area as one market) largest sports market in the country.

 

In the last five seasons the Sox have had attendance ranks of:

 

2004 - 1,930,537 (21st)

2005 - 2,342,833 (17th)

2006 - 2,957,414 (9th)

2007 - 2,684,395 (15th)

2008 - 2,501,103 (16th)

 

That averages to 16th in baseball over that time period.

 

Total Payroll in that time

 

2004 - $65,212,500 (15th)

2005 - $75,178,000 (13th)

2006 - $102,750,667 (4th)

2007 - $108,671,833 (5th)

2008 - $121,189,332 (5th)

 

Averaging the 8th highest payroll

 

Revenue in that time (2008 n/a yet)

 

2003 - $124,000,000 (17th)

2004 - $131,000,000 (19th)

2005 - $157,000,000 (14th)

2006 - $173,000,000 (13th)

2007 - $193,000,000 (14th)

 

Averaging the 15th amount of revenue.

 

So really the only financial figure which would not categorize the Sox as a middle of the pack team would be payroll. I see a lot of arguments that the Sox should be one of the top spending teams in baseball and that seems to be a pretty well accepted notion here, and I am sure there is probably a good reason for it. I wasnt able to find the amount of revenue sharing that the Sox receive and where that ranks, but they used to be in the middle of the pack as far as receiving money from the league.

 

So I guess the question is, are the Sox a mid-market team? KC, Pittsburgh and Minny are all small market teams according to the numbers for each of those teams, but the Sox seem to always fall right in the middle.

[daa84]

i heard that of all teams in baseball the sox are tied with teh Nationals as the team that spends the highest % of their revenue on payroll...so nobody should ever, every complain about how much we spend on players....i guess JR doesn't need to make money off the Sox, on the other hand the Bulls are a freaking money making machine for him

[caulfield12]

Do those revenue figures include any monies generated by World Series and playoff appearances in 2005 and 2008 (now I see 08 is not included)?

 

Broadcast revenues (WGN, etc.)?

 

Parking and concessions?

 

I know we have one of the highest average ticket prices in the majors, and I'm sure parking and concessions have to be up there as well...which is why I would have thought our revenues should be at least a BIT higher than our "average" as far as attendance.

 

Source of figures? MLB? Forbes?

 

I guess it's a little misleading to include the 2008 attendance figures without including revenues generated....that would seem to "skew" the average up a couple of ticks. I would think we're something like 10th-13th in revenue generation during that time, just guessing though.

 

And I'm a bit surprised the numbers for 2006 are so low, with all the season tickets and "sellouts" we had. I guess you have to take into consideration the diminished seating capacity as one equalizing factor.

Edited December 16, 2008 by caulfield12

[BaseballNick]

It's not all about attendance. I remember hearing that the Sox generate really good money from TV and radio. Whether that makes up the difference, I'm not sure, but it definitely counts for something.

[R.J.]

I've been extremely pleased with how we have handled the payroll the past 5-6 years.

[Buehrle>Wood]

You're not including money deferred in that payroll. If I were to guess we have deferred more money than anyone in baseball the past few years. It had to be about ten million alone last year.

[caulfield12]

I think the deal for Ken Griffey, Jr., he's just starting to collect the bulk of his deferred money. Not quite as crazy as the Herschel Walker contract, but close...

[harfman77]

Do those revenue figures include any monies generated by World Series and playoff appearances in 2005 and 2008 (now I see 08 is not included)?

 

Broadcast revenues (WGN, etc.)?

 

Parking and concessions?

 

I know we have one of the highest average ticket prices in the majors, and I'm sure parking and concessions have to be up there as well...which is why I would have thought our revenues should be at least a BIT higher than our "average" as far as attendance.

 

Source of figures? MLB? Forbes?

 

I guess it's a little misleading to include the 2008 attendance figures without including revenues generated....that would seem to "skew" the average up a couple of ticks. I would think we're something like 10th-13th in revenue generation during that time, just guessing though.

 

And I'm a bit surprised the numbers for 2006 are so low, with all the season tickets and "sellouts" we had. I guess you have to take into consideration the diminished seating capacity as one equalizing factor.

 

The attendance numbers are from ESPN, payrolls are from USA Today, and revenues are from Forbes. 2008 Revenue will not be available until April. Forbes does not say what they include in revenue, but it would take into account all incoming money.

[harfman77]

You're not including money deferred in that payroll. If I were to guess we have deferred more money than anyone in baseball the past few years. It had to be about ten million alone last year.

 

Deferred money still needs to be paid, it is just a question of when.

[striker]

don't they also get a cut of MLB's contracts with Fox, ESPN, XM Radio and MLBMedia?

[harfman77]

And I'm a bit surprised the numbers for 2006 are so low, with all the season tickets and "sellouts" we had. I guess you have to take into consideration the diminished seating capacity as one equalizing factor.

 

Attendance by percentage of capacity from ESPN

 

2004 - 61.1

2005 - 71.2

2006 - 89.9

2007 - 81.6

2008 - 76.0

 

http://sports.espn.go.com/mlb/attendance?sort=home_avg&year=2008&seasonType=2

[harfman77]

don't they also get a cut of MLB's contracts with Fox, ESPN, XM Radio and MLBMedia?

 

Yes, but every other team receives that as well so it is not really a factor that separates teams.

[chiguy79]

Forbes #s aren't that accurate, there is a lot of money not reported I am sure and they can only estimate.

 

I think the sox spending/income is where it is supposed to be. What shoudl benefit us the most is that we are the largest market in our division and thereby we should have the largest payroll in our division which should keep us competitive every year (Cubs benefit from this even more). The only outlier for us is Detroit but I think we all know their payroll is going to be getting sliced big time over the next five years and the albatross contracts they signed last year look terrible now, I could see the tigers going BK or being moved out of DET in the next 5-years (although the new stadium makes it tough). Maybe they will just suck with a $50mm payroll every year and be managed by Sheffield.

[harfman77]

According to previous Forbes reports, the White Sox made more than $70 million in profit from 2005-2007.

 

Profit or operating income? I am not trying to stir the pot, I am just trying to gain a better understanding.

[caulfield12]

I would guess that $70 million number would be "pure" profits, at least the conjecture from Forbes....although I'd doubt JR and the managing directors would agree, though.

 

I'm almost positive they would not be including the money that has been going into stadium improvements over the last 5-6 years. I'm also not sure if those revenues include "luxury suite" rentals by corporations.

[scenario]

I don't think there is any question the Sox have legitimate concerns about advertising revenues for next year.

 

 

[caulfield12]

http://www.chicagotribune.com/sports/chi-1...0,2965427.story

 

Even the Cubs have a lot of concerns about advertising revenue going forward...so you know it has to be a concern to almost every MLB franchise, with the probably exception of the Yankees, Mets and Red Sox. Even the Dodgers are getting a little "cost conscious" (letting Furcal go, and it's natural with those contracts for A. Jones, Pierre, Schmidt, etc.)

 

It will also be interesting to see if it's the Angels or Red Sox winning the bidding for TEX.

 

The Yankees are going crazy though...Kei Igawa's deal was $46 million if you include the outrageous "posting" fee. I guess shedding Abreu, Giambi, Mussina and possibly Pettitte, they feel they can afford to take on that extra payroll.

[Dick Allen]

http://www.chicagotribune.com/sports/chi-1...0,2965427.story

 

Even the Cubs have a lot of concerns about advertising revenue going forward...so you know it has to be a concern to almost every MLB franchise, with the probably exception of the Yankees, Mets and Red Sox. Even the Dodgers are getting a little "cost conscious" (letting Furcal go, and it's natural with those contracts for A. Jones, Pierre, Schmidt, etc.)

 

It will also be interesting to see if it's the Angels or Red Sox winning the bidding for TEX.

 

The Yankees are going crazy though...Kei Igawa's deal was $46 million if you include the outrageous "posting" fee. I guess shedding Abreu, Giambi, Mussina and possibly Pettitte, they feel they can afford to take on that extra payroll.

Last I checked none of these teams have lopped off as much payroll as the White Sox and say they are right up against their budget limit if not over, (not that I'm totally buying it). None also don't have the money coming off the books like the White Sox do the next year or 2, although the Yankees did have $85 million come off this year. KW liked to use Viciedo's signing bonus as Swisher's money so he will be $4 million cheaper in 2010. Dye, Contreras, Thome and Dotel will be off the books, with Konerko gone the following year. The other teams you have mentioned would have a much harder time getting to a Marlins-like payroll if it were necessary than the White Sox. Theorically, the White Sox could have a sub $50 million payroll in 2010.

Edited December 16, 2008 by Dick Allen

[caulfield12]

Well, you have to agree with the thinking, to be proactive now instead of reactive later, out of desperation.

 

It's better than having a firesale in the middle of the season IMO.

 

KW has to be thinking that if he can go into the season "under" payroll for once and experiment with the youngsters, he'll still have the flexibility to add more talent at the break, and not just a Ken Griffey, Jr., but a real impact player this time.

 

I think in the back of his mind, he has to realize it will be hard to hang with Minnesota and maybe Cleveland if they get off to really hot starts. Still, if they can stay within 5-7 games and "hang around" into July, then there's a chance that the youth movement (think Poreda, Beckham and Viciedo) will "kick in" and give them a renewed energy going into the second half, and that can be paired with a high impact vet to give them the perfect mixture going into the dog days of the summer.

 

However, as always, it comes down to starting pitching, plain and simple. On paper, we're definitely behind MIN and probably behind CLE. At best, we're even with KC and DET.

Edited December 16, 2008 by caulfield12