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Steinberg: A new MLB story

October 06, 2012|By Leigh Steinberg

There is no joy in So Cal. The mighty Angels and Dodgers have struck out.

Artie Moreno broke the bank signing slugger Albert Pujols and CJ Wilson in the offseason. He funded a powerful lineup of hitters. But oh the pitching was a disaster. The Dodgers hitting was weak even with the additions the new owners imported – Shane Victorino, Hanley Ramirez, Adrian Gonzalez – the hitting was a disaster. The Dodgers and Angels had opposite impediments but the same result: no playoffs. But more economic help is on the way for both franchises.

For many years Major League Baseball had a stunning disparity of revenue between big-market and small-market teams. In the NFL the major revenue source is network television and it is split into 32 equal shares. Each NFL team is receiving $170 million this year.

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Although there are differentials in seat and sponsorship revenues, a salary cap insures that each team has enough payroll parity to remain competitive. In baseball, with 162 regular games and a spring training schedule, it has been local television and radio in addition to gate intake, which defines the capacity of teams to spend.

It is not only the size of a city but the size of a regional market that makes a difference. The enormous region surrounding New York, the top market in the nation, allowed the Yankees to own part of their own television network – YES. They receive $90 million per season from their television contract and millions more from radio.

Several years ago, the contrast between their local revenue from television and radio compared to Seattle was about 8 to 1.

Baseball does not have an actual salary cap. The Yankees payroll is $197 million and San Diego and the Oakland A's is $55 million.

Payroll does not necessarily equate to on-field dominance. Arizona has won a World Series and Tampa Bay has gone deep in the postseason.

The A's are the surprise team this year even with a relatively skimpy payroll. Good scouting, maintenance of a superior farm system, excellence in administration, terrific field managers, team chemistry and motivation all play a role. The ability of the Yankees or the Dodgers and Angels to sign high priced free agents does give them an advantage. The Dodgers make $100 million from their local television deal with Prime Ticket, of which they own 30 percent.

The Angels receive $95 million and a 25-percent equity stake from Fox Sports West.

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