WEBVTT

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Is the goal to make money, or is the goal to

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win? Or can you find a way to do both? That's

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the business of baseball. The players, the owners,

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and the league at large all have a variety of

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income streams to pay for their services. On

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this month's episode of the Service Time Podcast,

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we're looking at the business of baseball right

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now. Not how it will change in the CBA, not how

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it was when it was 25 cents a ticket in the 1920s,

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but giving you a thousand mile wide and one mile

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deep view of how everyone makes money in the

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game. After all, diamonds are forever. I'm Dominic

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Catronio. I'm Scott Sweeney. Welcome to episode

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four of the Service Time podcast, the business

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of baseball. Let's get started. Welcome in and

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thanks for listening. This is our first episode

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And in the future, we're going to have some more

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Substack -only content coming as we get closer

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and closer to CBA Day. All right. Let's get started

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with the podcast. I'm looking forward to this

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one because, you know, talking the money of baseball,

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I mean, that's kind of one of the reasons why

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I got into. these kind of topics and contracts.

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I'm currently going to business school at the

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time, learning a lot of things about accounting

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and finance and really digging in for this episode.

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It's kind of interesting to look at a lot of

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the different teams, how they're run, how they're

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structured, and then also on the player's side,

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how they make the money from draft day until

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they retire and then get their pension. So we've

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got four categories that we're going to look

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at here of how everybody makes money. Just think

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of any type of revenue you can think of that

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has to do with Major League Baseball. We kind

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of divvied them up into four chapters. So this

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first chapter is going to be all about the player's

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revenue. So how do the players make money? The

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second chapter is how do the owners on a local

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level make money. So ticket sales and ballpark

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villages and that sort of thing. Then how the

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owners in the game at large make money is chapter

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three. That's the national view of the game.

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And then finally, chapter four is kind of a little

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bit of new money of how modern changes have affected

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how the income streams move around between private

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equity, how revenue sharing works, how luxury

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tax works, and that sort of stuff at the very

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end of this podcast. And I think, Scott, we have

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to kind of say a blanket catch -all disclaimer

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here at the top. There is only one team. that

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has their books public and there is one team

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that we're really going to rely heavily upon

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and some reporting from other pieces as well

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to analyze the business of baseball because no

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one's books are open. No one's really inviting

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media members to go open their books and to reveal,

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oh my gosh, you have this much that you spent

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this much on this. That is the Atlanta Braves.

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They are a publicly traded company. We have access

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to their proxies. It's available to anybody.

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If you're a shareholder too, I mean, it's $57

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a share right now. If that tickles your fancy,

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if you want to go invest in them, this is not

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investment advice. We are not an investment podcast,

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but I think it's important for us to remind everybody,

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everything is reported. and not necessarily clarified

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unless we are actually citing the Atlanta Braves

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proxy report, which is the only firm numbers

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you really get to use throughout this whole podcast.

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Yeah, one of the things is for the longest time,

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all the numbers that people would get from the

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team operating income, team revenue, team valuations,

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league overall revenue would come from Forbes.

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Forbes would do an annual article where they

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would list all the teams. There's always been

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some questions into whether those numbers are

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valid or close, but I've always held the opinion,

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hey, they should at least be a good estimation

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and in the ballpark. And I've kept a spreadsheet

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because this is the kind of stuff I do. For the

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past 20 years, they've been doing these articles.

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I have a spreadsheet of all the valuations, revenues,

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incomes, just to see how teams are going and

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then kind of analyze the numbers on where the

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league is going. And there were some major warning

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flags. in last year's article where the operational

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income based on past years made absolutely no

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sense. Like it was according to Forbes, which

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they didn't put this in their article because

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no one actually goes through and adds up all

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the operating incomes of all the teams like I

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did. But according to the numbers they were saying,

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baseball had the lowest profitable season since

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20 years, not even adjusting for inflation or

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even including inflation. was the lowest revenue

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year, was the lowest profit year. And that just

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didn't make any sense. That was the year where

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we just had the Yankees and the Dodgers in the

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World Series, which was the most profitable World

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Series. Attendance was higher over the past four

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years leading up to that. So since that, I've

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had a lot of doubts on whether Forbes' numbers

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are actually in the right ballpark. If you ask

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any GM or owner, They've said that those numbers

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make no sense, and I'm tending to agree with

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that. So we're relying a lot on the Braves because

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those are the only ones that are publicly posted,

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audited, and should be accurate if they're following

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the law. And on that note, the way that it's

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reported on Forbes. is in an evaluation sort

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of mindset where this is what this company is

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worth it's not talking about revenues and profit

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sharing and some of the deeper deeper stuff that

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you'll find in a proxy report i think that's

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an important definition for us to get right off

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the top here where I get really frustrated when

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you see like the number one graphic I hate more

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than anything in this world is when you see percentage

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of revenue and payroll. That is not how this

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works. And I think When you see the Mets being

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at like, oh, they made $450 million of revenue

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and they paid their players $400 million. That's

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not how this works. That doesn't include half

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the stuff that you need to include. And we'll

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talk about that in the owner side of things.

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I thought the Braves proxy report exhibits of

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just everything else you got to pay for when

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you're an owner. It's not just big league payroll.

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Front office payroll. It's literal baseballs.

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I think equipment is something that people forget.

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Travel, gas, the plane. You got to staff so much

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of this industry that it is why it is evaluated

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as greatly as it is. So an important definition

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off the top here, revenue is just money generated.

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It doesn't mean profit. Revenue is just the money

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that is generated from this. Profit obviously

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means, hey, our revenue minus our costs. making

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sure you make more money than you spend. It's

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that simple. So make sure you keep that in your

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brain for these next six months when you hear,

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oh, baseball operated at a $12 .7 billion revenue

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stream. Okay, that doesn't mean they made $12

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billion last year. I need to make sure people

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are understanding that. I think most of our listeners

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understand that, but you'd be surprised every

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now and then, Scott. Well, you can even get into

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some technicalities of profit. You can be making

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money, but not post a profit. because of depreciation

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and amortization, which are actually major things

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on the financial statements for the Braves and

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other sports teams. These teams own sometimes

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billion -dollar stadiums, and those don't go

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down as a normal, hey, minus $1 billion, let's

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calculate the profit. It gets more complicated

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than that. So this whole thing is, yeah, we've

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got to rely on the Braves a lot. I mean, we've

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gone through in our other episodes historically

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how much. the owners have not wanted to have

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their numbers be public. And there are a number

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of reasons why, which we'll also get into. Yeah.

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And we talked about it in the preview in the

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sub stack for this episode about how the Twins

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and the Pirates are kind of going through it

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right now. And that will come more to light once

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we get to the modern side of the game. But for

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now, let's jump into this episode, starting with

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the players. This first chapter is everything

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having to do with how do the players make money?

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And how does the door first get open for a player

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to make money? It's the MLB draft. And we're

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going to start with, let's just say, Scott, congratulations.

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You're good enough to be drafted to Major League

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Baseball. These teams are scouting you. We just

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saw it this past weekend during the All -Star

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break. Hey, you're going to be one of the next

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great studs. Now, the draft. started in 1965

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ironically not really having anything to do with

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Marvin Miller at the time but before 1965 it

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was the wild wild west you could just sign whoever

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you wanted you'd had the bonus babies that were

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coming out of high school that's still a thing

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to this day the bonus babies whether it's college

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or high school in the early rounds but back then

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it was go to the highest bidder there are no

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guardrails there is no chance for any other team

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to create some sort of system to say, well, we

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think we can offer you more. There's no bidding

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war. It's just go get whoever you want, scouting,

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farming, that sort of stuff. Whereas now, the

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rounds have shrunk year over year over year over

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year. We're down to 20 rounds now, it seems like.

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I hope it stays here. That's something for a

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later episode if it stays 20 rounds. But the

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number one thing that has changed in the Major

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League Baseball draft for Americans, Canadians,

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and Puerto Ricans how the bonus pool works. Yes,

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it's 20 rounds, but there is a bonus pool only

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available to be used in the first 10 rounds.

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And that pool is pretty strict. You cannot go

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over by certain number percentage. In your bonuses

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to your players. So Scott, congratulations. You've

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been signed in the second round by the Milwaukee

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Brewers. The slot value for that pick is just

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shy of a million dollars. But hey, you're a high

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school pick. Hey, I've got a great commitment.

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I'm really excited to go to LSU next year. You

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got to sweeten that deal. The player then can

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negotiate and say, well, I know the slot value

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is $950 ,000. But I think you should pay me $1

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.2 million to forego my commitment to LSU. Now,

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the team has to go to the players and the other

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players that I've drafted saying, hmm, who can

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I save money on the slot? Because I cannot go

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over on this pool that I have allocated to me.

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And that goes the first 10 rounds. You know,

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I use an example because we both live in the

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Wisconsin area and I think we use Cooper Pratt

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as a great example of how this works because

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Cooper Pratt was signed in the sixth round by

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the Brewers. Well, well, well below the slot

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value of what he actually signed for because

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the Brewers were signing players in their first

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three, four rounds under the assigned slot value

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and use that savings to give it to Cooper Pratt.

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You're allowed to do that where you reassign

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your slot values and give it to somebody else

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within the first 10 rounds. Anything beyond the

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10th round is kind of up for fair game. There's

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a certain level that you can't go over still.

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You can't just suddenly offer a guy $5 million

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in the 14th round. That's not allowed either.

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But this is something that's changed over the

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years too because you can remember back in the

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early 2000s. Signability was a real concern where

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there were no limits on what you could give a

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player. There were no international or there

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were no bonus pool offerings to give a player.

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Bryce Harper missed this just barely in 2012

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to be able to be signed and drafted where, hey,

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there's only a limit of how much your slot value

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is worth. Guys would be turning down number one

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draft money because they felt that they weren't

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going to get signed or I'm going to go to college

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out of this high school pick. Nowadays, it doesn't

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happen as much. I think teams have a better understanding

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of who's going to sign, who is not. Obviously,

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NIL makes things complicated. But the draft has

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changed drastically in just the last 15 years,

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going from 40 rounds down to 20. That shrinks

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the talent pool, but simultaneously shrinking

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the amount of money going to these players that

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are drafted in the Major League Baseball. So

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one thing that's really interesting is a lot

00:13:20.000 --> 00:13:22.879
of people follow and watch the NFL draft. When

00:13:22.879 --> 00:13:24.600
you watch the NFL draft, to go to your point

00:13:24.600 --> 00:13:27.919
on slot and over and under, the NFL draft's really

00:13:27.919 --> 00:13:30.500
easy to understand. Players, teams are going

00:13:30.500 --> 00:13:33.139
to draft the best player at a position of need.

00:13:33.320 --> 00:13:35.600
Well, Major League Baseball, the draft's completely

00:13:35.600 --> 00:13:39.600
different than that. You almost never draft on

00:13:39.600 --> 00:13:40.899
position of need because you're not going to

00:13:40.899 --> 00:13:44.580
see these players for three to six years sometimes.

00:13:45.500 --> 00:13:48.460
And as far as even best player, in order to manage

00:13:48.460 --> 00:13:51.440
your bonus pool, a lot of times teams will, like

00:13:51.440 --> 00:13:54.379
you said, underslot, draft players not as good.

00:13:54.480 --> 00:13:57.480
You mentioned Cooper Pratt. The Brewers, three

00:13:57.480 --> 00:14:00.700
of their top 10 prospects right now were all

00:14:00.700 --> 00:14:04.679
over slot picks in 2023. Sixth round for Cooper

00:14:04.679 --> 00:14:08.980
Pratt, 11th round with Bishop Ledsen, and 15th

00:14:08.980 --> 00:14:11.809
round with Josh Adamszewski. And the reason,

00:14:11.909 --> 00:14:14.470
like you said, they drafted college players earlier

00:14:14.470 --> 00:14:17.909
on or players that would sign under slot, saving

00:14:17.909 --> 00:14:20.070
them money. So these high schoolers that would

00:14:20.070 --> 00:14:22.370
have gone to college, they can now throw money

00:14:22.370 --> 00:14:24.990
at like the Prats, like the Lettcens, like the

00:14:24.990 --> 00:14:28.110
Adam Shevskys and be able to get these guys that

00:14:28.110 --> 00:14:30.470
have higher ceilings. They definitely have lower

00:14:30.470 --> 00:14:32.830
floors. Lots of high schoolers don't pan out.

00:14:33.269 --> 00:14:37.080
And they, in fact, if you look, they had. actually

00:14:37.080 --> 00:14:39.360
about five or six more high schoolers that they

00:14:39.360 --> 00:14:41.740
signed over slot not for nearly as much and they

00:14:41.740 --> 00:14:44.200
aren't top 10 prospects now but they're kind

00:14:44.200 --> 00:14:47.139
of rolling the dice on week if we get more high

00:14:47.139 --> 00:14:49.360
schoolers with high upside a few of them are

00:14:49.360 --> 00:14:50.980
going to be hits and we're going to end up with

00:14:50.980 --> 00:14:53.799
better players and dom did you see what the braves

00:14:53.799 --> 00:14:57.179
did with their draft that they just did now with

00:14:57.179 --> 00:15:00.019
their eighth ninth and tenth round picks tell

00:15:00.019 --> 00:15:04.940
me more So they drafted three college seniors

00:15:04.940 --> 00:15:07.059
in their eighth, ninth, and tenth round. Total

00:15:07.059 --> 00:15:10.000
slot value of around a million dollars total,

00:15:10.200 --> 00:15:12.720
those three picks. And all three just signed

00:15:12.720 --> 00:15:16.559
for $5 ,000 a piece. Basically making it so the

00:15:16.559 --> 00:15:18.779
Braves can now sign a bunch of high schoolers

00:15:18.779 --> 00:15:21.480
with much higher upside with that extra million

00:15:21.480 --> 00:15:23.620
dollars that they have left over. So this is

00:15:23.620 --> 00:15:25.639
a strategy that more and more teams are doing.

00:15:26.169 --> 00:15:28.570
And it may sound shrewd, but this is the truth.

00:15:28.950 --> 00:15:31.809
If you're a senior sign coming out of college,

00:15:32.070 --> 00:15:34.610
you've got no leverage. Where are you going to

00:15:34.610 --> 00:15:36.710
go? You can't go back to college. Are you going

00:15:36.710 --> 00:15:38.429
to go to independent baseball and then get even

00:15:38.429 --> 00:15:41.029
less? If you get selected, you're kind of in

00:15:41.029 --> 00:15:42.809
this, man, they really picked me. I'm not going

00:15:42.809 --> 00:15:45.490
to get this lot value here at all. And then college

00:15:45.490 --> 00:15:48.789
players, even if you're a junior. You still don't

00:15:48.789 --> 00:15:51.789
have a lot of negotiation power because, hey,

00:15:51.850 --> 00:15:53.190
it's the first year you're eligible. You got

00:15:53.190 --> 00:15:55.610
to strike when the iron is hot. Yes, my slot

00:15:55.610 --> 00:15:57.529
value might be a million dollars, but this team

00:15:57.529 --> 00:16:00.250
wants to sign me for $750K. What am I going to

00:16:00.250 --> 00:16:03.429
say? No, and then go back to school for a senior

00:16:03.429 --> 00:16:05.490
year. Now I'm a year older. Maybe I don't perform

00:16:05.490 --> 00:16:07.690
as well. Maybe I get picked later. Look at what

00:16:07.690 --> 00:16:09.370
Brandon Sproat did. It's kind of fascinating,

00:16:09.549 --> 00:16:11.730
again, to use a Brewer example, that he got drafted

00:16:11.730 --> 00:16:14.519
by the Mets back -to -back years. for virtually

00:16:14.519 --> 00:16:17.080
the same cost. That doesn't normally happen for

00:16:17.080 --> 00:16:19.080
players who bet on themselves and gamble to go

00:16:19.080 --> 00:16:22.220
back out for another year as a senior sign. But

00:16:22.220 --> 00:16:25.039
to give this year's example of the MLB draft,

00:16:25.419 --> 00:16:30.059
modern rules with the bonus pool pick, it goes

00:16:30.059 --> 00:16:33.279
up in conjunction with MLB revenue as to how

00:16:33.279 --> 00:16:35.259
much money the teams have available to them.

00:16:35.320 --> 00:16:37.360
So the White Sox, they obviously had the number

00:16:37.360 --> 00:16:39.460
one pick this year. They also had the largest

00:16:39.460 --> 00:16:42.480
bonus pool available to them. over $20 million

00:16:42.480 --> 00:16:44.860
available to them in their bonus pool. Granted,

00:16:44.860 --> 00:16:47.139
the number one pick, which went to Rock Chalowski,

00:16:47.340 --> 00:16:52.019
not Rock Chaluski, Rock Chalowski, $11 .35 million

00:16:52.019 --> 00:16:55.279
was the slot value for Rock. So that means they

00:16:55.279 --> 00:16:57.299
really got about a little less than $9 million

00:16:57.299 --> 00:17:00.940
to spend on the other nine picks in the first

00:17:00.940 --> 00:17:05.039
10 rounds. You can get penalties. impacted going

00:17:05.039 --> 00:17:07.259
beyond that bonus pool. And furthermore, if you're

00:17:07.259 --> 00:17:10.079
a team that pays into the luxury tax based on

00:17:10.079 --> 00:17:12.680
how much of a penalty you pay, it impacts your

00:17:12.680 --> 00:17:14.440
draft picks. Like for instance, the Dodgers,

00:17:14.500 --> 00:17:17.759
they only had two picks in the first five rounds

00:17:17.759 --> 00:17:20.220
of the draft because of how much they are paying

00:17:20.220 --> 00:17:23.279
into the competitive balance tax and into revenue

00:17:23.279 --> 00:17:26.480
sharing. Because as much as people complain about

00:17:26.480 --> 00:17:28.039
the Dodgers, oh, they never have to deal with

00:17:28.039 --> 00:17:30.000
a penalty. They never have to do, they never,

00:17:30.039 --> 00:17:33.200
this is the penalty. They have had the fewest

00:17:33.200 --> 00:17:35.180
draft picks over the last three years because

00:17:35.180 --> 00:17:37.519
they've signed qualified free agents. That's

00:17:37.519 --> 00:17:40.099
another penalty. You lose a player. You sign

00:17:40.099 --> 00:17:42.180
a player in free agency. The team that loses

00:17:42.180 --> 00:17:45.660
that player gets compensation in a competitive

00:17:45.660 --> 00:17:47.900
balance pick. I don't want to get into the minutia

00:17:47.900 --> 00:17:49.640
of all this because it's going to maybe change

00:17:49.640 --> 00:17:53.619
coming up in 2027. But the way that it works

00:17:53.619 --> 00:17:57.299
right now is anyone 1 through 18 that didn't

00:17:57.299 --> 00:18:00.250
make the playoffs. You are assigned based on,

00:18:00.309 --> 00:18:02.970
hey, are you a perennial tanker? Are you, you

00:18:02.970 --> 00:18:04.789
know, look at what the Rockies and the A's, they

00:18:04.789 --> 00:18:06.609
have been penalized. They cannot be a top five

00:18:06.609 --> 00:18:09.589
pick because we now have a lottery. There are

00:18:09.589 --> 00:18:12.950
ways to assign the number one pick, not just

00:18:12.950 --> 00:18:16.029
automatically the worst team in baseball. I enjoy

00:18:16.029 --> 00:18:18.959
that. I think that's a great way to. curtail,

00:18:18.959 --> 00:18:21.380
to tear it all down and move on like the Rockies

00:18:21.380 --> 00:18:24.559
have been perennially bad since 2018. They don't

00:18:24.559 --> 00:18:26.240
get guaranteed the number one pick every year.

00:18:26.279 --> 00:18:28.480
Look at the Guardians last year. They barely

00:18:28.480 --> 00:18:30.099
missed the playoffs, and then they're able to

00:18:30.099 --> 00:18:32.460
get Travis Buzana, who's an all -star this year.

00:18:32.559 --> 00:18:35.059
I think it's a great way to introduce some variance

00:18:35.059 --> 00:18:37.519
to the Major League Baseball draft and to find

00:18:37.519 --> 00:18:41.660
a way to create some value. Now, we just talked

00:18:41.660 --> 00:18:43.079
about the Americans, the Puerto Ricans, and the

00:18:43.079 --> 00:18:45.460
Canadians. What about everybody else? There are

00:18:45.460 --> 00:18:47.339
plenty of Dominicans. There are plenty of Venezuelans.

00:18:47.660 --> 00:18:50.799
They don't have a draft yet. That is another

00:18:50.799 --> 00:18:54.940
major contention, major project for the 2027

00:18:54.940 --> 00:18:58.680
CBA. As things stand right now, I think we can

00:18:58.680 --> 00:19:01.380
predict we're going to see an international draft.

00:19:01.640 --> 00:19:03.599
But why would they want to go to an international

00:19:03.599 --> 00:19:07.380
draft from the international bonus pool rate?

00:19:07.519 --> 00:19:10.680
The reason why is to clean up the game. Down

00:19:10.680 --> 00:19:14.500
in the international scouting world, This stuff

00:19:14.500 --> 00:19:17.380
starts when the prospect is 13, 14 years old.

00:19:17.480 --> 00:19:20.920
I know that sounds gross and sort of disgusting.

00:19:21.019 --> 00:19:23.720
Like, are you kidding me? You're making a handshake

00:19:23.720 --> 00:19:26.200
agreement with a 13 -year -old for a million

00:19:26.200 --> 00:19:28.859
dollars in three years? That's how it works.

00:19:29.039 --> 00:19:32.420
I don't have any other way to say I'm sorry,

00:19:32.599 --> 00:19:36.880
but these countries and these families understand

00:19:36.880 --> 00:19:40.019
baseball is their way out. And you could call

00:19:40.019 --> 00:19:42.619
it exploitation. You could call it... you know

00:19:42.619 --> 00:19:44.819
just the way that the business works you could

00:19:44.819 --> 00:19:47.559
say there's a supply and a demand the supply

00:19:47.559 --> 00:19:49.980
is latin baseball players from underprivileged

00:19:49.980 --> 00:19:52.460
communities and the demand is baseball players

00:19:52.460 --> 00:19:54.839
trying to save baseball teams trying to save

00:19:54.839 --> 00:19:57.380
money on who they can sign to join their clubs

00:19:57.380 --> 00:20:00.339
so there are international firm bonus pools now

00:20:00.339 --> 00:20:03.660
in the past again there used to be no limit there

00:20:03.660 --> 00:20:06.140
used to be luis robert being able to sign for

00:20:06.140 --> 00:20:08.839
30 million dollars on a snap of a finger coming

00:20:08.839 --> 00:20:12.230
from cuba to say yeah we got him Literally, Louie

00:20:12.230 --> 00:20:14.829
Robert was the last person to get that large

00:20:14.829 --> 00:20:17.349
of an international bonus pool because then in

00:20:17.349 --> 00:20:21.349
the 2017 CBA, things changed to create this international

00:20:21.349 --> 00:20:26.309
bonus pool money. Now, on that front, it is extremely,

00:20:26.589 --> 00:20:30.809
extremely strict. You have to stay in the firm

00:20:30.809 --> 00:20:35.049
bonus pools of under, let's say, $4 .75 million,

00:20:35.349 --> 00:20:37.950
whatever the number may be for year to year.

00:20:38.029 --> 00:20:41.250
If you go over that, you are penalized. harsh

00:20:41.250 --> 00:20:43.750
you may even lose some of the players that you

00:20:43.750 --> 00:20:46.750
signed and you mentioned on the proposals for

00:20:46.750 --> 00:20:49.569
2027 to make it an international draft and the

00:20:49.569 --> 00:20:51.789
reasons are to clean up the game that would be

00:20:51.789 --> 00:20:54.210
one reason but i don't believe that's the owner's

00:20:54.210 --> 00:20:56.369
reason the owner's reason is it's going to save

00:20:56.369 --> 00:20:57.769
them a heck of a lot of money if they go to an

00:20:57.769 --> 00:21:01.990
international draft on scouting as well as um

00:21:01.990 --> 00:21:05.450
as well as training and development costs and

00:21:05.450 --> 00:21:08.349
the players you would think oh they want to clean

00:21:08.349 --> 00:21:10.579
it up as well the players kind of don't want

00:21:10.579 --> 00:21:13.180
an international draft, even though it's completely

00:21:13.180 --> 00:21:16.880
corrupt, because that brings a lot of money into

00:21:16.880 --> 00:21:19.839
their communities regarding having complexes,

00:21:20.279 --> 00:21:22.900
having training facilities, all these things

00:21:22.900 --> 00:21:26.759
in the Dominican Republic, in Venezuela. If they

00:21:26.759 --> 00:21:30.339
went to a draft and there was no benefit for

00:21:30.339 --> 00:21:33.759
a team to be able to get a 13 -year -old, they're

00:21:33.759 --> 00:21:35.759
not going to invest any money into that country.

00:21:37.440 --> 00:21:40.039
We saw this with Puerto Rico. Puerto Rico used

00:21:40.039 --> 00:21:42.980
to be under this system. And then they added

00:21:42.980 --> 00:21:45.880
them to the domestic U .S. draft. And the amount

00:21:45.880 --> 00:21:48.019
of talent in Puerto Rico and the amount of funding

00:21:48.019 --> 00:21:50.160
and money that was funneled into Puerto Rico

00:21:50.160 --> 00:21:54.119
evaporated overnight because teams had no incentive

00:21:54.119 --> 00:21:57.160
to spend money in these countries. So while,

00:21:57.319 --> 00:22:00.920
yes, it is kind of an obscenely terrible system

00:22:00.920 --> 00:22:04.039
on how it works, the players, the ones that grew

00:22:04.039 --> 00:22:07.140
up with this system. actually still kind of support

00:22:07.140 --> 00:22:09.019
it. And I think the only way they would support

00:22:09.019 --> 00:22:12.220
going to a draft is if Major League Baseball

00:22:12.220 --> 00:22:15.519
set up a funding system equivalent to what is

00:22:15.519 --> 00:22:18.579
spent now on the development, on the scouting,

00:22:18.720 --> 00:22:21.559
league -wide to be able to still run those academies.

00:22:21.740 --> 00:22:24.660
Because right now, if they just went draft today,

00:22:24.960 --> 00:22:28.039
all that money would disappear, which it's kind

00:22:28.039 --> 00:22:30.160
of a double -edged sword, as you're saying, because

00:22:30.160 --> 00:22:33.599
it is, yeah, kind of making deals with 13 -year

00:22:33.599 --> 00:22:36.619
-olds. It's not something fun to talk about.

00:22:36.740 --> 00:22:41.819
To think about the money that's being flowed

00:22:41.819 --> 00:22:46.480
around, where it sounds kind of gross to say

00:22:46.480 --> 00:22:48.599
this, but a million dollars to a Major League

00:22:48.599 --> 00:22:52.039
Baseball team given to a kid is kind of nothing

00:22:52.039 --> 00:22:53.920
in the Major League Baseball players. If this

00:22:53.920 --> 00:22:56.900
kid becomes something, cool. If not, that's just

00:22:56.900 --> 00:22:59.759
the cost of doing business in Venezuela and the

00:22:59.759 --> 00:23:02.259
Dominican Republic. Now, in your bonus pools,

00:23:03.000 --> 00:23:07.279
You don't have to disclose bonuses worth less

00:23:07.279 --> 00:23:11.180
than $10 ,000. And a reminder, most of these

00:23:11.180 --> 00:23:15.099
kids are signing at age 16, 17 years old. And

00:23:15.099 --> 00:23:16.619
then they're going to the academies and growing

00:23:16.619 --> 00:23:19.200
up kind of, there's an education aspect to this

00:23:19.200 --> 00:23:21.039
thing. Hey, this kid is not ready to come immediately

00:23:21.039 --> 00:23:23.400
stateside. That's where you see all these teams

00:23:23.400 --> 00:23:25.200
have Dominican academies that are actually run

00:23:25.200 --> 00:23:27.180
and staffed by the Major League Baseball teams.

00:23:27.380 --> 00:23:29.400
And then they maybe will come to the complex

00:23:29.400 --> 00:23:31.960
leagues in Florida and Arizona as they've hit.

00:23:32.240 --> 00:23:34.740
maybe 18, 19, 20 years old as they've grown up,

00:23:34.779 --> 00:23:37.660
if they are good enough to come stateside. The

00:23:37.660 --> 00:23:41.660
vast majority of international signings every

00:23:41.660 --> 00:23:44.619
single year, the vast majority of them never

00:23:44.619 --> 00:23:46.579
make it off the island. And that's a phrase saying

00:23:46.579 --> 00:23:47.960
they never make it off the Dominican Republic,

00:23:48.119 --> 00:23:50.440
even if you come from Venezuela. Meaning you

00:23:50.440 --> 00:23:52.880
come to the Dominican Summer League and you walk

00:23:52.880 --> 00:23:55.440
30 guys and you strike out 15. Sorry, kids. See

00:23:55.440 --> 00:23:58.240
you later. Good luck next time. It's brutal.

00:23:58.460 --> 00:24:02.400
It's dog -eat -dog. It is... A lot of bad baseball

00:24:02.400 --> 00:24:04.539
down at the Dominican Republic, but the few diamonds

00:24:04.539 --> 00:24:06.900
in the rough are the reason why these teams still

00:24:06.900 --> 00:24:09.240
continue to do it because you need to have a

00:24:09.240 --> 00:24:11.779
presence in Latin America. But the moment you

00:24:11.779 --> 00:24:14.420
take advantage of that bonus pool, Major League

00:24:14.420 --> 00:24:17.119
Baseball is going to come down heavy on you.

00:24:17.200 --> 00:24:20.460
And that is the case of the Atlanta Braves back

00:24:20.460 --> 00:24:24.410
in 2017. They lost a third round pick in 2018.

00:24:24.809 --> 00:24:27.710
They had a massive cut to their international

00:24:27.710 --> 00:24:30.369
bonus pool money for the next three years because

00:24:30.369 --> 00:24:32.289
the Braves were circumventing the international

00:24:32.289 --> 00:24:35.230
signing rules where they were basically saying,

00:24:35.349 --> 00:24:39.130
hey, if you sign for 50 grand, we'll give you

00:24:39.130 --> 00:24:42.109
another 500 grand next year when it's not technically

00:24:42.109 --> 00:24:46.230
a signing bonus. Guys were losing jobs. There

00:24:46.230 --> 00:24:49.180
were suspensions involved in this. arguably led

00:24:49.180 --> 00:24:52.359
to Alex Anthopoulos coming into Atlanta to be

00:24:52.359 --> 00:24:54.660
able to create this behemoth that he's been able

00:24:54.660 --> 00:24:56.359
to create and then winning the World Series,

00:24:56.440 --> 00:25:00.339
obviously, in 2021. When you look at the rest

00:25:00.339 --> 00:25:03.200
of baseball and the teams that are really good

00:25:03.200 --> 00:25:04.559
in Latin America and the teams that are really

00:25:04.559 --> 00:25:07.220
poor in Latin America, teams have tried to change

00:25:07.220 --> 00:25:09.440
that. You think of the Dodgers, you think of

00:25:09.440 --> 00:25:11.259
the Yankees, you also think of the Milwaukee

00:25:11.259 --> 00:25:13.619
Brewers as being successful in Latin America.

00:25:14.220 --> 00:25:15.759
Teams that you don't think are successful in

00:25:15.759 --> 00:25:17.759
Latin America are teams that are more recently

00:25:17.759 --> 00:25:20.339
getting involved down there, teams like the Baltimore

00:25:20.339 --> 00:25:23.640
Orioles, teams like now the Washington Nationals.

00:25:23.660 --> 00:25:26.180
Yes, they got Juan Soto. That was more of a product

00:25:26.180 --> 00:25:28.500
of their scouting, not so much about how great

00:25:28.500 --> 00:25:32.579
their Dominican academies were down there. Every

00:25:32.579 --> 00:25:35.579
single team has to have a presence in Latin America.

00:25:35.700 --> 00:25:38.160
And with international signing bonus pool money

00:25:38.160 --> 00:25:40.759
maybe changing into the draft to clean things

00:25:40.759 --> 00:25:42.519
up down there, it's something to monitor for

00:25:42.519 --> 00:25:45.579
2027. It impacts how many players are going to

00:25:45.579 --> 00:25:47.420
be drafted, but it also impacts the teams that

00:25:47.420 --> 00:25:50.200
don't have investment down there maybe lucking

00:25:50.200 --> 00:25:53.960
into the next great Latin prospect that maybe

00:25:53.960 --> 00:25:55.579
haven't put the resources down there, which is

00:25:55.579 --> 00:25:58.640
what some teams are complaining about. You mentioned

00:25:58.640 --> 00:26:00.759
teams getting involved, and you also mentioned

00:26:00.759 --> 00:26:03.119
the Brewers having very good success in the last

00:26:03.119 --> 00:26:05.920
10 years. Before they put those limits in place,

00:26:06.000 --> 00:26:09.559
before they put those signing bonus pools and

00:26:09.559 --> 00:26:11.619
all that, and teams could really spend whatever

00:26:11.619 --> 00:26:13.380
they want, it's a little more complicated than

00:26:13.380 --> 00:26:15.299
that. They actually did penalize them for spending

00:26:15.299 --> 00:26:18.420
too much, so they couldn't sign anyone the next

00:26:18.420 --> 00:26:20.480
year, which created this weird thing where teams

00:26:20.480 --> 00:26:23.589
would just spend. a ton of money every other

00:26:23.589 --> 00:26:26.630
year. But before that, the Brewers were one of,

00:26:26.769 --> 00:26:30.150
I think they actually were the worst, the worst

00:26:30.150 --> 00:26:32.589
international signing team because they couldn't

00:26:32.589 --> 00:26:35.670
keep up financially. So here's a question for

00:26:35.670 --> 00:26:40.750
you. From 1980 till 2020, what international

00:26:40.750 --> 00:26:44.190
signee for the Brewers had the most career war?

00:26:44.789 --> 00:26:47.529
Gosh, it probably wasn't even with the Brewers,

00:26:47.529 --> 00:26:50.549
was it? It was with the Brewers. This guy only

00:26:50.549 --> 00:26:54.269
played with the Brewers. But it's a weird one.

00:26:54.329 --> 00:26:59.109
Dave Nielsen, an Australian, was the only spot

00:26:59.109 --> 00:27:01.170
they were able to get a guy. Now, they did have

00:27:01.170 --> 00:27:03.849
Sixto Lascano before that, but he was Puerto

00:27:03.849 --> 00:27:06.930
Rican, which in the 90s, that changed. So they're

00:27:06.930 --> 00:27:09.609
international on the current international countries

00:27:09.609 --> 00:27:14.029
list. Their best prospect, I think Jackson Churrio

00:27:14.029 --> 00:27:17.069
just passed him, like just passed him on that

00:27:17.069 --> 00:27:20.059
list. But it was Dave Nielsen. So just to show

00:27:20.059 --> 00:27:21.779
you how they had no presence in the Dominican

00:27:21.779 --> 00:27:23.720
Republic, they had no presence in Venezuela.

00:27:24.059 --> 00:27:26.640
And after those rules changed, that gave them

00:27:26.640 --> 00:27:29.119
an opening. And in the last 10 years, they have

00:27:29.119 --> 00:27:31.880
been spending a lot of money in Venezuela, actually

00:27:31.880 --> 00:27:33.940
a considerable amount in Guatemala, opened their

00:27:33.940 --> 00:27:36.259
academy in the Dominican Republic, and have completely

00:27:36.259 --> 00:27:38.940
overhauled their international system. But it

00:27:38.940 --> 00:27:42.880
definitely was not fair before 2017. If you were

00:27:42.880 --> 00:27:45.849
the Dodgers, if you were... The Yankees, if you

00:27:45.849 --> 00:27:49.009
were, the Giants also were really well. The Marlins

00:27:49.009 --> 00:27:50.549
also actually had a pretty good international,

00:27:50.710 --> 00:27:52.829
but that's just because of their proximity. And

00:27:52.829 --> 00:27:56.549
the Mariners had a stranglehold on Japan. But

00:27:56.549 --> 00:27:59.990
if you weren't those teams, if you were like

00:27:59.990 --> 00:28:02.430
the Pirates or the Brewers, you were getting

00:28:02.430 --> 00:28:06.289
the scraps at the end. And now it's a lot more

00:28:06.289 --> 00:28:08.990
even for every team involved, if you put the

00:28:08.990 --> 00:28:11.859
money into it anyways. And you mentioned Japan,

00:28:12.000 --> 00:28:14.140
which leads me to the last point on the international

00:28:14.140 --> 00:28:17.400
player acquisition. How do I make money from

00:28:17.400 --> 00:28:19.720
these signing bonuses and from first getting

00:28:19.720 --> 00:28:22.079
into the door into Major League Baseball? We

00:28:22.079 --> 00:28:24.980
got to talk about Korea and Japan and how those

00:28:24.980 --> 00:28:27.480
players come stateside with the posting fees

00:28:27.480 --> 00:28:30.369
and that sort of thing. Let's get Rintaro out

00:28:30.369 --> 00:28:32.349
of the way. Rintaro Sasaki, who just was drafted

00:28:32.349 --> 00:28:34.529
in the first round by the Miami Marlins. He's

00:28:34.529 --> 00:28:38.109
a unicorn. It's actually shocking that he skipped

00:28:38.109 --> 00:28:42.250
the MPB draft, the Japanese league, to come stateside,

00:28:42.250 --> 00:28:45.390
to come to Stanford, and then gets drafted from

00:28:45.390 --> 00:28:48.490
Stanford to the Miami Marlins, never going back

00:28:48.490 --> 00:28:51.049
over to Japan. He is the first and one of the

00:28:51.049 --> 00:28:53.529
only to have ever done that in the history of

00:28:53.529 --> 00:28:56.630
the MPB. So he's an anomaly to essentially be

00:28:56.630 --> 00:28:59.700
treated like an American. prospect even though

00:28:59.700 --> 00:29:02.519
he's Japanese he was the Japanese high school

00:29:02.519 --> 00:29:05.359
Babe Ruth he set every home run record you could

00:29:05.359 --> 00:29:08.940
imagine down there and now he's maybe going to

00:29:08.940 --> 00:29:11.700
be a Miami Marlin and never play for MPB for

00:29:11.700 --> 00:29:14.119
the players like Shohei Otani for the players

00:29:14.119 --> 00:29:16.240
like Yoshinobu Yamamoto for the players like

00:29:16.240 --> 00:29:18.900
Roki Sasaki they're all very different in how

00:29:18.900 --> 00:29:20.460
they were signed obviously they're all with the

00:29:20.460 --> 00:29:22.759
Dodgers now originally Shohei signed with the

00:29:22.759 --> 00:29:26.519
Angels but it's a reminder that in 2013 to 2017

00:29:26.519 --> 00:29:30.259
in the middle of the cbas that you know you look

00:29:30.259 --> 00:29:32.500
at somebody like masahiro tanaka or you look

00:29:32.500 --> 00:29:35.839
at somebody uh like dice k matsusaka in the early

00:29:35.839 --> 00:29:40.039
2000s and how these players were stars in japan

00:29:40.039 --> 00:29:44.099
and then being posted by their teams to come

00:29:44.099 --> 00:29:46.579
stateside you had to have played at least six

00:29:46.579 --> 00:29:50.640
years in mpb to be freely posted as an international

00:29:50.640 --> 00:29:53.940
free agent now there were no rules in that time

00:29:53.940 --> 00:29:56.019
of how much international bonus money needed

00:29:56.019 --> 00:29:57.720
to be allocated. No, you were essentially an

00:29:57.720 --> 00:29:59.420
unrestricted free agent. It's just a matter of

00:29:59.420 --> 00:30:02.380
a cut of your signing bonus was going back to

00:30:02.380 --> 00:30:06.059
the team that posted you in Japan. Then this

00:30:06.059 --> 00:30:09.200
changed really with Shohei when he decided to

00:30:09.200 --> 00:30:11.420
come over early. Shohei had only played three

00:30:11.420 --> 00:30:15.240
seasons of NPB and decided, I want to go to America

00:30:15.240 --> 00:30:18.200
right now. I want to be a two -way player. which

00:30:18.200 --> 00:30:20.960
meant he was subjected to international bonus

00:30:20.960 --> 00:30:25.000
pool money and subjected to being uh being forced

00:30:25.000 --> 00:30:27.579
to essentially be on a minor league deal now

00:30:27.579 --> 00:30:30.140
that's a blunt way to say it saying you get the

00:30:30.140 --> 00:30:33.279
full six years you're essentially drafted and

00:30:33.279 --> 00:30:36.339
signed and controlled for six years you're not

00:30:36.339 --> 00:30:39.039
a free agent it's not going to the highest bidder

00:30:39.039 --> 00:30:41.539
sort of thing now ultimately he did decide to

00:30:41.539 --> 00:30:43.099
go to the angels but this is where it's different

00:30:43.099 --> 00:30:45.680
with somebody like yoshinova yamamoto yamamoto

00:30:46.119 --> 00:30:48.000
had already spent his time. He had spent enough

00:30:48.000 --> 00:30:50.799
time in NPB to be an unrestricted free agent,

00:30:50.920 --> 00:30:54.059
which is why he got $325 million for 10 years

00:30:54.059 --> 00:30:56.500
from the Dodgers, as opposed to Shohei, who's

00:30:56.500 --> 00:30:58.519
become the greatest player of all time, to be

00:30:58.519 --> 00:31:00.559
a two -way player with the Angels. He essentially

00:31:00.559 --> 00:31:04.039
got signed a standard contract, six years of

00:31:04.039 --> 00:31:06.200
control, option years, all that stuff. Obviously,

00:31:06.200 --> 00:31:08.480
he was never optioned. And then you look at Roki

00:31:08.480 --> 00:31:11.680
Sasaki, the last example we'll use. Rokey was

00:31:11.680 --> 00:31:14.220
not yet at that six years of service. He was

00:31:14.220 --> 00:31:17.240
under the age of 25 as well. That's a new wrinkle

00:31:17.240 --> 00:31:19.619
in all this in your age of when you get posted.

00:31:19.799 --> 00:31:22.660
He was forcing, I want to be posted. I want to

00:31:22.660 --> 00:31:25.440
go stateside. And the same rules applied to him

00:31:25.440 --> 00:31:28.339
as Shohei, but now with even stricter international

00:31:28.339 --> 00:31:31.619
bonus pool money, meaning just like the Dominicans

00:31:31.619 --> 00:31:34.519
and Venezuelans and Nicaraguans and Panamanians

00:31:34.519 --> 00:31:35.960
that you're spending money on in your international

00:31:35.960 --> 00:31:39.119
bonus pool money, that applies. to Japanese players

00:31:39.119 --> 00:31:41.960
and Korean players that are not yet at their

00:31:41.960 --> 00:31:45.380
service time requirement to be unrestricted free

00:31:45.380 --> 00:31:48.339
agents coming to America. So it impacts the signing

00:31:48.339 --> 00:31:50.579
bonus. Rookie essentially did not get a signing

00:31:50.579 --> 00:31:52.839
bonus other than the international bonus pool

00:31:52.839 --> 00:31:55.000
money that the Dodgers were able to allocate

00:31:55.000 --> 00:31:57.599
toward him. Then he's making league minimum right

00:31:57.599 --> 00:32:00.259
now. He's not making the money that Yoshi and

00:32:00.259 --> 00:32:04.140
Shohei are making because he was signed as a...

00:32:04.410 --> 00:32:07.650
pre -six -year NPB free agent who was posted

00:32:07.650 --> 00:32:10.190
by his team. So it gets a little complicated

00:32:10.190 --> 00:32:13.210
over there. Just know that Korea and Japan have

00:32:13.210 --> 00:32:15.630
different rules for their posting because they

00:32:15.630 --> 00:32:18.009
have professional leagues. The reason why that

00:32:18.009 --> 00:32:20.630
doesn't apply to the Dominicans and the Venezuelans

00:32:20.630 --> 00:32:23.589
is there are no summer professional leagues.

00:32:23.650 --> 00:32:25.170
Yes, there's obviously winter ball down there,

00:32:25.269 --> 00:32:27.630
but it's not on equal footing as Major League

00:32:27.630 --> 00:32:31.819
Baseball or NPB or the KPO. Yeah. And the people

00:32:31.819 --> 00:32:35.079
I feel bad for in the Roki Sasaki situation is

00:32:35.079 --> 00:32:38.319
the number of handshake deals they had with other

00:32:38.319 --> 00:32:40.599
Dominicans, Venezuelans and Guatemalans that

00:32:40.599 --> 00:32:43.720
the Dodgers had to then cancel because they decided

00:32:43.720 --> 00:32:45.640
to give. I don't remember what it was like three

00:32:45.640 --> 00:32:49.619
plus million to Roki Sasaki under their pool

00:32:49.619 --> 00:32:51.539
because they had to make room for him. Being

00:32:51.539 --> 00:32:54.160
eligible like that was a last second addition.

00:32:54.460 --> 00:32:56.779
So they are most teams already have their deals

00:32:56.779 --> 00:33:00.380
aligned months before the signing day. And the

00:33:00.380 --> 00:33:04.059
Dodgers had to cancel a number of them last second.

00:33:04.180 --> 00:33:06.259
But you brought up team control, and that's going

00:33:06.259 --> 00:33:08.240
to be our next topic. What are we talking about

00:33:08.240 --> 00:33:12.759
when we say six years, when we say league minimum?

00:33:12.819 --> 00:33:16.400
And we'll get into arbitration as well. But really,

00:33:16.539 --> 00:33:21.220
when a team signs a player, they have six major

00:33:21.220 --> 00:33:24.940
league seasons, full seasons of control over

00:33:24.940 --> 00:33:27.599
that player. At the minor league level. It's

00:33:27.599 --> 00:33:30.000
kind of almost indefinite, but they put in rules

00:33:30.000 --> 00:33:32.900
in place something called the Rule 5 draft, where

00:33:32.900 --> 00:33:36.319
basically if a player doesn't make it to the

00:33:36.319 --> 00:33:38.720
major leagues in a certain amount of time, he

00:33:38.720 --> 00:33:41.819
becomes eligible to be drafted by other teams

00:33:41.819 --> 00:33:43.859
to be able to put on their major league roster.

00:33:44.140 --> 00:33:47.140
This became an issue. We talked about past lawsuits

00:33:47.140 --> 00:33:49.420
with George Toulson. He was suing because he

00:33:49.420 --> 00:33:51.880
was in the Yankees minor league system, and he

00:33:51.880 --> 00:33:53.920
had no way of making the roster because the Yankees

00:33:53.920 --> 00:33:57.279
were loaded. That could have been an issue. Hey,

00:33:57.400 --> 00:34:00.160
we can keep this guy for his entire career in

00:34:00.160 --> 00:34:02.259
the minor leagues because we never called him

00:34:02.259 --> 00:34:05.579
up and never started his service clock. But they

00:34:05.579 --> 00:34:08.039
changed the rules that the MLBPA was able to

00:34:08.039 --> 00:34:11.099
put in. If a player was drafted or signed at

00:34:11.099 --> 00:34:14.280
18 years of age or younger, and he spent five

00:34:14.280 --> 00:34:16.960
years in the minors, and they still haven't put

00:34:16.960 --> 00:34:20.679
him on the 40 -man roster, a 40 -man major league

00:34:20.679 --> 00:34:23.500
roster. other teams can come in and draft that

00:34:23.500 --> 00:34:25.500
player and put them on the active roster. For

00:34:25.500 --> 00:34:27.679
players that are 19 or older at the time they

00:34:27.679 --> 00:34:30.519
are drafted or signed, it's four years. So there's

00:34:30.519 --> 00:34:34.739
kind of a soft mechanism to make it so you just

00:34:34.739 --> 00:34:37.599
can't keep someone in the minors and hoard minor

00:34:37.599 --> 00:34:40.260
leaguers for an indefinite number of years. But

00:34:40.260 --> 00:34:45.179
the penalties and the system is not that. really

00:34:45.179 --> 00:34:47.719
the number of Rule 5 draft players that make

00:34:47.719 --> 00:34:49.960
an impact on the major league level has been

00:34:49.960 --> 00:34:52.880
decreasing steadily over the past 20 years just

00:34:52.880 --> 00:34:55.119
because players want to protect their talent

00:34:55.119 --> 00:34:57.320
and bring their guys up. And one of the ways

00:34:57.320 --> 00:35:00.960
that the teams identify... Who's going to be

00:35:00.960 --> 00:35:02.960
available? Because currently the deadline is

00:35:02.960 --> 00:35:04.900
in November to place somebody on your reserve

00:35:04.900 --> 00:35:08.699
40 -man roster for him to be not eligible, protected

00:35:08.699 --> 00:35:10.860
essentially from the World 5 draft. That's why

00:35:10.860 --> 00:35:13.780
you suddenly see a flurry of activity in the

00:35:13.780 --> 00:35:15.739
middle of November out of nowhere, maybe some

00:35:15.739 --> 00:35:18.400
minor league trades, maybe some guys that are

00:35:18.400 --> 00:35:22.159
getting traded or trying to create 40 -man availability

00:35:22.159 --> 00:35:25.619
because everybody that's on the 60 -day IL at

00:35:25.619 --> 00:35:28.110
the end of the season. gets put active again

00:35:28.110 --> 00:35:30.409
on the 40 -man roster. So suddenly somebody that

00:35:30.409 --> 00:35:32.349
you want to protect, you may are not able to

00:35:32.349 --> 00:35:35.610
protect. And suddenly a team, one man's trash

00:35:35.610 --> 00:35:37.369
is another man's treasure, is able to pluck somebody

00:35:37.369 --> 00:35:40.550
that is not protected. There's even a minor league

00:35:40.550 --> 00:35:43.789
version of the AAA Rule 5 draft, which is basically

00:35:43.789 --> 00:35:45.989
the team saying, we don't want this guy anymore

00:35:45.989 --> 00:35:49.250
and take him. It's a $50 ,000 bonus. He doesn't

00:35:49.250 --> 00:35:51.429
have the same upward mobility. But the thing

00:35:51.429 --> 00:35:54.309
about the Rule 5 draft is... The number one caveat

00:35:54.309 --> 00:35:57.710
about it is if I sign you, Scott Sweeney, from

00:35:57.710 --> 00:36:00.550
the Milwaukee Brewers to my Chicago Cubs or whatever,

00:36:00.710 --> 00:36:03.289
and say, all right, Scott, congrats. You're a

00:36:03.289 --> 00:36:05.869
major league rule five pick. You got to stay

00:36:05.869 --> 00:36:08.670
on my big league roster for at least 120 days

00:36:08.670 --> 00:36:11.949
of service for me to keep you for the rest of

00:36:11.949 --> 00:36:14.190
the year. Now, if in the middle of that time

00:36:14.190 --> 00:36:16.429
I say, ah, he's not good enough, I return you

00:36:16.429 --> 00:36:20.050
with a cash penalty to the Milwaukee Brewers

00:36:20.050 --> 00:36:22.070
and say, hey, he didn't work out for us. Hope

00:36:22.070 --> 00:36:23.650
he works out for you back in your organization.

00:36:23.969 --> 00:36:26.469
So the Rule 5 is an upward mobility chance for

00:36:26.469 --> 00:36:27.989
the guys who get stuck in the minor leagues,

00:36:28.110 --> 00:36:30.949
maybe behind a guy that's signed to a long -term

00:36:30.949 --> 00:36:33.829
deal. A trade can be made. Rule 5 pick can be

00:36:33.829 --> 00:36:36.730
made too. And I think with the contraction of

00:36:36.730 --> 00:36:38.389
the minor leagues as well as also played a role

00:36:38.389 --> 00:36:41.449
in rule five draft being less and less of an

00:36:41.449 --> 00:36:45.010
impact regarding actually good major league ready

00:36:45.010 --> 00:36:48.849
prospects being selected in the draft. But OK,

00:36:48.969 --> 00:36:50.829
you've spent your time in the minors, though.

00:36:50.909 --> 00:36:53.250
And when you're in the minors, you're making

00:36:53.250 --> 00:36:56.769
minor league pay, which fortunately has gone

00:36:56.769 --> 00:36:58.750
up pretty significantly in the past five years.

00:36:58.789 --> 00:37:01.530
But it's still not that great. I feel bad for

00:37:01.530 --> 00:37:03.500
anyone that came. that didn't make it to the

00:37:03.500 --> 00:37:06.039
majors that spent years in the minors before

00:37:06.039 --> 00:37:11.039
2020 because it was poverty wages. Now they at

00:37:11.039 --> 00:37:13.800
least cover your rent, like the team pays for

00:37:13.800 --> 00:37:16.099
your rent on top of the pay you make. And the

00:37:16.099 --> 00:37:18.719
pay has basically doubled. across all levels.

00:37:18.820 --> 00:37:21.320
Still not that great, though. And doubling from

00:37:21.320 --> 00:37:24.099
$15 ,000 to $20 ,000. It's not like they're making

00:37:24.099 --> 00:37:26.639
a ton of cash down in the minor leagues. A AAA

00:37:26.639 --> 00:37:29.099
experience guy is making roughly $40 ,000 to

00:37:29.099 --> 00:37:32.159
$45 ,000 if he's on a six -year on his original

00:37:32.159 --> 00:37:34.860
signing. When you're more service time in the

00:37:34.860 --> 00:37:36.659
minor leagues, you can get a different six -figure

00:37:36.659 --> 00:37:39.780
deal. But you're right. It's better than what

00:37:39.780 --> 00:37:43.110
it was. It's still not all the way there. I saw

00:37:43.110 --> 00:37:46.730
the King of Juco. I forgot his name. Eric Sim.

00:37:47.010 --> 00:37:50.489
Eric Sim. He went through what he made his first

00:37:50.489 --> 00:37:55.190
six years in the minors. And it was, in total,

00:37:55.289 --> 00:37:58.929
including his signing bonus, like $12 ,000. Total.

00:37:59.090 --> 00:38:01.690
Because he didn't get paid unless he was on a

00:38:01.690 --> 00:38:03.489
team. And they put him through instructionals

00:38:03.489 --> 00:38:05.889
for four months where he didn't get paid. Spring

00:38:05.889 --> 00:38:09.199
training, he didn't get paid. It was... I don't

00:38:09.199 --> 00:38:11.260
know how you're able to feed yourself at those

00:38:11.260 --> 00:38:13.659
wages. And he had to pay his own rent up to,

00:38:13.659 --> 00:38:16.340
I think like double a, when I was in Kingston,

00:38:16.460 --> 00:38:18.599
when I was in Kingston, North Carolina, I was

00:38:18.599 --> 00:38:21.840
getting paid $1 ,800 a month and then meal money

00:38:21.840 --> 00:38:23.719
to travel with the team. I had to pay my own

00:38:23.719 --> 00:38:26.730
rent. just in season i did not get paid in the

00:38:26.730 --> 00:38:29.550
off season it it's a grind and that's where the

00:38:29.550 --> 00:38:31.789
minor league grinder became a real thing because

00:38:31.789 --> 00:38:34.010
so many of these teams were not investing in

00:38:34.010 --> 00:38:35.409
the minor leagues and it's something that's going

00:38:35.409 --> 00:38:38.429
to come up in the 2027 cva of what's too much

00:38:38.429 --> 00:38:41.210
how can we you know decide who develops what

00:38:41.210 --> 00:38:44.269
and again not for this episode but you're right

00:38:44.269 --> 00:38:47.349
it's it's gotten better but back in the i mean

00:38:47.349 --> 00:38:50.380
i saw a team that i worked for that Post -game

00:38:50.380 --> 00:38:52.059
spread was legitimately peanut butter and jelly

00:38:52.059 --> 00:38:54.199
sandwiches, right? I mean, legitimately, a major

00:38:54.199 --> 00:38:56.519
league baseball franchise served its minor league

00:38:56.519 --> 00:38:59.260
players peanut butter and jelly sandwiches. That's

00:38:59.260 --> 00:39:01.820
not happening anymore, thank God, but that's

00:39:01.820 --> 00:39:04.920
how it really was in the 2010s. I lived in an

00:39:04.920 --> 00:39:07.280
apartment complex. So this wasn't minor league

00:39:07.280 --> 00:39:09.260
baseball players, but it was like minor league

00:39:09.260 --> 00:39:12.619
soccer players. And I had my own apartment. That

00:39:12.619 --> 00:39:15.059
team, those players were living five to an apartment.

00:39:15.420 --> 00:39:17.659
Cause they were just, they, they had to save

00:39:17.659 --> 00:39:20.780
as much money as possible. And it was very similar

00:39:20.780 --> 00:39:22.539
for major league baseball players. You just,

00:39:22.579 --> 00:39:24.440
you get these apartments or you get families

00:39:24.440 --> 00:39:27.219
in the individual cities to house them. So, but

00:39:27.219 --> 00:39:29.079
you've grinded through the minors. Let's say

00:39:29.079 --> 00:39:31.320
you, what we're saying, a second round pick before

00:39:31.320 --> 00:39:34.880
you out of high school, you spend four or five

00:39:34.880 --> 00:39:37.219
years in the minors. You finally make it to AAA

00:39:37.219 --> 00:39:40.380
and you get your call up to the majors. Now the

00:39:40.380 --> 00:39:43.679
team has six years of control. That's not six

00:39:43.679 --> 00:39:46.199
years from your call up day. That's six years

00:39:46.199 --> 00:39:50.420
of time on the active roster, meaning we're talking

00:39:50.420 --> 00:39:53.059
about 40 -man roster. There's the 26 -man active

00:39:53.059 --> 00:39:55.920
roster. Anyone who's on that roster for one day

00:39:55.920 --> 00:39:58.699
of the season gets one day of service time. If

00:39:58.699 --> 00:40:01.639
they're on the injured list, they still receive

00:40:01.639 --> 00:40:04.440
that service time as well. The only time you

00:40:04.440 --> 00:40:06.659
don't get the money without being, you don't

00:40:06.659 --> 00:40:08.900
get credit for service time without being sent

00:40:08.900 --> 00:40:11.219
down is if you get put on the restrictive list

00:40:11.219 --> 00:40:14.820
or some sort of suspension. You get one day of

00:40:14.820 --> 00:40:17.500
service time. The major league season is about

00:40:17.500 --> 00:40:22.119
185 days from opening day till the end of the

00:40:22.119 --> 00:40:26.119
162 games. So you think one year would be 185

00:40:26.119 --> 00:40:31.079
days. It's actually 172 days. Once you get 172

00:40:31.079 --> 00:40:34.400
days in one season, that counts as a full year.

00:40:34.579 --> 00:40:37.260
If you get, let's do the math in my head here

00:40:37.260 --> 00:40:39.869
very quickly. If you get 86 days. that would

00:40:39.869 --> 00:40:42.510
be a half a season. And the next year you'd need

00:40:42.510 --> 00:40:45.630
another 86 days before you take over to over

00:40:45.630 --> 00:40:49.170
one year. That's why you would see with, I think

00:40:49.170 --> 00:40:52.570
Chris Bryant was the best example. His rookie

00:40:52.570 --> 00:40:55.349
year, he got called up, I think it was April

00:40:55.349 --> 00:41:00.349
17th or 18th. He got called up exactly at the

00:41:00.349 --> 00:41:04.230
point where there were 171 days left in the year.

00:41:04.389 --> 00:41:06.449
So if you go to baseball reference and you go

00:41:06.449 --> 00:41:09.409
down to service time for Chris Bryant, Every

00:41:09.409 --> 00:41:13.349
year has 171 in the second column number of days.

00:41:13.409 --> 00:41:17.550
So zero years, 171 days would be his final number

00:41:17.550 --> 00:41:20.110
at the end of his first year. And really, it's

00:41:20.110 --> 00:41:22.369
that first number, number of years, number of

00:41:22.369 --> 00:41:25.610
days. If you're zero dot blah, blah, blah, you're

00:41:25.610 --> 00:41:28.309
still technically don't have a year yet. And

00:41:28.309 --> 00:41:30.250
you don't become a free agent until that first

00:41:30.250 --> 00:41:33.489
number ticks over to six. And then your next

00:41:33.489 --> 00:41:36.030
season, you would be a free agent. If you're

00:41:36.030 --> 00:41:40.190
at 5 .171, one day away, like Chris Bryant was,

00:41:40.389 --> 00:41:43.510
he would still have one whole more year of Cubs

00:41:43.510 --> 00:41:46.269
having team control. And he filed a grievance

00:41:46.269 --> 00:41:49.650
trying to fight this and trying to sue the Cubs

00:41:49.650 --> 00:41:51.070
and Major League Baseball. Sue is too strong

00:41:51.070 --> 00:41:54.130
a word, but the grievance to say. This is, you

00:41:54.130 --> 00:41:56.309
know, prospect emotion. You're keeping me down

00:41:56.309 --> 00:41:58.550
when I had an epic spring training. You know

00:41:58.550 --> 00:42:01.210
I'm good enough for your team. And Major League

00:42:01.210 --> 00:42:03.610
Baseball and the Players Association kind of

00:42:03.610 --> 00:42:04.809
had to throw their hands in the air and saying,

00:42:04.929 --> 00:42:08.289
we're sorry, Chris. Don't hate the player. Hate

00:42:08.289 --> 00:42:10.949
the game. This is how it works. You're the most

00:42:10.949 --> 00:42:14.429
famous example. He lost that grievance, thus

00:42:14.429 --> 00:42:17.070
helped create the prospect promotion incentive

00:42:17.070 --> 00:42:19.289
program, which is the biggest piece of eyewash

00:42:19.289 --> 00:42:23.079
ever legislated in the CBA. Oh, you can get a

00:42:23.079 --> 00:42:25.179
draft pick if you promote this guy before any

00:42:25.179 --> 00:42:27.579
– well, he has to be on a top 100 prospect. He

00:42:27.579 --> 00:42:30.280
also has to finish top two in rookie of the year.

00:42:30.340 --> 00:42:33.639
He also has to finish – no, that's not how this

00:42:33.639 --> 00:42:35.159
works. That's something that's going to be very

00:42:35.159 --> 00:42:38.940
important for the 2027 CBA of, hey, can we just

00:42:38.940 --> 00:42:42.829
eliminate the – If you play at least 100 days

00:42:42.829 --> 00:42:46.489
of your season or 86 days, can you change how

00:42:46.489 --> 00:42:48.989
many days are required for a year? I don't know

00:42:48.989 --> 00:42:51.230
if that could be that easy, but the Chris Bryant

00:42:51.230 --> 00:42:54.590
case is the most famous example of manipulating

00:42:54.590 --> 00:42:58.670
team control for an extra year to have him in

00:42:58.670 --> 00:43:01.289
a Cubs uniform. And we'll never know the what

00:43:01.289 --> 00:43:03.889
ifs of it. Like, is there a chance he would have

00:43:03.889 --> 00:43:07.739
won his grievance if this is really weird? The

00:43:07.739 --> 00:43:10.119
Cubs third baseman that they were playing the

00:43:10.119 --> 00:43:12.500
day before Chris Bryant came up broke his hand

00:43:12.500 --> 00:43:15.360
that day. So they literally had a legitimate

00:43:15.360 --> 00:43:17.760
out of, well, our third baseman got hurt. So

00:43:17.760 --> 00:43:20.320
now we called up Chris Bryant. That's why we

00:43:20.320 --> 00:43:23.500
waited. We would have waited longer. Yes, they

00:43:23.500 --> 00:43:25.539
were going to call him up that day anyway. But

00:43:25.539 --> 00:43:28.340
they just by chance had a player hit the I .L.

00:43:28.639 --> 00:43:32.239
due to a legitimate injury right as Chris Bryant's

00:43:32.239 --> 00:43:34.679
date. hit that specific timeline. And that may

00:43:34.679 --> 00:43:36.739
have been the factor in why Chris Bryant did

00:43:36.739 --> 00:43:38.920
not win his grievance because, you know, they

00:43:38.920 --> 00:43:41.179
had a legitimate out. I want to bring up one

00:43:41.179 --> 00:43:43.659
other example. Tyrone Taylor, currently with

00:43:43.659 --> 00:43:45.800
the Mets, previously with the Brewers. Tyrone

00:43:45.800 --> 00:43:50.019
Taylor was a 2012 high school draft pick. Slowly

00:43:50.019 --> 00:43:52.059
worked his way up in the minor leagues. Nobody

00:43:52.059 --> 00:43:54.880
selected him off the Rule 5 draft. He stayed

00:43:54.880 --> 00:43:57.400
in the Brewers organization in the minor leagues

00:43:57.400 --> 00:44:00.739
for seven years before he finally got added to

00:44:00.739 --> 00:44:02.699
the 40 -man roster. and made his major league

00:44:02.699 --> 00:44:06.559
debut in 2019. So even those seven years do not

00:44:06.559 --> 00:44:08.699
count to your service time. And he gets a brief

00:44:08.699 --> 00:44:11.820
amount at the end of 2019. Here's another fun

00:44:11.820 --> 00:44:14.760
fact. If you get called up in September when

00:44:14.760 --> 00:44:17.489
the rosters are expanded, That does not count

00:44:17.489 --> 00:44:20.929
to your service time days added. So Tyrone was

00:44:20.929 --> 00:44:23.409
not adding any service time despite being in

00:44:23.409 --> 00:44:27.110
the big leagues for 15 games in 2019. Then 2020,

00:44:27.309 --> 00:44:28.969
everybody still got a full year of service if

00:44:28.969 --> 00:44:31.449
you played, if you were active for the 60 games.

00:44:31.570 --> 00:44:34.969
But essentially, for a guy that was drafted in

00:44:34.969 --> 00:44:38.539
2012, Tyrone Taylor. and spent seven years in

00:44:38.539 --> 00:44:40.280
the minor leagues, and then made his big league

00:44:40.280 --> 00:44:43.019
debut in 2019 because of service time and the

00:44:43.019 --> 00:44:44.579
way how many days he was active and that sort

00:44:44.579 --> 00:44:49.519
of thing. This just now in 2026 will be his final

00:44:49.519 --> 00:44:53.800
year of team control. 14 years later, because

00:44:53.800 --> 00:44:57.340
nobody signed him as a Rule 5 pick, he kept remaining

00:44:57.340 --> 00:45:00.099
with the Brewers, working his way up. But he

00:45:00.099 --> 00:45:03.460
is just now accruing his sixth year of major

00:45:03.460 --> 00:45:07.059
league service time in 14 years as a professional.

00:45:07.619 --> 00:45:10.559
And for position players, normally it's pretty

00:45:10.559 --> 00:45:12.800
straightforward. You get called up. Unless you're

00:45:12.800 --> 00:45:14.599
a fringe guy, you're going to stay on the roster.

00:45:14.719 --> 00:45:16.900
But for a lot of relief pitchers especially,

00:45:17.300 --> 00:45:20.019
they'll get called up for a couple games. Team

00:45:20.019 --> 00:45:22.340
will go, hey, we need another fresh arm to come

00:45:22.340 --> 00:45:24.780
up. And they'll come. get sent back down. And

00:45:24.780 --> 00:45:26.860
their clock stops ticking when they get sent

00:45:26.860 --> 00:45:28.659
back down to the minors. It's actually one of

00:45:28.659 --> 00:45:32.900
the proposals the players have brought up is

00:45:32.900 --> 00:45:34.840
to limit the number of times you can call up

00:45:34.840 --> 00:45:37.619
and send down a guy. The rules now, this rule

00:45:37.619 --> 00:45:39.739
didn't exist before. The rules is now, I believe,

00:45:39.800 --> 00:45:42.519
five times in a season you can be called up and

00:45:42.519 --> 00:45:46.139
sent down. It used to be unlimited. And I don't

00:45:46.139 --> 00:45:47.780
know if you've ever played the game out of the

00:45:47.780 --> 00:45:51.230
park baseball, Dom, but... I played this a decade

00:45:51.230 --> 00:45:53.230
ago. It's like a simulation being able to manage

00:45:53.230 --> 00:45:55.670
a team. And they use the service time rules,

00:45:55.869 --> 00:45:58.409
but they didn't have the rule of when you get

00:45:58.409 --> 00:46:00.090
sent back down to the minors, you have to wait

00:46:00.090 --> 00:46:02.090
10 days, kind of an error on the games part.

00:46:02.489 --> 00:46:05.869
And I did this once just to try to min -max one

00:46:05.869 --> 00:46:09.949
of my saves. I had a top pitching prospect. And

00:46:09.949 --> 00:46:11.969
what I would do is I would call him up, have

00:46:11.969 --> 00:46:14.389
him pitch a start. send him down after the game

00:46:14.389 --> 00:46:16.889
wait four days call him up have him pitch a start

00:46:16.889 --> 00:46:18.889
send him down and over the course of a season

00:46:18.889 --> 00:46:21.349
he would only get 32 days of service time and

00:46:21.349 --> 00:46:24.070
there's three years where you can have unlimited

00:46:24.070 --> 00:46:26.710
sends up call -ups and send downs so i basically

00:46:26.710 --> 00:46:30.789
turned that six years of control uh into nine

00:46:30.789 --> 00:46:33.590
years of control uh obviously you can't do that

00:46:33.590 --> 00:46:35.789
in the major leagues but just to show you how

00:46:35.789 --> 00:46:39.230
you only get credit when you're on the active

00:46:39.230 --> 00:46:42.019
roster And this is a problem for a lot of relievers

00:46:42.019 --> 00:46:44.179
and a lot of starters. They call it for a spot

00:46:44.179 --> 00:46:46.840
start and sent down. You'll have relievers that

00:46:46.840 --> 00:46:49.599
have had a similar thing where they've been in

00:46:49.599 --> 00:46:52.840
the league for, you know, three years in the

00:46:52.840 --> 00:46:55.239
majors, pitched in the majors for three years

00:46:55.239 --> 00:46:58.400
and still might only have one year of service

00:46:58.400 --> 00:47:00.039
time because they've been shuffled up and down

00:47:00.039 --> 00:47:03.059
so often. You only get active service on the

00:47:03.059 --> 00:47:05.679
big league roster. Also on the big league injured

00:47:05.679 --> 00:47:08.039
list is a big reason. It's a big thing to monitor.

00:47:08.599 --> 00:47:11.659
Yes, injuries are up. There are questions about

00:47:11.659 --> 00:47:13.320
that. I'm never going to question another man

00:47:13.320 --> 00:47:15.179
putting his body on the line, but I will leave

00:47:15.179 --> 00:47:17.880
it at that because you get service time when

00:47:17.880 --> 00:47:19.619
you're on the major league injured list, and

00:47:19.619 --> 00:47:23.280
I'll just leave it there. You can even make the

00:47:23.280 --> 00:47:26.539
argument that there's some relief pitchers that

00:47:26.539 --> 00:47:29.280
their career, how much they've made in their

00:47:29.280 --> 00:47:32.840
career, benefited because they had Tommy John

00:47:32.840 --> 00:47:35.599
surgery just during a period where they happened

00:47:35.599 --> 00:47:37.659
to be called up. Like there might've been a guy

00:47:37.659 --> 00:47:40.019
that would have been fringe, but you can't send

00:47:40.019 --> 00:47:41.960
down a guy that's injured. You have to put them

00:47:41.960 --> 00:47:44.380
on the injured list and you can't cut a guy that's

00:47:44.380 --> 00:47:48.019
injured. That's just like normal labor law. And

00:47:48.019 --> 00:47:50.679
so you'll have guys that are fringe bullpen guys

00:47:50.679 --> 00:47:53.559
get called up for a couple of games, all of a

00:47:53.559 --> 00:47:55.980
sudden have to go down with a Tommy John surgery

00:47:55.980 --> 00:47:57.920
or have a egregious arm injury where they're

00:47:57.920 --> 00:48:00.099
out for a year and a half and they get a year

00:48:00.099 --> 00:48:01.840
and a half of service time. They might not have

00:48:01.840 --> 00:48:04.280
otherwise gotten. It's, again, another double

00:48:04.280 --> 00:48:06.480
-edged sword where some guys, there is a very,

00:48:06.539 --> 00:48:08.380
if you're good enough to stay on a major league

00:48:08.380 --> 00:48:11.159
roster, this doesn't benefit your finances. We'll

00:48:11.159 --> 00:48:13.400
get into arbitration later. But if you're a fringe

00:48:13.400 --> 00:48:16.000
guy, there's been some guys that have benefited

00:48:16.000 --> 00:48:18.599
from that. Well, let's get into arbitration because,

00:48:18.639 --> 00:48:21.739
yes, we know six years is free agency. We'll

00:48:21.739 --> 00:48:24.159
get there in a moment. But what about in the

00:48:24.159 --> 00:48:27.159
middle? When do I start getting a say in my pay?

00:48:27.300 --> 00:48:30.000
When do I start being able to say? I'm worth

00:48:30.000 --> 00:48:32.619
more than league minimum if I'm pounding the

00:48:32.619 --> 00:48:34.599
table and I'm Jacob Mizorowski. I'm only in my

00:48:34.599 --> 00:48:36.840
second year of service time. I don't have a say

00:48:36.840 --> 00:48:40.639
in my salary yet. Arbitration and what you get

00:48:40.639 --> 00:48:43.860
paid during those six years is also completely

00:48:43.860 --> 00:48:46.840
dependent on your service time. We talked about

00:48:46.840 --> 00:48:48.820
that first number, which is the number of years.

00:48:48.900 --> 00:48:53.380
It's 0, 1, 2, 3, 4, 5. If your first number at

00:48:53.380 --> 00:48:57.440
the opening day starts with a 0, 1, or 2, you're

00:48:57.440 --> 00:49:00.460
making league minimum. League minimum, regardless

00:49:00.460 --> 00:49:03.780
of anything, except there is a thing called Super

00:49:03.780 --> 00:49:06.760
2. If your number starts with a 2 and then your

00:49:06.760 --> 00:49:10.619
last three digits are in the top 22 % of players

00:49:10.619 --> 00:49:13.940
whose numbers start with 2, like the 22 % highest,

00:49:14.280 --> 00:49:16.780
you are eligible for arbitration for the first

00:49:16.780 --> 00:49:19.099
time and will have four years of arbitration.

00:49:19.460 --> 00:49:22.460
Everyone else, people who aren't in the top 22%,

00:49:22.460 --> 00:49:26.039
if their number starts with a 3, 4, and 5, those

00:49:26.039 --> 00:49:29.789
are their arbitration seasons. And what is arbitration?

00:49:29.909 --> 00:49:31.929
Well, we talked about this in things that the

00:49:31.929 --> 00:49:34.989
Players Association fought for in the 60s and

00:49:34.989 --> 00:49:36.909
70s. We talk about grievance arbitration, but

00:49:36.909 --> 00:49:39.630
there's also salary arbitration. Basically, in

00:49:39.630 --> 00:49:42.929
the old days, your year -to -year contract, it

00:49:42.929 --> 00:49:45.110
would be what the owners kind of really wanted

00:49:45.110 --> 00:49:47.690
you to pay. If it was egregiously low, you could

00:49:47.690 --> 00:49:50.769
sit out, which almost never happened. But basically,

00:49:50.789 --> 00:49:53.730
the owner said, you make this. If you don't like

00:49:53.730 --> 00:49:56.530
it, tough luck. And they introduced arbitration

00:49:56.530 --> 00:49:59.219
where they have a third party. an arbitrator

00:49:59.219 --> 00:50:01.940
come in and listen to the arguments of the team

00:50:01.940 --> 00:50:04.739
listen to the arguments of the player and based

00:50:04.739 --> 00:50:07.860
on historical trends of salary based on what

00:50:07.860 --> 00:50:10.980
normal players make of that caliber they look

00:50:10.980 --> 00:50:12.659
at their stats they look at their accomplishments

00:50:12.659 --> 00:50:15.440
the team says here's what he's worth the player

00:50:15.440 --> 00:50:17.639
says here's what he's worth and the arbitrator

00:50:17.639 --> 00:50:20.539
based on their arguments picks one or the other

00:50:20.539 --> 00:50:22.699
for players in their first year of arbitration

00:50:22.699 --> 00:50:25.880
they're not making free agent money it'll basically

00:50:25.880 --> 00:50:29.510
be like throw out a number like maybe 25 % of

00:50:29.510 --> 00:50:31.469
what they'd be worth on the open market. And

00:50:31.469 --> 00:50:33.630
for arbitration two, three, and for the super

00:50:33.630 --> 00:50:36.269
two players arbitration four, that number will

00:50:36.269 --> 00:50:40.150
creep up closer to free agent numbers, but it's

00:50:40.150 --> 00:50:43.230
always a discount on free agency. But the players

00:50:43.230 --> 00:50:46.230
still kind of like this. It's getting a worse

00:50:46.230 --> 00:50:49.050
rep now because earlier free agency would just

00:50:49.050 --> 00:50:51.590
be better overall for them as far as what they'd

00:50:51.590 --> 00:50:53.949
make. But compared to what it was beforehand,

00:50:54.250 --> 00:50:56.530
this is a better system because you have a third

00:50:56.530 --> 00:50:59.989
party determining what a player makes. And so

00:50:59.989 --> 00:51:03.289
if we take a step back and look at those six

00:51:03.289 --> 00:51:07.050
years, you make league minimum year 0, 1, 2,

00:51:07.150 --> 00:51:09.710
or their first three years. And then you make

00:51:09.710 --> 00:51:13.969
arbitration years 3, 4, and 5. And that will

00:51:13.969 --> 00:51:16.369
raise your salary. So you're making league minimum

00:51:16.369 --> 00:51:18.510
for the first three years. And then your salary

00:51:18.510 --> 00:51:21.510
gets closer and closer to free agency. And then

00:51:21.510 --> 00:51:24.969
you hit free agency. And let's say you're a...

00:51:25.309 --> 00:51:28.550
player that wants to go to the actual arbitration

00:51:28.550 --> 00:51:30.769
hearing. You'll see a lot of settlements. This

00:51:30.769 --> 00:51:33.630
usually comes in December and January when that

00:51:33.630 --> 00:51:37.010
deadline comes to say, okay, we didn't come to

00:51:37.010 --> 00:51:39.789
an agreement on Scott thinks he's worth, you

00:51:39.789 --> 00:51:43.210
know, $2 million. I think he's worth 1 .5. Maybe

00:51:43.210 --> 00:51:44.829
teams generally meet in the middle, say, all

00:51:44.829 --> 00:51:47.409
right, 1 .75, or maybe they lean one way or another

00:51:47.409 --> 00:51:49.150
and they make creative moves. But the moment

00:51:49.150 --> 00:51:51.929
those arbitration doors open, the numbers are

00:51:51.929 --> 00:51:55.019
locked where Scott's filing for 2 million. I'm

00:51:55.019 --> 00:51:57.920
filing for 1 .5, and the arbitrator has to make

00:51:57.920 --> 00:52:00.139
the decision. Now, you look at the most famous

00:52:00.139 --> 00:52:02.940
arbitration case from the last cycle, that's

00:52:02.940 --> 00:52:06.280
Tarek Skubal, and where the Detroit Tigers filed

00:52:06.280 --> 00:52:11.659
at a hilariously low $15 million, whereas Skubal

00:52:11.659 --> 00:52:14.900
in his ARB 4 year was filing at $32 million,

00:52:15.139 --> 00:52:17.079
thus making him the highest paid arbitration

00:52:17.079 --> 00:52:19.460
player of all time. They could not make an agreement

00:52:19.460 --> 00:52:22.820
beforehand. And I'll tell you what, I actually

00:52:22.820 --> 00:52:25.760
got to meet... the arbitrator who ruled on the

00:52:25.760 --> 00:52:29.019
case and just by a way of luck and i was you

00:52:29.019 --> 00:52:31.320
know in the same place as this person i don't

00:52:31.320 --> 00:52:33.420
want to reveal their identity and we talked about

00:52:33.420 --> 00:52:36.179
that case and i said hey did Boris really bring

00:52:36.179 --> 00:52:38.039
in the Cy Young Awards and put them on the table?

00:52:38.119 --> 00:52:39.940
He said, he didn't put them on the table, but

00:52:39.940 --> 00:52:41.760
they were in the room. And I think that that's

00:52:41.760 --> 00:52:44.420
such a cool flex because you're truly sitting

00:52:44.420 --> 00:52:46.780
there and arguing in front of an arbiter saying,

00:52:47.000 --> 00:52:49.159
here's why I'm worth $32 million. On the open

00:52:49.159 --> 00:52:51.400
market, I'll be worth this. The production I've

00:52:51.400 --> 00:52:53.000
done is this and this, that, and the other. And

00:52:53.000 --> 00:52:55.260
then the team has to go, yeah, I hear all that,

00:52:55.280 --> 00:52:58.219
but here's why he's worth $15 million. And it's

00:52:58.219 --> 00:53:01.260
simply one person decides. The arbitrator says,

00:53:01.420 --> 00:53:04.429
I rule in favor of this direction. the players

00:53:04.429 --> 00:53:08.929
want this to be either accessed sooner where

00:53:08.929 --> 00:53:11.070
everybody is a super tune you get four years

00:53:11.070 --> 00:53:14.369
of arbitration as opposed to three or you make

00:53:14.369 --> 00:53:17.369
free agency available sooner at five years potentially

00:53:17.369 --> 00:53:20.110
as opposed to six something for down the road

00:53:20.110 --> 00:53:24.510
and to give some scale on these hearings uh usually

00:53:24.510 --> 00:53:28.829
every year there's about 150 or so players that

00:53:28.829 --> 00:53:31.579
are eligible for arbitration actually might be

00:53:31.579 --> 00:53:34.039
even closer to 200 200 players are eligible for

00:53:34.039 --> 00:53:36.519
arbitration about a quarter of them right off

00:53:36.519 --> 00:53:40.179
the top uh the players say or the team says this

00:53:40.179 --> 00:53:42.300
guy's not good enough for us to give him a pay

00:53:42.300 --> 00:53:45.039
raise and they aren't tendered arbitration at

00:53:45.039 --> 00:53:47.639
all and they immediately become free agents and

00:53:47.639 --> 00:53:51.099
then the remaining 150 what it is is the teams

00:53:51.099 --> 00:53:54.699
negotiate prior to that deadline of filing for

00:53:54.699 --> 00:53:57.460
arbitration and the vast majority of them do

00:53:57.460 --> 00:54:00.000
sign one -year deals with their team, sometimes

00:54:00.000 --> 00:54:02.199
multiple -year deals, but usually a one -year

00:54:02.199 --> 00:54:07.280
deal with the team. And then the remaining, I'd

00:54:07.280 --> 00:54:11.239
say, 50 or so file that are going to go to a

00:54:11.239 --> 00:54:14.360
case. And even then, about half of those, again,

00:54:14.460 --> 00:54:17.219
sign an agreement before an actual arbitration

00:54:17.219 --> 00:54:20.710
case. So every year out of the 200 arbitration

00:54:20.710 --> 00:54:24.190
eligible players, you'll maybe get 15 that actually

00:54:24.190 --> 00:54:27.170
go to a hearing, sometimes even less, maybe five

00:54:27.170 --> 00:54:31.449
to 15. So it's really not a lot. And the owners

00:54:31.449 --> 00:54:34.010
in the last CBA kind of slipped in a little tricky

00:54:34.010 --> 00:54:38.329
thing where if you sign a deal before going to

00:54:38.329 --> 00:54:42.090
arbitration, that salary is guaranteed for the

00:54:42.090 --> 00:54:45.039
year. If you actually go to an arbitration hearing

00:54:45.039 --> 00:54:47.420
and have an arbitrator determine, OK, here's

00:54:47.420 --> 00:54:50.239
your salary, that is not guaranteed. There was

00:54:50.239 --> 00:54:51.900
I'm trying to remember the name of the player.

00:54:52.000 --> 00:54:53.780
There was one player that won his arbitration

00:54:53.780 --> 00:54:56.599
hearing and the team cut him two weeks later,

00:54:56.699 --> 00:54:58.960
only had to give him separation pay, which I

00:54:58.960 --> 00:55:02.539
believe is like two months salary. So two months.

00:55:02.539 --> 00:55:04.679
So about a third of what he actually earned in

00:55:04.679 --> 00:55:07.800
arbitration. And I'm sure the after that, the

00:55:07.800 --> 00:55:10.440
players are going to try to go back and. say,

00:55:10.519 --> 00:55:12.400
hey, we should have all arbitration contacts

00:55:12.400 --> 00:55:16.159
be guaranteed. But the owners have given as much

00:55:16.159 --> 00:55:19.780
incentive as possible for the players to sign

00:55:19.780 --> 00:55:22.619
a deal before actually going to a hearing. Because

00:55:22.619 --> 00:55:25.579
the hearing costs money for everyone, isn't a

00:55:25.579 --> 00:55:29.780
fun environment. And the owners actually save

00:55:29.780 --> 00:55:33.340
money if they get players to sign before an arbitration

00:55:33.340 --> 00:55:37.019
filing deadline. And on top of... you know, arbitration,

00:55:37.079 --> 00:55:41.480
the players and the owners understand, I need

00:55:41.480 --> 00:55:43.920
to make as much of a margin as I can on this

00:55:43.920 --> 00:55:46.159
guy. Because as we go into free agency, as we

00:55:46.159 --> 00:55:48.840
go into how a player makes the bulk of their

00:55:48.840 --> 00:55:52.659
money, this is the prime of their careers generally

00:55:52.659 --> 00:55:54.880
in arbitration. And hopefully if a player debuted

00:55:54.880 --> 00:55:58.219
young enough, that free agency will feature some

00:55:58.219 --> 00:56:00.619
of that prime. The average free agency age right

00:56:00.619 --> 00:56:04.659
now is pushing 27, 28 years old, which is...

00:56:04.940 --> 00:56:08.599
old in baseball standards because of team control.

00:56:08.840 --> 00:56:12.800
You want players to be peaking at 25, 26, 27,

00:56:12.980 --> 00:56:16.239
28 years old, not necessarily peaking at 28,

00:56:16.320 --> 00:56:18.320
29, 30 years old when you're paying them the

00:56:18.320 --> 00:56:20.760
most. That's hard to do. Aging curves really

00:56:20.760 --> 00:56:24.099
kick in starting at age 33, 34 years old, which

00:56:24.099 --> 00:56:26.019
is something we're seeing getting harder and

00:56:26.019 --> 00:56:29.139
harder, which is why players are saying, you

00:56:29.139 --> 00:56:31.780
want to pay us when we're at our best. So make

00:56:31.780 --> 00:56:34.880
us accessible to free agency a little bit earlier,

00:56:34.960 --> 00:56:37.679
a year earlier, maybe to be a five -year free

00:56:37.679 --> 00:56:39.539
agent deal instead of a six -year free agent

00:56:39.539 --> 00:56:42.119
deal. Or furthermore, to say, you want to pay

00:56:42.119 --> 00:56:43.800
us earlier, you want to pay us for our prime

00:56:43.800 --> 00:56:45.980
or what we're worth during our prime. Let's make

00:56:45.980 --> 00:56:48.960
that whole time eligible for arbitration because

00:56:48.960 --> 00:56:52.340
the owners know they are saving boatloads of

00:56:52.340 --> 00:56:54.500
cash with the way the system currently works.

00:56:55.179 --> 00:56:57.820
Yeah, and right now there's also been some proposals

00:56:57.820 --> 00:57:00.659
to add some age qualifier on that. I think it

00:57:00.659 --> 00:57:03.260
was the players were pushing for if you're over

00:57:03.260 --> 00:57:06.980
30 with only, I think, five years, then you become

00:57:06.980 --> 00:57:09.480
a free agent. Because you have some guys that

00:57:09.480 --> 00:57:11.840
don't make their major league debut until they're

00:57:11.840 --> 00:57:14.239
like 29. They're a late bloomer. They're not

00:57:14.239 --> 00:57:16.280
going to see free agency until they're 36, and

00:57:16.280 --> 00:57:18.659
no one's going to pay for a 36 -year -old. You're

00:57:18.659 --> 00:57:21.489
not going to make that much money. We'll go back

00:57:21.489 --> 00:57:23.889
to this career of this player. I think you were

00:57:23.889 --> 00:57:25.590
saying it was me. Let's make it you now, Dom.

00:57:25.630 --> 00:57:27.889
Dom, you've killed it in the majors. You are

00:57:27.889 --> 00:57:30.730
one of the best players. You've hit your six

00:57:30.730 --> 00:57:33.030
years, and you're going to be a free agent. So

00:57:33.030 --> 00:57:34.670
you're ready to go for the bidding. But there's

00:57:34.670 --> 00:57:38.809
still one final step, which is the qualifying

00:57:38.809 --> 00:57:42.190
offer. Basically, if the team says, hey, you're

00:57:42.190 --> 00:57:45.670
one of the top guys, we're going to be worse

00:57:45.670 --> 00:57:48.610
without you. But we don't want to sign you for

00:57:48.610 --> 00:57:52.110
anything. We can give you a qualifying offer,

00:57:52.250 --> 00:57:55.090
a one -year contract that is the average of the

00:57:55.090 --> 00:57:58.690
top 125 players in the league salary. We offer

00:57:58.690 --> 00:58:01.750
you that. And if you decline, we get a draft

00:58:01.750 --> 00:58:04.449
pick. So we get something in return. You see

00:58:04.449 --> 00:58:07.030
this in a lot of the negotiations around free

00:58:07.030 --> 00:58:09.690
agency in the 70s and 80s between the MLBPA and

00:58:09.690 --> 00:58:12.030
the owners. The owners really got wanted compensation,

00:58:12.550 --> 00:58:14.769
meaning if we lost a player, we would get something

00:58:14.769 --> 00:58:17.150
in return. And this is kind of over the years

00:58:17.150 --> 00:58:19.719
what it's settled on. If you are a good enough

00:58:19.719 --> 00:58:23.940
player, well, you'll turn down a top 125 salary,

00:58:24.179 --> 00:58:26.219
which this year I think it was like $22 million.

00:58:26.880 --> 00:58:28.880
If you're good enough where you think you'll

00:58:28.880 --> 00:58:31.940
make more than one year, $22 million contract,

00:58:32.139 --> 00:58:34.500
we're going to get a draft pick in return. There

00:58:34.500 --> 00:58:36.599
are some players that are on the edge of, well,

00:58:36.739 --> 00:58:39.679
$22 million might be what I make. So there are

00:58:39.679 --> 00:58:42.679
a rare few, Brandon Woodruff was one recently,

00:58:42.820 --> 00:58:45.860
that will accept that $22 million contract and

00:58:45.860 --> 00:58:48.719
go back to the team. But most players either

00:58:48.719 --> 00:58:50.960
aren't offered a qualifying offer because they're

00:58:50.960 --> 00:58:54.460
not worth $22 million or are offered it, decline

00:58:54.460 --> 00:58:57.079
it, and go into free agency. And I'll tell you,

00:58:57.099 --> 00:58:59.860
free agency is where you make the money. You

00:58:59.860 --> 00:59:02.519
look at the players that have made the most amount

00:59:02.519 --> 00:59:06.280
of money without signing a long -term deal during

00:59:06.280 --> 00:59:09.579
their first six years of service time, you might

00:59:09.579 --> 00:59:13.980
get around $80 million cumulative. I'd have to

00:59:13.980 --> 00:59:15.960
look up what Mookie Betts' was. He was near the

00:59:15.960 --> 00:59:19.630
top. There was for pitchers, it used to be David

00:59:19.630 --> 00:59:21.929
Price. Now it might be Scooble. But you might

00:59:21.929 --> 00:59:24.590
make 60 to 80 million dollars, even if you're

00:59:24.590 --> 00:59:27.610
an MVP caliber player. And then you have Kyle

00:59:27.610 --> 00:59:30.429
Tucker, who just became a free agent last year,

00:59:30.489 --> 00:59:33.590
and he's making 60 million a year. You know,

00:59:33.630 --> 00:59:37.210
you that you look at that comparison of where

00:59:37.210 --> 00:59:40.750
you can almost make in one year of free agency

00:59:40.750 --> 00:59:44.469
what you've made your entire career up to this

00:59:44.469 --> 00:59:46.900
point. This is why the Players Association is

00:59:46.900 --> 00:59:48.840
really trying to make sure players have access

00:59:48.840 --> 00:59:51.260
to free agency. Their number one goal is to make

00:59:51.260 --> 00:59:54.340
sure their playing members have money in their

00:59:54.340 --> 00:59:56.599
pockets. And one of the ways to do that is free

00:59:56.599 --> 00:59:59.900
agency. However, the majority of players never

00:59:59.900 --> 01:00:03.460
make it to six years of service time to make

01:00:03.460 --> 01:00:06.179
it to free agency. So do you make it accessible

01:00:06.179 --> 01:00:09.559
earlier? Do you change the rules? Right now,

01:00:09.579 --> 01:00:13.000
the PA is stuck between we want players to make

01:00:13.000 --> 01:00:15.199
it to free agency. and get what their money is

01:00:15.199 --> 01:00:18.000
worth. And realizing, okay, most of these players

01:00:18.000 --> 01:00:20.079
are not making it to free agency. We're supposed

01:00:20.079 --> 01:00:23.260
to be down on these team -friendly extensions

01:00:23.260 --> 01:00:26.099
and players signing before they've really proven

01:00:26.099 --> 01:00:28.340
themselves. But I think it's starting to realize,

01:00:28.639 --> 01:00:31.179
hey, the hay's in the barn. Let's make sure these

01:00:31.179 --> 01:00:33.599
guys get their cash and sort of encourage them.

01:00:34.030 --> 01:00:36.869
To sign the deals, you look at Jackson Churio

01:00:36.869 --> 01:00:38.809
signing an $80 million deal before he even made

01:00:38.809 --> 01:00:40.670
his big league debut that can escalate up to

01:00:40.670 --> 01:00:43.869
$140 million if every single team option is picked

01:00:43.869 --> 01:00:46.190
up. You look at Colt Emerson with the Mariners.

01:00:46.230 --> 01:00:48.090
You look at Kevin McGonigal with the Tigers.

01:00:48.250 --> 01:00:50.789
Now you look at J .J. Weatherholt with the Cardinals.

01:00:51.030 --> 01:00:53.929
We're seeing this trend really explode because

01:00:53.929 --> 01:00:56.650
of two reasons. Cost control in the eyes of the

01:00:56.650 --> 01:00:58.780
owners saying, okay. I don't have to worry about

01:00:58.780 --> 01:01:00.519
arbitration rules changing. I don't have to worry

01:01:00.519 --> 01:01:02.719
about this player hitting the open market in

01:01:02.719 --> 01:01:04.480
six years' time when he's going to be priced

01:01:04.480 --> 01:01:06.960
out for me. Now I get a couple more years of

01:01:06.960 --> 01:01:10.099
this player's prime at a cost -controlled number

01:01:10.099 --> 01:01:12.460
that I can budget for. And from the player's

01:01:12.460 --> 01:01:16.110
perspective, I'm set. I've made my fortune. I've

01:01:16.110 --> 01:01:18.050
done it. I don't have to worry about twisting

01:01:18.050 --> 01:01:20.469
my knee and then being out for the year and maybe

01:01:20.469 --> 01:01:22.550
never making what I'm supposed to make. The most

01:01:22.550 --> 01:01:24.409
famous example of a guy that turned this down,

01:01:24.469 --> 01:01:26.610
of course, and bet on himself is Jared Kelnick,

01:01:26.710 --> 01:01:29.250
who continues to bounce around in AAA right now.

01:01:29.309 --> 01:01:31.090
He was offered a nine -figure deal with the Seattle

01:01:31.090 --> 01:01:33.409
Mariners. He turned it down. Maybe one of the

01:01:33.409 --> 01:01:35.670
biggest regrets of his life, but so it goes.

01:01:35.750 --> 01:01:38.349
That's baseball, Susan, because the way free

01:01:38.349 --> 01:01:42.230
agency works is the sad thing is you're going

01:01:42.230 --> 01:01:44.980
to overpay. It's the truth. You are going to

01:01:44.980 --> 01:01:48.400
overpay for a free agent. Teams are understanding

01:01:48.400 --> 01:01:51.099
that now, saying, let's go ahead and pay this

01:01:51.099 --> 01:01:54.099
guy up front. We'll save money there and not

01:01:54.099 --> 01:01:57.900
have to pay for the age 35, 36, 37, 38 year seasons

01:01:57.900 --> 01:02:00.679
when he's inevitably going to decline. We all

01:02:00.679 --> 01:02:02.699
talk about the Padres contracts that they've

01:02:02.699 --> 01:02:05.900
got dealt out to Bogarts, to Machado, to Tatis,

01:02:05.900 --> 01:02:08.500
that they're not going to age well because...

01:02:08.909 --> 01:02:10.530
You just aren't as athletic as you were in your

01:02:10.530 --> 01:02:12.630
late 30s. Teams are starting to catch on to say,

01:02:12.710 --> 01:02:14.949
you know what? Let's just get it up front and

01:02:14.949 --> 01:02:17.750
get the payment out of the way now. And one thing

01:02:17.750 --> 01:02:19.710
that a lot of people have done studies into is

01:02:19.710 --> 01:02:22.769
how much does one win above replacement cost

01:02:22.769 --> 01:02:26.530
in free agency? Because you mentioned teams are

01:02:26.530 --> 01:02:29.050
going to pay in free agency. And if you look

01:02:29.050 --> 01:02:32.389
at someone who's still on their rookie deal or

01:02:32.389 --> 01:02:34.769
still on their league minimum first three years,

01:02:34.909 --> 01:02:39.269
they're not even making a million dollars. two

01:02:39.269 --> 01:02:41.449
to four war player that you're paying a million

01:02:41.449 --> 01:02:43.869
dollars for, that's a great deal. Because in

01:02:43.869 --> 01:02:46.869
free agency, historically, and I'm accounting

01:02:46.869 --> 01:02:49.929
for inflation here, from the 80s through the

01:02:49.929 --> 01:02:53.250
90s and into the early 2000s, it was about $8

01:02:53.250 --> 01:02:58.110
million per win above replacement. So basically,

01:02:58.409 --> 01:03:00.750
that league minimum guy is making $1 million

01:03:00.750 --> 01:03:04.889
and putting up potentially multiple war. You

01:03:04.889 --> 01:03:07.130
can have some guys that are even like six war

01:03:07.130 --> 01:03:10.570
guys. incredible bargain even in the arbitration

01:03:10.570 --> 01:03:13.570
incredible bargain free agency you're gonna have

01:03:13.570 --> 01:03:16.570
to pay 16 million dollars for a league average

01:03:16.570 --> 01:03:20.130
two war player and that number has gone up since

01:03:20.130 --> 01:03:25.329
around 2004 2005 the price of one win in free

01:03:25.329 --> 01:03:28.690
agency is gone from 8 million creeped up to 9

01:03:28.690 --> 01:03:31.710
10 right now the numbers that i've looked at

01:03:31.710 --> 01:03:34.829
for recent contracts uh and and kind of charted

01:03:34.829 --> 01:03:38.679
it out we're approaching 12 to $13 million per

01:03:38.679 --> 01:03:42.719
one win buying it through free agency, meaning

01:03:42.719 --> 01:03:46.860
you're going to pay $26 million a year for a

01:03:46.860 --> 01:03:50.199
league average player, which is just, that's

01:03:50.199 --> 01:03:52.519
why the players want free agency early. That's

01:03:52.519 --> 01:03:55.260
why the owners kind of want to keep it out. But

01:03:55.260 --> 01:03:57.340
one thing that does concern me, if we can touch

01:03:57.340 --> 01:04:00.460
on. those deals that players have been signing

01:04:00.460 --> 01:04:02.239
that gives the owners cost control, certainty

01:04:02.239 --> 01:04:04.519
and gives the players their bag where they're

01:04:04.519 --> 01:04:07.099
kind of guaranteed to make life changing money

01:04:07.099 --> 01:04:11.559
is the rise in those has been dramatic. The last,

01:04:11.639 --> 01:04:16.940
especially this year before we've had maybe two

01:04:16.940 --> 01:04:19.699
or three players before this year that had never

01:04:19.699 --> 01:04:21.820
had, I think it was three players before this

01:04:21.820 --> 01:04:24.179
year that had never played a day in major league

01:04:24.179 --> 01:04:26.500
baseball. that were in the minor leagues that

01:04:26.500 --> 01:04:29.360
signed a long -term deal that covered all of

01:04:29.360 --> 01:04:32.639
their team control years. I think we've had five

01:04:32.639 --> 01:04:36.800
this year. We've had a large number. And that

01:04:36.800 --> 01:04:41.920
concerns me because if the rules change from

01:04:41.920 --> 01:04:46.159
the CBA negotiations and we get a cap and a floor,

01:04:46.340 --> 01:04:50.199
that will almost certainly come with a decrease.

01:04:50.940 --> 01:04:53.559
in service time required for free agency. You

01:04:53.559 --> 01:04:55.219
got to give the players something in order for

01:04:55.219 --> 01:04:57.519
the owners to get the thing they want. And the

01:04:57.519 --> 01:04:59.659
owners signing all these deals with these young

01:04:59.659 --> 01:05:02.800
guys, to me anyway, is a sign that they're pretty

01:05:02.800 --> 01:05:06.500
confident about their push for a salary cap in

01:05:06.500 --> 01:05:08.739
Florida. Yeah, and we'll see that moving forward.

01:05:08.840 --> 01:05:10.820
And one thing we didn't touch on too, pre -free

01:05:10.820 --> 01:05:13.760
agency and pre -arbitration is the new bonus

01:05:13.760 --> 01:05:16.440
pool that the owners have paid into. It's a worthy

01:05:16.440 --> 01:05:19.579
investment for these owners to essentially pay.

01:05:20.320 --> 01:05:23.739
I believe it's 1 .67 million a year per team,

01:05:23.880 --> 01:05:27.719
which goes into this $40 million pool or $50

01:05:27.719 --> 01:05:30.179
million pool that gets divvied up for the top

01:05:30.179 --> 01:05:33.500
125 players that are not yet arbitration eligible.

01:05:33.860 --> 01:05:36.300
So for instance, when you... Factor in the value

01:05:36.300 --> 01:05:38.139
and everything. Let's use Jacob Mizorowski as

01:05:38.139 --> 01:05:40.239
an example. Right now, here at the All -Star

01:05:40.239 --> 01:05:44.719
break, Mizorowski is making $788 ,000 this year

01:05:44.719 --> 01:05:48.079
on his league minimum deal. But he will be one

01:05:48.079 --> 01:05:51.239
of the top, if not the top, war producer that

01:05:51.239 --> 01:05:54.360
is a pre -arbitration eligible player this coming

01:05:54.360 --> 01:05:56.840
year. So he'll probably get a $2 -3 million bonus

01:05:56.840 --> 01:06:00.440
coming up this offseason. from this $50 million

01:06:00.440 --> 01:06:03.039
pool. And on the value front of that for Jacob

01:06:03.039 --> 01:06:05.840
Mizorowski, again, he's making less than a million

01:06:05.840 --> 01:06:08.360
dollars this year. It's like a quarterback being

01:06:08.360 --> 01:06:10.800
on his rookie deal to use the NFL comparison

01:06:10.800 --> 01:06:13.639
because you got to pay for quarterbacks and you

01:06:13.639 --> 01:06:15.940
got to pay for pitching. Jacob Mizorowski to

01:06:15.940 --> 01:06:19.659
date is worth $35 million if you were factoring

01:06:19.659 --> 01:06:21.679
in what is worse. And that's only half of a season,

01:06:21.699 --> 01:06:24.469
mind you. He could be easily... $40 to $45 million

01:06:24.469 --> 01:06:26.429
by the end of the season for what he could be

01:06:26.429 --> 01:06:28.929
worth for a team. That's why these players are

01:06:28.929 --> 01:06:32.030
trying to get the money as soon as possible because

01:06:32.030 --> 01:06:34.429
player careers are getting shorter and shorter

01:06:34.429 --> 01:06:37.190
and shorter and debuts are coming later and later

01:06:37.190 --> 01:06:39.269
and later. The peaks are getting suppressed.

01:06:39.530 --> 01:06:42.389
You've got to strike when the iron is hot. And

01:06:42.389 --> 01:06:44.449
that pre -arbitration bonus pool that you mentioned

01:06:44.449 --> 01:06:48.650
is a new thing that came in the last CBA. I honestly

01:06:48.650 --> 01:06:51.179
think one of the best wins. for the Players Association

01:06:51.179 --> 01:06:52.780
that they've had in a while, one of their best

01:06:52.780 --> 01:06:55.400
ideas and wins, making it so those league minimum

01:06:55.400 --> 01:06:58.679
guys that are MVP, all -star caliber players

01:06:58.679 --> 01:07:01.380
get a nice bonus. Paul Skeens last year got $3

01:07:01.380 --> 01:07:04.599
.4 million from his pre -arbitration bonus. So

01:07:04.599 --> 01:07:08.159
he's making $800 ,000. He gets $3 .4 million

01:07:08.159 --> 01:07:10.820
on top of that, which still isn't close to what

01:07:10.820 --> 01:07:13.059
he'd make in free agency, but it still is something

01:07:13.059 --> 01:07:16.000
better to reward players that are on league minimum

01:07:16.000 --> 01:07:18.659
but perform well above league minimum salaries.

01:07:19.440 --> 01:07:22.699
But now let's say, Dom, you're in free agency.

01:07:22.920 --> 01:07:25.219
You're going to sign your deal. And let's get

01:07:25.219 --> 01:07:27.400
into the elephant in the room, the thing that

01:07:27.400 --> 01:07:30.519
a lot of fans have been complaining about. You

01:07:30.519 --> 01:07:34.059
sign your deal, and it contains a lot of deferred

01:07:34.059 --> 01:07:36.500
money. Deferred money is kind of like the boogeyman

01:07:36.500 --> 01:07:38.960
that people are pointing the Dodgers and saying

01:07:38.960 --> 01:07:41.500
they're taking advantage of this. I don't know

01:07:41.500 --> 01:07:43.840
your opinions on deferred money, Dom, but I've

01:07:43.840 --> 01:07:46.440
been going through. business school the last

01:07:46.440 --> 01:07:48.679
couple years and almost all my stuff is about

01:07:48.679 --> 01:07:51.699
the time value of money i think it's a red herring

01:07:51.699 --> 01:07:54.420
deferred money is not an issue when it comes

01:07:54.420 --> 01:07:57.780
to the luxury tax or the dodgers dodging the

01:07:57.780 --> 01:08:00.199
luxury tax if they didn't defer their salary

01:08:00.199 --> 01:08:02.159
they still would have signed all the players

01:08:02.159 --> 01:08:04.179
that they currently have they would just pay

01:08:04.179 --> 01:08:06.960
them in present dollar values and i think it's

01:08:06.960 --> 01:08:09.559
it's the fact that the owners put that into their

01:08:09.559 --> 01:08:12.460
most recent proposal is something that the play

01:08:13.000 --> 01:08:15.340
it doesn't impact the owners or the players.

01:08:15.420 --> 01:08:17.159
That's more of like a for the fans. Hey, you

01:08:17.159 --> 01:08:18.899
guys have been complaining about this. We're

01:08:18.899 --> 01:08:21.880
going to get this. And I'll say the only benefit,

01:08:21.939 --> 01:08:25.020
because if you go with the present value calculations

01:08:25.020 --> 01:08:27.880
of how it works, it's not dodging the luxury

01:08:27.880 --> 01:08:32.119
tax. The only benefit of deferred salary is players

01:08:32.119 --> 01:08:36.000
get to dodge some state taxes. And in some instances,

01:08:36.039 --> 01:08:39.619
yeah. Players get to dodge some state taxes because

01:08:39.619 --> 01:08:42.640
money deferred more than 10 years is taxed wherever

01:08:42.640 --> 01:08:45.680
you are at the time you receive the deferred

01:08:45.680 --> 01:08:48.819
payment. So if Otani goes and leaves California

01:08:48.819 --> 01:08:51.909
and goes back to live in Japan. he's going to

01:08:51.909 --> 01:08:55.270
pay $0 in state taxes because his money was deferred

01:08:55.270 --> 01:08:57.050
10 years. Now, I don't know if I just opened

01:08:57.050 --> 01:08:59.170
a can of worms, but I'm going to pass it to you

01:08:59.170 --> 01:09:02.310
to see your opinion on that. Well, I'm in favor

01:09:02.310 --> 01:09:05.489
of deferred money. I think every ownership knows

01:09:05.489 --> 01:09:09.010
it's available to them. I think every team has,

01:09:09.090 --> 01:09:11.970
just about every team has done it for their mega

01:09:11.970 --> 01:09:14.609
contracts to be able to say, hey, we'll give

01:09:14.609 --> 01:09:16.789
this to you down the road because there are two

01:09:16.789 --> 01:09:18.989
reasons you do it as an ownership group. Number

01:09:18.989 --> 01:09:22.539
one, in the long run, As Shohei Otani, obviously,

01:09:22.579 --> 01:09:24.800
he's making $70 million a year, but he's deferring

01:09:24.800 --> 01:09:28.000
$68 million of it every year. So if I'm Guggenheim,

01:09:28.159 --> 01:09:31.199
I'm saying, okay, you don't want me to pay you

01:09:31.199 --> 01:09:33.359
$68 million this year. I'm only going to pay

01:09:33.359 --> 01:09:35.159
you two because he's making so much on endorsements

01:09:35.159 --> 01:09:38.880
otherwise. That's $68 million. I take that and

01:09:38.880 --> 01:09:42.119
the S &P, and in 10 years, that $68 million is

01:09:42.119 --> 01:09:45.060
going to be like $88 million. I am making money

01:09:45.060 --> 01:09:48.600
off of this in the long term and paying you,

01:09:48.739 --> 01:09:51.039
putting this, letting money grow, right? You

01:09:51.039 --> 01:09:53.420
just talked about that. The value of money over

01:09:53.420 --> 01:09:57.539
time, compounding interest, creating money from

01:09:57.539 --> 01:10:01.340
within itself. In that regard, you look at Bobby

01:10:01.340 --> 01:10:03.640
Bonilla. We just celebrated Bobby Bonilla Day.

01:10:04.170 --> 01:10:06.829
His deferred money contract is the last of its

01:10:06.829 --> 01:10:10.529
kind because it had interest included on it.

01:10:10.810 --> 01:10:13.909
Modern deferred money contracts do not have interest

01:10:13.909 --> 01:10:16.069
added to it, which is why Bobby is still getting

01:10:16.069 --> 01:10:18.210
paid for another 15 years or whatever it is.

01:10:18.630 --> 01:10:22.189
Shohei Otani is getting $68 million with no interest

01:10:22.189 --> 01:10:25.270
per year once he is done with this 10 -year deal.

01:10:25.430 --> 01:10:27.229
There is not interest on top of that. And you

01:10:27.229 --> 01:10:29.810
talked about the taxes. California even introduced

01:10:29.810 --> 01:10:32.800
and is trying to pass legislation that... If

01:10:32.800 --> 01:10:35.579
you sign this contract in California, you thus

01:10:35.579 --> 01:10:39.279
have to pay the taxes on this contract in California,

01:10:39.340 --> 01:10:41.760
no matter where you're living. I haven't checked

01:10:41.760 --> 01:10:44.619
the status of that recently, so hand up if that's

01:10:44.619 --> 01:10:46.100
already been passed or if it's been shot down

01:10:46.100 --> 01:10:48.760
or something like that. But it's going to be

01:10:48.760 --> 01:10:50.640
an issue moving forward because every team has

01:10:50.640 --> 01:10:52.840
it. Another example that I bring up is somebody

01:10:52.840 --> 01:10:55.859
like Max Scherzer. I believe he's getting deferred

01:10:55.859 --> 01:10:59.590
money from four. Different teams in throughout

01:10:59.590 --> 01:11:02.829
his career where the big mega deal from the Nats

01:11:02.829 --> 01:11:05.010
is a lot of deferred money When he signed as

01:11:05.010 --> 01:11:07.270
a free agent with the Mets was deferred money

01:11:07.270 --> 01:11:11.989
then when he got traded to the Rangers Part of

01:11:11.989 --> 01:11:14.149
that bonus was deferred money, and now with the

01:11:14.149 --> 01:11:16.970
Blue Jays and the Dodgers, some of it is deferred

01:11:16.970 --> 01:11:19.189
money. He is going to be getting a lot of money

01:11:19.189 --> 01:11:22.409
well beyond from three. His taxes are going to

01:11:22.409 --> 01:11:24.569
be complicated. This is not a new thing. He's

01:11:24.569 --> 01:11:25.949
going to move to Florida, and he's not going

01:11:25.949 --> 01:11:27.850
to pay anything. Truly. I mean, this is not a

01:11:27.850 --> 01:11:29.489
new thing. I think that's the number one thing

01:11:29.489 --> 01:11:31.510
to hammer home about deferred salary. This is

01:11:31.510 --> 01:11:34.649
not new. It's just become a bigger boogeyman

01:11:34.649 --> 01:11:37.069
because the Dodgers do it. The Brewers have done

01:11:37.069 --> 01:11:39.930
it. The Yankees have done it. Almost every team

01:11:39.930 --> 01:11:42.100
has done deferred money at some point. The other

01:11:42.100 --> 01:11:46.479
thing is what else has changed, and I haven't

01:11:46.479 --> 01:11:48.319
been able to pinpoint exactly when this changed,

01:11:48.399 --> 01:11:51.760
is how the reporting is done on these deals.

01:11:51.840 --> 01:11:55.460
Because there were just as many, if not more,

01:11:55.579 --> 01:11:58.479
deferred contracts in the late 70s and early

01:11:58.479 --> 01:12:02.100
80s in the advent of free agency. But when they

01:12:02.100 --> 01:12:05.119
reported the contract, if you look at Brent Souter,

01:12:05.239 --> 01:12:08.840
Brent Souter's contract. was a, in present value

01:12:08.840 --> 01:12:12.739
terms, $10 million total contract. All of the

01:12:12.739 --> 01:12:14.760
deferred money he got, which his interest rate

01:12:14.760 --> 01:12:20.239
was, I think, 13%, he got a $9 million payment

01:12:20.239 --> 01:12:27.140
in 2021, I think, 30 years after he played with

01:12:27.140 --> 01:12:30.220
the Braves. If you count up all his deferred

01:12:30.220 --> 01:12:32.500
payments, all the money he made down the line,

01:12:32.600 --> 01:12:35.220
his contract today would have been reported as

01:12:35.220 --> 01:12:38.180
a $50 million contract. But at the time, it was

01:12:38.180 --> 01:12:41.020
reported as a $10 million contract with a lot

01:12:41.020 --> 01:12:44.199
of the money deferred. They used to report the

01:12:44.199 --> 01:12:47.060
present value of the contracts. And I think only

01:12:47.060 --> 01:12:51.300
in the last 15 years have reports been of the

01:12:51.300 --> 01:12:54.640
future value of the contracts, which has changed

01:12:54.640 --> 01:12:57.340
the perception of these deals. If they reported

01:12:57.340 --> 01:13:00.890
Ohtani's contract. that he signed a few years

01:13:00.890 --> 01:13:04.850
ago as a 10 -year deal at $480 million, the present

01:13:04.850 --> 01:13:07.750
value, nobody would have blinked an eye at that.

01:13:07.909 --> 01:13:10.829
No one would have said, oh my God, the Dodgers

01:13:10.829 --> 01:13:13.189
are getting away with murder, highway robbery.

01:13:13.449 --> 01:13:16.890
They're taking advantage of the league. But because

01:13:16.890 --> 01:13:21.010
it was reported as a $700 million contract, it

01:13:21.010 --> 01:13:24.289
raises a lot with 98 % of the money deferred.

01:13:24.590 --> 01:13:26.829
it raises a lot more eyebrows than it did in

01:13:26.829 --> 01:13:28.550
the past. That's just a personal opinion of mine.

01:13:28.569 --> 01:13:31.149
I think the reporting is one of the things that

01:13:31.149 --> 01:13:34.149
have changed the perception of deferrals. I think

01:13:34.149 --> 01:13:37.470
that this is going to be something used heavily

01:13:37.470 --> 01:13:40.470
in the future, which is why it is going to be

01:13:40.470 --> 01:13:42.489
something that we need to pay attention to come

01:13:42.489 --> 01:13:46.770
December 2nd of what is the messaging. I recently

01:13:46.770 --> 01:13:49.189
compared it on a podcast I was on about the two

01:13:49.189 --> 01:13:51.569
buckets. Everyone's focused on bucket number

01:13:51.569 --> 01:13:54.270
one, which is salary cap. But bucket number two

01:13:54.270 --> 01:13:55.810
is going to have, are there going to be limits

01:13:55.810 --> 01:13:58.210
on deferred salary? Are there going to be limits

01:13:58.210 --> 01:14:00.390
on how many years you can defer a payment and

01:14:00.390 --> 01:14:02.729
how ownership works? That's going to be one of

01:14:02.729 --> 01:14:04.689
the key things to monitor moving forward because

01:14:04.689 --> 01:14:08.510
of the fact that players shouldn't mind deferred

01:14:08.510 --> 01:14:10.970
money. They really shouldn't because I understand

01:14:10.970 --> 01:14:13.430
the thought of. Oh, I want it now. And who am

01:14:13.430 --> 01:14:15.149
I to complain about somebody else's bank account?

01:14:15.250 --> 01:14:17.289
But I want all the cash I'm worth right now.

01:14:17.369 --> 01:14:20.409
But at the same time, it's saying, oh, I can

01:14:20.409 --> 01:14:22.930
be paid $10 million this year to live and to

01:14:22.930 --> 01:14:24.869
do my thing. That's plenty. You're going to pay

01:14:24.869 --> 01:14:27.529
me $20 million in 30 years when I'm done playing

01:14:27.529 --> 01:14:29.329
ball. Yeah, I'm good with that. I'll take it

01:14:29.329 --> 01:14:31.109
very much now. Ownership. Doesn't love to do

01:14:31.109 --> 01:14:33.449
it all the time because it makes it harder for

01:14:33.449 --> 01:14:35.430
them to sell a team and impacts their valuation

01:14:35.430 --> 01:14:38.189
down the road. But ask the Padres. It did not

01:14:38.189 --> 01:14:41.770
impact them all that much. That's a heavy first

01:14:41.770 --> 01:14:43.869
segment. We're going to talk about licensing

01:14:43.869 --> 01:14:48.250
later on in the show. That's another way players

01:14:48.250 --> 01:14:49.649
can make money, but that can kind of fall into

01:14:49.649 --> 01:14:52.109
the national at -large stuff. They're not going

01:14:52.109 --> 01:14:54.630
to all be this dense, but those are basically

01:14:54.630 --> 01:14:57.939
the... Easiest ways that we can give you the

01:14:57.939 --> 01:15:00.539
business side from the player's view. All the

01:15:00.539 --> 01:15:03.520
ways players can make money from on the field,

01:15:03.760 --> 01:15:07.659
arbitration, free agency, bonus pools, drafting,

01:15:07.899 --> 01:15:10.380
that sort of thing. That chapter was a dense

01:15:10.380 --> 01:15:12.819
chapter. They're not all going to be this dense.

01:15:13.000 --> 01:15:16.260
So we've outlined every way a player can make

01:15:16.260 --> 01:15:19.159
money on the field. What about the people paying

01:15:19.159 --> 01:15:21.859
them, the owners? There are two levels on how

01:15:21.859 --> 01:15:24.760
the owners make money. First, on the local side,

01:15:24.920 --> 01:15:27.579
everything that has to do with Detroit that doesn't

01:15:27.579 --> 01:15:29.140
have to do with Los Angeles, that doesn't have

01:15:29.140 --> 01:15:30.720
to do with Seattle, that doesn't have to do with

01:15:30.720 --> 01:15:34.899
Atlanta, right? Each individual ballpark, infrastructure,

01:15:35.600 --> 01:15:39.500
village, local media rights, parking, every single

01:15:39.500 --> 01:15:41.619
team is different in their local side of things.

01:15:41.859 --> 01:15:44.479
And then the second half of this segment is the

01:15:44.479 --> 01:15:47.829
national view of the game. Broadcast revenues,

01:15:48.170 --> 01:15:51.449
all -star games, playoff shares, international

01:15:51.449 --> 01:15:54.430
revenues, merchandise, licensing, things like

01:15:54.430 --> 01:15:57.670
that become more of a the game national view

01:15:57.670 --> 01:16:02.149
to create revenue. Now, this chapter is all about

01:16:02.149 --> 01:16:05.069
the local side of things. And the most important

01:16:05.069 --> 01:16:09.350
way, Scott, to make money as a baseball team

01:16:09.350 --> 01:16:13.289
could be media rights. It could be real estate.

01:16:13.350 --> 01:16:17.609
It could be non -baseball events. The most important

01:16:17.609 --> 01:16:22.250
way to make money is to get people in the door.

01:16:22.390 --> 01:16:26.329
You got to sell tickets. The gate continues to

01:16:26.329 --> 01:16:29.229
be one of the biggest drivers of revenue for

01:16:29.229 --> 01:16:32.109
all of these teams. And as we talked about at

01:16:32.109 --> 01:16:34.310
the beginning of the show, we have the books

01:16:34.310 --> 01:16:37.029
on the Braves. We don't have the books on the

01:16:37.029 --> 01:16:39.789
other teams. What we do have is baseball reference.

01:16:39.890 --> 01:16:42.710
And baseball reference has the official attendance

01:16:42.710 --> 01:16:46.619
figures for every single team. across Major League

01:16:46.619 --> 01:16:49.680
Baseball. Now, another fun fact about all this

01:16:49.680 --> 01:16:51.720
and something that the Society of American Baseball

01:16:51.720 --> 01:16:55.220
Research has done in tracking the average cost

01:16:55.220 --> 01:16:58.939
of tickets. Now, this goes to 2004 from the 50s.

01:16:58.960 --> 01:17:02.020
Just take a wild guess here, Scott. How much

01:17:02.020 --> 01:17:06.239
do you think it cost to watch baseball in, let's

01:17:06.239 --> 01:17:10.300
say, 1956, 70 years ago? What was the average

01:17:10.300 --> 01:17:13.539
ticket price to attend a game in Major League

01:17:13.539 --> 01:17:16.359
Baseball in 1956? Oh, you're putting me on the

01:17:16.359 --> 01:17:19.699
spot, but I would guess two bucks. I don't even

01:17:19.699 --> 01:17:24.680
know. $1 .72. I was close. I was close. 70 years

01:17:24.680 --> 01:17:27.680
later, we don't have a firm average on this,

01:17:27.760 --> 01:17:31.880
but we know the Dodgers average about $90 a ticket.

01:17:32.260 --> 01:17:36.720
The Yankees average about $95 to $98 a ticket.

01:17:37.140 --> 01:17:41.659
It has become vastly more expensive to attend

01:17:41.659 --> 01:17:43.520
a game. So you may be thinking, okay, great.

01:17:43.600 --> 01:17:46.819
That means that... attendance continues to rise

01:17:46.819 --> 01:17:48.819
and everybody's paying that. Not necessarily.

01:17:49.220 --> 01:17:51.439
One of the things I think that's fascinating

01:17:51.439 --> 01:17:55.720
about the current trend of the gate and how to

01:17:55.720 --> 01:18:00.239
generate income from the gate is to create margins

01:18:00.239 --> 01:18:04.479
on, you know what? Even if we only have 20 ,000

01:18:04.479 --> 01:18:07.560
fans in the stands, we've charged those 20 ,000

01:18:07.560 --> 01:18:10.560
fans more money to be here. So we have now made

01:18:10.560 --> 01:18:14.100
the same amount of cash. With 20 ,000 fans in

01:18:14.100 --> 01:18:17.640
the stand as we did maybe in 2005 with 36 ,000

01:18:17.640 --> 01:18:21.439
fans in the stands. This is part of the dynamic

01:18:21.439 --> 01:18:24.979
pricing that we see in seats. Obviously, a lower

01:18:24.979 --> 01:18:27.819
bowl seat is going to cost more than a upper

01:18:27.819 --> 01:18:31.060
terrace level seat. But now we see dynamic pricing

01:18:31.060 --> 01:18:34.390
from section to section within the same. ballpark

01:18:34.390 --> 01:18:37.569
or dynamic pricing based on demand and secondary

01:18:37.569 --> 01:18:41.170
markets that aren't controlled by the teams have

01:18:41.170 --> 01:18:43.489
something to do with that as well. But I find

01:18:43.489 --> 01:18:46.090
it fascinating just looking at the American League

01:18:46.090 --> 01:18:47.930
attendance totals here just for the sake of the

01:18:47.930 --> 01:18:52.109
one that I pulled up here. In 1994, strike shortened

01:18:52.109 --> 01:18:54.970
year obviously, one of the peaks of popularity

01:18:54.970 --> 01:18:58.890
before the strike of that year, baseball was

01:18:58.890 --> 01:19:03.729
averaging over 30 ,000 fans a game. That's not

01:19:03.729 --> 01:19:07.090
an insignificant number. Averaging over 30 ,000

01:19:07.090 --> 01:19:12.649
fans a game. Right now, in 2025, last year, averaging

01:19:12.649 --> 01:19:17.189
about 26 ,000 fans a game. But again, because

01:19:17.189 --> 01:19:20.149
of those margins, teams are making as much, if

01:19:20.149 --> 01:19:22.189
not more money because of rising ticket costs,

01:19:22.470 --> 01:19:24.829
different suite level packages, different premium

01:19:24.829 --> 01:19:27.229
seating packages in order to make that money

01:19:27.229 --> 01:19:29.789
back. Again, we don't have firm data on what

01:19:29.789 --> 01:19:33.079
each team makes on their gate. But I think it's

01:19:33.079 --> 01:19:35.899
fascinating to see that league attendance has

01:19:35.899 --> 01:19:39.300
kind of stagnated right around 30 million per

01:19:39.300 --> 01:19:42.180
year per league, right? So 60 million fans or

01:19:42.180 --> 01:19:46.039
so per league in total in Major League Baseball.

01:19:46.460 --> 01:19:49.899
That post -COVID, this is actually down from

01:19:49.899 --> 01:19:52.960
pre -COVID. Again, are the costs lining up? Is

01:19:52.960 --> 01:19:54.899
everything more expensive? But these teams are

01:19:54.899 --> 01:19:57.619
still able to make money. And to give you an

01:19:57.619 --> 01:20:00.619
impact and to give you a picture, Scott, of what

01:20:00.619 --> 01:20:03.220
the strike did to the popularity of Major League

01:20:03.220 --> 01:20:06.600
Baseball when the gate was everything in 1994

01:20:06.600 --> 01:20:10.380
and in the 80s and the 90s. The drop from 94

01:20:10.380 --> 01:20:13.739
to 95 after the strike. Again, they were averaging

01:20:13.739 --> 01:20:18.600
in the American League 30 ,366 fans a game in

01:20:18.600 --> 01:20:25.670
1994. 1995, that dropped to 25 ,000. 107 averaging

01:20:25.670 --> 01:20:29.930
less than 5 000 fans a game and it dropped their

01:20:29.930 --> 01:20:35.069
season total to 25 million whereas the previous

01:20:35.069 --> 01:20:38.909
full year it was 33 million to show how drastic

01:20:38.909 --> 01:20:43.729
a work stoppage can be to the gate into a massive

01:20:43.729 --> 01:20:46.430
revenue generator for all of these teams you

01:20:46.430 --> 01:20:48.770
need to make sure you are not only putting a

01:20:48.770 --> 01:20:51.479
good product on the field but Listening to your

01:20:51.479 --> 01:20:53.819
fan to say, stay on the field and keep playing

01:20:53.819 --> 01:20:56.420
baseball. Things are a little bit different now

01:20:56.420 --> 01:20:59.600
because of the size of stadiums too. Stadiums

01:20:59.600 --> 01:21:02.300
have slowly gotten smaller to be baseball specific

01:21:02.300 --> 01:21:04.779
and the baseball only. We'll talk about ballparks

01:21:04.779 --> 01:21:08.180
in this segment too. But comparing the Dodgers,

01:21:08.180 --> 01:21:10.439
who have more than 50 ,000 seats available to

01:21:10.439 --> 01:21:13.100
them, the largest stadium in Major League Baseball,

01:21:13.220 --> 01:21:16.600
to say the Trop and the Tampa Bay Rays, who average

01:21:16.600 --> 01:21:20.189
about 12 ,000 fans a game. It's not the same

01:21:20.189 --> 01:21:23.510
apples to apples comparison. However, these are

01:21:23.510 --> 01:21:26.609
part of the net local revenues that teams are

01:21:26.609 --> 01:21:30.250
pooling together to share with each other in

01:21:30.250 --> 01:21:33.149
order to make sure that you stay afloat in the

01:21:33.149 --> 01:21:36.470
revenue sharing model that is net local revenues

01:21:36.470 --> 01:21:39.310
that when the Rays are not making as much money

01:21:39.310 --> 01:21:41.770
at the gate as the Yankees and the Dodgers, they

01:21:41.770 --> 01:21:43.770
can survive because they're getting a piece of

01:21:43.770 --> 01:21:46.420
the pie from those other teams. You mentioned

01:21:46.420 --> 01:21:49.239
margins and a really good example, a personal

01:21:49.239 --> 01:21:55.420
example I have on margins is in the early 2000s,

01:21:55.420 --> 01:21:58.880
I was going to college in New York. And a lot

01:21:58.880 --> 01:22:00.779
of times on the weekends, we would go down to

01:22:00.779 --> 01:22:03.800
old Yankee Stadium at the time, which has larger

01:22:03.800 --> 01:22:06.760
capacity than new Yankee Stadium. But it was

01:22:06.760 --> 01:22:09.220
always fun. The tickets weren't overly expensive.

01:22:09.380 --> 01:22:11.140
I'd sit out in the bleachers, have a hell of

01:22:11.140 --> 01:22:16.699
a fun time. And then in, I believe, 2010 or 11,

01:22:16.859 --> 01:22:19.239
I went to my first game at New Yankee Stadium.

01:22:19.439 --> 01:22:23.220
And the difference was stark. They basically

01:22:23.220 --> 01:22:26.539
built this stadium, slightly less capacity, but

01:22:26.539 --> 01:22:30.380
with a focus on luxury seats, with luxury boxes,

01:22:30.619 --> 01:22:34.970
with really that ring around. The first couple

01:22:34.970 --> 01:22:37.890
of rows behind home plate was where the priority

01:22:37.890 --> 01:22:40.289
was. And the bleachers were an afterthought.

01:22:40.369 --> 01:22:43.210
I thought, hey, I had a great time in the bleachers

01:22:43.210 --> 01:22:45.529
in old Yankee Stadium. We'll get some bleacher

01:22:45.529 --> 01:22:48.090
tickets, be out there and have a fun time. We

01:22:48.090 --> 01:22:50.890
got and sat down in our seats, which is right

01:22:50.890 --> 01:22:52.710
next to center field, where they had a giant

01:22:52.710 --> 01:22:55.609
restaurant. And half of our view was blocked

01:22:55.609 --> 01:22:58.609
off. We couldn't see left field. We couldn't

01:22:58.609 --> 01:23:01.750
see half of the field because designing that

01:23:01.750 --> 01:23:04.609
stadium for those bleacher seats was an afterthought.

01:23:04.670 --> 01:23:06.829
Those aren't the money -making seats. The money

01:23:06.829 --> 01:23:08.869
-making seats are the premium ones that cost,

01:23:08.970 --> 01:23:13.409
you know, $500 a pop. And they have since fixed

01:23:13.409 --> 01:23:15.569
that. That's no longer an obstructive view area.

01:23:15.649 --> 01:23:17.909
They kind of made an opening in between the restaurant.

01:23:18.050 --> 01:23:22.399
But for three years, they put TVs. up along that

01:23:22.399 --> 01:23:24.859
concrete wall that was blocking our view so if

01:23:24.859 --> 01:23:27.260
a ball was hit to left field you could see what

01:23:27.260 --> 01:23:30.399
was going on it was that poorly designed because

01:23:30.399 --> 01:23:32.979
again the bleacher seats were not the money makers

01:23:32.979 --> 01:23:35.359
it was the afterthought in designing the stadium

01:23:35.359 --> 01:23:38.560
and we can go back to the brewers they just had

01:23:38.560 --> 01:23:41.739
a proposal to turn their first six rows excuse

01:23:41.739 --> 01:23:44.020
me they just had a proposal to turn their first

01:23:44.020 --> 01:23:47.420
six rows into a club level seat where they have

01:23:47.420 --> 01:23:50.479
the trust club Where you can go hang out at the

01:23:50.479 --> 01:23:53.479
club and get drinks before the game. And then

01:23:53.479 --> 01:23:55.579
you pay a premium. You have to buy, I think,

01:23:55.579 --> 01:23:59.939
a half season worth of tickets. I think $20 ,000

01:23:59.939 --> 01:24:02.739
a seat to even be able to afford that. I think

01:24:02.739 --> 01:24:05.380
for full season then is like $40 ,000 a seat.

01:24:05.800 --> 01:24:11.640
And they're pricing out the average fan in...

01:24:12.239 --> 01:24:14.739
The goal of trying to get corporate packages

01:24:14.739 --> 01:24:16.920
that come in and buy a couple of those seats

01:24:16.920 --> 01:24:20.619
and have their salespeople bring their customers

01:24:20.619 --> 01:24:24.420
in and treat them to a game. Tickets that the

01:24:24.420 --> 01:24:26.819
average person can't afford because those give

01:24:26.819 --> 01:24:30.819
increasingly higher margins relative to just

01:24:30.819 --> 01:24:33.760
a normal seat in the stadium. So as you mentioned,

01:24:34.000 --> 01:24:38.420
attendance may be less than it was per game than

01:24:38.420 --> 01:24:42.470
1993, 1994 today, but they're making. way more

01:24:42.470 --> 01:24:45.529
money on the margins than they were back in those

01:24:45.529 --> 01:24:49.229
days. And on that note, some of those big corporate

01:24:49.229 --> 01:24:52.130
sponsors, they may have suites, they may have

01:24:52.130 --> 01:24:56.489
access to these clubs. And under the... the guise

01:24:56.489 --> 01:24:59.409
of, oh, they're paying $40 ,000 to be in these

01:24:59.409 --> 01:25:02.289
seats. It doesn't necessarily work like a simple

01:25:02.289 --> 01:25:05.930
cash transaction. There could be trades involved

01:25:05.930 --> 01:25:09.609
with this where, hey, if you want to create some

01:25:09.609 --> 01:25:12.289
signage in the outfield, or if you want to sponsor

01:25:12.289 --> 01:25:14.890
some sort of program within the Brewers, you

01:25:14.890 --> 01:25:16.390
know, I use, you know, to use the Brewers because

01:25:16.390 --> 01:25:17.829
they're the team that we watch the most often,

01:25:17.949 --> 01:25:20.430
Northwestern Mutual, right? Northwestern Mutual.

01:25:20.750 --> 01:25:23.430
has the jersey patch they have an outfield sign

01:25:23.430 --> 01:25:26.529
they have presence with the telecast they have

01:25:26.529 --> 01:25:29.869
presence in the stadium right and on top of all

01:25:29.869 --> 01:25:32.569
that they have multiple suites they have a giant

01:25:32.569 --> 01:25:35.550
block of tickets available to them all this is

01:25:35.550 --> 01:25:39.010
to say it's not necessarily just a cash flow

01:25:39.010 --> 01:25:41.510
transaction with some of your sponsors where

01:25:42.010 --> 01:25:45.430
yes you want the big ticket spenders to go into

01:25:45.430 --> 01:25:48.569
these premium areas of your ballpark but at the

01:25:48.569 --> 01:25:51.590
same time some of these deals are really just

01:25:51.590 --> 01:25:54.930
trades where if i'm a private equity firm in

01:25:54.930 --> 01:25:57.529
new york city Maybe I don't necessarily have,

01:25:57.649 --> 01:26:00.649
you know, season tickets, but I pay for a half

01:26:00.649 --> 01:26:03.489
season package of their, you know, luxury lounge

01:26:03.489 --> 01:26:06.510
down there behind home plate to say, Hey, we

01:26:06.510 --> 01:26:08.670
will pay for this half season tickets for us.

01:26:08.710 --> 01:26:11.210
This is a write off for us. And we don't mind

01:26:11.210 --> 01:26:13.430
that because we're using this for client business

01:26:13.430 --> 01:26:16.250
and for trying to acquire people to, to help

01:26:16.250 --> 01:26:18.489
out our organization and everything becomes kind

01:26:18.489 --> 01:26:20.750
of a little of a trade of like, we'll scratch

01:26:20.750 --> 01:26:22.270
your back here. We'll scratch your back there

01:26:22.270 --> 01:26:24.630
in cash. Isn't necessarily getting moved around.

01:26:25.149 --> 01:26:28.590
And to add to that point, the only time I in

01:26:28.590 --> 01:26:31.909
my life have sat in a luxury box at a baseball

01:26:31.909 --> 01:26:34.810
game was when I lived in Cincinnati and worked

01:26:34.810 --> 01:26:37.449
for Procter & Gamble. And our section won the

01:26:37.449 --> 01:26:40.789
raffle to be able to have our work section sit

01:26:40.789 --> 01:26:43.590
in the luxury box there. If you go to a Cincinnati

01:26:43.590 --> 01:26:46.409
Reds game today, count the number of PNG ads

01:26:46.409 --> 01:26:48.970
you see littered around the stadium. Count the

01:26:48.970 --> 01:26:51.569
number of PNG references they'll have on their

01:26:51.569 --> 01:26:54.210
scoreboard when they do in -between inning ads.

01:26:54.390 --> 01:26:57.569
This section is sponsored by... Procter & Gamble,

01:26:57.649 --> 01:27:00.390
this section is sponsored by this. It's entirely,

01:27:00.590 --> 01:27:03.970
and I think Procter & Gamble actually has a small,

01:27:03.970 --> 01:27:07.010
small ownership stake in the team as well. Like

01:27:07.010 --> 01:27:10.310
it is a transaction where they're able to lure

01:27:10.310 --> 01:27:12.789
in Procter & Gamble to spend a lot of money on

01:27:12.789 --> 01:27:17.090
the Reds by offering them a luxury box for employees

01:27:17.090 --> 01:27:20.590
and for any other use they want to use. And Sportico

01:27:20.590 --> 01:27:24.489
had a brilliant article recently about how the

01:27:24.489 --> 01:27:28.619
home plate view, has become a billboard for all

01:27:28.619 --> 01:27:30.819
of these teams, how it's changed in the last

01:27:30.819 --> 01:27:34.020
15 years. These companies that are trying to

01:27:34.020 --> 01:27:38.739
invest in the most premium camera view of a ballpark,

01:27:38.819 --> 01:27:41.899
meaning you're now seeing behind the mound sponsor

01:27:41.899 --> 01:27:45.319
next to the cleat scrape. You're now seeing,

01:27:45.380 --> 01:27:47.779
obviously, the banner and the ribbon board right

01:27:47.779 --> 01:27:50.399
behind home plate where that changes from inning

01:27:50.399 --> 01:27:53.159
to inning. Then you've got maybe a painted on,

01:27:53.239 --> 01:27:56.859
you know, laminated by brewers tickets at brewers

01:27:56.859 --> 01:27:59.680
.com. Then maybe the back of the seats have signage

01:27:59.680 --> 01:28:01.739
like you see in Cincinnati with the Lexus club,

01:28:01.840 --> 01:28:03.739
or like you see in Atlanta with the Delta club,

01:28:03.800 --> 01:28:06.680
or then maybe you have another sponsor that rotates

01:28:06.680 --> 01:28:09.380
on a video board behind it. The amount of sponsors

01:28:09.380 --> 01:28:13.060
that pop up now on that most frequent view of

01:28:13.060 --> 01:28:15.359
home plate. I mean, it's NASCAR esque of how

01:28:15.359 --> 01:28:20.260
many ads you see on the most frequent shot in

01:28:20.260 --> 01:28:23.000
the game. Then you now see the augmented ads

01:28:23.000 --> 01:28:26.500
when you, Cut to camera two, which is the high

01:28:26.500 --> 01:28:30.380
home camera, and looking out to the field and

01:28:30.380 --> 01:28:33.279
see the center field batter's eye now have, for

01:28:33.279 --> 01:28:36.380
instance, Apple TV uses Verilux. There's a free

01:28:36.380 --> 01:28:39.340
ad for you, Verilux, where they put in Verilux

01:28:39.340 --> 01:28:42.140
on the hitter's eye as the presenting sponsor

01:28:42.140 --> 01:28:47.380
of baseball on Apple TV+. There are so many ways

01:28:47.380 --> 01:28:50.500
to augment and to create sponsorship opportunities

01:28:50.500 --> 01:28:54.659
for these local revenues where, I've literally

01:28:54.659 --> 01:28:58.539
seen it augmented on the local level. For instance,

01:28:58.720 --> 01:29:03.399
the Brewers are playing in St. Louis and there's

01:29:03.399 --> 01:29:06.060
a sponsor on the back of the mound that's not

01:29:06.060 --> 01:29:08.500
a sponsor of the Brewers. You were able to augment

01:29:08.500 --> 01:29:10.779
over that sponsor on the back of the mound and

01:29:10.779 --> 01:29:13.680
put Northwestern Mutual or Pottawatomie or whatever

01:29:13.680 --> 01:29:16.319
you need to put for your local broadcast, even

01:29:16.319 --> 01:29:19.770
though it's not even in the ballpark. And I don't

01:29:19.770 --> 01:29:22.289
remember what team it was, but there was opening

01:29:22.289 --> 01:29:25.810
day this year, the camera view from center field

01:29:25.810 --> 01:29:27.869
where you can see the pitcher and the batter

01:29:27.869 --> 01:29:30.829
and everything. One team had it set up where

01:29:30.829 --> 01:29:34.350
the entire, where the action is, where the pitcher

01:29:34.350 --> 01:29:36.550
was, where the batter was, was entirely on the

01:29:36.550 --> 01:29:38.229
left -hand side of the screen, and the right

01:29:38.229 --> 01:29:40.590
hand was just so they could capture the billboards

01:29:40.590 --> 01:29:44.390
behind home plate. And you'll also see it wherever

01:29:44.390 --> 01:29:46.960
the Dodgers play. Even though a lot of teams

01:29:46.960 --> 01:29:49.039
on national broadcasts have the green screen,

01:29:49.199 --> 01:29:53.100
if the Dodgers play in Milwaukee, the static

01:29:53.100 --> 01:29:56.520
advertisements all become in Japanese. They're

01:29:56.520 --> 01:30:00.159
selling them to the Brewers are selling ad space

01:30:00.159 --> 01:30:02.539
to Japanese companies because Otani is in town

01:30:02.539 --> 01:30:05.479
for three days. And on the national ones, they

01:30:05.479 --> 01:30:07.279
have the green screen so they can change it,

01:30:07.300 --> 01:30:10.130
which a pet peeve of mine. is whenever one of

01:30:10.130 --> 01:30:12.670
those ads have a bright color, like a yellow

01:30:12.670 --> 01:30:16.529
or a bright red or something like that, it doesn't

01:30:16.529 --> 01:30:19.369
really green screen that well behind the players

01:30:19.369 --> 01:30:21.170
and you have these weird little artifacts. So

01:30:21.170 --> 01:30:23.430
I think they should outlaw, or the league should

01:30:23.430 --> 01:30:25.630
at least tell these companies, don't do bright

01:30:25.630 --> 01:30:28.170
colors in your ads because it looks horrendous.

01:30:28.210 --> 01:30:30.409
I think there was a Phillies broadcast. A couple

01:30:30.409 --> 01:30:32.569
of weeks ago, I saw where the catcher's arm would

01:30:32.569 --> 01:30:34.170
actually disappear every time you throw it back

01:30:34.170 --> 01:30:36.149
because the bright color behind him was messing

01:30:36.149 --> 01:30:38.750
up the green screen. And you had these like fuzzy

01:30:38.750 --> 01:30:41.210
outlines on all the players. So just a pet peeve

01:30:41.210 --> 01:30:45.810
of mine. The other thing about these local revenues

01:30:45.810 --> 01:30:49.069
that you can generate that varies vastly from

01:30:49.069 --> 01:30:51.470
team to team is where we get into the media rights

01:30:51.470 --> 01:30:54.149
and where we get into how these owners are making

01:30:54.149 --> 01:30:56.810
money based on their market and what they're

01:30:56.810 --> 01:31:00.479
able to do locally. Media and television continues

01:31:00.479 --> 01:31:03.970
to change literally by the day right now. And

01:31:03.970 --> 01:31:06.449
everyone wants to compare the Dodgers as being

01:31:06.449 --> 01:31:09.189
unfair, which it truly is. They got a billion

01:31:09.189 --> 01:31:12.050
-plus dollar deal from Time Warner Cable at the

01:31:12.050 --> 01:31:14.810
time, now Spectrum, to broadcast their game over

01:31:14.810 --> 01:31:17.449
a 25 -year period. So they're getting $350 million

01:31:17.449 --> 01:31:21.350
a year to broadcast exclusively on Spectrum aside

01:31:21.350 --> 01:31:23.510
from the national broadcast deals. Most teams

01:31:23.510 --> 01:31:27.550
are not getting a nine -figure deal from a cable

01:31:27.550 --> 01:31:30.949
company, let alone, to broadcast their games.

01:31:31.439 --> 01:31:33.819
Some of these teams are able to cook their books

01:31:33.819 --> 01:31:39.119
with Nesson, with Yes, with teams that own their

01:31:39.119 --> 01:31:42.800
own broadcasting entity within their own. Marquee

01:31:42.800 --> 01:31:45.039
is a different story because the Cubs don't outright

01:31:45.039 --> 01:31:48.640
own Marquee. It actually was being operated in

01:31:48.640 --> 01:31:50.920
conjunction with Main Street Sports Group, which

01:31:50.920 --> 01:31:55.319
was RIP Valley Sports. Each team has something

01:31:55.319 --> 01:31:58.319
a little bit different. Not every team nowadays

01:31:58.319 --> 01:32:01.859
make money on their local revenues, especially

01:32:01.859 --> 01:32:04.000
now you look at the teams that are signed up

01:32:04.000 --> 01:32:07.479
for MLB TV instead of doing their own regional

01:32:07.479 --> 01:32:10.500
sports network. That costs money to get it up

01:32:10.500 --> 01:32:12.579
off the ground. You look at what the Rangers

01:32:12.579 --> 01:32:15.939
just went through this week in July. The Rangers

01:32:15.939 --> 01:32:19.579
literally had to change sports providers in the

01:32:19.579 --> 01:32:22.850
middle of the season. Because Victory Plus was

01:32:22.850 --> 01:32:25.569
going under. Now they're using a different service

01:32:25.569 --> 01:32:27.710
provider whose name I don't understand how to

01:32:27.710 --> 01:32:31.329
pronounce. Ranger Sports Network, RSN. And it's

01:32:31.329 --> 01:32:33.189
a mess right now. And that's something to monitor

01:32:33.189 --> 01:32:37.430
for the 2027 negotiations. Because media rights

01:32:37.430 --> 01:32:41.949
and local revenues, those don't go hand in hand.

01:32:42.170 --> 01:32:46.310
Meaning your local media deal, the Dodgers, do

01:32:46.310 --> 01:32:49.649
not have to share what they make off Time Warmer

01:32:49.649 --> 01:32:52.319
Cable and Spectrum. with the Brewers, with the

01:32:52.319 --> 01:32:54.020
Reds, with the Marlins, with all that stuff,

01:32:54.159 --> 01:32:57.000
all those teams are left out to dry. You look

01:32:57.000 --> 01:33:00.119
at it from a media market standpoint, obviously

01:33:00.119 --> 01:33:01.880
the small market teams are not going to be able

01:33:01.880 --> 01:33:04.760
to demand as much money to get a local media

01:33:04.760 --> 01:33:09.600
right deal in their favor. Whereas if the Dodgers

01:33:09.600 --> 01:33:11.699
are being allowed in the Mets and the Yankees,

01:33:11.779 --> 01:33:15.000
these teams that own their own sports networks

01:33:15.000 --> 01:33:19.399
to thus staff their own people. create their

01:33:19.399 --> 01:33:21.720
own sponsorship nesting doll within their own

01:33:21.720 --> 01:33:24.220
companies to keep all of that money because it

01:33:24.220 --> 01:33:26.279
doesn't have to be considered net local revenues.

01:33:26.659 --> 01:33:29.279
That's how the pay gap gets bigger and bigger

01:33:29.279 --> 01:33:31.859
and bigger. You can make a little bit of money

01:33:31.859 --> 01:33:34.340
on television rights, but if you're doing it

01:33:34.340 --> 01:33:38.000
yourself, nowadays teams are realizing very quickly

01:33:38.000 --> 01:33:41.319
how expensive it's been to produce games on their

01:33:41.319 --> 01:33:44.640
own with the downfall of Fox Sports and Bally.

01:33:45.260 --> 01:33:47.479
And now having to go to the MLB model with the

01:33:47.479 --> 01:33:49.779
central fund and blackouts are still a thing.

01:33:49.880 --> 01:33:52.880
It is a big chunk of revenue that is missing

01:33:52.880 --> 01:33:55.720
from the majority of the league to not be able

01:33:55.720 --> 01:33:58.319
to say, snap your fingers, and you're going to

01:33:58.319 --> 01:34:00.819
get $50 million a year based on somebody who

01:34:00.819 --> 01:34:05.659
wanted to broadcast your games. Yeah. Talk a

01:34:05.659 --> 01:34:09.579
little about the 2027 negotiations and my wishes.

01:34:09.720 --> 01:34:12.119
I honestly think the one thing. If you could

01:34:12.119 --> 01:34:14.500
give me anything, it's not a cap or a floor.

01:34:14.619 --> 01:34:18.199
It's not earlier free agency. It's not any of

01:34:18.199 --> 01:34:21.000
this. It's that the league would completely share

01:34:21.000 --> 01:34:23.920
local revenue because right now that is the largest

01:34:23.920 --> 01:34:26.739
differentiator between a large market and small

01:34:26.739 --> 01:34:29.159
market team. Yes, the gate can make a difference,

01:34:29.279 --> 01:34:31.979
but the Dodgers, while they're doing very, very

01:34:31.979 --> 01:34:35.100
well with their gate, they're not making 10 times

01:34:35.100 --> 01:34:37.520
more than the next team. The Dodgers on their

01:34:37.520 --> 01:34:40.859
TV deal. are making 10 times more than the smallest

01:34:40.859 --> 01:34:44.300
market team just on their TV deal. So I honestly

01:34:44.300 --> 01:34:48.779
believe a lot of the revenue disparity and competitive

01:34:48.779 --> 01:34:53.619
disparity is based into these local TV deal rights

01:34:53.619 --> 01:34:56.739
and how much money the teams make. On that front,

01:34:56.779 --> 01:35:01.840
too. The future of blackouts and baseball being

01:35:01.840 --> 01:35:04.140
available over the air, however you get it, whether

01:35:04.140 --> 01:35:06.399
it be cable, whether it be on a local channel,

01:35:06.520 --> 01:35:09.640
or whether it be on MLB TV, is going to be a

01:35:09.640 --> 01:35:12.560
massive thing to monitor for the 2027 CBA. But

01:35:12.560 --> 01:35:15.359
the catch to it is, we'll talk about this in

01:35:15.359 --> 01:35:18.119
the national game in Chapter 3. But the catch

01:35:18.119 --> 01:35:20.359
to it is that the media rights deals run through

01:35:20.359 --> 01:35:24.279
2028, meaning the ESPN, the NBC, the Apple Plus.

01:35:24.380 --> 01:35:28.199
That doesn't get to change until after the CBA

01:35:28.199 --> 01:35:32.159
has begun. But the local can be negotiated right

01:35:32.159 --> 01:35:35.920
now for a way to generate more income for some

01:35:35.920 --> 01:35:39.260
of these other small market teams. We'll talk

01:35:39.260 --> 01:35:41.020
about how the Dodgers were able to keep that

01:35:41.020 --> 01:35:43.520
money and how that deal came about. in Episode

01:35:43.520 --> 01:35:50.720
7 and 8, the 2000s, in the McCourt divorce and

01:35:50.720 --> 01:35:53.859
how Bud Selig had to step in and make sure Major

01:35:53.859 --> 01:35:56.560
League Baseball was running the Dodgers on their

01:35:56.560 --> 01:35:58.699
behalf during this divorce because no one knew

01:35:58.699 --> 01:36:01.500
how it was going to play out, of who was getting

01:36:01.500 --> 01:36:04.850
what. It was a nasty divorce. It's actually fascinating

01:36:04.850 --> 01:36:07.250
to read about, but we'll save that for the November

01:36:07.250 --> 01:36:10.729
and October episodes of this podcast. Another

01:36:10.729 --> 01:36:13.449
way that teams try to save money, though, and

01:36:13.449 --> 01:36:18.149
try to create something locally is the government

01:36:18.149 --> 01:36:21.649
is trying to get local state funding to help

01:36:21.649 --> 01:36:24.250
them with their ballparks. This is nothing that's

01:36:24.250 --> 01:36:27.069
breaking news. This is not a baseball -exclusive

01:36:27.069 --> 01:36:32.710
idea to have. taxpayers flipped the bill on ballparks.

01:36:32.930 --> 01:36:35.130
I don't have to tell you twice, Scott, about

01:36:35.130 --> 01:36:38.970
how contentious it was for Bud Selig to build

01:36:38.970 --> 01:36:42.770
Miller Park at the time, in 2002 finally getting

01:36:42.770 --> 01:36:46.609
open, 2001 finally getting open, that even in

01:36:46.609 --> 01:36:48.729
the 90s when he was trying to negotiate, it was

01:36:48.729 --> 01:36:51.529
dead multiple times because people were refusing

01:36:51.529 --> 01:36:56.680
to pay. for a millionaire into a new ballpark,

01:36:56.779 --> 01:36:58.819
right? And wanting to foot the bill for that

01:36:58.819 --> 01:37:01.659
sort of thing. The vast majority of modern ballparks

01:37:01.659 --> 01:37:03.239
that have been built during the ballpark boom,

01:37:03.300 --> 01:37:05.319
and we'll talk about the ballpark boom in the

01:37:05.319 --> 01:37:09.060
90s episode, but it's taxpayer -funded, the majority

01:37:09.060 --> 01:37:12.000
of them. I look at Lone Depot Park, right? It's

01:37:12.000 --> 01:37:15.060
a shame that Lone Depot Park is empty as often

01:37:15.060 --> 01:37:17.159
as it is. And they have a winning team right

01:37:17.159 --> 01:37:20.079
now, which is fun. But it's in Little Havana.

01:37:20.180 --> 01:37:22.329
People have talked about how... who are familiar

01:37:22.329 --> 01:37:24.689
with Miami. It's kind of hard to get to. It's

01:37:24.689 --> 01:37:26.289
not a great spot to do it, but the reason why

01:37:26.289 --> 01:37:28.590
they chose it is because they were getting money

01:37:28.590 --> 01:37:32.350
to build it there. In the percentage of Lone

01:37:32.350 --> 01:37:36.649
Depot Park, 81 % of the total cost of Lone Depot

01:37:36.649 --> 01:37:40.010
Park, then Bartland's Park at the time, was being

01:37:40.010 --> 01:37:44.350
footed by the public. $580 million of taxpayer

01:37:44.350 --> 01:37:47.170
subsidies were helping build Marlins Park for

01:37:47.170 --> 01:37:50.770
a ballpark that took $716 million to build. The

01:37:50.770 --> 01:37:53.630
majority of it, was done by the taxpayers you

01:37:53.630 --> 01:37:56.189
look at the other end of that spectrum say the

01:37:56.189 --> 01:37:59.369
new york yankees almost completely financed they're

01:37:59.369 --> 01:38:01.930
actually leasing it from the bronx and owe the

01:38:01.930 --> 01:38:04.949
bronx money every single year because the bronx

01:38:04.949 --> 01:38:07.649
owns the land and owns yankee stadium essentially

01:38:08.270 --> 01:38:10.670
even though it was privately financed by the

01:38:10.670 --> 01:38:12.649
Steinbrenner family. Or you look at Truist Park,

01:38:12.710 --> 01:38:15.029
where it was a big deal when the Braves were

01:38:15.029 --> 01:38:17.930
leaving Turner Field in downtown Atlanta to move

01:38:17.930 --> 01:38:20.529
north to Cobb County. Well, the reason why they

01:38:20.529 --> 01:38:23.069
were able to do it is, yes, they got 40 % or

01:38:23.069 --> 01:38:25.569
so of public money from Cobb County and from

01:38:25.569 --> 01:38:27.930
the surrounding areas north of Atlanta. But they

01:38:27.930 --> 01:38:30.149
were still footing a good chunk of that bill.

01:38:30.210 --> 01:38:33.109
They were still footing $400 million to build

01:38:33.109 --> 01:38:35.010
this ballpark. And by the way, it's a lease.

01:38:35.130 --> 01:38:37.569
It's a 25 -year lease that they need to make

01:38:37.569 --> 01:38:39.390
sure they uphold their end of it. They are paying

01:38:39.390 --> 01:38:42.329
rent to live there and to house it. That's one

01:38:42.329 --> 01:38:44.229
of the reasons that we're able to look at this

01:38:44.229 --> 01:38:47.270
proxy report from the Braves and understand what

01:38:47.270 --> 01:38:49.750
they're paying on an annual basis to operate

01:38:49.750 --> 01:38:53.010
and to continue to own the battery and everything

01:38:53.010 --> 01:38:56.449
around Truist Park. And as we see the unfortunate

01:38:56.449 --> 01:38:58.989
side effect of this, not only taxpayers paying

01:38:58.989 --> 01:39:01.850
the money, but that the teams can almost hold

01:39:01.850 --> 01:39:05.010
a city hostage or a state hostage on saying we

01:39:05.010 --> 01:39:07.750
will move out. I mean, I think the Royals, they're

01:39:07.750 --> 01:39:11.470
going to be moving from Missouri to Kansas, Kansas

01:39:11.470 --> 01:39:13.909
City, Missouri to Kansas City, Kansas. They're

01:39:13.909 --> 01:39:16.729
talking about doing that because Kansas is going

01:39:16.729 --> 01:39:18.750
to give them a more sweetheart deal. We're going

01:39:18.750 --> 01:39:21.590
to have the Hammond Bears in the NFL in a few

01:39:21.590 --> 01:39:25.180
years because Indiana. And the city of Hammond

01:39:25.180 --> 01:39:27.460
gave them a sweetheart deal while Chicago and

01:39:27.460 --> 01:39:29.279
Illinois were going, no, we're not going to pay

01:39:29.279 --> 01:39:32.460
for this. So while there's been public backlash

01:39:32.460 --> 01:39:35.939
against these deals, it ultimately comes down

01:39:35.939 --> 01:39:40.359
to if they are asking for their government financing

01:39:40.359 --> 01:39:43.000
and they don't get it, they don't get their taxpayer

01:39:43.000 --> 01:39:47.380
financing, they will move. I mean, the brewers

01:39:47.380 --> 01:39:51.199
would have lost. The Milwaukee Brewers would

01:39:51.199 --> 01:39:54.159
not be in Milwaukee if they lost that vote to

01:39:54.159 --> 01:39:56.640
get taxpayer funding for Miller Park. And it

01:39:56.640 --> 01:40:00.239
won by one vote. And the guy that was the deciding

01:40:00.239 --> 01:40:03.659
vote lost his job because of that vote. So really,

01:40:03.819 --> 01:40:05.859
it's this thing of where there's public backlash.

01:40:06.119 --> 01:40:08.319
But I can say as a Brewer fan, it would have

01:40:08.319 --> 01:40:10.319
sucked to lose the Brewers. So I don't know how

01:40:10.319 --> 01:40:12.460
I even feel about that vote. Yeah, I'm not a

01:40:12.460 --> 01:40:15.819
fan of taxpayer funding of all of this, of having

01:40:15.819 --> 01:40:19.630
to pay for the stadium and subsidize. you know,

01:40:19.630 --> 01:40:22.930
Marc Antanasio or at the time Bud Selig's, you

01:40:22.930 --> 01:40:26.510
know, company, but it would have sucked to lose

01:40:26.510 --> 01:40:29.149
the Brewers. So if I were in that chair making

01:40:29.149 --> 01:40:31.949
that deciding vote, I don't know how I would

01:40:31.949 --> 01:40:36.149
have voted, honestly. I think the major selling

01:40:36.149 --> 01:40:39.779
point at the time. was that there was competition

01:40:39.779 --> 01:40:42.420
for expansion. There were other cities that were

01:40:42.420 --> 01:40:45.060
actively bidding to get Major League Baseball.

01:40:45.140 --> 01:40:46.659
And expansion fees are something that are going

01:40:46.659 --> 01:40:49.640
to come up in the 2027 CBA of what's going to

01:40:49.640 --> 01:40:52.659
happen if they're able to expand to 32 teams.

01:40:53.020 --> 01:40:55.680
And that's a conversation for another time. But

01:40:55.680 --> 01:40:59.590
right now, the threat of moving... is kind of

01:40:59.590 --> 01:41:03.050
empty because realistic cities that can host

01:41:03.050 --> 01:41:05.829
major league baseball are running out we know

01:41:05.829 --> 01:41:08.590
the a's are moving to las vegas that's always

01:41:08.590 --> 01:41:11.890
been a popular oh we could move to vegas vegas

01:41:11.890 --> 01:41:16.020
is off the board uh you all assume that Nashville

01:41:16.020 --> 01:41:18.979
is going to be one of those expansion teams whenever

01:41:18.979 --> 01:41:21.659
that day comes. Could the other expansion team

01:41:21.659 --> 01:41:23.460
be on the West Coast? Most likely. Could it be

01:41:23.460 --> 01:41:26.159
Salt Lake City? Could it be Vancouver? Could

01:41:26.159 --> 01:41:28.600
it be Portland? It seems like all signs point

01:41:28.600 --> 01:41:30.579
to Salt Lake City. But the point being is that

01:41:30.579 --> 01:41:32.979
if somebody... is trying to say, oh, we're going

01:41:32.979 --> 01:41:34.539
to move. Look at the Tampa Bay Rays situation

01:41:34.539 --> 01:41:37.720
right now. Tampa Bay has released new renderings

01:41:37.720 --> 01:41:39.500
to say, we want to stay in Tampa Bay. They're

01:41:39.500 --> 01:41:42.239
going to move over by the Buccaneers complex

01:41:42.239 --> 01:41:44.460
over on the Tampa side, away from St. Petersburg,

01:41:44.619 --> 01:41:48.199
and try to build there. While there are veiled

01:41:48.199 --> 01:41:50.560
threats of maybe we'll go to Orlando instead.

01:41:51.100 --> 01:41:54.079
And there aren't many cities that can realistically

01:41:54.079 --> 01:41:57.579
say, we can bid and get this team to move. And

01:41:57.579 --> 01:42:01.520
this is where the antitrust comes in. that teams

01:42:01.520 --> 01:42:05.220
can do whatever they want they can go and hold

01:42:05.220 --> 01:42:07.079
these city governments and local governments

01:42:07.079 --> 01:42:11.060
hostage and i think that the way that they are

01:42:11.060 --> 01:42:13.439
able to make this sales pitch and people can

01:42:13.439 --> 01:42:16.539
roll their eyes at the sound of this and i sometimes

01:42:16.539 --> 01:42:20.399
do myself they're always baseball and and sports

01:42:20.399 --> 01:42:23.140
teams in general are always one of the largest

01:42:23.140 --> 01:42:27.119
employers in any given state it's kind of fascinating

01:42:27.119 --> 01:42:29.880
when you think about the private sector There

01:42:29.880 --> 01:42:33.659
aren't many other organizations that pay that

01:42:33.659 --> 01:42:36.920
amount of tax to the rest of the government.

01:42:36.979 --> 01:42:41.079
So it becomes a handshake. Hey, we're employing

01:42:41.079 --> 01:42:45.130
600 people. maybe even over 1 ,000 people in

01:42:45.130 --> 01:42:48.250
some cases, in different levels of varying jobs.

01:42:48.489 --> 01:42:50.069
You've got high -paying jobs within the front

01:42:50.069 --> 01:42:51.869
office of these teams. You've got director positions.

01:42:52.069 --> 01:42:54.449
You've got manager positions. You've got concessions

01:42:54.449 --> 01:42:56.250
people. You've got cleanup crews. You've got

01:42:56.250 --> 01:42:57.649
ground crew. You've got skilled work. You've

01:42:57.649 --> 01:43:02.029
got so many different employees of a sports franchise

01:43:02.029 --> 01:43:04.810
that these ownership groups are able to go to

01:43:04.810 --> 01:43:06.949
local governments and say, look at all these

01:43:06.949 --> 01:43:08.689
people that you're going to lose. Look at all

01:43:08.689 --> 01:43:10.750
this income tax you're going to lose if we walk

01:43:10.750 --> 01:43:13.510
out the door. and that's where the local governments

01:43:13.510 --> 01:43:15.529
are caught in this oh man they're absolutely

01:43:15.529 --> 01:43:19.689
right we cannot afford to lose 1500 people paying

01:43:19.689 --> 01:43:24.270
their taxes to live in our city and as frustrating

01:43:24.270 --> 01:43:27.369
as it is to say that a taxpayer paid for a ballpark

01:43:27.369 --> 01:43:30.489
the taxpayers are the ones benefiting from the

01:43:30.489 --> 01:43:33.569
ballpark so at least they get to use the subsidies

01:43:33.569 --> 01:43:37.640
that they are providing Yeah, and it's even when

01:43:37.640 --> 01:43:40.779
you get into the jock tax. So when Kyle Tucker

01:43:40.779 --> 01:43:43.119
is making his $60 million with the Dodgers and

01:43:43.119 --> 01:43:45.819
they play in Milwaukee, he's paying Milwaukee

01:43:45.819 --> 01:43:49.239
and Wisconsin income tax on the money earned

01:43:49.239 --> 01:43:51.960
there. So even though the Brewers may be on the

01:43:51.960 --> 01:43:54.779
lower end of the payroll, those higher payroll

01:43:54.779 --> 01:43:57.920
teams are also still paying tax in Wisconsin

01:43:57.920 --> 01:44:01.479
just because of a weird quirk of how taxes work

01:44:01.479 --> 01:44:05.810
for traveling professionals. The other part of

01:44:05.810 --> 01:44:09.409
all the state funding and how ballparks get built

01:44:09.409 --> 01:44:13.270
is what can you do around it? And real estate

01:44:13.270 --> 01:44:17.149
has become a massive boom. I really point to

01:44:17.149 --> 01:44:20.050
the Cardinals as somebody that with the ballpark

01:44:20.050 --> 01:44:21.810
village, obviously beyond the left field wall

01:44:21.810 --> 01:44:25.210
with new Bush stadium three to understand let's

01:44:25.210 --> 01:44:27.510
make this as they call it. And I barf in my mouth

01:44:27.510 --> 01:44:29.670
a little bit. Sorry, Cardinals fans, baseball

01:44:29.670 --> 01:44:32.310
heaven. And quite frankly, you got to hand it

01:44:32.310 --> 01:44:34.489
to them because they were one of the first to

01:44:34.489 --> 01:44:38.430
say, let's create a whole ecosystem here where

01:44:38.430 --> 01:44:40.970
people will come from all over Missouri, not

01:44:40.970 --> 01:44:43.109
just St. Louis or all over the Midwest, because

01:44:43.109 --> 01:44:46.050
they were for a long time a national brand to

01:44:46.050 --> 01:44:48.390
say, let's make sure they spend their money on

01:44:48.390 --> 01:44:51.109
our land and our businesses that we have a cut

01:44:51.109 --> 01:44:53.920
in to make sure that. There's another form of

01:44:53.920 --> 01:44:57.680
passive income for these clubs. And now the darling

01:44:57.680 --> 01:44:59.699
of all this, the one that everybody is trying

01:44:59.699 --> 01:45:01.899
to emulate and the one that we have plenty of

01:45:01.899 --> 01:45:04.739
data on is the Atlanta Braves and the battery.

01:45:05.560 --> 01:45:08.739
Yeah, it's it's it's this has kind of been something

01:45:08.739 --> 01:45:10.859
that the Brewers may even do soon because they

01:45:10.859 --> 01:45:13.720
have a whole bunch of parking space. They have

01:45:13.720 --> 01:45:18.119
they might be able to add a parking garage instead.

01:45:18.699 --> 01:45:20.779
reduce a bunch of that parking space and add

01:45:20.779 --> 01:45:22.979
a ballpark village the bucks did that recently

01:45:22.979 --> 01:45:25.720
uh in milwaukee as well they made a little they

01:45:25.720 --> 01:45:27.920
made a bucks village uh what do they call it

01:45:27.920 --> 01:45:30.779
again the i can't remember the uh the the deer

01:45:30.779 --> 01:45:33.359
district the deer district they have the deer

01:45:33.359 --> 01:45:36.659
district and it's not even in cincinnati also

01:45:36.659 --> 01:45:38.699
has on the riverfront when i was there they have

01:45:38.699 --> 01:45:41.319
a little baseball district and it's not even

01:45:41.319 --> 01:45:43.800
just for games uh i know people that will go

01:45:43.800 --> 01:45:46.760
out drinking around the stadium near the river

01:45:46.760 --> 01:45:48.699
in Cincinnati just because it was a nice place

01:45:48.699 --> 01:45:51.260
to be. It was nice real estate. There were nice

01:45:51.260 --> 01:45:54.579
bars there. There were things to do. So it becomes

01:45:54.579 --> 01:45:57.779
a thing where it can bring in revenue year -round,

01:45:57.859 --> 01:46:00.119
not even during the baseball season. But I got

01:46:00.119 --> 01:46:02.359
to say, if they call it baseball heaven in St.

01:46:02.640 --> 01:46:04.460
Louis, I'd never heard that before. There's a

01:46:04.460 --> 01:46:08.859
lot of ugly six -story... white parking garages

01:46:08.859 --> 01:46:10.899
littered around that area for it to be heaven

01:46:10.899 --> 01:46:13.979
i don't know that's the brew fan coming out in

01:46:13.979 --> 01:46:16.439
you as well but when you look at the proxy report

01:46:16.439 --> 01:46:21.140
from the braves one of the ways that they define

01:46:21.140 --> 01:46:24.420
it the battery you know they talk about the battery

01:46:24.420 --> 01:46:27.619
in this report but they define it as mixed use

01:46:27.619 --> 01:46:30.439
development The reason why this is important

01:46:30.439 --> 01:46:32.779
to point out, and not every team has this, right?

01:46:32.880 --> 01:46:36.100
The Cubs are trying to do this with Wrigleyville.

01:46:36.199 --> 01:46:38.819
And the Ricketts are buying up all the rooftops

01:46:38.819 --> 01:46:40.960
and trying to create more space for them and

01:46:40.960 --> 01:46:43.220
more land for them to buy and sell apartments

01:46:43.220 --> 01:46:45.359
and that sort of thing. Or even the businesses,

01:46:45.500 --> 01:46:48.399
Hotel Z across the street and some of the other

01:46:48.399 --> 01:46:51.039
businesses when you go up Clark and you see all

01:46:51.039 --> 01:46:54.720
the stuff that is on Cubs -owned land. Mixed

01:46:54.720 --> 01:46:58.300
-use development. does not need to be put into

01:46:58.300 --> 01:47:01.279
net local revenues. This is where the definitions

01:47:01.279 --> 01:47:04.319
and the ways that you can keep money can be cooking

01:47:04.319 --> 01:47:07.119
the books in a way. The Braves have no obligation

01:47:07.119 --> 01:47:10.039
to have to share the money on real estate that

01:47:10.039 --> 01:47:13.020
they own on the ballpark. They have to share

01:47:13.020 --> 01:47:15.539
the gate revenue. They have to share licensing

01:47:15.539 --> 01:47:17.699
revenue. They have to share merchandising revenue.

01:47:17.979 --> 01:47:21.680
They all share national TV revenue, but the Braves

01:47:21.680 --> 01:47:24.140
don't have to share. the amount of stakes they

01:47:24.140 --> 01:47:26.619
sell at that steakhouse across the street there

01:47:26.619 --> 01:47:29.699
in the Battery with the Tampa Bay Rays, that's

01:47:29.699 --> 01:47:32.020
why mixed -use development has become so popular

01:47:32.020 --> 01:47:33.859
because it's a way for you to generate income.

01:47:34.060 --> 01:47:36.000
You've got to bite the bullet early when it comes

01:47:36.000 --> 01:47:39.840
to land acquisition, construction costs, and

01:47:39.840 --> 01:47:41.760
that sort of thing. But at the end of the day,

01:47:41.880 --> 01:47:46.060
if you create an environment that can... Be a

01:47:46.060 --> 01:47:48.560
consumer friendly area where everybody can get

01:47:48.560 --> 01:47:51.420
what they want. There are apartments disguised

01:47:51.420 --> 01:47:54.359
or parking garages disguised as apartments in

01:47:54.359 --> 01:47:56.859
there at the battery, too. It's really a genius

01:47:56.859 --> 01:48:00.119
way to try to circumvent how much money is leaving

01:48:00.119 --> 01:48:02.579
the Braves and revenue sharing. And it said they

01:48:02.579 --> 01:48:05.359
could keep in their own pockets. And as far as

01:48:05.359 --> 01:48:09.399
it being a growing year over year. something

01:48:09.399 --> 01:48:11.539
for the Braves, since we have their official

01:48:11.539 --> 01:48:13.579
numbers, their mixed use development revenue

01:48:13.579 --> 01:48:20.380
in 2023 was about $60 million. In 2025, it has

01:48:20.380 --> 01:48:23.380
just gotten to the edge of $100 million, almost

01:48:23.380 --> 01:48:26.439
doubled in just two years. And we may see this

01:48:26.439 --> 01:48:28.760
go up and up and up as they continue to develop

01:48:28.760 --> 01:48:33.060
the area around there. And as far as the costs,

01:48:33.140 --> 01:48:36.819
we're talking about margin on seats. The margin

01:48:36.819 --> 01:48:40.050
on this mixed use development, dwarfs the margin

01:48:40.050 --> 01:48:42.449
for the Braves on their baseball revenue and

01:48:42.449 --> 01:48:45.810
baseball operating costs. For the baseball revenue

01:48:45.810 --> 01:48:48.789
on the Braves side, they had $635 million in

01:48:48.789 --> 01:48:51.810
2025 and their operating costs were about $500

01:48:51.810 --> 01:48:55.859
million. So for every dollar they earn, about

01:48:55.859 --> 01:48:58.680
85 cents of it is going out the door in costs.

01:48:58.779 --> 01:49:01.479
For their mixed use development, almost 100 million

01:49:01.479 --> 01:49:05.739
in revenue in 2025, their costs were 15 million.

01:49:05.960 --> 01:49:09.420
So for every dollar they earn, they're keeping

01:49:09.420 --> 01:49:12.880
85 cents, not losing 85 cents, which is just

01:49:12.880 --> 01:49:16.890
an incredible margin. compared to the baseball

01:49:16.890 --> 01:49:19.550
side of things. You have a million acronyms that

01:49:19.550 --> 01:49:20.810
you can look in this, and I'm not a business

01:49:20.810 --> 01:49:23.050
guy. You're in business school right now. The

01:49:23.050 --> 01:49:28.029
operating income before, I don't know, is it

01:49:28.029 --> 01:49:31.609
OBTA? Well, there's different terms. The Braves

01:49:31.609 --> 01:49:35.250
use O -I -D -B -A, but a lot of companies in

01:49:35.250 --> 01:49:38.170
the business world use E -M -B -I -T -A, which

01:49:38.170 --> 01:49:41.409
is almost kind of a running joke. Because when

01:49:41.409 --> 01:49:43.960
you look at these financial statements, You have

01:49:43.960 --> 01:49:46.960
the things that are required to post. They're

01:49:46.960 --> 01:49:48.579
required to have an income statement. They're

01:49:48.579 --> 01:49:51.100
required to have a balance sheet, a cash flow

01:49:51.100 --> 01:49:54.260
statement, a retained earnings statement. Those

01:49:54.260 --> 01:49:57.680
are the things required by law and are governed

01:49:57.680 --> 01:50:01.180
by the accounting principles, gap accounting

01:50:01.180 --> 01:50:04.659
principles. And then each company, this isn't

01:50:04.659 --> 01:50:06.439
just baseball. You see this in a lot of companies.

01:50:06.640 --> 01:50:10.170
They'll create their own. little thing they'll

01:50:10.170 --> 01:50:12.630
make this summary of their financial statements

01:50:12.630 --> 01:50:15.850
and create their own you know definition of net

01:50:15.850 --> 01:50:19.689
income for the braves it's adjusted oidba for

01:50:19.689 --> 01:50:22.149
a lot of companies it's ambita which is basically

01:50:22.149 --> 01:50:26.689
let's ignore depreciation amortization uh for

01:50:26.689 --> 01:50:29.069
i believe i'm bit it's like let's ignore taxes

01:50:29.069 --> 01:50:32.189
as well let's ignore a lot of these things and

01:50:32.189 --> 01:50:34.130
give you a summary that's because these companies

01:50:34.130 --> 01:50:36.500
want you to buy their stock Let's give a summary

01:50:36.500 --> 01:50:39.100
that gives the rosiest picture possible. And

01:50:39.100 --> 01:50:41.739
the Braves definitely do that. For any financial

01:50:41.739 --> 01:50:44.060
statement I look at, I almost ignore that summary

01:50:44.060 --> 01:50:46.840
first page because it's them trying to tell you

01:50:46.840 --> 01:50:51.319
a story. To give you the operating income before

01:50:51.319 --> 01:50:55.039
depreciation and amortization, the OBTA, however

01:50:55.039 --> 01:50:56.420
we want to pronounce it, maybe some baseball.

01:50:56.980 --> 01:50:59.100
Some business baseball man is cringing as we

01:50:59.100 --> 01:51:01.239
say that. We're not business guys, okay? I am

01:51:01.239 --> 01:51:03.319
reading a report. I am trying to figure out and

01:51:03.319 --> 01:51:05.640
talk to people that I know. They are essentially

01:51:05.640 --> 01:51:08.199
saying before depreciation, before amortization,

01:51:08.399 --> 01:51:10.939
before taxes, before all that, they made $107

01:51:10.939 --> 01:51:13.560
million last year. Now, there are taxes and there

01:51:13.560 --> 01:51:15.180
are more expenses that go into on top of that.

01:51:15.359 --> 01:51:18.090
That's why it's not just a firm number. on Liberty

01:51:18.090 --> 01:51:21.229
Media's proxy report. But I highlighted something

01:51:21.229 --> 01:51:23.710
interesting in the proxy report, too, just below

01:51:23.710 --> 01:51:26.409
that, when you look at baseball revenues specifically.

01:51:27.189 --> 01:51:30.930
Baseball events, they made $357 million, so that

01:51:30.930 --> 01:51:33.510
is ticket gate, that is concessions, that is

01:51:33.510 --> 01:51:36.189
that sort of thing. Broadcasting in 2025, they

01:51:36.189 --> 01:51:39.670
made $188 million. Then retail and licensing

01:51:39.670 --> 01:51:43.149
is another $46 million. Other is just a catch

01:51:43.149 --> 01:51:47.050
-all for 46 mil. So the baseball revenue that

01:51:47.050 --> 01:51:49.149
the Braves reported last year, just baseball

01:51:49.149 --> 01:51:54.770
revenue, was $635 million. They also, in this

01:51:54.770 --> 01:51:58.250
report, talk about what their baseball cost is

01:51:58.250 --> 01:52:00.949
when it comes to employment, how much money all

01:52:00.949 --> 01:52:03.689
their salaries, not just baseball salaries, but

01:52:03.689 --> 01:52:05.449
coaching staff, front office, that sort of thing,

01:52:05.489 --> 01:52:08.079
and how... They are still making a profit. And

01:52:08.079 --> 01:52:09.960
here's the sentence that I highlighted from this

01:52:09.960 --> 01:52:13.260
proxy. Baseball event revenue increased by nearly

01:52:13.260 --> 01:52:17.439
$10 million from the year ending 2025 as compared

01:52:17.439 --> 01:52:20.960
to the prior year. primarily due to the contractual

01:52:20.960 --> 01:52:24.359
rate increases on season tickets and existing

01:52:24.359 --> 01:52:27.739
sponsorship contracts, as well as new premium

01:52:27.739 --> 01:52:31.039
seating and sponsorship agreements, partially

01:52:31.039 --> 01:52:34.699
offset by reduced attendance at regular season

01:52:34.699 --> 01:52:37.199
home games. If you know anything about the Braves

01:52:37.199 --> 01:52:39.859
in 2025, they didn't make the playoffs. They

01:52:39.859 --> 01:52:41.520
were not a very good team the majority of the

01:52:41.520 --> 01:52:45.380
year, and they still made more money. That's

01:52:45.380 --> 01:52:49.119
how this business works. Yeah, it's kind of incredible.

01:52:49.340 --> 01:52:52.199
It's what's funny, though, is when the first

01:52:52.199 --> 01:52:55.720
year the Braves were public was their previous

01:52:55.720 --> 01:52:59.279
year was the World Series year. So there was

01:52:59.279 --> 01:53:01.659
this kind of interesting picture of where they

01:53:01.659 --> 01:53:04.699
weren't a high payroll team that year. Like their

01:53:04.699 --> 01:53:06.859
payroll has more than doubled since the World

01:53:06.859 --> 01:53:10.239
Series year. But their revenue was still kind

01:53:10.239 --> 01:53:13.659
of up there. They made a lot. So it was interesting

01:53:13.659 --> 01:53:15.899
seeing their reactions to the first year of the

01:53:15.899 --> 01:53:19.899
Financial Braves statements because what they

01:53:19.899 --> 01:53:22.399
got that year was about the maximum profit a

01:53:22.399 --> 01:53:24.899
baseball team could possibly get in the last

01:53:24.899 --> 01:53:27.399
five years. And it happened to be the first time

01:53:27.399 --> 01:53:30.060
it was something like that was declared public.

01:53:30.180 --> 01:53:32.239
So I kind of found that funny on the outrage.

01:53:32.420 --> 01:53:34.260
But the thing you point out, if you look at the

01:53:34.260 --> 01:53:38.090
revenue for that. World Series year and their

01:53:38.090 --> 01:53:40.949
revenue today, they're making more revenue today

01:53:40.949 --> 01:53:43.329
than they were then. The thing that's changed

01:53:43.329 --> 01:53:46.390
in that time regarding their overall profit is

01:53:46.390 --> 01:53:48.970
they've signed a lot more large contracts in

01:53:48.970 --> 01:53:51.609
those five years. And that's really been the

01:53:51.609 --> 01:53:53.489
only difference. They've shown year over year

01:53:53.489 --> 01:53:57.029
growth on the revenue, growth on the both baseball

01:53:57.029 --> 01:54:02.000
revenue and both mixed use area revenue. And

01:54:02.000 --> 01:54:04.060
they're in this proxy. We can also see their

01:54:04.060 --> 01:54:07.079
employment agreements here. This includes baseball

01:54:07.079 --> 01:54:09.159
payroll and includes their front office payroll

01:54:09.159 --> 01:54:11.859
and everything else that goes into it. They pay

01:54:11.859 --> 01:54:17.779
$730 million in compensation to their employees.

01:54:17.920 --> 01:54:19.760
That includes the baseball team, I understand,

01:54:19.840 --> 01:54:22.779
which is operating north of $200 million of that.

01:54:22.840 --> 01:54:25.560
So, I mean, you can argue nearly $500 million.

01:54:26.720 --> 01:54:30.039
Being paid to people not on the field. I think

01:54:30.039 --> 01:54:32.600
that's a really important smoking gun to point

01:54:32.600 --> 01:54:36.670
out here that look Not everything is just guaranteed

01:54:36.670 --> 01:54:39.850
to make cash. And this is the Braves, let's be

01:54:39.850 --> 01:54:42.750
honest, a very successful franchise, a very well

01:54:42.750 --> 01:54:45.670
-run organization with a fantastic fan base.

01:54:45.850 --> 01:54:48.210
They have an entire region that's a fan of them

01:54:48.210 --> 01:54:51.270
because they have Alabama, Mississippi, the Carolinas,

01:54:51.270 --> 01:54:54.489
Tennessee, even parts of Kentucky are more Braves

01:54:54.489 --> 01:54:56.369
fans than Reds fans. It's kind of surprising

01:54:56.369 --> 01:54:58.789
to hear that. And even parts of North Florida

01:54:58.789 --> 01:55:01.409
are massive Braves fans too. And they're still

01:55:01.409 --> 01:55:05.250
operating with... a lot of debt with a lot of

01:55:05.250 --> 01:55:08.609
employment agreements on top of what it takes

01:55:08.609 --> 01:55:12.770
to put out a winner every single year. And they

01:55:12.770 --> 01:55:15.010
try to stay below that luxury tax line as much

01:55:15.010 --> 01:55:18.369
as they can. It's $244 million this season because

01:55:18.369 --> 01:55:21.109
the other $500 million they got to pay to the

01:55:21.109 --> 01:55:22.810
rest of their employees. Those people want raises.

01:55:22.989 --> 01:55:25.130
Those people want benefits. Those people want

01:55:25.130 --> 01:55:27.970
pensions. All of this is just like any other

01:55:27.970 --> 01:55:30.329
business. Just because you work in baseball and

01:55:30.329 --> 01:55:31.970
it's a cool business and all, yeah, it doesn't

01:55:31.970 --> 01:55:33.350
mean you don't want to raise. It doesn't mean

01:55:33.350 --> 01:55:34.869
you don't want the same benefits that a regular

01:55:34.869 --> 01:55:38.340
person working a nine to five would want. This

01:55:38.340 --> 01:55:40.899
is an important and we'll drop the proxy report.

01:55:41.000 --> 01:55:43.359
It's available for anybody on the Internet. You

01:55:43.359 --> 01:55:45.380
don't have to be a shareholder to access this,

01:55:45.439 --> 01:55:47.619
but I'll put it in the sub stack to go with this

01:55:47.619 --> 01:55:49.399
episode. And you can read through it and learn

01:55:49.399 --> 01:55:52.479
from this because it's fascinating to really

01:55:52.479 --> 01:55:55.579
finally see how big the numbers get when you're

01:55:55.579 --> 01:55:57.399
trying to operate a successful Major League Baseball

01:55:57.399 --> 01:56:01.119
team. Well, the interesting thing is I did a

01:56:01.119 --> 01:56:05.140
comparison because the Braves are the only publicly

01:56:05.140 --> 01:56:08.359
traded. baseball and major league baseball team

01:56:08.359 --> 01:56:11.239
that has to by law post their financial statements

01:56:11.239 --> 01:56:13.979
but I looked at other professional sports teams

01:56:13.979 --> 01:56:17.800
that also are publicly traded and there's the

01:56:17.800 --> 01:56:21.659
Madison Square Garden sports group which they

01:56:21.659 --> 01:56:25.159
own the Knicks and the Rangers and then there's

01:56:25.159 --> 01:56:28.239
the Manchester United football team football

01:56:28.239 --> 01:56:32.590
club and those are the only two other major sports

01:56:32.590 --> 01:56:35.010
teams that I was able to find. I tried to find

01:56:35.010 --> 01:56:37.289
the Green Bay Packers numbers, but because they're

01:56:37.289 --> 01:56:38.930
a nonprofit, it works differently. I wasn't able

01:56:38.930 --> 01:56:42.630
to get that. But we can see a similar trend on

01:56:42.630 --> 01:56:45.470
how these sports teams operate. Because if you

01:56:45.470 --> 01:56:48.850
compare their financial statements to other companies

01:56:48.850 --> 01:56:52.729
that operate differently, it's kind of eye -opening

01:56:52.729 --> 01:56:57.329
how these companies operate. I kind of brought

01:56:57.329 --> 01:57:00.470
it down to the personal finance level. What would

01:57:00.470 --> 01:57:03.770
it be for you or I to be able to start a business

01:57:03.770 --> 01:57:06.890
that's similar to a professional sports team?

01:57:06.949 --> 01:57:10.909
And a similar thing would be to buy a house with

01:57:10.909 --> 01:57:13.529
a mortgage and then Airbnb it throughout the

01:57:13.529 --> 01:57:19.909
course of that mortgage. Basically, you are starting

01:57:19.909 --> 01:57:22.770
a mortgage. Your total assets is going to equal

01:57:22.770 --> 01:57:24.729
that house, but your liabilities are almost going

01:57:24.729 --> 01:57:28.310
to be 100%. You basically have no equity in the

01:57:28.310 --> 01:57:31.270
house. You're all debting. Sports teams, you

01:57:31.270 --> 01:57:34.149
look at how much debt they have to their equity

01:57:34.149 --> 01:57:37.829
versus their assets. They're almost entirely

01:57:37.829 --> 01:57:41.170
debt financed. So what's the benefit for you?

01:57:41.289 --> 01:57:44.310
Well, you get this house. You Airbnb it out.

01:57:44.750 --> 01:57:47.310
The money you bring in pays for the mortgage.

01:57:47.550 --> 01:57:50.199
The money you bring in. makes it so you will

01:57:50.199 --> 01:57:52.739
now own a little bit more of that house year

01:57:52.739 --> 01:57:57.159
after year. And you won't pay taxes on any of

01:57:57.159 --> 01:58:00.460
that money because the cost of your house, you're

01:58:00.460 --> 01:58:02.939
going to depreciate that out for, let's say you

01:58:02.939 --> 01:58:05.260
do a 15 year mortgage and you depreciate it out

01:58:05.260 --> 01:58:08.840
15 years. Every year, one 15th of the house of

01:58:08.840 --> 01:58:11.600
that cost is going to be deducted from the money

01:58:11.600 --> 01:58:14.119
you make. The property taxes you pay on that

01:58:14.119 --> 01:58:16.420
house are going to be deducted from the money

01:58:16.420 --> 01:58:19.640
you make. There is no way if you do this business

01:58:19.640 --> 01:58:22.500
that you're ever going to pay a cent in taxes

01:58:22.500 --> 01:58:25.159
because the things you owe, the liabilities you

01:58:25.159 --> 01:58:28.739
have, make it so you'll never cash out. It's

01:58:28.739 --> 01:58:30.579
why the Braves don't pay a dividend. It's why

01:58:30.579 --> 01:58:34.199
Madison Square Garden Sports doesn't pay a dividend.

01:58:34.319 --> 01:58:36.479
It's why the Manchester United don't pay a dividend.

01:58:36.659 --> 01:58:39.500
Because on the bottom line, they're not really

01:58:39.500 --> 01:58:42.159
making a lot of money year over year. So what's

01:58:42.159 --> 01:58:45.310
the benefit of you doing this plan of... buying

01:58:45.310 --> 01:58:47.930
a house, starting a mortgage, running it out

01:58:47.930 --> 01:58:50.689
through 15 years. Because 15 years down the road,

01:58:50.789 --> 01:58:53.670
when that house is paid off, you have an asset

01:58:53.670 --> 01:58:56.409
that you own entirely, and now you can sell it

01:58:56.409 --> 01:58:58.810
to someone else. Or you can live in it for the

01:58:58.810 --> 01:59:01.050
rest of your life. I don't know. But for these

01:59:01.050 --> 01:59:03.970
sports teams, you constantly see ownership changes.

01:59:04.050 --> 01:59:07.770
You constantly see deals to bring in more financing.

01:59:07.989 --> 01:59:10.689
The Yankees just made the news. They're looking

01:59:10.689 --> 01:59:15.020
for a $3 billion financing deal right now. These

01:59:15.020 --> 01:59:18.180
teams will constantly leverage up their debt.

01:59:18.960 --> 01:59:24.279
Madison Square Garden Sports Group, their debt

01:59:24.279 --> 01:59:26.939
is more than their assets on hand. Basically,

01:59:27.159 --> 01:59:30.680
they have $3 billion in assets. They have $3

01:59:30.680 --> 01:59:34.039
.5 billion in debts. It's kind of crazy that

01:59:34.039 --> 01:59:36.560
any normal business, you go, this is not a way

01:59:36.560 --> 01:59:39.340
to operate. But for sports, they have such...

01:59:39.739 --> 01:59:42.539
consistent income streams that are constantly

01:59:42.539 --> 01:59:45.319
going up that can cover the interest on their

01:59:45.319 --> 01:59:48.380
loans, can cover the depreciation costs, can

01:59:48.380 --> 01:59:52.359
cover all these things that it costs to do a

01:59:52.359 --> 01:59:54.220
sports team. So while they're not making money

01:59:54.220 --> 01:59:56.920
at the end, over the long haul, they can either

01:59:56.920 --> 02:00:00.100
use those assets, use those stadiums they own,

02:00:00.199 --> 02:00:02.960
use those player contracts to either get more

02:00:02.960 --> 02:00:06.300
debt financing, bring in more money, or be able

02:00:06.300 --> 02:00:10.560
to sell and cash out. The last thing on making

02:00:10.560 --> 02:00:14.979
money on a local level that is starting to grow

02:00:14.979 --> 02:00:18.840
and be more popular is non -baseball events.

02:00:19.199 --> 02:00:22.970
So for instance... I'm a music guy, and Noah

02:00:22.970 --> 02:00:25.189
Kahn has been doing a bunch of ballpark tours.

02:00:25.470 --> 02:00:28.250
John Mulaney just did Wrigley Field, the first

02:00:28.250 --> 02:00:30.689
comic to ever do Wrigley Field. The Savannah

02:00:30.689 --> 02:00:35.010
Bananas, they pay to be in these ballparks in

02:00:35.010 --> 02:00:37.670
major league facilities, and that ticket revenue

02:00:37.670 --> 02:00:41.430
is then kept. in part from the Bananas and from

02:00:41.430 --> 02:00:43.949
the team that hosts them. You've got concerts,

02:00:44.050 --> 02:00:46.189
you've got trade shows, you've got other things

02:00:46.189 --> 02:00:49.170
that happen. Now, not every team is able to host

02:00:49.170 --> 02:00:52.109
these sort of events where you're able to generate

02:00:52.109 --> 02:00:55.529
non -baseball revenue. For instance, you think

02:00:55.529 --> 02:00:59.489
of somebody like the Yankees and the Red Sox,

02:00:59.529 --> 02:01:03.569
they host a bowl game every year that... Other

02:01:03.569 --> 02:01:05.890
teams just don't host a football game at their

02:01:05.890 --> 02:01:07.890
ballpark. Wrigley hosts a college football game

02:01:07.890 --> 02:01:10.770
too once their season is over. That's more revenue

02:01:10.770 --> 02:01:12.689
that doesn't have to be reported back. Now, I'm

02:01:12.689 --> 02:01:14.130
not saying it's a significant amount of revenue

02:01:14.130 --> 02:01:17.710
that is going to be given back, but concerts

02:01:17.710 --> 02:01:22.090
and... ancillary events are starting to increase

02:01:22.090 --> 02:01:25.270
a way to generate some income that can be all

02:01:25.270 --> 02:01:27.489
kept. That's what all of these owners and local

02:01:27.489 --> 02:01:30.810
ownership means. They want to be able to keep

02:01:30.810 --> 02:01:33.510
as much of this money as possible and not put

02:01:33.510 --> 02:01:36.029
it into the net local revenues pot where we're

02:01:36.029 --> 02:01:38.149
talking parking, we're talking ticket gate, we're

02:01:38.149 --> 02:01:40.810
talking playoff shares, that the more money they

02:01:40.810 --> 02:01:42.489
can keep for themselves, the more they can invest

02:01:42.489 --> 02:01:44.949
it. back into their team and pay down with a

02:01:44.949 --> 02:01:47.430
lot of these teams they carry debt actively most

02:01:47.430 --> 02:01:49.810
successful businesses do carry debt you're not

02:01:49.810 --> 02:01:53.649
always in the green moving forward so when you

02:01:53.649 --> 02:01:58.069
are able to create a variety of events that aren't

02:01:58.069 --> 02:02:01.109
just baseball games right you look at the braves

02:02:01.109 --> 02:02:03.029
they had the savannah bananas for three days

02:02:03.029 --> 02:02:05.189
they've had a country music festival they have

02:02:05.189 --> 02:02:07.930
multiple other concerts throughout the year they

02:02:07.930 --> 02:02:10.590
get paid twice because they're having a non -baseball

02:02:10.590 --> 02:02:13.460
event at the ballpark those tickets that all

02:02:13.460 --> 02:02:15.539
that that goes into that. And those people are

02:02:15.539 --> 02:02:17.260
probably going to the battery. Those people are

02:02:17.260 --> 02:02:19.260
all probably hanging out, paying for parking.

02:02:19.399 --> 02:02:21.439
They are probably all getting a dinner, they're

02:02:21.439 --> 02:02:23.600
getting a drink, whatever. None of that is going

02:02:23.600 --> 02:02:25.920
to the rest of the teams, which is why everybody

02:02:25.920 --> 02:02:30.180
is envious and why every modern ballpark proposal

02:02:30.180 --> 02:02:34.180
includes some sort of district owned by the teams

02:02:34.180 --> 02:02:36.880
in the surrounding areas. So these owners make

02:02:36.880 --> 02:02:39.680
money locally in a variety of ways as we just

02:02:39.680 --> 02:02:41.979
talked about. But how do they all pool it together?

02:02:42.159 --> 02:02:44.439
How do they work together to make more money

02:02:44.439 --> 02:02:46.439
for the entire game and to make sure that there

02:02:46.439 --> 02:02:49.859
is a guaranteed income coming in in a variety

02:02:49.859 --> 02:02:52.939
of ways? It can be national broadcast revenues.

02:02:53.039 --> 02:02:55.399
It can be international revenues. It can be licensing.

02:02:55.619 --> 02:02:58.859
It can be playoff shares. But the event that

02:02:58.859 --> 02:03:01.159
we want to start with, Scott, is the event that

02:03:01.159 --> 02:03:04.479
just happened. The All -Star Game. What a show

02:03:04.479 --> 02:03:06.699
Philadelphia put on, what it meant for the city.

02:03:06.800 --> 02:03:09.100
Obviously, they've had a lot of events for America's

02:03:09.100 --> 02:03:12.859
250th, but even last year, when you look at everything

02:03:12.859 --> 02:03:15.359
that went down in Atlanta and how much fun that

02:03:15.359 --> 02:03:19.060
was, All -Star Games are a massive piece of the

02:03:19.060 --> 02:03:23.039
game's income at large, despite being a very

02:03:23.039 --> 02:03:25.859
expensive event to operate, but why this is so

02:03:25.859 --> 02:03:28.460
important for both players and owners to make

02:03:28.460 --> 02:03:30.600
sure the game at large is making money at the

02:03:30.600 --> 02:03:33.300
All -Star Game. Yeah, one thing when looking

02:03:33.300 --> 02:03:35.399
into the All -Star game, I tried to find year

02:03:35.399 --> 02:03:38.100
over year if we can find numbers of how much

02:03:38.100 --> 02:03:41.720
the league is actually making, which it's a little

02:03:41.720 --> 02:03:44.579
convoluted because in trying to sell the All

02:03:44.579 --> 02:03:47.539
-Star game, they include a lot of local revenue

02:03:47.539 --> 02:03:50.239
in those numbers. Like, hey, local businesses

02:03:50.239 --> 02:03:52.579
will make this. So this was the immediate impact

02:03:52.579 --> 02:03:55.140
on the local community. But the best estimates

02:03:55.140 --> 02:03:59.300
I can get is the league makes about 50 to 80

02:03:59.300 --> 02:04:02.560
million dollars. on the all -star game and the

02:04:02.560 --> 02:04:04.920
and that goes into the pool that gets shared

02:04:04.920 --> 02:04:08.100
amongst all the teams but the thing that kind

02:04:08.100 --> 02:04:11.619
of stands out for the all -star game is the players

02:04:11.619 --> 02:04:14.939
almost get nothing the winning team the winning

02:04:14.939 --> 02:04:17.100
team of the all -star game all the players on

02:04:17.100 --> 02:04:19.560
the team split eight hundred thousand dollars

02:04:19.560 --> 02:04:21.640
but you think of how many players are on a playoff

02:04:21.640 --> 02:04:23.960
roster how much a player makes a year they're

02:04:23.960 --> 02:04:26.859
splitting the salary of a league minimum player

02:04:26.859 --> 02:04:30.270
amongst you know 20 -some of the most highly

02:04:30.270 --> 02:04:32.550
paid players across the league. And compared

02:04:32.550 --> 02:04:37.250
to the $50 to $80 million, that's 1 % to 2 %

02:04:37.250 --> 02:04:41.890
of what the All -Star Game brings in goes to

02:04:41.890 --> 02:04:44.430
the players. The rest goes to the owners. They

02:04:44.430 --> 02:04:47.109
were having problems getting players to sign

02:04:47.109 --> 02:04:49.170
up for the Home Run Derby, so they had to put

02:04:49.170 --> 02:04:52.569
this little incentive. And it's interesting for

02:04:52.569 --> 02:04:56.130
someone who might be a league minimum player.

02:04:56.800 --> 02:04:58.800
with the winner getting $1 million. And this

02:04:58.800 --> 02:05:01.060
is a newer thing. They can double their salary

02:05:01.060 --> 02:05:02.840
now if they sign up for the Home Run Derby. So

02:05:02.840 --> 02:05:05.079
you get a lot of younger guys that play the Home

02:05:05.079 --> 02:05:08.939
Run Derby. Second place gets $150 ,000. And they

02:05:08.939 --> 02:05:11.020
even do small little incentives. Like if you

02:05:11.020 --> 02:05:14.260
agree to do an in -game interview in the field,

02:05:14.399 --> 02:05:17.420
you get $15 ,000 of pay. So when you see that

02:05:17.420 --> 02:05:19.880
player that's got that little pack in their back

02:05:19.880 --> 02:05:22.460
pocket and is being interviewed while in the

02:05:22.460 --> 02:05:26.899
field, he's getting paid $15 ,000 for that. The

02:05:26.899 --> 02:05:29.539
other thing on the all -star game and the other

02:05:29.539 --> 02:05:31.840
benefits the players get, it's all listed out

02:05:31.840 --> 02:05:35.380
in the collective bargaining agreement of six

02:05:35.380 --> 02:05:38.079
complimentary tickets for everybody that goes

02:05:38.079 --> 02:05:40.800
there. They don't have to pay face value on that.

02:05:40.840 --> 02:05:42.760
Generally, in the postseason, you're paying face

02:05:42.760 --> 02:05:45.100
value for tickets. I think that's another misconception

02:05:45.100 --> 02:05:47.739
that we see a lot in baseball. People all assume

02:05:47.739 --> 02:05:50.989
that players are getting tickets for free. They

02:05:50.989 --> 02:05:54.109
are not free. You are paying taxes on those tickets

02:05:54.109 --> 02:05:55.710
that you give away. And then in the playoffs,

02:05:55.930 --> 02:05:58.229
you only get a small portion that you're allowed

02:05:58.229 --> 02:06:01.130
to give away. And you are paying face value for

02:06:01.130 --> 02:06:03.529
those tickets. I mean, the joke is if you have

02:06:03.529 --> 02:06:05.550
a big group on your opening day or if you're

02:06:05.550 --> 02:06:07.590
going back to your hometown, oh, you're playing

02:06:07.590 --> 02:06:09.250
for free this week because you got to give away.

02:06:09.840 --> 02:06:11.720
30, 40 tickets to the people that you know and

02:06:11.720 --> 02:06:13.699
you love and that sort of thing. It's a big deal

02:06:13.699 --> 02:06:15.439
if they get six complimentary tickets without

02:06:15.439 --> 02:06:17.779
taxes from the All -Star Game for everybody that's

02:06:17.779 --> 02:06:19.359
going. They get first -class travel accommodations.

02:06:19.619 --> 02:06:22.159
They get a stipend for meals and that sort of

02:06:22.159 --> 02:06:26.079
thing. They get mementos and gifts for their

02:06:26.079 --> 02:06:27.819
5th, their 10th, and their 15th All -Star Game.

02:06:27.899 --> 02:06:30.899
There are other little notches to sweeten the

02:06:30.899 --> 02:06:32.659
pot for the players on the All -Star Game. So

02:06:32.659 --> 02:06:34.680
how does the pot get sweetened for the owners?

02:06:34.739 --> 02:06:38.189
Well, locally, Philly makes money. the city at

02:06:38.189 --> 02:06:41.949
large to put their stadium on full view major

02:06:41.949 --> 02:06:46.110
league baseball operates the all -star game Philadelphia

02:06:46.110 --> 02:06:48.270
staffs the All -Star Game. It gets very tough

02:06:48.270 --> 02:06:52.510
to decide what teams want to have the All -Star

02:06:52.510 --> 02:06:55.109
Game because it is such a burden on these teams

02:06:55.109 --> 02:06:57.590
and on these cities to be able to do so. You

02:06:57.590 --> 02:07:00.449
think about the All -Star Village where you take

02:07:00.449 --> 02:07:02.189
over the convention center for the week and you

02:07:02.189 --> 02:07:04.470
have all these activations from every brand other

02:07:04.470 --> 02:07:07.029
than the Sun. All those brands are paying to

02:07:07.029 --> 02:07:09.670
be there to Major League Baseball. All these

02:07:09.670 --> 02:07:12.109
fans are buying tickets to come to the game.

02:07:12.460 --> 02:07:14.060
or they're buying tickets to the Home Run Derby

02:07:14.060 --> 02:07:16.779
on top of the national media rights that help

02:07:16.779 --> 02:07:18.979
pay for, like you're talking about, the winning

02:07:18.979 --> 02:07:21.899
bonuses. Everything else is really kept by ownership

02:07:21.899 --> 02:07:24.260
in order to make sure that this goes into the

02:07:24.260 --> 02:07:26.899
central fund and everybody makes money on the

02:07:26.899 --> 02:07:30.199
All -Star Game. Yeah, when you talk about people

02:07:30.199 --> 02:07:33.119
bringing up revenue split. amongst the players

02:07:33.119 --> 02:07:35.560
and the owners. The number like 50 % is always

02:07:35.560 --> 02:07:37.859
thrown around. But if you look just at the all

02:07:37.859 --> 02:07:40.699
-star game, the revenue splits like 4 % for the

02:07:40.699 --> 02:07:43.739
players, 96 % for the owners. But something that

02:07:43.739 --> 02:07:45.939
also brings in a lot of money that gives a little

02:07:45.939 --> 02:07:49.699
bit better revenue split for the players is the

02:07:49.699 --> 02:07:52.420
playoffs. It's still less than the regular season,

02:07:52.539 --> 02:07:54.260
but it gives them a little bit more. But I'm

02:07:54.260 --> 02:07:57.880
going to bring up kind of an old wives' tale,

02:07:57.939 --> 02:08:01.100
old story about Marge Schott. Do you know this

02:08:01.100 --> 02:08:04.020
one, Dom, about the 1990 World Series? It's better

02:08:04.020 --> 02:08:06.060
if you tell it because I won't be able to hold

02:08:06.060 --> 02:08:10.920
myself back. So the Reds swept the World Series

02:08:10.920 --> 02:08:14.100
in four games. And after the game, the Reds were

02:08:14.100 --> 02:08:17.140
going to celebrate in the clubhouse. And Marge's

02:08:17.140 --> 02:08:20.550
shot was... apparently so angry that the series

02:08:20.550 --> 02:08:23.609
ended early even though her team the team she

02:08:23.609 --> 02:08:27.050
owns won a world series she was so angry that

02:08:27.050 --> 02:08:30.210
it ended early depriving her of additional revenue

02:08:30.210 --> 02:08:33.630
for games five six and seven that there was no

02:08:33.630 --> 02:08:36.270
celebration in the clubhouse i believe it was

02:08:36.270 --> 02:08:38.050
one of the sports writers had to go out and get

02:08:38.050 --> 02:08:40.109
hamburgers for everyone at fast food and bring

02:08:40.109 --> 02:08:41.829
it back and they ate it in their hotel rooms

02:08:41.829 --> 02:08:44.590
that was their celebration regarding winning

02:08:44.590 --> 02:08:47.489
the world series in four games and there's a

02:08:47.489 --> 02:08:49.729
lot of People have said, oh, that can't possibly

02:08:49.729 --> 02:08:52.810
be true. Game 5 was going to be in Oakland anyway,

02:08:53.149 --> 02:08:55.930
so it's probably made up, even though the sports

02:08:55.930 --> 02:08:58.369
writer that got the hamburgers confirmed that

02:08:58.369 --> 02:09:00.470
they did that, and a couple other players have

02:09:00.470 --> 02:09:04.029
confirmed later in life that that is what happened.

02:09:04.090 --> 02:09:07.430
But the reason why I put a little credence into

02:09:07.430 --> 02:09:12.189
that story is how revenue and sharing the player

02:09:12.189 --> 02:09:20.649
pool works in the playoffs. 60 % of every playoff

02:09:20.649 --> 02:09:24.510
games gate, but only the guaranteed games. Meaning

02:09:24.510 --> 02:09:26.970
if you're in a five game series, only the first

02:09:26.970 --> 02:09:29.449
three are guaranteed to be played. So they get

02:09:29.449 --> 02:09:32.069
60 % of the first three games. Games four and

02:09:32.069 --> 02:09:36.130
five go 100 % to the owners. Seven game series,

02:09:36.310 --> 02:09:39.729
the first four games, players take 60%. Games

02:09:39.729 --> 02:09:43.470
five, six, seven, 100 % goes to the owners. And

02:09:43.470 --> 02:09:46.510
it's not the team that hosts. If the game was

02:09:46.510 --> 02:09:50.960
in Oakland, The Reds and the A's split that fully.

02:09:51.119 --> 02:09:54.079
So when you break it down on how much is made

02:09:54.079 --> 02:09:57.279
in the World Series, how much is made per game,

02:09:57.420 --> 02:10:01.279
game five would have brought in almost doubled

02:10:01.279 --> 02:10:03.579
the amount of money that Marge Schott would have

02:10:03.579 --> 02:10:05.960
made in that World Series if they had just played

02:10:05.960 --> 02:10:09.079
a game five. And that's why I put a little credence

02:10:09.079 --> 02:10:13.460
into that. I think I did a breakdown of, I did

02:10:13.460 --> 02:10:16.960
this a while ago, of... Taking World Series revenue

02:10:16.960 --> 02:10:19.659
today, kind of inflation adjusted back to then,

02:10:19.859 --> 02:10:21.939
it would have been something like Marge Schott

02:10:21.939 --> 02:10:25.600
would have made $6 million in games one through

02:10:25.600 --> 02:10:27.880
four. And then game five, she would have made

02:10:27.880 --> 02:10:30.439
$4 million. Game six, another $4 million. Game

02:10:30.439 --> 02:10:33.039
seven, another $4 million. If this had gone to

02:10:33.039 --> 02:10:34.800
seven games, it would have tripled the amount

02:10:34.800 --> 02:10:38.239
of money she could have pocketed. The way that

02:10:38.239 --> 02:10:41.140
last year's playoff shares worked, and you look

02:10:41.140 --> 02:10:44.420
at it, it's a perfect example as a seven -game

02:10:44.420 --> 02:10:48.199
World Series. And let's also be very, very clear.

02:10:48.340 --> 02:10:51.880
It was a record -setting playoff share given

02:10:51.880 --> 02:10:55.619
to the players, too. It's already agreed upon

02:10:55.619 --> 02:11:00.239
that they get 60 % of the guaranteed games. The

02:11:00.239 --> 02:11:04.159
reason you do that is a safeguard. to make sure

02:11:04.159 --> 02:11:07.180
that nobody's throwing games to make them go

02:11:07.180 --> 02:11:10.119
longer i know that sounds silly that would never

02:11:10.119 --> 02:11:12.939
happen dom do you know that for certain because

02:11:12.939 --> 02:11:15.939
we have history that tells us it's happened before

02:11:15.939 --> 02:11:19.460
yes it was a hundred years ago so for instance

02:11:20.029 --> 02:11:22.569
You look at this year and the player pool and

02:11:22.569 --> 02:11:25.970
how much was retained between the owners getting

02:11:25.970 --> 02:11:29.210
extra games, right? You only had one extra game

02:11:29.210 --> 02:11:31.590
for the Phillies and the Dodgers and the DS.

02:11:31.829 --> 02:11:33.909
You had two extra games between the Brewers and

02:11:33.909 --> 02:11:35.710
Cubs. I'm just using the NL. But you didn't get

02:11:35.710 --> 02:11:37.710
any extra games for the Dodgers sweeping the

02:11:37.710 --> 02:11:40.010
Brewers. But then you make that up again with

02:11:40.010 --> 02:11:42.989
a seven -game series in the World Series for

02:11:42.989 --> 02:11:45.369
the Dodgers. And by the way, they also only won

02:11:45.369 --> 02:11:47.090
their first two games in the wildcard series

02:11:47.090 --> 02:11:49.579
against the Reds. So there's no extra game. in

02:11:49.579 --> 02:11:53.640
that one too hypothetically retained by the clubs

02:11:53.640 --> 02:11:57.760
you know you you've got 234 million dollars to

02:11:57.760 --> 02:12:01.920
be dispersed across all 47 games but of those

02:12:01.920 --> 02:12:06.640
32 that are guaranteed that's 64 million dollars

02:12:06.640 --> 02:12:10.920
right there so the the clubs got to retain 77

02:12:10.920 --> 02:12:14.579
million dollars last year from the extra games

02:12:14.579 --> 02:12:19.050
getting played in the playoffs meaning Game three

02:12:19.050 --> 02:12:21.189
in Wrigley against the Padres and Cubs. Games

02:12:21.189 --> 02:12:23.869
four and five when Wrigley and Milwaukee between

02:12:23.869 --> 02:12:26.689
the Brewers and Cubs. Or even you look over in

02:12:26.689 --> 02:12:28.270
the American League side, that also went seven

02:12:28.270 --> 02:12:30.909
between Detroit and Seattle. And you look at,

02:12:30.909 --> 02:12:33.270
or I should say Toronto and Seattle, and you

02:12:33.270 --> 02:12:37.529
look at every single extra game adds up in favor

02:12:37.529 --> 02:12:40.750
of the owners. And everyone that says, oh, making

02:12:40.750 --> 02:12:43.170
the playoffs is net even. In fact, Mark Ananasio

02:12:43.170 --> 02:12:45.670
has said this as such to the media in an on -the

02:12:45.670 --> 02:12:48.739
-record session where... Making a wildcard series,

02:12:48.840 --> 02:12:52.399
even hosting that wildcard series, and Mark Adonacio's

02:12:52.399 --> 02:12:55.539
own words were, you about break even when you

02:12:55.539 --> 02:13:00.560
factor in labor costs and extra costs for parking

02:13:00.560 --> 02:13:03.260
and everything else. You about break even if

02:13:03.260 --> 02:13:05.579
you don't make it out of the wildcard series,

02:13:05.899 --> 02:13:09.859
which is simultaneously hard to believe and sort

02:13:09.859 --> 02:13:12.260
of understandable to believe because... There

02:13:12.260 --> 02:13:15.000
just isn't that much money in the wildcard round.

02:13:15.100 --> 02:13:16.779
It's not until you get later and later do you

02:13:16.779 --> 02:13:19.199
start getting more of the share. Because the

02:13:19.199 --> 02:13:21.000
way that that playoff share works, that total

02:13:21.000 --> 02:13:26.619
sum to be shared, 157 million of it, 3 % of it

02:13:26.619 --> 02:13:29.220
goes to the wildcard losers. So that's four teams.

02:13:29.239 --> 02:13:33.960
So that's now 12 % of it. Then 13 % of it goes

02:13:33.960 --> 02:13:36.460
to the division series losers. It's another four

02:13:36.460 --> 02:13:40.319
teams. 24 % of it goes to the... Championship

02:13:40.319 --> 02:13:42.380
Series losers, so last year that would have been

02:13:42.380 --> 02:13:44.380
the Mariners and the Brewers. And then the World

02:13:44.380 --> 02:13:47.300
Series loser gets 24 % of that playoff share.

02:13:47.439 --> 02:13:50.319
And then finally, the World Series winner gets

02:13:50.319 --> 02:13:53.920
the majority of it, 36 % of the playoff share

02:13:53.920 --> 02:13:56.560
goes to the World Series winner. So the longer

02:13:56.560 --> 02:13:59.340
you play, the more money everybody makes. That's

02:13:59.340 --> 02:14:01.619
how it's supposed to be. But from the player's

02:14:01.619 --> 02:14:03.699
perspective, you only get the guaranteed cash

02:14:03.699 --> 02:14:06.100
from those games like you talked about, the owner's

02:14:06.100 --> 02:14:08.140
pocket, everything else, which is why... Every

02:14:08.140 --> 02:14:10.159
time you see a long series, the owners are smiling

02:14:10.159 --> 02:14:11.880
and they're happy and the players know they're

02:14:11.880 --> 02:14:14.880
essentially playing for free. Yeah, you mentioned

02:14:14.880 --> 02:14:18.000
that on an osteo quote. There is one thing I

02:14:18.000 --> 02:14:20.960
think he's omitting there is the television deals

02:14:20.960 --> 02:14:23.979
are not playoff specific. They sign these national

02:14:23.979 --> 02:14:27.199
television deals for the whole season. So he's

02:14:27.199 --> 02:14:28.920
probably not counting that revenue, which is

02:14:28.920 --> 02:14:33.079
a substantial amount of the television revenue

02:14:33.079 --> 02:14:36.399
is because playoff games are all televised nationally.

02:14:36.970 --> 02:14:40.149
But if he counts that, they're making still quite

02:14:40.149 --> 02:14:42.289
a bit. But they make a lot more if they get into

02:14:42.289 --> 02:14:45.289
those later games. But another interesting thing

02:14:45.289 --> 02:14:47.930
about the playoffs is the players get a share

02:14:47.930 --> 02:14:50.890
of the revenue, but they don't get paid their

02:14:50.890 --> 02:14:54.710
salary. It's basically an unpaid period. You

02:14:54.710 --> 02:14:58.909
only get that player's share after the fact when

02:14:58.909 --> 02:15:02.029
they calculate out how everything's divvied.

02:15:02.149 --> 02:15:06.819
So from an owner's perspective, it almost becomes

02:15:06.819 --> 02:15:10.579
pure profit compared to the regular season. And

02:15:10.579 --> 02:15:14.460
one way we saw this play out was 2020. I don't

02:15:14.460 --> 02:15:16.600
know if you remember when COVID happened during

02:15:16.600 --> 02:15:18.659
spring training and the season was shut down.

02:15:19.199 --> 02:15:22.020
Around, I'm trying to remember exactly when,

02:15:22.119 --> 02:15:25.920
I would say around the end of May, there began

02:15:25.920 --> 02:15:29.319
discussions of reopening the league back up and

02:15:29.319 --> 02:15:33.510
starting the regular season. A sticking point,

02:15:33.630 --> 02:15:36.770
I believe, my theory is that they still could

02:15:36.770 --> 02:15:39.329
have gotten in like 110 regular season games,

02:15:39.609 --> 02:15:43.689
but the players wanted prorated salaries, meaning

02:15:43.689 --> 02:15:46.109
they get paid the same amount per game. These

02:15:46.109 --> 02:15:48.949
games are not going to have any fans, so you

02:15:48.949 --> 02:15:54.510
have no gate. And on top of that, the television

02:15:54.510 --> 02:15:57.529
deals will be a little bit truncated, but what

02:15:57.529 --> 02:15:59.390
brings in the television deals are the playoffs,

02:15:59.609 --> 02:16:02.439
and the players don't have to get paid. Their

02:16:02.439 --> 02:16:04.760
normal salaries in the playoffs. So from the

02:16:04.760 --> 02:16:07.579
owner's perspective, any regular season games

02:16:07.579 --> 02:16:10.699
they have, they got to play the payers, pay the

02:16:10.699 --> 02:16:13.340
players the full amount with no fans in the stand,

02:16:13.479 --> 02:16:17.579
no gate. It's going to lose the money. So you

02:16:17.579 --> 02:16:20.020
could see this in the negotiations. They kept

02:16:20.020 --> 02:16:23.579
stalling until the last possible second, which

02:16:23.579 --> 02:16:26.899
ended up being a 60 game season because and then

02:16:26.899 --> 02:16:29.699
expanded the playoffs because this means they

02:16:29.699 --> 02:16:31.899
don't got to pay the players as much. They don't

02:16:31.899 --> 02:16:33.540
have as many of these games that are going to

02:16:33.540 --> 02:16:35.639
lose the money, but they still get their playoff

02:16:35.639 --> 02:16:37.340
money, which is going to bring in the bulk of

02:16:37.340 --> 02:16:40.200
the TV revenue, is going to bring in a period

02:16:40.200 --> 02:16:42.440
where they don't have to give anything to the

02:16:42.440 --> 02:16:44.940
players because if there's no gate in the playoffs,

02:16:45.059 --> 02:16:47.100
which they actually ended up having a gate, if

02:16:47.100 --> 02:16:49.579
there's reduced gate because of COVID, that doesn't

02:16:49.579 --> 02:16:51.920
hurt them in any way. They're almost making pure

02:16:51.920 --> 02:16:55.739
profit on the playoffs. And yeah, again, it could

02:16:55.739 --> 02:17:02.510
have been a 110, 120 game season there wasn't

02:17:02.510 --> 02:17:05.569
that reason why the owners wanted to stall. Now

02:17:05.569 --> 02:17:07.469
that's kind of a theory on my part, but everything

02:17:07.469 --> 02:17:09.670
in negotiations kind of leaned towards that.

02:17:09.729 --> 02:17:12.549
They wanted as few regular season games, but

02:17:12.549 --> 02:17:15.110
still have it be enough to be legitimate to have

02:17:15.110 --> 02:17:18.129
a playoff, which they expanded in order to make

02:17:18.129 --> 02:17:19.809
their money back. Yeah, that's going to be a

02:17:19.809 --> 02:17:22.610
big negotiation piece we talk about in Episode

02:17:22.610 --> 02:17:25.670
8 of this podcast series as well. But you talk

02:17:25.670 --> 02:17:27.510
about the national media rights and the national

02:17:27.510 --> 02:17:31.030
TV deal. That's $2 billion a year that gets divvied

02:17:31.030 --> 02:17:33.590
up across the teams. It is such an important

02:17:33.590 --> 02:17:36.850
piece of what you're guaranteed to make on a

02:17:36.850 --> 02:17:39.989
game -at -large revenue basis. So the ones that

02:17:39.989 --> 02:17:43.930
pay into the rights to broadcast these games,

02:17:44.209 --> 02:17:47.620
obviously Fox has the World Series. and the All

02:17:47.620 --> 02:17:50.260
-Star game, the marquee events. They have a whole

02:17:50.260 --> 02:17:52.840
league's postseason every year. They pay the

02:17:52.840 --> 02:17:55.100
biggest sum of any of the media rights holders,

02:17:55.340 --> 02:18:00.079
$730 million annually to have division, championship,

02:18:00.319 --> 02:18:03.459
and World Series, the All -Star game, exclusives

02:18:03.459 --> 02:18:05.319
throughout the year, also some side -by -sides

02:18:05.319 --> 02:18:07.680
with FS1. They have their own content ecosystem

02:18:07.680 --> 02:18:10.040
around it and that sort of thing. So the Fox

02:18:10.040 --> 02:18:12.940
are the biggest payers. Then next, you've got

02:18:12.940 --> 02:18:15.680
ESPN. Now this is a little complicated because

02:18:15.680 --> 02:18:19.399
Major League Baseball just sold its BAM, the

02:18:19.399 --> 02:18:22.079
Major League Baseball Advanced Media, entity

02:18:22.079 --> 02:18:27.659
of MLB .TV to ESPN for them to handle the distribution

02:18:27.659 --> 02:18:32.000
and the rights of MLB .TV this year. So Major

02:18:32.000 --> 02:18:35.559
League Baseball exchanged the lump sum of them

02:18:35.559 --> 02:18:39.250
operating MLB .TV. for handing it off to ESPN.

02:18:39.329 --> 02:18:40.969
Now, why would ESPN be interested in doing that?

02:18:41.350 --> 02:18:43.610
They want to generate the revenue of their own

02:18:43.610 --> 02:18:46.190
subscription model because it comes with a year

02:18:46.190 --> 02:18:48.649
or a month of ESPN Unlimited. They're hoping

02:18:48.649 --> 02:18:51.110
they can keep some subscribers on that front

02:18:51.110 --> 02:18:53.030
because everything's all a cart these days of

02:18:53.030 --> 02:18:54.790
being able to watch sports is getting harder

02:18:54.790 --> 02:18:57.629
and harder and harder. But ESPN still has some

02:18:57.629 --> 02:18:59.989
games. They have some midweek exclusives, but

02:18:59.989 --> 02:19:03.069
they obviously opted out of Sunday Night Baseball.

02:19:03.450 --> 02:19:06.829
while simultaneously buying MLB .tv in order

02:19:06.829 --> 02:19:10.469
to distribute it through the next couple of seasons.

02:19:10.670 --> 02:19:14.329
Next on that list is TBS. TBS has been broadcasting

02:19:14.329 --> 02:19:17.750
baseball games for over 50 years. They pay $470

02:19:17.750 --> 02:19:19.989
million for exclusive rights to the postseason

02:19:19.989 --> 02:19:22.770
mostly. Now, their Tuesday night side -by -sides,

02:19:22.790 --> 02:19:26.030
which I work on, those games are not blacked

02:19:26.030 --> 02:19:28.239
out. all the time they are sometimes blacked

02:19:28.239 --> 02:19:29.819
out but it's a reminder they're not national

02:19:29.819 --> 02:19:32.239
exclusives during the regular season there's

02:19:32.239 --> 02:19:34.200
a difference between like forcing your team to

02:19:34.200 --> 02:19:37.000
be on friday night apple being on sunday night

02:19:37.000 --> 02:19:40.579
on nbc being on saturday against on fox tbs's

02:19:40.579 --> 02:19:43.459
tuesdays are side by sides they are with the

02:19:43.459 --> 02:19:46.959
local broadcast happening two booths over so

02:19:46.959 --> 02:19:50.000
their pay goes is smaller than what fox's is

02:19:50.000 --> 02:19:52.459
because they don't have the national blackout

02:19:52.459 --> 02:19:54.899
of sort of This is a national excuse for us.

02:19:54.959 --> 02:19:57.280
But in the postseason, it becomes national where

02:19:57.280 --> 02:19:59.120
they have a division series and a championship

02:19:59.120 --> 02:20:02.159
series on the side. And one thing I think it's

02:20:02.159 --> 02:20:03.959
brought up a lot is blackouts. You know, fans

02:20:03.959 --> 02:20:06.879
hate blackouts. And there's been a lot of talk

02:20:06.879 --> 02:20:09.059
about the league trying to get rid of blackouts.

02:20:09.319 --> 02:20:11.379
I want to make a clarification. When they say

02:20:11.379 --> 02:20:14.200
blackout, they mean local blackout, meaning you

02:20:14.200 --> 02:20:18.399
get MLB TV and you're in St. Louis. You can watch

02:20:18.399 --> 02:20:24.219
the Cardinals on MLB TV. in which we've seen

02:20:24.219 --> 02:20:27.180
with like Brewers TV for Milwaukee, that gets

02:20:27.180 --> 02:20:31.659
rid of the local blackouts. I can watch any locally

02:20:31.659 --> 02:20:34.659
broadcasted Brewers game living in Wisconsin

02:20:34.659 --> 02:20:38.040
on Brewers TV. National blackouts, those are

02:20:38.040 --> 02:20:41.079
never going away. That is way too much of a moneymaker

02:20:41.079 --> 02:20:43.940
for the teams. So no matter, you know, a lot

02:20:43.940 --> 02:20:46.200
of people got mad because Brewers TV advertised

02:20:46.200 --> 02:20:49.739
no local blackouts. And they assumed, oh, I get

02:20:49.739 --> 02:20:53.799
162 games. Now you still only get like 154 because

02:20:53.799 --> 02:20:56.280
they're going to have those six that are going

02:20:56.280 --> 02:21:02.540
to be on Apple TV+. You know, TBS, Fox, if they're

02:21:02.540 --> 02:21:04.899
going to have everything on these other channels,

02:21:04.979 --> 02:21:08.299
ABC. Those are never going away because as you

02:21:08.299 --> 02:21:11.139
said, those national media deals, $2 billion,

02:21:11.479 --> 02:21:14.819
that's almost 20 % of the entire league's revenue.

02:21:15.059 --> 02:21:18.659
And the only reason the Foxes and... Apple TV

02:21:18.659 --> 02:21:21.680
pluses and Netflix's are paying this money is

02:21:21.680 --> 02:21:25.200
to get exclusivity. So you have to buy a subscription

02:21:25.200 --> 02:21:28.020
to them to watch these games. That's the whole

02:21:28.020 --> 02:21:30.040
reason they're paying this amount of money. And

02:21:30.040 --> 02:21:31.860
the major league baseball is not going to give

02:21:31.860 --> 02:21:36.829
up 20 % of the league's revenue over. half a

02:21:36.829 --> 02:21:38.889
dozen to a dozen games a year being nationally

02:21:38.889 --> 02:21:40.829
blacked out. So when you hear that conversation

02:21:40.829 --> 02:21:43.229
of getting rid of blackouts, national blackouts

02:21:43.229 --> 02:21:45.510
are never going away, at least under how the

02:21:45.510 --> 02:21:47.670
current system works. And any proposal that's

02:21:47.670 --> 02:21:49.850
brought up that mentions getting rid of blackouts,

02:21:49.969 --> 02:21:53.129
they're specifically talking about local blackouts.

02:21:53.370 --> 02:21:56.209
That's a confusion I see all the time. Every

02:21:56.209 --> 02:21:59.559
time the Brewers... have a nationally broadcast

02:21:59.559 --> 02:22:02.479
game. There are a number of people that go online

02:22:02.479 --> 02:22:05.120
complaining, hey, it said no blackouts. And then

02:22:05.120 --> 02:22:07.500
now they have this game on Apple TV Plus and

02:22:07.500 --> 02:22:10.340
I can't see it. It said no blackouts. And you

02:22:10.340 --> 02:22:12.479
didn't see the little asterisk that said subject

02:22:12.479 --> 02:22:16.649
to national blackouts. Exactly. And people found

02:22:16.649 --> 02:22:19.170
out this week with the Home Run Derby being on

02:22:19.170 --> 02:22:21.010
Netflix. I think everybody was used to it being

02:22:21.010 --> 02:22:24.729
on ESPN. Netflix paid $50 million to have an

02:22:24.729 --> 02:22:27.409
opening day game, the Home Run Derby, and they'll

02:22:27.409 --> 02:22:29.469
also have the Field of Dreams game next month

02:22:29.469 --> 02:22:31.750
as well on their air too. So that's why their

02:22:31.750 --> 02:22:33.569
number is so low because they're only doing really

02:22:33.569 --> 02:22:35.909
three events. They also got the rights to the

02:22:35.909 --> 02:22:37.690
World Baseball Classic in Japan. More on the

02:22:37.690 --> 02:22:39.670
international revenues in a moment. You also

02:22:39.670 --> 02:22:41.709
have NBC getting into the fold. They bought that

02:22:41.709 --> 02:22:45.270
remaining share from ESPN. They've foregone Sunday

02:22:45.270 --> 02:22:47.469
Night Baseball, so NBC took it. They also get

02:22:47.469 --> 02:22:49.909
Peacock Sunday leadoff to drive subscriptions

02:22:49.909 --> 02:22:52.049
to their web -based platform, to their streaming

02:22:52.049 --> 02:22:54.430
platform. They also are now going to be the ones

02:22:54.430 --> 02:22:57.510
doing the wildcard round. NBC is. ESPN did it

02:22:57.510 --> 02:22:59.409
in the past. ESPN no longer does the playoffs.

02:22:59.670 --> 02:23:02.110
It is going to be NBC doing the first round of

02:23:02.110 --> 02:23:05.030
the playoffs. Then, this year anyway, the National

02:23:05.030 --> 02:23:06.690
League is going to be on Fox with the Division

02:23:06.690 --> 02:23:09.610
Series, on Fox and FS1, and the American League

02:23:09.610 --> 02:23:13.670
is going to be on TBS with... The AL playoffs

02:23:13.670 --> 02:23:16.969
moving through the DS and the CS over there.

02:23:17.110 --> 02:23:19.549
But NBC also got the first day of the MLB draft.

02:23:19.750 --> 02:23:21.989
They have the Futures game. They have special

02:23:21.989 --> 02:23:24.950
event games as well. So they are trying to get

02:23:24.950 --> 02:23:27.190
a bigger footprint. But none of that is going

02:23:27.190 --> 02:23:31.049
to change until after the 2028 season. That $2

02:23:31.049 --> 02:23:34.350
billion number, in theory, should be going up.

02:23:34.370 --> 02:23:37.190
It's gone up every year because these entities

02:23:37.190 --> 02:23:41.700
are willing to pay that to get live sports. Now,

02:23:41.959 --> 02:23:44.719
a last couple of bullet points here in this national

02:23:44.719 --> 02:23:49.100
game chapter of the business. International revenues

02:23:49.100 --> 02:23:52.940
is not a massive piece of the puzzle for Major

02:23:52.940 --> 02:23:55.040
League Baseball. It has only become more popular

02:23:55.040 --> 02:23:58.659
lately because of NHK's desire to broadcast as

02:23:58.659 --> 02:24:01.420
many games that Shohei Otani plays in back in

02:24:01.420 --> 02:24:04.100
Japan. Major League Baseball gets a small cut

02:24:04.100 --> 02:24:06.959
of that. The World Baseball Classic is a massive

02:24:06.959 --> 02:24:10.530
revenue generator. for federations of each individual

02:24:10.530 --> 02:24:13.610
country and the rights holders, right? Netflix

02:24:13.610 --> 02:24:17.329
getting the rights in Japan. Fox paying in that

02:24:17.329 --> 02:24:19.909
$730 million to have the World Baseball Classic

02:24:19.909 --> 02:24:24.290
stateside. Also, these teams are getting revenues

02:24:24.290 --> 02:24:27.950
locally. Miami getting local revenues. for the

02:24:27.950 --> 02:24:30.569
finals and having sellout crowds for these games

02:24:30.569 --> 02:24:32.270
in March if they wouldn't have revenue otherwise.

02:24:32.549 --> 02:24:34.430
Or you look at Houston hosting it this year,

02:24:34.530 --> 02:24:36.670
Arizona hosting it in the past, San Diego hosting

02:24:36.670 --> 02:24:38.850
it in the past. That's revenues for those teams

02:24:38.850 --> 02:24:41.610
too. And furthermore, the international broadcast

02:24:41.610 --> 02:24:44.709
rights. You've got the MLB International feed,

02:24:44.829 --> 02:24:49.909
which is the World Series in Europe. other developed

02:24:49.909 --> 02:24:51.870
countries around the world. Canada has its own

02:24:51.870 --> 02:24:55.290
Sportsnet international feed as well. Japan has

02:24:55.290 --> 02:24:57.469
its own international feed. Korea has its own

02:24:57.469 --> 02:25:00.209
international feed. And that's a whole different

02:25:00.209 --> 02:25:03.209
rights package for all of these clubs. And finally,

02:25:03.309 --> 02:25:06.909
the last thing about licensing and about how

02:25:06.909 --> 02:25:09.889
players can make money in this too, trading cards

02:25:09.889 --> 02:25:15.309
and player likeness and being able to use, hey.

02:25:15.819 --> 02:25:17.840
all the controversy of Bryce Harper this week

02:25:17.840 --> 02:25:21.020
dealing with a cameo ad for FanDuel, it turned

02:25:21.020 --> 02:25:23.659
out, because sports gambling continues to be

02:25:23.659 --> 02:25:26.639
a rise. There was a lawsuit settled earlier this

02:25:26.639 --> 02:25:29.819
year from DraftKings and FanDuel using players'

02:25:29.979 --> 02:25:33.399
likeness without the permission of MLBPA. And

02:25:33.399 --> 02:25:36.520
it became a settlement and another lump sum that

02:25:36.520 --> 02:25:40.899
comes over to MLBPA and MLB Players Incorporated

02:25:40.899 --> 02:25:43.680
is the entity that is their licensing and using

02:25:43.680 --> 02:25:46.079
their likeness. That's where you... See MLB The

02:25:46.079 --> 02:25:48.219
Show. That's where you see Topps trading cards.

02:25:48.360 --> 02:25:51.159
That's where you see different levels of merchandise

02:25:51.159 --> 02:25:54.459
that could be sold with permission of the player's

02:25:54.459 --> 02:25:56.159
likeness. One of the things that the Players

02:25:56.159 --> 02:25:59.319
Association has done with that money from licensing

02:25:59.319 --> 02:26:02.579
right now is they have made that licensing, normally

02:26:02.579 --> 02:26:04.860
it's a payout to all players. It's not just,

02:26:04.899 --> 02:26:07.420
yes, Aaron Judge and Shohei Otani are the most

02:26:07.420 --> 02:26:10.360
marketable players in baseball, but it becomes

02:26:10.360 --> 02:26:14.049
a lump sum that gets then distributed to... players

02:26:14.049 --> 02:26:17.129
amongst the union on these licensing deals where

02:26:17.129 --> 02:26:19.750
you get there's one of one refractor pack of

02:26:19.750 --> 02:26:22.909
somebody's debut patch that the money that's

02:26:22.909 --> 02:26:25.870
generated from these boxes gets shared amongst

02:26:25.870 --> 02:26:27.989
the league and gets shared amongst players around

02:26:27.989 --> 02:26:30.190
the league so just because you're the most marketable

02:26:30.190 --> 02:26:31.389
player in baseball doesn't mean you're keeping

02:26:31.389 --> 02:26:33.469
all that lump sum for yourself when it comes

02:26:33.469 --> 02:26:37.129
to licensing but if it comes to a personal event

02:26:37.129 --> 02:26:39.870
or a personal sponsorship then you get to keep

02:26:39.870 --> 02:26:42.629
that money if Aaron Judge is paid by Air Jordan,

02:26:42.870 --> 02:26:46.530
right? Or if Jacob Mizorowski is paid by New

02:26:46.530 --> 02:26:48.969
Balance, Shohei Otani is paid by New Balance.

02:26:49.030 --> 02:26:50.770
So those are the ways that they keep their money

02:26:50.770 --> 02:26:53.729
while licensing gets pooled across all of baseball.

02:26:54.389 --> 02:26:57.250
Fashion is another fascinating thing where you

02:26:57.250 --> 02:26:59.629
go anywhere, the Yankees hat and the Dodgers

02:26:59.629 --> 02:27:02.530
hat are everywhere in Europe, in South America,

02:27:02.690 --> 02:27:05.790
in Japan. They are the most popular logos and

02:27:05.790 --> 02:27:07.770
some of the most recognizable logos in the world.

02:27:08.250 --> 02:27:10.149
They don't get more money. The Yankees and the

02:27:10.149 --> 02:27:12.010
Dodgers don't get more money because their hats

02:27:12.010 --> 02:27:14.190
are being worn in Japan. That gets pooled and

02:27:14.190 --> 02:27:16.709
distributed across Major League Baseball. Just

02:27:16.709 --> 02:27:19.750
because there are no Tampa Bay Rays hats somewhere

02:27:19.750 --> 02:27:23.129
in Osaka, Japan, does not mean they're getting

02:27:23.129 --> 02:27:25.090
hurt by the Yankees hats being purchased over

02:27:25.090 --> 02:27:27.350
there because it's licensing and it's shared

02:27:27.350 --> 02:27:29.549
throughout Major League Baseball. And the last

02:27:29.549 --> 02:27:32.069
thing on the big game at large, this is where

02:27:32.069 --> 02:27:35.170
one of my asides come in here, Scott. Fanatics.

02:27:35.850 --> 02:27:39.209
Because... I can go on and on and on and on about

02:27:39.209 --> 02:27:41.389
something just doesn't smell right here. And

02:27:41.389 --> 02:27:43.790
that's not a very good journalistic thing to

02:27:43.790 --> 02:27:45.590
talk about where just something doesn't smell

02:27:45.590 --> 02:27:47.930
right. But you want to talk about antitrust.

02:27:47.930 --> 02:27:51.190
You want to talk about a monopoly. Fanatics is

02:27:51.190 --> 02:27:55.850
that and then some. They have every single step

02:27:55.850 --> 02:28:00.170
of the merchandise. Every single step of the

02:28:00.170 --> 02:28:03.750
merchandise world cornered. They have the manufacturing.

02:28:04.069 --> 02:28:06.549
They have the drive shipping. They have the web

02:28:06.549 --> 02:28:09.270
platform. They have the distribution. They have

02:28:09.270 --> 02:28:12.530
even the rights to tops. They bought tops. They

02:28:12.530 --> 02:28:14.510
bought Mitchell and Ness. They are buying up

02:28:14.510 --> 02:28:16.930
these entities that were away that were officially

02:28:16.930 --> 02:28:20.069
licensed gear. If it's licensed. Fanatics is

02:28:20.069 --> 02:28:22.809
trying to buy it. And it's a monopoly. It is

02:28:22.809 --> 02:28:25.069
scary. Fanatics Fest in New York City where they

02:28:25.069 --> 02:28:27.569
have all these signings and these promos. That

02:28:27.569 --> 02:28:31.309
stuff costs money. I am sitting here looking

02:28:31.309 --> 02:28:34.350
at Fanatics. And I am looking at people complaining

02:28:34.350 --> 02:28:35.909
about the quality of the jerseys that they are

02:28:35.909 --> 02:28:39.250
receiving. The workmanship. Errors that they

02:28:39.250 --> 02:28:41.549
continually make. While simultaneously, Michael

02:28:41.549 --> 02:28:43.569
Rubin is hosting an all -white party with every

02:28:43.569 --> 02:28:45.290
celebrity you've ever heard of on the Hamptons.

02:28:45.370 --> 02:28:48.489
And these things cannot be correlated, man. You've

02:28:48.489 --> 02:28:52.030
got to get this. You can't be a monopoly in also

02:28:52.030 --> 02:28:53.610
flexing your wealth of all the people you're

02:28:53.610 --> 02:28:56.090
paying to come party with you. I really, really

02:28:56.090 --> 02:28:59.069
still sit here. This is where I get really unhinged.

02:28:59.069 --> 02:29:03.110
I'm like, we need to create some sort of guardrail

02:29:03.110 --> 02:29:06.469
for fanatics to have this awful monopoly on merchandising.

02:29:06.889 --> 02:29:09.290
Because the leagues don't care. It takes something

02:29:09.290 --> 02:29:11.969
that they previously had to worry about out of

02:29:11.969 --> 02:29:14.010
their pocket. Oh, Fanatics wants to take care

02:29:14.010 --> 02:29:15.790
of everything and the distribution. I don't have

02:29:15.790 --> 02:29:18.350
to keep a warehouse of all my extra jerseys and

02:29:18.350 --> 02:29:21.129
extra hats. You take care of that. You're going

02:29:21.129 --> 02:29:24.110
to pay us to do it too? Oh, even better. I totally

02:29:24.110 --> 02:29:27.250
understand from a business perspective why these

02:29:27.250 --> 02:29:29.790
teams and these leagues do it. But from a fan

02:29:29.790 --> 02:29:33.069
consumer, I freaking hate it, man. Well, I mean,

02:29:33.090 --> 02:29:36.069
monopolies are bad for the consumers. I mean,

02:29:36.069 --> 02:29:39.069
we know licensing jerseys and hats are cheap,

02:29:39.149 --> 02:29:41.750
right? They don't cost that much money. Yeah,

02:29:41.770 --> 02:29:45.510
and not only does it look bad off the field,

02:29:45.549 --> 02:29:47.569
it also looks bad on the field sometimes, like

02:29:47.569 --> 02:29:50.389
the uniform changes two years ago. Them moving

02:29:50.389 --> 02:29:53.870
the MLB logo down on the back to make the player's

02:29:53.870 --> 02:29:58.420
name smaller and the MLB logo more. It was one

02:29:58.420 --> 02:30:00.879
of the worst -looking decisions. They looked

02:30:00.879 --> 02:30:03.040
like cheap little knockoffs. And the fact that

02:30:03.040 --> 02:30:05.040
they're made by Fanatics as well, which is, as

02:30:05.040 --> 02:30:06.959
you said, quality problems. If you're making

02:30:06.959 --> 02:30:09.659
an already bad jersey and then making it bad

02:30:09.659 --> 02:30:12.719
quality on top of that, it's not that good. So

02:30:12.719 --> 02:30:15.059
I'm with you. Let's break up Fanatics. If anything

02:30:15.059 --> 02:30:17.559
comes out of this podcast, let's break up Fanatics.

02:30:17.700 --> 02:30:20.379
I'm all in on all of that stuff. Okay. We've

02:30:20.379 --> 02:30:21.940
talked about the game at large and the revenue

02:30:21.940 --> 02:30:24.829
generation from all that. The new money. How

02:30:24.829 --> 02:30:28.270
are things changing into the CBA and what the

02:30:28.270 --> 02:30:30.870
future could hold for the business aspect of

02:30:30.870 --> 02:30:33.290
all these teams? This has been a deep, heavy

02:30:33.290 --> 02:30:36.129
episode when it talks about all the maybe numbers

02:30:36.129 --> 02:30:37.489
and stuff. Maybe you know a lot of this stuff

02:30:37.489 --> 02:30:39.690
already, but we just want to level set everything

02:30:39.690 --> 02:30:43.530
that's on the way here for how teams are making

02:30:43.530 --> 02:30:47.290
money more after the break. This final chapter

02:30:47.290 --> 02:30:50.200
is a shorter chapter because... These are things

02:30:50.200 --> 02:30:52.379
are going to come up throughout the negotiation

02:30:52.379 --> 02:30:55.520
of the CBA. There are some things in place right

02:30:55.520 --> 02:30:58.000
now that matter to how owners and players make

02:30:58.000 --> 02:31:00.819
money and how the new money that has arrived

02:31:00.819 --> 02:31:03.139
into Major League Baseball is going to be something

02:31:03.139 --> 02:31:07.930
to monitor moving forward. Simply put, the evaluations

02:31:07.930 --> 02:31:11.989
of teams have changed very minimally over the

02:31:11.989 --> 02:31:14.469
last 20 or so years. The Athletic talked about

02:31:14.469 --> 02:31:17.329
this as a reason why owners want to push for

02:31:17.329 --> 02:31:20.149
a salary cap is because one of the ways you can

02:31:20.149 --> 02:31:24.229
increase your evaluation of your team is to know

02:31:24.229 --> 02:31:26.510
your fixed costs, to know that I'm going to spend

02:31:26.510 --> 02:31:29.690
up to $250 million, throwing a number out there,

02:31:29.850 --> 02:31:33.440
$250 million a year. on salary, and then I can

02:31:33.440 --> 02:31:35.420
fix my cost. I don't care how much staff do I

02:31:35.420 --> 02:31:36.899
need to employ on that, how much all this stuff.

02:31:37.280 --> 02:31:39.700
Fixed cost is what everybody is after in all

02:31:39.700 --> 02:31:41.700
this. And one of the ways that you're trying

02:31:41.700 --> 02:31:45.299
to pay for those costs is create bigger ownership

02:31:45.299 --> 02:31:48.659
groups. And one of those ownership entities has

02:31:48.659 --> 02:31:51.440
become private equity. And private equity is

02:31:51.440 --> 02:31:53.159
invading just about everything in our lives these

02:31:53.159 --> 02:31:55.500
days. We briefly touched on it earlier about

02:31:55.500 --> 02:31:58.260
how the New York Yankees are currently evaluating

02:31:58.260 --> 02:32:02.000
what they could be worth. if a private equity

02:32:02.000 --> 02:32:05.920
branch and a firm was able to acquire 15 of the

02:32:05.920 --> 02:32:08.799
new york yankees and maintain controlling assets

02:32:08.799 --> 02:32:13.799
within the the yankee global enterprise group

02:32:13.799 --> 02:32:18.079
which is uh you know ac milan that is new york

02:32:18.079 --> 02:32:21.620
city fc that is yes network they have a hospitality

02:32:21.620 --> 02:32:23.979
company in there as well in addition to of course

02:32:23.979 --> 02:32:27.500
part ownership of the yankees now private equity

02:32:27.500 --> 02:32:31.110
is already in A lot of teams. This isn't breaking

02:32:31.110 --> 02:32:34.149
news. What's breaking news is that it's the Yankees

02:32:34.149 --> 02:32:37.670
listening on private equity. And we all think

02:32:37.670 --> 02:32:40.549
of the Yankees as being this undefeated, massive

02:32:40.549 --> 02:32:44.690
private equity power. The Red Sox, the Dodgers,

02:32:44.750 --> 02:32:49.250
the Cubs, the Giants, the Astros, the Padres

02:32:49.250 --> 02:32:52.969
all have some form of private equity ownership.

02:32:53.229 --> 02:32:56.340
Now, when we say private equity. and you think

02:32:56.340 --> 02:32:58.379
about investment groups and that sort of thing,

02:32:58.479 --> 02:33:02.579
it means the group itself is owning up to 15

02:33:02.579 --> 02:33:06.639
% of the team. It's a little different. It gets

02:33:06.639 --> 02:33:08.360
a little cloudy when you talk about the Dodgers

02:33:08.360 --> 02:33:10.940
because obviously Guggenheim is one of the most

02:33:10.940 --> 02:33:13.379
powerful investment private equity firms in the

02:33:13.379 --> 02:33:17.239
world, but it's a technicality that while Guggenheim

02:33:17.239 --> 02:33:20.899
doesn't own the Brewers, it's Guggenheim Baseball

02:33:20.899 --> 02:33:24.479
Management, but the executives of Guggenheim

02:33:24.479 --> 02:33:27.069
Baseball Management, also work for Guggenheim

02:33:27.069 --> 02:33:30.389
and also work for the Dodgers. So it's not directly,

02:33:30.549 --> 02:33:33.309
oh, the Guggenheim private equity firm owns the

02:33:33.309 --> 02:33:37.229
Dodgers. The people that Guggenheim pays to own

02:33:37.229 --> 02:33:39.889
the Dodgers are technically the ones owning the

02:33:39.889 --> 02:33:41.530
Dodgers. It gets cloudy there. You get what I'm

02:33:41.530 --> 02:33:44.209
trying to say. But private equity is not something

02:33:44.209 --> 02:33:47.909
new in baseball. In fact, the NFL has rules on

02:33:47.909 --> 02:33:50.329
this too. The NBA has rules on this too on how

02:33:50.329 --> 02:33:54.110
much private equity can own a percentage group

02:33:54.110 --> 02:33:56.270
of an ownership group. And we've talked about

02:33:56.270 --> 02:33:58.370
ownership groups in the past where you look at

02:33:58.370 --> 02:34:00.670
somebody like John Middleton. John Middleton

02:34:00.670 --> 02:34:03.889
with the Phillies, he technically only owns 48

02:34:03.889 --> 02:34:07.170
% of the Phillies because their bylaws indicate

02:34:07.170 --> 02:34:10.110
nobody can actually have more than a 50 % share

02:34:10.110 --> 02:34:12.409
of the Phillies. While he is still the majority

02:34:12.409 --> 02:34:16.170
owner, there are other pieces and investors within.

02:34:16.649 --> 02:34:20.190
the Phillies as a franchise that help pay on

02:34:20.190 --> 02:34:22.209
debts and pay on player payroll and play on front

02:34:22.209 --> 02:34:24.250
office payroll, that sort of thing. If private

02:34:24.250 --> 02:34:27.930
equity sees an investment opportunity in having

02:34:27.930 --> 02:34:31.290
partial ownership in a baseball team, it means

02:34:31.290 --> 02:34:34.370
two things to me, Scott. Number one, it means

02:34:34.370 --> 02:34:37.690
they see value in it. They see growth in owning

02:34:37.690 --> 02:34:41.569
a baseball franchise. And number two, they think

02:34:41.569 --> 02:34:45.069
they can help these owners make more money. in

02:34:45.069 --> 02:34:47.049
the long term now that goes in in hand with the

02:34:47.049 --> 02:34:50.530
growth but it's a quick infusion of cash for

02:34:50.530 --> 02:34:53.889
these owners to pay off whatever it may be and

02:34:53.889 --> 02:34:56.049
these private equity groups may feel that either

02:34:56.049 --> 02:35:01.030
a that 15 percent 15 share could increase in

02:35:01.030 --> 02:35:03.930
years to come and they will make their money

02:35:03.930 --> 02:35:07.510
back in the long -term play in sports yeah it's

02:35:07.510 --> 02:35:09.549
it's interesting private equity is almost kind

02:35:09.549 --> 02:35:11.450
of like a buzzword you hear it throughout all

02:35:11.450 --> 02:35:14.069
of business and you know like housing you hear

02:35:14.069 --> 02:35:17.870
it You hear it all over the place. And why is

02:35:17.870 --> 02:35:19.729
this a thing? If you brought up private equity

02:35:19.729 --> 02:35:23.909
20 years ago, most people would look at you dear

02:35:23.909 --> 02:35:25.209
and have likes and be like, what does that mean?

02:35:25.290 --> 02:35:28.270
It's become so much more common now. And why

02:35:28.270 --> 02:35:30.190
is that is kind of an interesting thing. Because

02:35:30.190 --> 02:35:33.729
why that is, is you ever heard of the company

02:35:33.729 --> 02:35:40.430
called Enron, Don? Enron was a massive company

02:35:40.430 --> 02:35:44.319
that failed. Yeah, Enron Field. Is it still Minute

02:35:44.319 --> 02:35:46.180
Maid now? What is it? Now it's Dyken Park, and

02:35:46.180 --> 02:35:48.299
it's not the juice box anymore. Dyken Park. It's

02:35:48.299 --> 02:35:53.700
the ice box. Yeah, so Enron, what it was, accounting

02:35:53.700 --> 02:35:56.819
principles and accounting law and what was required

02:35:56.819 --> 02:35:59.000
of companies to put in their financial reports

02:35:59.000 --> 02:36:01.299
was not as strict back then. They didn't even

02:36:01.299 --> 02:36:04.399
have to publish a cash flow statement, which

02:36:04.399 --> 02:36:06.299
is kind of one of the biggest things. I look

02:36:06.299 --> 02:36:08.959
at for a professional sports team, because when

02:36:08.959 --> 02:36:10.940
you take out all that depreciation, amortization,

02:36:11.139 --> 02:36:14.159
all that stuff, their costs and things, do they

02:36:14.159 --> 02:36:16.360
actually have more money at the end of the year

02:36:16.360 --> 02:36:17.620
than they had at the beginning of the year? And

02:36:17.620 --> 02:36:20.040
if you can answer that, yes, then the business

02:36:20.040 --> 02:36:23.420
is okay. But back in the Enron days, they didn't

02:36:23.420 --> 02:36:25.780
even have to publish that. And Enron was able

02:36:25.780 --> 02:36:28.899
to cook their books enough, so to say, to make

02:36:28.899 --> 02:36:31.239
it look like they were a fine operating business.

02:36:31.840 --> 02:36:34.760
when they were massively, massively in debt,

02:36:34.899 --> 02:36:38.680
at the brink of collapse. And when they finally

02:36:38.680 --> 02:36:41.120
collapsed, lawmakers went, this isn't good. So

02:36:41.120 --> 02:36:43.879
what they did is they passed the Sarbanes -Oxley

02:36:43.879 --> 02:36:47.559
Act, which basically standardized the accounting

02:36:47.559 --> 02:36:49.760
principles, standardized how they had to be put

02:36:49.760 --> 02:36:51.420
out, standardized the things that you had to

02:36:51.420 --> 02:36:54.620
make publicly known about your company so that

02:36:54.620 --> 02:36:57.200
investors can know, is this a good company? Is

02:36:57.200 --> 02:36:59.360
this a bad company? Are they generating cash?

02:36:59.579 --> 02:37:02.760
Are they in massive debt? And what the response

02:37:02.760 --> 02:37:05.459
to that was, yes, publicly traded companies,

02:37:05.600 --> 02:37:07.620
you can get pretty good information on what's

02:37:07.620 --> 02:37:10.219
going on on their books. But a lot of companies

02:37:10.219 --> 02:37:12.420
just went, well, why don't we just go private?

02:37:12.579 --> 02:37:16.260
If we go private, then we don't have to do any

02:37:16.260 --> 02:37:19.319
of these reports. If we instead of being a corporation,

02:37:19.600 --> 02:37:22.739
we become an LLC or a partnership. We don't have

02:37:22.739 --> 02:37:25.239
to publish any of this information. And if you

02:37:25.239 --> 02:37:27.959
look at the number of companies that are publicly

02:37:27.959 --> 02:37:31.920
traded from 2002 to today. it has decreased massively,

02:37:32.399 --> 02:37:35.819
especially in the small cap, the smaller companies.

02:37:36.879 --> 02:37:39.020
Auditing your books and publishing this information

02:37:39.020 --> 02:37:41.879
costs a lot of money. It's a major expense. So

02:37:41.879 --> 02:37:44.420
they just said, well, we'll just not be public

02:37:44.420 --> 02:37:47.700
anymore. And it's almost amazing that the Braves

02:37:47.700 --> 02:37:49.680
are public in this day and age because they are,

02:37:49.840 --> 02:37:52.139
don't get me wrong, you think of baseball, you

02:37:52.139 --> 02:37:53.840
think a lot of money, large business, they are

02:37:53.840 --> 02:37:57.649
a small cap company based on their cap. Most

02:37:57.649 --> 02:38:00.809
small cap companies, I think small caps have

02:38:00.809 --> 02:38:03.409
gone down like 80 % the number that are public

02:38:03.409 --> 02:38:06.510
just because it's not worth them to have all

02:38:06.510 --> 02:38:08.370
that information public, to have their books

02:38:08.370 --> 02:38:11.889
audited, to pay for all those expenses. And that's

02:38:11.889 --> 02:38:14.149
why you hear private equity. It means this company

02:38:14.149 --> 02:38:16.290
is not public and is investing in these companies.

02:38:16.530 --> 02:38:19.409
To show you how hard it is, when we had our first

02:38:19.409 --> 02:38:21.069
meeting on this episode and we were talking about

02:38:21.069 --> 02:38:23.850
things that we were going to research, you talked

02:38:23.850 --> 02:38:27.680
about ownership share. And I thought, okay, I'm

02:38:27.680 --> 02:38:30.760
going to go through each of the teams, find out

02:38:30.760 --> 02:38:33.780
what LLC or partnership they are, and find out

02:38:33.780 --> 02:38:37.020
what percent of each team, a different person

02:38:37.020 --> 02:38:40.440
or organization or private capital or private

02:38:40.440 --> 02:38:46.000
equity owns of each of these teams. I wasn't

02:38:46.000 --> 02:38:48.299
able to find direct numbers for any of them.

02:38:48.360 --> 02:38:50.479
I'm telling you zero. I thought, okay, I'll be

02:38:50.479 --> 02:38:52.500
able to find out if this team's owned 100 % by

02:38:52.500 --> 02:38:55.770
this person. They're all under LLCs or partnerships

02:38:55.770 --> 02:38:58.250
that don't list out ownership share on their

02:38:58.250 --> 02:39:02.850
articles of organization. They don't have any

02:39:02.850 --> 02:39:05.909
numbers that are public. It's basically, it's

02:39:05.909 --> 02:39:08.110
almost like dealing with an AI where it's a black

02:39:08.110 --> 02:39:09.889
box where you don't know what's going on behind

02:39:09.889 --> 02:39:11.829
the scenes. You just see the output. You just

02:39:11.829 --> 02:39:14.129
see the team on the field and you have Forbes

02:39:14.129 --> 02:39:16.149
to estimate. We think they're worth this and

02:39:16.149 --> 02:39:18.590
they're making this much money, but nobody knows.

02:39:19.040 --> 02:39:22.579
Nobody knows at all. I just wanted to see what

02:39:22.579 --> 02:39:26.719
teams are owned more than 50 % by one person,

02:39:26.840 --> 02:39:30.100
and I wasn't able to conclude any of it. I mean,

02:39:30.120 --> 02:39:35.879
I think the Mets are mostly owned by one person,

02:39:35.959 --> 02:39:38.139
but I couldn't verify it. I couldn't verify it

02:39:38.139 --> 02:39:40.700
at all because even his ownership is behind a

02:39:40.700 --> 02:39:43.299
company that owns a company that owns the Mets.

02:39:43.340 --> 02:39:47.079
It's just these layers of... Who owns the team?

02:39:47.159 --> 02:39:51.459
We have no idea on some level. And they're starting

02:39:51.459 --> 02:39:54.340
to operate in a fashion that they need to be

02:39:54.340 --> 02:39:58.540
more anonymous, where the owners either A, in

02:39:58.540 --> 02:40:01.100
the social media world, like Steve Cohen briefly

02:40:01.100 --> 02:40:04.219
is active on social media. And quite frankly,

02:40:04.340 --> 02:40:08.079
it's just an absolute venom pit for anything

02:40:08.079 --> 02:40:10.719
he steps into. The worst of the worst comes out.

02:40:10.760 --> 02:40:12.639
There's even some anti -Semitism in there, which

02:40:12.639 --> 02:40:15.000
is just awful. I mean, the dude's just an owner

02:40:15.000 --> 02:40:16.819
of a baseball team, of the team that he loves,

02:40:16.840 --> 02:40:18.319
by the way. Of course, he wants the Mets to win,

02:40:18.399 --> 02:40:20.819
too. But, you know, these owners are starting

02:40:20.819 --> 02:40:23.579
to get more anonymous where, you know, John Henry

02:40:23.579 --> 02:40:26.659
hasn't spoken to the media in, you know, directly

02:40:26.659 --> 02:40:29.780
to the media, not at a, you know, fan fest in

02:40:29.780 --> 02:40:33.760
years. Or you look at... The learners haven't

02:40:33.760 --> 02:40:36.959
spoke to the media in a long time. The poll ads

02:40:36.959 --> 02:40:38.440
are speaking to the media and they're saying

02:40:38.440 --> 02:40:40.360
all the wrong things with the Minnesota Twins

02:40:40.360 --> 02:40:42.299
of just how much they've been dealing with their

02:40:42.299 --> 02:40:45.799
debts and that sort of thing. Whereas it's harder

02:40:45.799 --> 02:40:48.719
and harder to get a microphone in front of the

02:40:48.719 --> 02:40:51.319
owners because... a they're speaking on behalf

02:40:51.319 --> 02:40:54.399
of their entire ownership group and b they don't

02:40:54.399 --> 02:40:56.500
want to reveal anything that incriminates them

02:40:56.500 --> 02:40:58.139
and i'm not saying they're doing nefarious things

02:40:58.139 --> 02:41:00.139
but they're saying they don't want to be held

02:41:00.139 --> 02:41:02.659
to a different standard because they're not publicly

02:41:02.659 --> 02:41:06.360
traded companies right ceos appearing on cnbc

02:41:06.360 --> 02:41:08.739
talking about why their earnings report was underwhelming

02:41:08.739 --> 02:41:10.319
and why they need to convince shareholders and

02:41:10.319 --> 02:41:12.420
stockholders to keep investing in their company

02:41:12.420 --> 02:41:15.729
that matters owners can sit there and go you

02:41:15.729 --> 02:41:17.250
know, like the Castellini's did a couple of years

02:41:17.250 --> 02:41:19.409
ago, where are you going to go? You know, and

02:41:19.409 --> 02:41:23.450
it's, it's frustrating to see that because that's

02:41:23.450 --> 02:41:26.690
what leads us into this, you know, sort of acrimonious

02:41:26.690 --> 02:41:29.510
relationship with owner and fan when it shouldn't

02:41:29.510 --> 02:41:31.569
be that way. I hope one day where we can sit

02:41:31.569 --> 02:41:34.049
here and go, you know what, thank goodness somebody's

02:41:34.049 --> 02:41:36.629
footing the bill because I can't do so. But ownership

02:41:36.629 --> 02:41:39.510
groups are a massive piece. Private equity slowly

02:41:39.510 --> 02:41:41.889
infiltrating into investing into these teams.

02:41:41.969 --> 02:41:44.090
Let's be honest, too. A lot of these teams operate

02:41:44.090 --> 02:41:46.309
at a loss. A lot of these teams operate with

02:41:46.309 --> 02:41:48.989
debt on their books every single year. Is it

02:41:48.989 --> 02:41:51.729
crippling debt? No, but it sounds like the Twins

02:41:51.729 --> 02:41:54.010
and the Pirates and some other small market teams

02:41:54.010 --> 02:41:56.610
consistently carry a large amount of debt that

02:41:56.610 --> 02:41:59.170
would make other businesses and franchises uncomfortable.

02:41:59.690 --> 02:42:02.360
But the reality is... They know they're getting

02:42:02.360 --> 02:42:04.899
a long -term play here, that they're not going

02:42:04.899 --> 02:42:07.200
anywhere. Major League Baseball can step in and

02:42:07.200 --> 02:42:08.860
help. Maybe they sell the team one day and they

02:42:08.860 --> 02:42:10.680
get a lump sum of cash and they deal with everything

02:42:10.680 --> 02:42:12.879
down the road. You're starting to see some of

02:42:12.879 --> 02:42:14.719
the old guard phase out. We talked about it at

02:42:14.719 --> 02:42:18.120
the beginning of this show where the Polads,

02:42:18.360 --> 02:42:21.319
the Reinsdorfs, and the Steinbrenners are the

02:42:21.319 --> 02:42:24.920
only families that are still in control of their

02:42:24.920 --> 02:42:28.959
teams since the 1994 strike. Three of the 27

02:42:28.959 --> 02:42:31.920
owners have stuck around the whole time since

02:42:31.920 --> 02:42:35.000
1994. So things are changing rapidly on that

02:42:35.000 --> 02:42:36.500
front. And the thing that's changing rapidly

02:42:36.500 --> 02:42:38.639
on the front is literally as we're recording,

02:42:38.719 --> 02:42:41.260
it's the day that Chase Burns signed an extension

02:42:41.260 --> 02:42:44.620
is agency. And Scott Boris takes a lot of the

02:42:44.620 --> 02:42:47.639
headlines in agency and, you know, make sure

02:42:47.639 --> 02:42:49.360
you get as much money as possible and holding

02:42:49.360 --> 02:42:51.879
out as long as possible. But we're starting to

02:42:51.879 --> 02:42:54.819
see changes in that front to Scott where. Team

02:42:54.819 --> 02:42:56.340
-friendly extensions are becoming a lot more

02:42:56.340 --> 02:43:00.219
popular. Agents are getting fired if they're

02:43:00.219 --> 02:43:03.120
not doing their job well enough. There are different

02:43:03.120 --> 02:43:05.700
levels to agency now that isn't just negotiate

02:43:05.700 --> 02:43:09.680
my contract than it was 30, 40 years ago when

02:43:09.680 --> 02:43:12.739
Dick Moss left the Players Association to become

02:43:12.739 --> 02:43:14.540
his own agent, and he did a very good job at

02:43:14.540 --> 02:43:15.819
it, but there were other agents that were doing

02:43:15.819 --> 02:43:18.600
it nefariously. That stuff has cleaned up drastically

02:43:18.600 --> 02:43:21.180
over the years, but the role of an agent has

02:43:21.180 --> 02:43:23.760
changed a lot in just the last 10 years. It's

02:43:23.760 --> 02:43:26.280
it's you bring up the 70s and 80s. There's a

02:43:26.280 --> 02:43:29.479
there's an interview I saw with Marvin Miller

02:43:29.479 --> 02:43:33.500
in I think it was like 83. And he was talking

02:43:33.500 --> 02:43:36.600
when free agency became a thing because a sports

02:43:36.600 --> 02:43:39.219
agent was not a thing before free agency. So

02:43:39.219 --> 02:43:41.500
everyone goes, oh, man, I don't know how to negotiate

02:43:41.500 --> 02:43:44.719
this stuff. I need to get an agent. And Marvin

02:43:44.719 --> 02:43:48.819
Miller's thing was these agents. we didn't have

02:43:48.819 --> 02:43:52.120
a certification process from the MLBPA to certify

02:43:52.120 --> 02:43:54.559
an agent at the time. So anyone could just say,

02:43:54.659 --> 02:43:58.760
I'm a sports agent and then take 15 % of a player's,

02:43:58.760 --> 02:44:02.659
you know, contract and go negotiate it. And he

02:44:02.659 --> 02:44:05.520
would tell stories of like, he met, he's meeting

02:44:05.520 --> 02:44:07.559
a guy at a bar, met a guy at a bar, the guy he

02:44:07.559 --> 02:44:09.260
doesn't know. And the guy goes, yeah, I decided

02:44:09.260 --> 02:44:10.940
to become a sports agent yesterday. And then,

02:44:10.940 --> 02:44:12.579
you know, I'm going to go get out some contracts.

02:44:12.639 --> 02:44:14.520
And he's horrified because he's like, these people

02:44:14.520 --> 02:44:17.399
have no idea what they're doing. And the MLBPA

02:44:17.399 --> 02:44:20.040
would provide resources for arbitration hearings.

02:44:20.260 --> 02:44:23.079
If you go, hey, here's the comparisons you can

02:44:23.079 --> 02:44:25.659
use. Here's these amount of things. And he said

02:44:25.659 --> 02:44:27.860
he would have these new agents that had no idea

02:44:27.860 --> 02:44:30.780
what they're doing come in the day before the

02:44:30.780 --> 02:44:32.959
hearing to the MLBPA and go, hey, can you help

02:44:32.959 --> 02:44:34.760
me on this arbitration? I have no idea what's

02:44:34.760 --> 02:44:37.920
going on. And he was horrified. So you can see

02:44:37.920 --> 02:44:41.040
some really, really bad deals during these days

02:44:41.040 --> 02:44:44.100
negotiated by agents because agents were just,

02:44:44.200 --> 02:44:47.979
there was no. no barrier to entry whatsoever.

02:44:48.479 --> 02:44:50.840
Since then, the MLBPA has done a certification

02:44:50.840 --> 02:44:53.000
process. You have to meet these certain requirements.

02:44:53.280 --> 02:44:56.139
And on top of that, you've had like Scott Boris.

02:44:56.260 --> 02:44:58.120
I mean, he kind of rose in the eighties. You

02:44:58.120 --> 02:45:00.899
have these official agencies where that's their

02:45:00.899 --> 02:45:03.319
whole job to negotiate on behalf of players.

02:45:03.559 --> 02:45:07.840
And when you say players signing extensions now,

02:45:07.959 --> 02:45:12.530
ultimately how any agent should work is. If the

02:45:12.530 --> 02:45:15.190
player wants something, he'll do it. Like Ozzy

02:45:15.190 --> 02:45:17.069
Albee's extension may have been one of the worst

02:45:17.069 --> 02:45:19.829
extensions. And if his agent said, hey, this

02:45:19.829 --> 02:45:22.549
is a terrible extension. If Ozzy Albee's goes,

02:45:22.649 --> 02:45:25.170
yeah, but I want to sign it. The agent should

02:45:25.170 --> 02:45:29.709
go, okay, we'll sign it then. And so what you

02:45:29.709 --> 02:45:33.549
have, you've mentioned players firing their agents.

02:45:33.809 --> 02:45:37.870
That's almost a last resort, but it's the...

02:45:38.190 --> 02:45:41.670
change from the late 70s and early 80s to today,

02:45:41.770 --> 02:45:44.350
where it's basically an industry. If you look

02:45:44.350 --> 02:45:47.209
at some of the things Scott Boris puts together

02:45:47.209 --> 02:45:50.250
on behalf of his players when negotiating contracts

02:45:50.250 --> 02:45:53.770
or arbitration hearings, it's professional documents

02:45:53.770 --> 02:45:56.389
that look almost like a financial report. You'll

02:45:56.389 --> 02:45:59.159
find these. 15 -page PDFs where he lists out,

02:45:59.219 --> 02:46:01.879
here's the things we're doing. Here's the comparisons

02:46:01.879 --> 02:46:04.879
we're doing to other salaries. Here's our arguments

02:46:04.879 --> 02:46:07.600
for this player. It's almost like the legal proceeding

02:46:07.600 --> 02:46:11.659
right now. The quality of agents, there are some

02:46:11.659 --> 02:46:13.879
exceptions. There are some bad agents, and some

02:46:13.879 --> 02:46:17.579
players will hire their friends to be their agents.

02:46:17.739 --> 02:46:20.659
But vast majority across the league, players

02:46:20.659 --> 02:46:22.840
are getting much better representation today

02:46:22.840 --> 02:46:25.959
than they ever have. And some fans complain about

02:46:25.959 --> 02:46:27.979
that. They make Boris out to be the evil guy

02:46:27.979 --> 02:46:30.079
because he's only in it for money. That's his

02:46:30.079 --> 02:46:32.719
whole job. His whole job is on behalf of his

02:46:32.719 --> 02:46:35.540
player to get as much money as possible. And

02:46:35.540 --> 02:46:38.819
I can't really fault him for doing that job very,

02:46:38.879 --> 02:46:41.959
very well. And he seeks out those clients that

02:46:41.959 --> 02:46:45.479
are willing to go up to that line to say, this

02:46:45.479 --> 02:46:49.329
is what I'm worth or else. That takes some guts.

02:46:49.350 --> 02:46:51.510
That takes some gusto to do that. And Boris has

02:46:51.510 --> 02:46:54.250
been the guy that's been on the forefront talking

02:46:54.250 --> 02:46:56.469
about why a salary cap would be bad, not only

02:46:56.469 --> 02:46:58.610
for baseball, but for him, because he can't make

02:46:58.610 --> 02:47:00.569
the same amount of commission for him and his

02:47:00.569 --> 02:47:03.370
lieutenants at Boris Court. Another thing about

02:47:03.370 --> 02:47:07.209
the salaries right now and things that we're

02:47:07.209 --> 02:47:10.379
looking out for, maybe... And it's kind of dumb

02:47:10.379 --> 02:47:13.020
for us to save two of the biggest contentious

02:47:13.020 --> 02:47:16.139
issues heading into 2027 for the very end of

02:47:16.139 --> 02:47:18.219
this business podcast. But if you made it this

02:47:18.219 --> 02:47:20.440
far, you made it to the nitty gritty. It's the

02:47:20.440 --> 02:47:23.040
luxury tax and revenue sharing issue. Because

02:47:23.040 --> 02:47:26.219
Rob Manfred has already said it such that he

02:47:26.219 --> 02:47:29.680
thinks the luxury tax was a mistake. And we're

02:47:29.680 --> 02:47:32.440
now seeing, I mean, for lack of a better term,

02:47:32.520 --> 02:47:37.260
state -run propaganda on MLB TV ads from Major

02:47:37.260 --> 02:47:40.270
League Baseball. how aggressive they are about

02:47:40.270 --> 02:47:43.889
wanting a salary cap because they feel the fan

02:47:43.889 --> 02:47:46.670
sentiment is there, that they can get a salary

02:47:46.670 --> 02:47:49.930
cap, that there is enough momentum that if they

02:47:49.930 --> 02:47:52.409
continue to talk about the game not being fair

02:47:52.409 --> 02:47:54.469
and all this stuff, try to sell their vision

02:47:54.469 --> 02:47:57.549
of what the game looks like right now, I understand

02:47:57.549 --> 02:48:00.809
why they do this. But the luxury tax system as

02:48:00.809 --> 02:48:03.530
we know it today... To Rob Manfred's credit,

02:48:03.649 --> 02:48:06.690
it has failed because it has not stopped the

02:48:06.690 --> 02:48:08.989
biggest spenders from spending as much as possible.

02:48:09.370 --> 02:48:12.010
You mentioned Manfred saying it's the biggest

02:48:12.010 --> 02:48:14.389
mistake. Well, you can't really say it's a mistake

02:48:14.389 --> 02:48:16.670
on the owner's behalf because they only did the

02:48:16.670 --> 02:48:19.870
luxury tax because their push for a salary cap

02:48:19.870 --> 02:48:22.909
in 94 completely failed and blew up in their

02:48:22.909 --> 02:48:27.629
faces. So when they brought in a luxury tax was

02:48:27.629 --> 02:48:33.399
the CBA negotiations. after the 94 -95 strike

02:48:33.399 --> 02:48:37.020
where they go, okay, salary cap didn't work.

02:48:37.120 --> 02:48:41.260
Can we at least get some form of increased revenue

02:48:41.260 --> 02:48:43.940
sharing with a luxury tax with penalties for

02:48:43.940 --> 02:48:47.659
going over? And that wasn't a line, unlike a

02:48:47.659 --> 02:48:50.180
salary cap, that wasn't a line where the MOEPA

02:48:50.180 --> 02:48:52.559
said, no, we can't do that. So that's what ended

02:48:52.559 --> 02:48:56.069
up happening. And how the luxury tax works, I

02:48:56.069 --> 02:48:58.149
mean, you mentioned there are some more penalties

02:48:58.149 --> 02:49:01.770
than just financially, like Dodgers having one

02:49:01.770 --> 02:49:04.110
of the lowest draft pools, one of the lowest

02:49:04.110 --> 02:49:08.629
international pools, and having their draft picks

02:49:08.629 --> 02:49:13.010
bumped back. That is one of the penalties for

02:49:13.010 --> 02:49:15.989
going over the luxury tax. But ultimately, it

02:49:15.989 --> 02:49:18.430
has not been a barrier to the Dodgers spending,

02:49:18.549 --> 02:49:22.309
you know. four times as much as other teams on

02:49:22.309 --> 02:49:24.510
their payroll is it even is it more than four

02:49:24.510 --> 02:49:26.250
times now i'm trying to do the math in my head

02:49:26.250 --> 02:49:28.870
they're they're pushing 400 million at the moment

02:49:28.870 --> 02:49:31.670
they're at 420 million including their competitive

02:49:31.670 --> 02:49:35.110
balance tax penalty from last year which the

02:49:35.110 --> 02:49:39.629
tax penalty alone is 168 million dollars which

02:49:39.629 --> 02:49:42.010
is more than the majority of major league baseballs

02:49:42.379 --> 02:49:45.500
total team payroll right now. And the way that

02:49:45.500 --> 02:49:48.500
the rolling scale works, it's based on how many

02:49:48.500 --> 02:49:50.940
times you've had to pay into the tax. It multiplies

02:49:50.940 --> 02:49:53.780
on itself. So if you're a first time payer onto

02:49:53.780 --> 02:49:58.190
the luxury tax, you get 20%. based on how much

02:49:58.190 --> 02:50:02.930
over the tax is so for here in 2026 the first

02:50:02.930 --> 02:50:06.989
level is 244 million dollars so if i'm 10 million

02:50:06.989 --> 02:50:09.989
dollars over if i'm at 254 million dollars i

02:50:09.989 --> 02:50:14.290
owe a two million dollar tax On top of my payroll

02:50:14.290 --> 02:50:17.370
already. Now that $2 million gets pooled. And

02:50:17.370 --> 02:50:20.030
then later with all the other luxury tax payers.

02:50:20.030 --> 02:50:22.790
Gets distributed back out to the teams. Based

02:50:22.790 --> 02:50:25.510
on market score. And the small market teams get

02:50:25.510 --> 02:50:27.209
a benefit from this competitive balance tax.

02:50:27.309 --> 02:50:29.250
But it obviously multiplies as things go up.

02:50:29.549 --> 02:50:32.530
Guess how many consecutive years. The Dodgers

02:50:32.530 --> 02:50:36.329
are now in a competitive balance tax payer status.

02:50:36.510 --> 02:50:39.809
Heading into 2026. And will soon be another payer

02:50:39.809 --> 02:50:43.159
once again heading into 2027. I'm trying to think

02:50:43.159 --> 02:50:45.879
of when's the last time they had a lower payroll.

02:50:47.399 --> 02:50:51.219
Are we at like 10 years now? Almost. So this

02:50:51.219 --> 02:50:54.459
is going to be year seven in a row. Or I should

02:50:54.459 --> 02:50:57.100
say, this is going to be year six in a row. There

02:50:57.100 --> 02:50:59.399
were three straight years. They were under the

02:50:59.399 --> 02:51:03.299
competitive balance tax in 18, 19, and 20. But

02:51:03.299 --> 02:51:06.059
then the previous six years to that, they were

02:51:06.059 --> 02:51:07.739
over the competitive balance tax. So they've

02:51:07.739 --> 02:51:10.260
kind of gone cyclical where they went six straight

02:51:10.260 --> 02:51:12.219
years paying into it, three years not paying

02:51:12.219 --> 02:51:14.840
into it. Now they're into six years paying it

02:51:14.840 --> 02:51:18.200
once again. And a reminder, because things multiply

02:51:18.200 --> 02:51:22.479
as a six -time payer in 2026, you are now paying

02:51:22.479 --> 02:51:28.200
a 110 % tax on how much you go over. So again,

02:51:28.829 --> 02:51:33.530
The threshold is $244 million. They are over

02:51:33.530 --> 02:51:39.629
it by $175 million. It's not stopping them at

02:51:39.629 --> 02:51:43.489
all. They're still paying $168 million on top

02:51:43.489 --> 02:51:45.870
of being over it. So their technical payroll

02:51:45.870 --> 02:51:52.129
right now is $317 million. But yet another $168

02:51:52.129 --> 02:51:55.680
million of it. is just in their competitive balance

02:51:55.680 --> 02:52:00.680
tax penalty. It's ludicrous. Now, the Mets, this

02:52:00.680 --> 02:52:02.620
is where it gets sad because the Dodgers, hey,

02:52:02.700 --> 02:52:04.840
they've won back -to -back World Series. It's

02:52:04.840 --> 02:52:07.340
no big deal for them, right? And then the Mets.

02:52:07.379 --> 02:52:10.219
Oh, the Mets. Everybody loves to make fun of

02:52:10.219 --> 02:52:12.319
the Mets. They're not going to make the playoffs

02:52:12.319 --> 02:52:14.940
for the second consecutive year. They are paying

02:52:14.940 --> 02:52:19.559
$120 million in competitive backs. competitive

02:52:19.559 --> 02:52:23.639
balance tax penalties while carrying a $354 million

02:52:23.639 --> 02:52:26.520
payroll this season. That's embarrassing, and

02:52:26.520 --> 02:52:28.760
that's frustrating. The small market teams don't

02:52:28.760 --> 02:52:30.879
care because they get to get that revenue in

02:52:30.879 --> 02:52:33.620
the revenue sharing, but the luxury tax system

02:52:33.620 --> 02:52:37.159
to have multiple teams blowing by the guardrails

02:52:37.159 --> 02:52:40.780
is an indicator that Rob Manfred knows from the

02:52:40.780 --> 02:52:43.770
owner's perspective that it's a failure. The

02:52:43.770 --> 02:52:45.510
guardrails that are in place are not actually

02:52:45.510 --> 02:52:47.350
in place. Now, granted, there are some teams

02:52:47.350 --> 02:52:50.770
that treat that $244 million as, like, we will

02:52:50.770 --> 02:52:53.590
not go over this no matter what. I think of last

02:52:53.590 --> 02:52:57.389
year with the Rangers barely going over and still

02:52:57.389 --> 02:52:59.229
really not doing anything in October, right?

02:52:59.290 --> 02:53:01.770
You look at teams right now that are projected

02:53:01.770 --> 02:53:04.629
for their competitive balance 40 -man tax payroll

02:53:04.629 --> 02:53:07.510
right now. In the AL East, the Yankees, the Blue

02:53:07.510 --> 02:53:10.280
Jays, and the Red Sox are going to go over. The

02:53:10.280 --> 02:53:12.860
Tigers are treating that $244 million as like

02:53:12.860 --> 02:53:15.920
the line. They do not want to go over $244 million.

02:53:16.159 --> 02:53:19.180
The Astros don't want to go over $244 million.

02:53:19.399 --> 02:53:22.280
The Padres are above it right now. I wonder if

02:53:22.280 --> 02:53:23.540
they're going to be able to bring that down.

02:53:24.219 --> 02:53:28.299
The Giants are just below $244 million. The Cubs

02:53:28.299 --> 02:53:31.959
are just above $244 million. So for all the mortal

02:53:31.959 --> 02:53:34.700
teams, they treat it pretty strong. But then

02:53:34.700 --> 02:53:36.780
there are teams, the Mets, the Phillies, the

02:53:36.780 --> 02:53:39.059
Yankees, the Blue Jays, and, of course, the Dodgers.

02:53:39.549 --> 02:53:41.649
that are saying, to heck with it, we can spend

02:53:41.649 --> 02:53:43.750
whatever we want. And you mentioned with the

02:53:43.750 --> 02:53:46.030
escalating payments, a lot of teams will go over

02:53:46.030 --> 02:53:48.690
it for a couple years and then try to come back

02:53:48.690 --> 02:53:53.430
down. I remember, I think it was the Cubs a couple

02:53:53.430 --> 02:53:55.930
years ago were doing one of those years where

02:53:55.930 --> 02:53:59.030
they wanted to just be under. And after the season

02:53:59.030 --> 02:54:01.329
ended, they realized an accounting mistake and

02:54:01.329 --> 02:54:04.430
were over by like $5 ,000. It was hilarious.

02:54:04.610 --> 02:54:07.559
So therefore, the penalties did not reset. But

02:54:07.559 --> 02:54:10.459
you mentioned the tax bill. Where does this money

02:54:10.459 --> 02:54:13.100
go? So the Dodgers tax bill last year was about

02:54:13.100 --> 02:54:18.540
$170 million. Where that goes is the first $3

02:54:18.540 --> 02:54:21.899
million of all the collected tax bills across

02:54:21.899 --> 02:54:27.159
the league, which last year added up to around

02:54:27.159 --> 02:54:32.760
$300 million. The first $3 million goes to the

02:54:32.760 --> 02:54:37.110
players' pensions and retirement funds. Then

02:54:37.110 --> 02:54:41.129
the remainder of that is split 50 -50. 50 of

02:54:41.129 --> 02:54:44.569
it goes to the league, which you've mentioned

02:54:44.569 --> 02:54:47.129
revenue sharing. It's not like a strict revenue

02:54:47.129 --> 02:54:50.690
sharing. It's this money goes to the league and

02:54:50.690 --> 02:54:52.829
the commissioner's office gets to distribute

02:54:52.829 --> 02:54:56.950
it to teams, however they see fit. They say it's

02:54:56.950 --> 02:55:00.209
for teams that have shown a willingness to spend.

02:55:00.729 --> 02:55:03.030
while still being small market, gets the priority

02:55:03.030 --> 02:55:05.329
of the money. But we really don't know exactly

02:55:05.329 --> 02:55:08.709
how it spread out. But the other 50 % goes to

02:55:08.709 --> 02:55:11.590
the players' pension plans and retirement plans,

02:55:11.809 --> 02:55:15.090
and so is additional compensation. I find a lot

02:55:15.090 --> 02:55:19.969
of analysis of if the salary cap, the owner's

02:55:19.969 --> 02:55:22.530
proposal was put in place with a 50 % guaranteed

02:55:22.530 --> 02:55:26.909
share, what that means for the players. Would

02:55:26.909 --> 02:55:30.420
they make more money or less money? a lot of

02:55:30.420 --> 02:55:33.780
things people omit when they make these analysis,

02:55:33.979 --> 02:55:37.420
when they break down the numbers is first, a

02:55:37.420 --> 02:55:39.260
lot of them omit benefits. Like you should be

02:55:39.260 --> 02:55:43.219
using tax payroll, not the regular payroll. There's

02:55:43.219 --> 02:55:45.319
like four different payroll numbers. I think

02:55:45.319 --> 02:55:48.379
when we go into details of these negotiations,

02:55:48.600 --> 02:55:50.659
I could break down what each one means, but you

02:55:50.659 --> 02:55:52.600
should be using the luxury tax payrolls, which

02:55:52.600 --> 02:55:54.750
a lot of people don't do. A lot of people don't

02:55:54.750 --> 02:55:56.829
include playoff shares that we talked about before.

02:55:56.950 --> 02:55:59.190
They don't include the money from the All -Star

02:55:59.190 --> 02:56:01.350
game that goes to the players, but especially

02:56:01.350 --> 02:56:04.090
they don't include the luxury tax bill. If we

02:56:04.090 --> 02:56:06.850
assume if a cap and floor would be put in place

02:56:06.850 --> 02:56:09.969
and a hard cap, these luxury tax bills where

02:56:09.969 --> 02:56:13.530
almost 50 or just over 50 percent, three million

02:56:13.530 --> 02:56:16.290
dollars of, you know, initial and then the 50

02:56:16.290 --> 02:56:18.370
percent of the remainder goes to the players

02:56:18.370 --> 02:56:22.010
currently, that would also go away. So that's

02:56:22.010 --> 02:56:25.270
one thing to consider when we're going to these

02:56:25.270 --> 02:56:28.790
discussions of a cap and floor and how the compensation

02:56:28.790 --> 02:56:31.610
to the players would change. And part of that

02:56:31.610 --> 02:56:35.129
revenue sharing is the proposal from baseball,

02:56:35.270 --> 02:56:37.209
and this could change between now and December

02:56:37.209 --> 02:56:41.829
2nd, but that they've offered, in theory, so

02:56:41.829 --> 02:56:46.010
we believe, a 50 -50 split of revenue, which

02:56:46.010 --> 02:56:49.309
would be game -changing for baseball. What is

02:56:49.309 --> 02:56:51.909
revenue, though? Exactly. Well, this would include

02:56:51.909 --> 02:56:56.350
all baseball revenue. That includes media revenue.

02:56:56.569 --> 02:57:00.209
That includes gate revenue. That includes parking

02:57:00.209 --> 02:57:02.250
revenue. Right now, like we've talked about,

02:57:02.370 --> 02:57:04.250
all these teams are trying to find their own

02:57:04.250 --> 02:57:08.090
advantages to not have to pay as much into revenue

02:57:08.090 --> 02:57:10.829
sharing. Parking gets shared. Gate gets shared.

02:57:11.450 --> 02:57:13.430
Concessions gets shared. Merchandise gets shared.

02:57:13.549 --> 02:57:16.709
But media... does not get shared, which is why

02:57:16.709 --> 02:57:19.030
the Dodgers have this behemoth that they have.

02:57:19.290 --> 02:57:22.489
A reminder, as we move closer and closer to the

02:57:22.489 --> 02:57:26.950
end of this episode, that in this upcoming negotiation,

02:57:27.450 --> 02:57:32.770
you need 23 owners to say yes. If you have 22

02:57:32.770 --> 02:57:35.989
owners say yes, you do not have an agreement.

02:57:36.149 --> 02:57:39.290
They need a three -quarters majority in order

02:57:39.290 --> 02:57:41.930
to move forward. So if you're going to get eight

02:57:41.930 --> 02:57:46.010
naysayers, could it be? The Dodgers, the Yankees,

02:57:46.030 --> 02:57:49.790
the Red Sox, the Blue Jays, the Braves, the Giants,

02:57:49.829 --> 02:57:53.610
the Padres, the big market teams. Could you get

02:57:53.610 --> 02:57:56.649
eight no's out of that in this 50 -50 split of

02:57:56.649 --> 02:57:59.190
revenue sharing? Because one of these advantages

02:57:59.190 --> 02:58:02.010
for the Dodgers and the Yankees and the Red Sox

02:58:02.010 --> 02:58:04.110
and that and even the Cubs to a certain extent

02:58:04.110 --> 02:58:07.569
is that they don't have to share all of their

02:58:07.569 --> 02:58:09.489
net local revenues, including the media rights

02:58:09.489 --> 02:58:12.500
on that front. However... When you're making

02:58:12.500 --> 02:58:16.340
nearly $13 billion in a year revenue, that is

02:58:16.340 --> 02:58:18.719
not profit when you're making nearly 13 billion

02:58:18.719 --> 02:58:21.139
in revenues. And if in theory that continues

02:58:21.139 --> 02:58:23.200
to increase and it will definitely, I will say

02:58:23.200 --> 02:58:26.799
this, it will definitely increase revenues. If

02:58:26.799 --> 02:58:29.799
there's a salary cap, which means players could

02:58:29.799 --> 02:58:32.120
get a bigger share than what they currently get

02:58:32.120 --> 02:58:34.319
right now. And some people think like, well,

02:58:34.420 --> 02:58:35.879
wait a minute, Donald, how would that actually

02:58:35.879 --> 02:58:39.479
work? Well, more revenue gets to be kept in the

02:58:39.479 --> 02:58:42.329
pockets of the players. even though their contracts

02:58:42.329 --> 02:58:45.549
are thus lowered by, well, we've got to be under

02:58:45.549 --> 02:58:48.389
$245 million, whatever the number may be, because

02:58:48.389 --> 02:58:50.909
the revenue sharing then guarantees the players

02:58:50.909 --> 02:58:54.149
to get 50 % of the revenue generated. They will

02:58:54.149 --> 02:58:56.729
hopefully continue to grow, unlike the NBA this

02:58:56.729 --> 02:58:58.569
last year where they had some players have to

02:58:58.569 --> 02:59:00.649
give checks back in escrow because they did not

02:59:00.649 --> 02:59:02.649
beat the revenue number, and that's where the

02:59:02.649 --> 02:59:04.790
players come in and say, see, it doesn't work

02:59:04.790 --> 02:59:07.250
in other leagues. It does not work to have a

02:59:07.250 --> 02:59:10.370
cap because... Revenue fluctuates year over year.

02:59:10.530 --> 02:59:13.149
You cannot guarantee us to make money and to

02:59:13.149 --> 02:59:15.250
make that every single season, which is a fair

02:59:15.250 --> 02:59:18.149
argument to be said. Revenue sharing and making

02:59:18.149 --> 02:59:19.969
it a little bit more transparent, especially

02:59:19.969 --> 02:59:22.629
when it comes to the luxury tax payments and

02:59:22.629 --> 02:59:25.709
when it comes to these small market teams. David

02:59:25.709 --> 02:59:27.370
Sampson's talked about this plenty on Nothing

02:59:27.370 --> 02:59:30.250
Personal, on his personal podcast, where when

02:59:30.250 --> 02:59:32.280
he was with the Marlins. You get that revenue

02:59:32.280 --> 02:59:34.600
-sharing check, and they say you have to use

02:59:34.600 --> 02:59:37.079
this to improve your team. You can make up whatever

02:59:37.079 --> 02:59:40.000
you wanted in order to say, well, this helped

02:59:40.000 --> 02:59:41.959
improve my team. I paid for a new weight room.

02:59:42.040 --> 02:59:44.280
That helped improve my team. And, oh, I paid

02:59:44.280 --> 02:59:47.420
for a new hotel down the road, or I paid for

02:59:47.420 --> 02:59:50.340
a new clubhouse on my minor league team. That

02:59:50.340 --> 02:59:52.559
improved my team. Whereas the vision of it was

02:59:52.559 --> 02:59:55.700
to pay players, not pay for the ancillary stuff,

02:59:55.760 --> 02:59:57.739
but the owners found the loophole, and I give

02:59:57.739 --> 02:59:59.959
them credit. Could that change in the future?

03:00:00.120 --> 03:00:02.590
Potentially. But revenue sharing and luxury tax

03:00:02.590 --> 03:00:06.510
is going to be the most contentious part of this

03:00:06.510 --> 03:00:08.409
coming negotiation. We just wanted to lay out

03:00:08.409 --> 03:00:10.930
how it works in the current form of where it

03:00:10.930 --> 03:00:13.590
is broken. I agree with Rob Manfred. It is broken

03:00:13.590 --> 03:00:15.729
that you have multiple teams just blowing past

03:00:15.729 --> 03:00:18.010
the guardrails with no big deal. And that money

03:00:18.010 --> 03:00:19.790
that gets pulled and distributed out to the smaller

03:00:19.790 --> 03:00:21.950
teams, they can do whatever they want with it,

03:00:21.989 --> 03:00:23.870
even though it's supposed to be going to help

03:00:23.870 --> 03:00:27.270
improve their teams. Yeah, we'll probably talk

03:00:27.270 --> 03:00:30.510
the Dodgers a lot more because I think the reason

03:00:30.510 --> 03:00:32.829
the owners are in such a good push right now

03:00:32.829 --> 03:00:36.110
is the Dodgers are running their team incredibly

03:00:36.110 --> 03:00:38.450
well. It's not even the fact that they're spending

03:00:38.450 --> 03:00:40.149
the most money. You mentioned the Mets. The Mets

03:00:40.149 --> 03:00:43.010
are spending nearly as much but are not having

03:00:43.010 --> 03:00:45.790
the on -field success. The Dodgers, even though

03:00:45.790 --> 03:00:47.250
they're having these luxury tax penalties and

03:00:47.250 --> 03:00:49.709
having their draft picks bumped out back and

03:00:49.709 --> 03:00:53.260
their international... bonus pool being decreased

03:00:53.260 --> 03:00:56.100
guess what their minor league system ranking

03:00:56.100 --> 03:00:59.440
is right now according to experts number two

03:00:59.440 --> 03:01:02.600
number two only behind the brewers i gotta gotta

03:01:02.600 --> 03:01:05.540
give props for that but a team that's constantly

03:01:05.540 --> 03:01:08.280
been drafting not even having a draft pick in

03:01:08.280 --> 03:01:11.680
the first round or first 30 picks for years now

03:01:11.680 --> 03:01:14.719
and has the least amount in signing bonus money

03:01:14.719 --> 03:01:18.299
and the least amount in amateur bonus money still

03:01:18.299 --> 03:01:22.059
having the number two system means When you're

03:01:22.059 --> 03:01:23.799
talking about the Marlins, oh, we put in a weight

03:01:23.799 --> 03:01:25.899
room. The Dodgers are going, oh, we put in an

03:01:25.899 --> 03:01:28.739
international academy. Oh, we put in this new

03:01:28.739 --> 03:01:31.440
state of the art biometric system. We put in

03:01:31.440 --> 03:01:36.180
all these things. So every 16 to 22 year old

03:01:36.180 --> 03:01:37.940
that we get in the draft or internationally,

03:01:38.100 --> 03:01:41.299
we're giving them the best facilities. We're

03:01:41.299 --> 03:01:45.030
giving them the best meals. nutritionists, everything

03:01:45.030 --> 03:01:47.750
to develop into the best player they possibly

03:01:47.750 --> 03:01:50.170
can be. And I think that's something we'll find

03:01:50.170 --> 03:01:53.209
out when we go into kind of go into details of

03:01:53.209 --> 03:01:56.370
successful teams versus not successful teams

03:01:56.370 --> 03:02:00.569
of teams like the Rockies and the Marlins are

03:02:00.569 --> 03:02:03.370
notorious. And the angels are notorious for not

03:02:03.370 --> 03:02:06.329
spending money in those areas. So the Dodgers

03:02:06.329 --> 03:02:07.750
with all the money that they have, they spend

03:02:07.750 --> 03:02:10.610
the money in all the areas that matter. They.

03:02:11.579 --> 03:02:14.520
are able to not only buy the best players, but

03:02:14.520 --> 03:02:16.819
also have the best scouts, have the best front

03:02:16.819 --> 03:02:19.979
office guys. It's almost unfair. And the question

03:02:19.979 --> 03:02:23.899
is, if you're that well run, is a salary cap

03:02:23.899 --> 03:02:27.479
going to stop them? So I don't even know. I don't

03:02:27.479 --> 03:02:30.260
even know. I think they're going to be a powerhouse

03:02:30.260 --> 03:02:32.840
no matter what system is put in place. And that's

03:02:32.840 --> 03:02:34.680
something to negotiate in the final episode of

03:02:34.680 --> 03:02:37.500
this podcast. But we just wanted to, again, lay

03:02:37.500 --> 03:02:39.620
out how everything currently works, because you're

03:02:39.620 --> 03:02:41.219
going to hear everything we talked about in this

03:02:41.219 --> 03:02:43.760
episode in the last couple of episodes of this,

03:02:43.860 --> 03:02:46.239
because we see a lot of misinformation out there

03:02:46.239 --> 03:02:48.659
in the world right now about what people do and

03:02:48.659 --> 03:02:51.719
don't understand about the revenue and how the

03:02:51.719 --> 03:02:53.959
business itself works for everybody involved.

03:02:54.719 --> 03:02:56.680
Literally every single thing we talked about

03:02:56.680 --> 03:02:59.120
in this episode will come up again. So this is

03:02:59.120 --> 03:03:01.440
how it is. right now. And we'll talk about how

03:03:01.440 --> 03:03:04.659
it could change in the future. That's another

03:03:04.659 --> 03:03:07.260
long episode. I mean, as usual, you should know

03:03:07.260 --> 03:03:08.719
by now, this is fourth episode. We know they're

03:03:08.719 --> 03:03:10.819
all pretty long right now, but the support's

03:03:10.819 --> 03:03:12.979
been tremendous, Scott. I know you felt it. I've

03:03:12.979 --> 03:03:14.879
certainly felt it. And we thank everybody that's

03:03:14.879 --> 03:03:18.180
been enjoying these podcasts. And I think everything

03:03:18.180 --> 03:03:20.540
is starting to really come together and finding

03:03:20.540 --> 03:03:22.200
our niche and finding our audience of people

03:03:22.200 --> 03:03:24.979
trying to learn what baseball has been going

03:03:24.979 --> 03:03:29.409
through throughout its history with labor. Yeah,

03:03:29.409 --> 03:03:32.690
I'm really again, this is this has been an awesome

03:03:32.690 --> 03:03:35.149
experience for us being able to work with you

03:03:35.149 --> 03:03:37.670
on this and as well as doing the research. And

03:03:37.670 --> 03:03:40.930
then it's furthering my understanding of the

03:03:40.930 --> 03:03:43.870
business and the sport of baseball, because no

03:03:43.870 --> 03:03:45.850
matter how big of a fan or researcher you are,

03:03:45.930 --> 03:03:47.469
there's still going to be gaps in your knowledge.

03:03:47.489 --> 03:03:51.350
And this has done a great job in informing me

03:03:51.350 --> 03:03:54.690
in the research on the things that I did not

03:03:54.690 --> 03:03:57.000
know about the sport coming into it. And our

03:03:57.000 --> 03:04:01.739
next episode next month in August, we'll go back

03:04:01.739 --> 03:04:04.389
in time again. We're now going into our decades

03:04:04.389 --> 03:04:07.030
moving forward. So we've level set everything.

03:04:07.149 --> 03:04:08.590
We've introduced you to the player association.

03:04:08.690 --> 03:04:10.409
We've introduced you to the owners. We've introduced

03:04:10.409 --> 03:04:12.190
you to commissioners. And now we've introduced

03:04:12.190 --> 03:04:14.149
you to the business. So now we're going to go

03:04:14.149 --> 03:04:16.450
back and work our way forward. We're going to

03:04:16.450 --> 03:04:19.030
start with the advent of free agency in 1976

03:04:19.030 --> 03:04:22.649
through the split season of 1981 and the chaos

03:04:22.649 --> 03:04:25.229
that the 80s featured into the collusion era

03:04:25.229 --> 03:04:28.389
and scandals that that featured in our next episode.

03:04:28.670 --> 03:04:32.139
Then the 90s, revisiting the strike. the home

03:04:32.139 --> 03:04:35.959
run race, the ballpark boom, then the early 2000s,

03:04:35.959 --> 03:04:41.879
and then the modern game into December 2nd, 2026,

03:04:42.020 --> 03:04:45.620
when the presumed lockout begins for Major League

03:04:45.620 --> 03:04:48.559
Baseball. So four episodes down, five to go.

03:04:49.440 --> 03:04:51.520
I think we're really starting to hit our stride.

03:04:51.520 --> 03:04:53.260
So thank you, as always, Scott, for everything

03:04:53.260 --> 03:04:55.420
you've done on this pod and all the research

03:04:55.420 --> 03:04:57.920
you've done. Reminder, subscribe to the Substack.

03:04:58.219 --> 03:05:00.420
You can follow us on social media as well. It's

03:05:00.420 --> 03:05:03.340
all in the show notes. So go ahead and drop a

03:05:03.340 --> 03:05:05.860
like, subscribe, rate, review. I hope you enjoy

03:05:05.860 --> 03:05:07.579
it because we're starting to gain some traction.

03:05:07.719 --> 03:05:09.959
And I really hope you all had some fun listening

03:05:09.959 --> 03:05:12.959
to this episode. For my co -host, Scott Sweeney,

03:05:12.979 --> 03:05:15.540
I'm Dominic Cotronio. We'll talk to you in a

03:05:15.540 --> 03:05:17.620
month. And until next time, keep on swinging.