New CBA approved including possible revenue sharing rollbacks for A’s

MLB and MLBPA burned the midnight oil the last couple of days to get a CBA approved before tonight’s midnight deadline. Though the talk did not include the same kinds of contentious items other leagues normally argue over (salary cap, players’ percentage of revenue), the sides still worked hard to avoid any kind of work stoppage. As of this post, both sides are touting a tentative agreement with much of the fine print to be worked out over the coming weeks. Like the last CBA, the new one will run for five years through the 2021 season. Major items that were up for grabs, such as the international draft and 26-man rosters were left by the wayside in order to get the deal done. What did apparently get through was a tweaking – if not an overhaul – of baseball’s revenue sharing system.

That news got started by Jeff Passan:

And was built upon by Ken Rosenthal:

Okay, let’s start with the Rosenthal scoop. As a way to “motivate” the A’s to build a new ballpark, they will be phased out of revenue sharing. This was the plan under the last agreement too, except that the A’s were given an exemption as long as they continued to play at the Coliseum. Since that didn’t net a change in the A’s venue, the owners (with the union’s help?) may have decided to light a fire under A’s ownership to build that. Nevermind that the A’s would already be in a new home in San Jose if MLB actually supported the A’s plans in 2012, that’s water under the bridge. Now John Fisher has the reins of the efforts to build in Oakland. And by phasing out the A’s revenue sharing check over the life of the CBA, the A’s won’t realize up to $90 million over the five years. That’s just as well for many A’s fans and rival owners who believe ownership has been pocketing those checks for years. The A’s weren’t spending it on payroll anyway.

disqual

As you can see from the table above, the previous CBA called for revenue sharing to be phased out for all of the Top 15 “Big Market” teams. The A’s are in a big market, but they are a relatively low-revenue franchise thanks to the dilapidated Coliseum. MLB carried over the last agreement while it also more-or-less imposed a deadline to complete the ballpark of 2021 or 2022. There’s always another side to the story, which makes me wonder what MLB will offer to the A’s to make the stadium project worth Fisher’s while. After all, if Fisher’s going to take all the risk while not getting monetary help from either MLB or the City of Oakland, what’s in it for him? The A’s aren’t guaranteed to get a

Rob Manfred called for the A’s to be more proactive in the stadium pursuit. The recent ownership change and other moves indicate that the A’s are serious. Still, the Raiders are the biggest obstacle to getting the Coliseum site as well as a competitor for scarce infrastructural funding should both teams get Oakland projects going. MLB’s pitch to Fisher may be “Once the Raiders and Warriors leave you’ll have the East Bay all to yourself. We’ll throw our weight behind your plans when that happens.” Will MLB provide funding to the A’s to get through lean years? Will Manfred finally play the heavy when it comes time to negotiate with the City?

Now about that performance factor. Performance factor is a key feature of the revenue sharing scheme. There are two parts of the scheme, the 34% straight pool Base Plan and the (14%) Supplemental Plan.  The Base Pool plan is simple: every team contributes 34% of their local revenue after deductions regardless of how little/much that is. All teams above the average (mean) amount lose the difference between the mean and their contribution. Those below the fold receive the difference between their respective contributions and the mean.The Supplemental Plan takes the aggregate of 14% of local revenue for all teams, pulls from the Top 15 teams based on each team’s Performance Factor and sends that to the Bottom 15 based on their PF’s. It’s unclear whether MLB got rid of the Supplemental Pool altogether or calibrated revenue sharing by folding the Supplemental Plan into the Base Plan. That would make the whole plan a 48% straight pool Base Plan, one that would penalize rich teams for being rich less than before. Elements of the new plan may be released in the coming days. Eventually we’ll know what it is and what the A’s have to deal with.

A’s brass were hoping revenue sharing would stay intact, but the writing’s on the wall. The business model should stay intact, in that they plan their payroll limits and roster makeup based on regularly-sourced revenue (stadium, TV/radio, streaming) not including the revenue sharing receipt, which is received in December after the usual rash of free agent signings. I always figured that if the A’s needed that last piece for a championship roster, they’d dig into that receipt. Now Fisher will have to make a cash call to himself. The dynamic of trying to field a more competitive team to hopefully help sell a new ballpark vs. the need to save pennies for the ballpark by reducing costs is plenty fascinating on its own. Which way Fisher will turn will show us what his priorities are.

19 thoughts on “New CBA approved including possible revenue sharing rollbacks for A’s

  1. I know a new ballpark will create a lot more revenue for the A’s, but it’s hard to imagine they will make up the revenue sharing offset, plus the added revenue they need to operate on a competitive level, all while they are paying for that new ballpark.

    I guess the other MLB owner knew something we didn’t, maybe an A’s new ballpark pencils out a lot better then some of our resident commenters believed, or perhaps MLB plan’s on helping the A’s in another way

    Well, I guess we will finally see the the A’s aggressively market themselves in a way they haven’t done before, they certainly needed Wolff to step down for that to happen.

  2. revenue sharing basically ends after four years? can the a’s and the city of oakland work out a deal that ends in a baseball park being built by the start of the 2020 or 2021 season at the very latest?

    if you look at the two most recent big stadium sports venue projects here in northern california with levis stadium in santa clara and the golden 1 center in sacramento, sorry not going to include the earthquakes’ avaya stadium down in sj.

    levi’s campaigning began in late 2009-early 2010 with the ballot measure passing in june of 2010. construction started in april of 2012 and the stadium opened in aug of 2014.

    golden 1 in sacramento? really things started with the new ownership in the summer/fall of 2013. the sacramento city council approved funding of the project in may of 2014 . the arena broken ground in oct of 2014 and opened in oct of 2016.

    beginning to end it took 3.5 to 4 years for each venue to get built?

    so what would have to happen for the a’s? if you say kaval taking over the team president as the first step in this whole journey. whats next? get something finalized and announced late 2017/early 2018 and construction to take place summer/fall of 2018 for a 2020 opening day to happen at the earliest? for a 2021 opening day construction would start at the earliest late 2018/early 2019.

    • Why not include Avaya?

      • avaya i believe took 5 or 6 years? far too long of a timetable for the a’s wanting to duplicate.

      • More – I believe nearly eight years, from the time it was brought to SJ City Council to opening day. However, Wolff sat on the project for a year or two because a naming rights sponsor couldn’t be found. Also, they ran into construction hurdles that they didn’t anticipate beforehand (underground bunkers).

      • Because it’s not major league? (I was going to say “because soccer just plain sucks” but stopped myself).

  3. So what happens if revenue-sharing goes, there’s still no new ballpark and A’s revenues remain low, low, low? They will be fielding a minor league team out there. Yes, that will be good for MLB. MLB does realize the A’s are being offered $0.00 in public funds, right? MLB could find itself the owners of the A’s before too long when the existing owners don’t want to keep losing money and prospective owners take a look at the books sans revenue-sharing.

    • I don’t think it is true to say “The A’s are being offered $0.00 in public funds.” We don’t know what specifically has been discussed, but generally we do know that Mayor Libby (and Mayor Quan before that) is on board with infrastructure funding. That $200M for the Raiders? It could just as easily be $200M for an A’s Downtown Disney like Coliseum City (which is to say a seriously scaled back version of Colsieum City).

      • The A’s are looking at financing a $500-$600 million ballpark with no public money for construction in a city where a lot of the sponsorship and suite leasing opportunities have already been taken up by the Giants and 49ers. The issues remain the same. Wolff tried to get a stadium in Oakland and got nowhere, went to Fremont and that got killed and then went to San Jose and MLB killed that. What has magically changed that is going to make a privately financed ballpark suddenly viable in Oakland, particularly if Oakland somehow manages to keep the Raiders (who also want the same best site for a stadium and who would also compete with the A’s for sponsorship and suite leasing opportunities). And with no revenue-sharing to boot. Remember Mark Davis’s map of where all the corporate HQs were in the Bay Area? Lots and lots in the South Bay, a few in Frisco and one or two in Oakland…FWIW, the whole thing could come down to how the NFL votes on Raiders-to-Vegas. If that gets approved, the A’s might be able to get it done in Oakland.

      • would the size of the stadium be a huge factor in all of this. i do remember the a’s park plans down in fremont and san jose the reported capacity size initially was 32k which would’ve made it the smallest park in mlb. then you had some speculate that mlb wanted the a’s to increase the size to around 35k-36k?

        smaller size park means less expensive. wonder if that could play a role in the a’s design of a park especially if it’s at howard terminal or even lane to lesson the overall cost of the project?

        i definitely could see the a’s going for a two deck park like pit has with pnc which would be a lot cheaper to build than the normal 3 deck baseball park.

        if they were to build at the coliseum site they could build any size park they may want which is something that maybe isn’t viable at the smaller and or more expensive sites to build at in howard terminal and laney.

        honestly i don’t think the a’s want to build a large park regardless of where the park hopefully is eventually built at. even if it’s build at the coliseum location i don’t see it being any larger than 38k-40k.

    • “They will be fielding a minor league team out there.”

      Will be? Heck, they already are. For the last few years, they’ve essentially been trading away their Major League level talent for minor league talent.

      Yes, that’s part of the normal rebuild cycle that most MLB teams go through (save for the Giants, Dodgers, Yankees, etc). However, with the A’s, the cycle is taken to extremes. Essentially, fans only get to enjoy a player being a good MLB talent for a season or two (seasons prior typically were unproductive and they bounced between AAA and Majors). Then Boom! Gone for prospects. Basically, as soon as they approach their Arbitration years, they’re probably on their way out.

      Regardless of stadium or not, Beane/Forst/Fisher need to tone this down a bit. Once in a while they need to truly pony up to keep a top player. They can’t do all, due to revenue constraints. But they can afford to keep one or two top players when they get close to arb years or end of contract. But like with Reddick, they only want to offer below market value, shorter term contracts, because they’re so risk adverse (Thanks to the Eric Chavez situation of the mid 2000’s)

      But if they want anyone to actually give a damn about their product, the A’s need to start opening the purse strings a bit, and take some long term risks. And they can afford the risk – John Fisher is the 3rd (or 4th) wealthiest owner in MLB.

      Otherwise, they are nothing more than a AAA team.

      And we all know that the A’s have been mostly pocketing the revenue sharing checks, and even often spending less than their “half of regular revenue to be solvent” amount.

      This extreme cheapness is getting really really old.

      • re: Then Boom! Gone for prospects The A’s payroll is in line with revenues, which are always low. Take away revenue-sharing and it’s going to get even lower. I know some people expect the owners to dig into their own personal fortunes and pay for topnotch free agents – if they can find some willing to play at the Coliseum – but how long could the A’s go on as an owner-subsidized money-losing operation?

  4. Oakland is booming more than ever, in fact more and more corporations are moving there due to the lack of office space in SF and SJ.

    Now, if the A’s build privately at the Coliseum (most logical) they will not revenue sharing at all. Here is the math on this:

    Naming rights: 160M over 20 years, SunTrust paid excess of 10M per year in Atlanta. The A’s can get 8M per year and that is a fair assessment considering how many corporations there are in the Bay Area.

    http://www.sportsbusinessdaily.com/Daily/Issues/2014/09/17/Facilities/Braves.aspx

    Revenue Uplift from new stadium- 2016 Revenue: 208M (Forbes), 41.6M uptick or 19% increase

    According to document below on page 14, the average uptick on revenue in a new MLB stadium is 19% from 2009. The The Marlins and Twins got 32% and 31% upticks while the Yankees and Nats got 18% and 20%. We will go with the average for the A’s which is 19%.

    I am willing to bet it will be closer to 30% in this market and how awful the Coliseum is, similar to the Marlins and Twins and their former stadiums being shared with an NFL team.

    http://www.valuewalk.com/wp-content/uploads/2016/07/BATRA-Presentation-2016.06-Final.pdf

    Corporate Suite and Sponsorship Sales: 150M

    Suites at AT&T Park go for 3k-8k, let’s assume the A’s go for 2k-5k on the average to be fair. ATT has 68 luxury suites, A’s will go with probably 50 or so.

    PSL Sales: 50M total, Giants got 40M in 2000, I am going to be modest on this one. Probably lower and/or middle deck only.

    Total upfront for financing: 160M+150M+40M= 350M

    Oakland Ballpark cost: 460M at the Coliseum (No way it is more expensive than Downtown San Jose in 2009).

    All Fisher has to do is pony up 100M or so in his own cash and this is done.

    With the uptick in revenue it covers the 100M in 2+ years. I am low balling revenue uptick, suite/corporate sales and PSL sales big time.

    If the A’s get 30% revenue uptick that is 62.4M more in revenue per year. They can come off revenue sharing from the 30M per year and still be up 30M in the surplus at least.

    Forget all the other upfront investments from the fans and corporations. Bay Area can easily support two teams in the SF-Oak area. SJ would be more ideal but Oakland is no longer a bum in SF’s shadow as it used to be.

  5. First comment from Fisher should have been:

    “So explain to me again how if we’re in San Jose we somehow block the Giants from making money on San Jose?”

    MLB just said that even though they’re restricted to Alameda and Contra Costa, the A’s have as much opportunity as the Giants to make money from the entire Bay Area. At the same time they’re saying that if the A’s are in San Jose, than the Giants won’t get as much money from San Jose.

    Both statements can’t be true. Following this logic Baltimore should be in the top 15 as well. Distance from Baltimore to DC is the same as Oakland to San Jose.

    • Slacker nailed it- would love to hear manfred/Baer response to that- fewer and fewer folks will be willing to go to either SF or Oakland for games due to traffic issues- in essence the South Bay will become nothing more than a tv market for MLB- good luck to the A’s- they are a distant third to giants and warrior tix at a new SF arena- god forbid and the raiders stay then make it a distant fourth.

      I do believe in karma- A’s building a new ballpark in spitting distance to ATT is horrible business- not only for the A’s but gints and MLB- Larry B first and only focus was to get A’s out of Bay Area- failing that he should have supported a move to SJ in a New York minute- he put all his eggs in one basket and he failed- now he has to live with the consequences- karma

    • still laughable that the bay area is the ONLY two market team that has stupid territorial rights.

  6. If the A’s do ultimately build their new ballpark in the much smaller(population and area) East Bay territory, then MLB will have to make some form of compensation offer to the A’s. In no way would the A’s take the significantly added risk of building their new ballpark in a territorial area with less revenue potential without some financial assurances from MLB.

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