John Henry's Competitive Balance Ideas
TheVon
Posts: 2,725 ✭
in Sports Talk
Linky Dinky
He's got some interesting ideas, IMO, in response to Boras' assertion that teams aren't spending their revenue sharing money on payrolls. I know that this topic has been discussed quite a bit on here, but I think Henry has a pretty good sense for what it would actually take to get owners and players to agree to make real changes that everyone could accept.
A couple quotes from the article to note:
"Change is needed and that is reflected by the fact that over a billion dollars have been paid to seven chronically uncompetitive teams, five of whom have had baseball’s highest operating profits," Henry responded in an e-mail. "Who, except these teams, can think this is a good idea?"
"While the Red Sox are in the 16th largest media market we’ve found a way to be very competitive even though we are funding other teams. At the end of the day, the small market clubs still cannot begin to compete with the Yankees and have a very hard time competing with the teams that are struggling to pay them so much. Consequently, a system that directly impacts competition has to replace the current system, that hoped to, but ultimately did not cure competitive imbalances."
Henry wrote that baseball "needs slotting for amateurs, a worldwide amateur draft and most importantly, an effective competitive balance tax that directly addresses disparity once and for all for baseball."
"It’s a very simple approach in which payroll tax dollars replace revenue sharing dollars and go directly to the clubs that need revenues in order to meet minimum payrolls that should be imposed on each club receiving revenue. Further, players would have to be protected with a guaranteed minimum percentage of overall revenues. This would be a very simple and effective method in reducing top payrolls and increasing bottom payrolls with no tax on revenues," Henry wrote.
"Baseball has determined that the best way to deal with the Yankees is to take as much of their revenue as possible. I see that in direct opposition to the ideals this country was built on. Baseball is a business and should be treated as such. Baseball is also a sport that needs competitive balance in order to prosper. Taxing their revenues and other “large markets” in the way it is presently done, is simply confiscation on an order of magnitude never seen in any industry in America," Henry said.
He's got some interesting ideas, IMO, in response to Boras' assertion that teams aren't spending their revenue sharing money on payrolls. I know that this topic has been discussed quite a bit on here, but I think Henry has a pretty good sense for what it would actually take to get owners and players to agree to make real changes that everyone could accept.
A couple quotes from the article to note:
"Change is needed and that is reflected by the fact that over a billion dollars have been paid to seven chronically uncompetitive teams, five of whom have had baseball’s highest operating profits," Henry responded in an e-mail. "Who, except these teams, can think this is a good idea?"
"While the Red Sox are in the 16th largest media market we’ve found a way to be very competitive even though we are funding other teams. At the end of the day, the small market clubs still cannot begin to compete with the Yankees and have a very hard time competing with the teams that are struggling to pay them so much. Consequently, a system that directly impacts competition has to replace the current system, that hoped to, but ultimately did not cure competitive imbalances."
Henry wrote that baseball "needs slotting for amateurs, a worldwide amateur draft and most importantly, an effective competitive balance tax that directly addresses disparity once and for all for baseball."
"It’s a very simple approach in which payroll tax dollars replace revenue sharing dollars and go directly to the clubs that need revenues in order to meet minimum payrolls that should be imposed on each club receiving revenue. Further, players would have to be protected with a guaranteed minimum percentage of overall revenues. This would be a very simple and effective method in reducing top payrolls and increasing bottom payrolls with no tax on revenues," Henry wrote.
"Baseball has determined that the best way to deal with the Yankees is to take as much of their revenue as possible. I see that in direct opposition to the ideals this country was built on. Baseball is a business and should be treated as such. Baseball is also a sport that needs competitive balance in order to prosper. Taxing their revenues and other “large markets” in the way it is presently done, is simply confiscation on an order of magnitude never seen in any industry in America," Henry said.
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I like him, but the above quote is really his bottom line.
He wants to pay less and keep more.
........
The correct solution is to make owners accept that the ROI
is going to come in out years from the increase in value of
their franchise.
Owners' notions that they have to collect annual returns on
their investments as an entitlement for having "risked" capital
must be abandoned.
The teams with the largest payrolls all understand the concept.
If the "poor" teams don't get it, they should be told to sell their
franchises to owners with deeper pockets.
is going to come in out years from the increase in value of
their franchise.>>>
When you factor in inflation, the value of their franchise doesn't really grow all that much, if at all. There is nothing about a baseball franchise that makes it any more "valuable" 10 years from now than it does today. If anything, it would worth less when you factor in depreciation of the ballpark.
This article is from May 2009...It lists the purchase price at 660M, and a current value of 816M. Factoring in 3% annual inflation from 2002-2009, brings the purchase price in current dollars to almost $800M, meaning Henry has made a whopping 2% profit on his purchase.
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