Major League Baseball teams who have counted on large checks from the league’s revenue sharing system may not be able to count on those payments, at the same level anyway, for much longer.
Revenue Sharing Overhaul Likely in New CBA
The ongoing negotiations for a new collective bargaining agreement (the current CBA expires on Dec. 1) have included a long look at the current structure of revenue sharing. There is a myriad of possibilities of what that system, if it survives, could look like in the new deal.
The Likely Possibilities for the Future of Revenue Sharing
There is a slight possibility that the revenue sharing system could be completely written out of the new CBA, but that’s unlikely to have enough owner support. Too many teams depend on that revenue as part of their annual budgets, and the few teams that pay into the system need opponents.
The figures for revenue sharing are calculated on an annual basis, and that tradition is likely to stay in place. It is possible, however, that the formula for determining that annual figure may change. The threshold for having to pay into the system could drop, requiring more teams to pay in and allowing fewer to receive payments. The current system is more accurately described as a luxury tax than a true revenue-sharing structure.
The most likely changes will center on enforcement and supervision of how revenue sharing funds are spent.
How the Potential New Rules Could Work
The current MLB bylaws regulating revenue sharing already state that funds received can only be used to improve the on-field product and the way those funds are spent has to be detailed for the league to review. What teams that pay into the system are dissatisfied with, despite the language being in place, is the enforcement of the policies governing how the funds can be spent.
In the case of the Oakland Athletics, who despite playing in one of MLB’s largest markets still receive an equally large amount of money in revenue sharing, there is what is perceived as a lack of push toward being more sustainably profitable.
That’s the difference of vision for revenue sharing between the teams that pay in and the teams that receive funds. The teams that pay in see revenue sharing as a structure meant to keep franchises afloat while they work out strategies to get to the point where they no longer need revenue sharing payments to compete.
The teams that receive funding have treated it like revenue from their sponsors that can be counted upon to renew contracts on an annual basis. Going forward, there may be new structures that require teams to submit concrete business plans and marketing strategies to increase revenue in order to receive revenue sharing payments.
The new CBA could be announced very soon, as free agency is slated to begin this week after the conclusion of the World Series. The revenue sharing system could be the part of the contract that gets the most thorough overhaul.
Main Photo:
