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MLB cuts back revenue sharing

Scott Jagow Oct 27, 2006


SCOTT JAGOW: The St. Louis Cardinals could win the World Series tonight. Of course, the Detroit Tigers might have something to say about that. The Tigers have been the Cinderella story this year and some of that is due to baseball’s collective bargaining agreement. The players and teams reached a new five-year deal this week. Business of Sports Commentator Diana Nyad tells us more about it.

DIANA NYAD: The history of it is that when that devastating strike happened in 1994, Major League Baseball made a 10-year campaign to make sure that America’s pastime didn’t fade into the woodwork and I think the biggest thing they did to make sure that all those fans around the country to make sure all those fans around the country didn’t just have the New York Yankees to root for and the Atlanta Braves, they did a deal called revenue sharing and so that every team had to take 48 percent, almost half of their local revenue, and put it into a collective fund. Well the Yankees didn’t like it very much but the Pittsburgh Pirates did, and certainly the Diamondbacks and the Marlins and Angels did and they wound up in the World Series. So the whole country was glad to see some new teams and get your local guys have actually a chance to make it to the big show.

Well this new collective bargaining agreement has gone a step further. They’re going to bump down that 48 percent down now to 31 percent. So a team like the Kansas City Royals , that used to be such a great franchise in this country and has fallen so far behind, now they can take only 31 percent of all that local revenue that they have during the year instead of 48 percent, throw it in the pot and that means they’ve got great incentives to get local revenue up because they’re going to keep a bigger piece of that pie.

JAGOW: Well even with the Detroit Tigers in World Series, you know small market team, underdog, people pulling for it, the TV ratings are horrible.

NYAD: Abysmal. I guess the third game was the lowest-rated World Series game on television in history and to my mind though, all that means Scott, is that the entire country would have rather seen the Subway Series, the Mets-Yankees, or any of the New York teams go against one of these guys so we’d have a David-Goliath kind of Series. But if you look at the regular season still, the rest of the country is feeling like ‘my guys could make it.’ So the Tigers once they get to the World Series, you know maybe that interest falls off as a national interest.

JAGOW: And still, two thirds I read, of Major League franchises are losing money.

NYAD: I think that most analysts in the world of baseball say that all of that comes down to local television rights. I mean, the Yankees is the most egregious example. George Steinbrenner owns the YES network so they take 100 percent of the profit of local TV. And when you get down to Kansas City and Tampa Bay and Pittsburgh, you know those other cities struggle with just a tiny percent, all they sell is really the rights and that’s all the money they have coming in so that’s really the disparity.

JAGOW: Alright Diana thanks a lot.

NYAD: Scott, see ya next time

JAGOW: Diana Nyad is our Business of Sports commentator. In Los Angeles, I’m Scott Jagow. Have a great weekend.

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