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How to boost the Pirates’ revenue, what might be leveling the financial playing field, and is Mike Trout more valuable than your franchise? … Also, who should win Gold Gloves?

SOUTH HILLS COMMAND CENTER – Baseball’s death has been greatly exaggerated. Don’t believe me? Go ask your neighborhood MLB franchise owner.

 

In case you missed it, earlier this week Bloomberg came out with a new report on the value of MLB franchises accompanied with a really great interactive graphic.

 

The average value of a major league franchise has increased 35 percent in nine months!!! according to Bloomberg, in large part because of the $2 billion sale of the Dodgers, but also because of skyrocketing media revenue streams. The average value of a major league franchise is now $1 billion. Ten franchises are valued at at least $1 billion. Russian oil tycoons might even be priced out of this game.

 

So while the Pirates are 22nd in baseball with a “team value” of $500 million and 23rd with a “total value” of $610 million – that includes their stake in MLB Advanced Media – the value of the team has increased 43 percent in one year according to Forbes.

 

Somewhere Bob Nutting is smiling.

 

Of course there are relative competition concerns in the report for the Pirates.

 

While the Pirates have increased in value, the club ranks 20th or lower in team revenue ($185 million – 27th), gate receipts ($39 million – 25th), concessions ($14 million – 20th) and media rights ($56 million – 28th), according to Bloomberg.

 

Gate receipts should increase in 2014.

 

The Pirates finished 19th in attendance in 2013 and president Frank Coonelly is expecting attendance to increase in 2014. The club hopes it approaches 2.5 million, which combined with an increase in ticket prices, could lift the Pirates into the teens in gate receipts.

 

The biggest gap is in media rights.

 

The Pirates’ local cable deal with ROOT is signed through 2019, and according to multiple reports, its value is tied for a low among such deals in baseball. The Pirates claim they are receiving more than $18 million per year in the deal but have not made public the terms of the contract.

 

While the Pirates have missed the initial proliferation and explosion of lucrative regional TV agreements — 13 MLB clubs received revenue from a regional sports networks in 2013 (the Mets received a whopping $1.1 billion in regional cable money in 2013, the Yankees $932 million) – it’s not too late to get in the game later this decade.

 

It would make a ton of sense for the Penguins and Pirates to form a joint regional sports network, which could provide year-round live content. We’ve seen the Penguins’ impressive local NHL cable ratings – best in the sport – and we’ve seen how the Pirates’ ratings broke records this season.

 

While the Pirates are never going to be a major market type revenue producer, they do have untapped revenue potential in local media dollars. The bad news is they’re going to have to wait.

 

MLB ADVANCED MEDIA LEVELING THE PLAYING FIELD? 

 

The other encouraging trend for small-market clubs is the dollars – shared equally by all 30 MLB teams – from the MLB Advanced Media, the internet and interactive branch of the league.

 

MLB Advanced media was founded in 2000. Last year, it reportedly produced $620 million in revenue and its value is worth $110 million to each MLB team.

 

As mobile devices grow as the primary vehicle with which people consume media and advertising, MLB Advanced Media has huge potential. And since its shared equally could it become something like the leveler the national TV deals in the NFL have become? Could it top the value of local TV deals? Maybe not until 2050 or something but it’s something to keep an eye on.

 

HEY, MIKE, WE’LL GIVE YOU OUR TEAM … YOU PAY US! 

 

As good as business has been for owners, it hasn’t been bad for players, either.

 

Some are estimating 1 win above replacement is worth $7 million on the open, free agent market. But even if you go with the accepted $5 million per WAR, that would make Mike Trout‘s value worth $50 million per season if he were a free agent this offseason.

 

 

If Trout kept up this level of performance, or if say Bryce Harper becomes a 10-win player, we are going to be looking at 10-year, $500 million deal contracts before the end of the decade? (Keep in mind WAR/$$$ will inflate along with revenues). Trout will be a free agent entering his Age 27 season.

 

Barry Bonds earned a 7-year, $49 million deal after 1992 in his first free agent deal.

 

Alex Rodriguez earned a 10-year, $225 million deal after the 2000 season

 

Trout will earn a XX-year, $XXX deal after the 2017 season. It’s going to be a record breaker

 

It means a player has the potential to be more valuable than a MLB team. That’s crazy. Has that ever happened? Maybe Babe Ruth in the 1920s?

 

WHO SHOULD WIN GOLD GLOVES?  (NERDS HAVE A SAY THIS YEAR)

 

Pirates outfielders Andrew McCutchen and Starling Marte  and catcher Russell Martin were nominated for Gold Gloves on Friday. Defense was a big part of the Pirates’ season and all three players are above average defenders.

 

According to Fangraphs’ defensive runs above average, here is your NL Gold Glove team:

 

C Russell Martin 

1B Anthony Rizzo

2B Darwin Barney

SS Andrelton Simmons

3B Juan Uribe 

OF Carlos Gomez

OF Gerardo Parra 

OF  AJ Pollock 

 

Martin is great, we know that. He led the league in throwing out potential base stealers. He’s an above average pitch framer and is praised for his pitch sequencing. The metrics like him more than Yadier Molina. The metrics are not as kind to McCutchen and Marte.

 

Yes, defensive stats are imperfect but so is the eye test and for the first time nerds will have a say in who wins the Gold Glove award as 25 to 30 percent of the voting will be done by a sabermetric panel determined by SABR. It should be interesting to see if there are any surprises and perhaps the SABR panel will give Martin a chance against the Molina name brand.

 

-TS

27 Comments

  1. Gold Glove voting never has been about who are the best fielders. Weak hitting OF never win them, do they? It is mostly about offense and reputation. So, I see this inclusion of SABR as a positive. Some objectivity will be brought to the process, at least.

    But, as defensive shifting becomes more and more sophisticated, I feel like defense is becoming more of a team stat. If your team aligns you in such a way that you catch far more balls in play than you would have in a traditional alignment, you don’t even have to be a great fielder by traditional standards to be the most effective fielder. I don’t know if I am stating that clearly, but it seems to me the slowest OF around could potentially catch the highest % of balls hit in his vicinity if he plays for the smartest team. Does that mean he deserves a GG? Or, does it mean there should no longer be GGs?

    • Jim – as I understand it, you just described a big reason publicly held defensive metrics used to be very inaccurate. I believe current technology accounts for fielder position, thus does not give Neil Walker credit for impossible range when he fields a routine grounder in short right-center field. And conversely does give Clint Barmes credit for ranging far to his right while positioned over the second base bag on a ball to short.
      .
      You’ve brought up a great point, though. Shifting teams should be able to mitigate poor range from certain fielders. But shifts don’t improve a guys hands, footwork, or arm strength. Still plenty of value in ccombining good defenders with good strategy.

      • Yes, indeed. Put Starling Marte in LF with Dan Fox and Nick Leyva (or whoever it is) positioning him, and that makes for a lethal defensive OF. Put Matt Holliday in LF with those 2 positioning him, and it still may make him look above average by the metrics. But, anyone who has every watched baseball enough to judge talent would never say Holliday is anything approaching good defensively at this point.

        I’ve just never put much stock in Gold Gloves. I would like to know, however, who are the best defensive OFs. They seem to be able to measure how far guys run to catch fly balls. And, they can measure the % of fly balls a guy catches of the available ones. Maybe there is a way to marry them together. I would just like to know which OFs have the largest avg. distance run per catch -you know, LADRC! Haha! I suppose that would be one way to measure range.

        • I may not have worded that well, Jim, but the way I understand it, player do NOT get credit for exceptional range due to shifting in the newest defensive metrics. So when metrics say Marte’s range is phenomenal, it is because he does track down balls most guys wouldn’t touch, regardless of positioning.
          .
          My cursory knowledge of defensive metrics is that they basically take what you described and convert that data to assumed runs saved. So when Marte has a UZR of 10.1, for instance, that is the amount of runs that he kept from scoring due to all the varied facors that go into fielding your position.

        • Good conversation, I just wanted to add what I know Defensive Run Saved, which was developed by Baseball Info Solutions uses a grid and has historical averages for each positions player in each grid, so if a SS makes an out in an gird area were historically SS have made it .90 of time the SS gets 1.0 – .90 = 0.1 Runs saved for that play. (I could be completely wrong but that was my understanding last time I looked)

          I forget how UZR works, however both systems give no credit to a fielder when they are shifted, which is defined as three infielders on one side of 2nd.

      • When FieldFx is fully implemented — it will track movement of defenders and trajectory and velocity of batted balls — the industry for the first time will get an accurate measure of defensive value. It’s going to change the game.

  2. Still, I would like to know what the average distance run for each fly ball caught by each OF is. I don’t know how I would interpret it exactly, but I’d like to see it. Maybe the teams who position players the best would have OFs who don’t travel very far to catch their fly balls. I’ve seen it shown during a game on a particular ball, but never more than that.

    I often wonder how far infielders range, on average, to catch grounders. Maybe interesting only to me.

    • From a statistical standpoint, average distance probably doesn’t tell you much since there is no time variable applied. An outfielder could range 60′ on a high fly ball rather easily and on the next play miss a liner 20′ away.
      .
      I do know what you’re getting at, though, and unfortunately, accounting for all these variables that come up is exactly what makes these metrics so damn tedious.

  3. Funny that the “nerds” who don’t know the game seem to be the only ones capable of understanding that fielding performance varies year to year just like hitting. When was the last time you heard any “old school” baseball people talk about a player having an off year, or a great year, in the field? Never happens.
    .
    It’s always Player X is a great defender, or Player Y is a poor defender. Well, thats nice, but it takes a gigantic leap in logic to believe either player is the same amount of good or bad each year.
    .
    Yadi Molina is a better defensive catcher than Russell Martin, hands down. But I can’t imagine any way one could say Yadi Molina was a better defender LAST YEAR. Martin was just unbelievable.

  4. I have been spouting this for about a year now and it has fallen on deaf ears.
    If anybody is interested in leveling the playing field in MLB THE EASIEST ANSWER is to change the draft system.
    The thing that big market teams don’t want to give up is the advantage they have financially and give money to other teams.
    OK, big market teams usually draft low because of their ability to maintain their players and to be able to afford the best free agents usually make them pretty competitive so you don’t see them often drafting in the top ten unless it is a poorly run organization such as the Cubs have been for decades.
    If small market teams were given a permanent place in the draft where they could always have a chance at high draft picks instead of having a small window when they improve like the Pirates have only to lose those players eventually then have to rebuild because they are drafting in the 20′s while big market teams are buying up those players that teams like the Pirates have drafted and worked with only to lose them because they can’t afford them.
    Money is an advantage that never goes away. Small market teams only advantage is when they are not good is the draft but their advantage disappears once they become competitive. Give the small market teams a permanent advantage also so the playing field is a bit more even.

    • PirateMike : I have seen you put that opinion forward on other sites with very little comments made. I thought you had a great idea there,but trying to get that past the Yankees,Red Sox ,Dodgers etc. would be like getting the camel through the eye of the needle. Look at how the Red Sox re-acted to the Pirates signing Josh Bell for a good example.

      • Leo, I know that I’m probably beating a dead horse but I am really shocked that people just accept the tremendous advantage that big market teams have.
        People hate that some teams have 220m payrolls and other teams 80m and less. and still don’t care about changing the system.
        As I said before the one thing that big market teams don’t like is giving money to other teams so even though it would be very hard to do if there was a enough outcry from small market teams and national commentators making this an issue there might be some movement that would at least bring about some change. and it wouldn’t cost the big boys any money.
        I have a lot to say on this subject that is why I was hoping for a discussion but I guess people are happy with the status quo.

        .

        • Disagree with a central premise of your argument, Mike. Big market teams are just fine with revenue sharing, in fact, revenue sharing is their creation. Without revenue sharing, a hard cap and floor would be required as a means of centrally distributing revenue or else some small market teams would not be able to survive, let alone compete. The Yankees may whine once in a while about CERTAIN teams not using their share for the intended purposes, but make no mistake, the system still benefits them.

    • I believe this was generally the idea behind the new Competitive Balance picks that occur after the first and second round. Obviously there is a fairly large difference in talent between top picks and those in the mid 30′s, but the intent was there.
      .
      As a compromise between your suggestion and the obvious big market rebuttal, what if small market teams draft spending was uncapped?

      • NMR, the problem there is the Union doesn’t want money being spent on players not in the Union.
        I don’t mind the draft having a cap because even though the Pirates benefitted by over slot spending there was a danger of it getting out of hand.
        One thing that Tim @ PP suggested was a lottery for the small market teams so that there would be no teams losing on purpose to get the #1 pick.

        • The Union didn’t bring about the Draft Spending rules, Bud Selig did. In a conversation where big concessions will have to be made regardless of proposal, getting the Union to go back to rules they were perfectly content having is the least of worries.
          .
          And talk of over-slot spending getting out of hand (at least relative to overall spending) always dealt with wild hypotheticals and not reality. Big market team were spending overslot before small market. This isn’t anything new. Pre-draft deals that are/were the central fear of big markets ruling the draft would be blown up by other teams in a heartbeat.

  5. I do not follow the logic that the Pirates gaining ownership of the regional sports network would dramatically increase their revenue. Yes, MLB teams’ values are increasing at double digit rates but this is because teams have internalized television networks, moving what where once separate enterprises under team control. However, revenue is up only 7%, which is still much higher than the recent average of 3-4%. Overall operating income has fallen 9% due to increased player costs and stadium expenses.

    Is there some untapped television revenue for the Pirates, sure. But if the Nutting and the other principles were to acquire ROOT it would dramatically affect that value of the Pirates, I just do not think it would greatly alter the revenue stream. The recent success will definitely increase revenue at a faster rate than average but there will always be a limit to the Pirates’ market size.

    As usual great content, any idea what metric the SABR panel will use?

    • Speaking in terms of the timeline needed to get out of their existing contractual obligations and set up a regional sports network with the Penguins in order to leverage greater local television revenue, I think there is a far greater chance of the whole premise being a thing of the past.
      .
      Skyrocketing team values brought on by enormous television contracts have many signs of a major bubble ready to burst. The only reason these contracts are so lucrative is because cable providers are able to “piggy-back” the stations onto a customers plan. Actual game viewership is secondary to market size for this reason. When – not if – there is a significant change to this system, you’ll see these deal plummet, if not default.

      • I’ve heard the bubble talk but since live sporting events are one of the few relatively DVR-proof options of advertisers I actually think sports programming is only going to become more valuable.

        • More valuable per person watching. But not necessarilly more valuable overall, right?
          .
          The big money comes from number of TV sets. If the TV industry changes such that users are able to choose the content they pay for, then the overall number of TV sets drops enormously. Increasing rates to make up for the lost revenue only exacerbates the issue.
          .
          But trust me, I don’t profess to have more than cursory knowledge of this thing. Just logically seems like this cannot be sustainable.

    • I’m not suggesting the Pirates are suddenly going to enjoy $100 million plus per year in TV revenue through a regional sports network, but I do think they could at least double their current earnings.

      For instance, the Indians, in a similar market, take in $40 million per year in local cable and also took in a one-time lump sum payment of $240 million for selling STO, their regional cable network. The Pirates are earning $18 million. Whether or not they could creation a regional sports network, their TV rights are undervalued.

      And we’ve seen now slowing in the escalation of TV rights in any sport. College fooball, NFL, NBA, baseball …

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