30 April 2016

The Revenue Rivalry in New York

Guest Post by Nick Constantilos

The Battle for New York’s Heart

Famous poet Samuel Butler once emphasized “Friendship is like money, easier made than kept”. What makes New York such a notorious and famous city is the endless opportunities and the reputation of endless fame that can come along with it. New York has a variety of reasons why the city has come to such great fame, from Ellis Island to Radio City Music Hall. But maybe the most important and historical is the contribution the city has made to America’s past time, baseball. New York has the pleasure of being the home to two major league baseball teams, the New York Yankees and New York Mets. Great pride comes with having two talented teams but along with that comes great rivalry. Ever since the New York Mets were established in 1962, the two major league teams have been battling for New York’s heart. Although these two teams were only separated by a subway ride, the real rivalry didn’t spark until their first meeting in 1997. This show down earned its nickname the “subway series” due to the short distance between them and fans going back and forth on the subway. Their rivalry would be truly defined after the epic game one in the 2000 world series between the two teams, which the Yankees eventually claimed the trophy.

The Revenue Conflict

The difference in distance between the New York Yankees and New York Mets is just a subway ride away, but the difference in revenue is much more drastic. The New York Yankees earnings in 2015 were 211.75 million dollars while the New York Mets was the MLB’s 10th lowest payroll of 94.76 million dollars. Although the Yankees hold the highest payroll in baseball, the value of the dollar to them is just as meaningful as any team in the MLB. The triumphant Yankees made their voice heard when the President of the Yankees, Randy Levine, commented on the MLB’s unfair revenue sharing system. Levine stated, "What is very burdensome to us -- and is unfair -- is the amount of money we have to pay in revenue sharing compared, for example, to teams in our market that pay 10 times less than us”. This issue caused another stirring of the Yankees vs. Mets pot but this time on the business end. It appears that the main reason Randy Levine was making these unfair claims towards the Mets is because the Mets could potentially be doing better financially then it appears on paper. One thing that is extremely confusing is the revenue sharing between these two teams. Any conflict regarding money such as expenses or revenue can be a complicated conflict to resolve. Revenue sharing is calculated through a formula which relates to net local revenue and many amounts of income and expenses are characterized and measured differently. An important aspect to keep in mind is most of this information doesn’t travel beyond the ownership level which makes it difficult for people outside the “circle” to understand the process. Baseball teams have no limit to the money they can bring in and spend so this makes it hard to justify what is truly fair when it comes to comparisons in revenue sharing. But whether is unfair or not the Yankees as usual made their voice heard.

If you are interested in learning more about the revenue rivalry between the Mets and Yankees check out this link: http://espn.go.com/mlb/story/_/id/15072082/randy-levine-says-unfair-new-york-yankees-pay-more-new-york-mets-revenue-sharing

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