What is your opinion of the A.J. Pierzynski signing?
MJH on accountability
I posted most of this in another thread, but I feel it is worth merit on its own to discuss how it affects the Rangers, as well as all of MLB going forward.
Recently, MLB signed new TV deals, worth a combined 12.4 billion over 8 years, beginning after the 2013 season, with revenue split evenly between all 30 teams. These deals combined are worth approximately $51.6 million/year to each team, including the Rangers. Breaking this deal down, it is split between 3 networks: Fox, ESPN, and Turner (TBS). Though I can't find exact numbers on the old deals, the new combined deals were reported to be more than double the amount of the old deals. (I was able to find that ESPN's portion is going to increase from $356 million/year to $700 million a year. This equates to an extra $11 million/yr per team on the ESPN portion annually, but I digress.)
For the sake of simplicity, let's say that beginning in 2014, each team in MLB, including the Rangers, gets about double what they were getting before from the old TV deals. This means that the Rangers, along with everyone else, will have an extra $25-26 million a year in their budgets from the national TV deal.
Also, the Rangers private TV deal (worth somewhere between $1.6 and $3 Billion over 20 years, have we decided yet?) kicks in after the 2014 season, one year later than the national TV deals. This will be worth, worst case, about $75 million a year, assuming $100 million was paid up front and the deal was worth $1.6 billion total. The Rangers old TV deal signed in 2000 (combined with the Stars) was worth $300 million over 15 years, with Fox 'kicking in another 250 million to control over-the-air rights for 10 years.' Assuming the full $550 million total was going to the Rangers (unrealistic, but I can't find details), the old deal paid the Rangers $36.6 million/yr. So the new local TV deal also doubles the old TV deal revenues.
Therefore beginning in 2015, the Rangers will have at least $125 million/year in TV revenue alone coming in vs an overly optimistic $62 million/year coming in now. Realistically, the figure now is probably closer to $50 million/year.
This extra money, $75 million/year, could be used to potentially sign Greinke and/or Josh, with only a one year gap to bridge (2012-2013) between the contract and the extra national revenue kicking in, and a two year gap between the extra local revenue kicking in.
It is almost certain that this extra money will greatly raise salaries going forward, but it also allows the Rangers to potentially do things they wouldn't have been able to do otherwise now, such-as sign two superstars instead of one if they choose. Unfortunately, it also means the Angels will get a mulligan of sorts on the Albert Pujols deals with the extra money coming in each year basically covering most of the cost of his contract. Still, I believe the Rangers are in the better financial situation overall by simpy not havign a monstrosity of a contract like Pujol's.
Nice write up. More Ranger money is a good thing, but a lot of other teams are getting their own TV contracts. The price of WAR is going up and if I were. Team I would begin locking players down with extensions.
I agree. With all this extra money coming in, I believe a lot of teams will start acting somewhat more like the Yankees. Here is an interesting aspect to this however. The Tampa Bay Rays will also benefit from the national deal, and have an extra $25 million/year. Yeah those Rays. Yep, the broke people over there in Florida will have enough cash to increase their payroll by $25 million/year.Doesn't that affect a potential David Price trade just a bit? Or give them the finances to take shot at resigning BJ? Or make them just a bit scarier since they can now sign 2-3 good players at $7 - $8 million/year now that they couldn't before?
I agree. With all this extra money coming in, I believe a lot of teams will start acting somewhat more like the Yankees.
Here is an interesting aspect to this however. The Tampa Bay Rays will also benefit from the national deal, and have an extra $25 million/year. Yeah those Rays. Yep, the broke people over there in Florida will have enough cash to increase their payroll by $25 million/year.
Doesn't that affect a potential David Price trade just a bit? Or give them the finances to take shot at resigning BJ? Or make them just a bit scarier since they can now sign 2-3 good players at $7 - $8 million/year now that they couldn't before?
There's a difference between spending money just to spend money and spending it wisely. The Rangers won't be using this money to bring Josh Hamilton back, because that's just a bad investment no matter how you look at it. I'll assume Zach Greinke is our #1 free agent priority this offseason; other than that I don't see us going after any expensive names.
Nice work BZ.
Without ever looking at a cash flow statement for an MLB team, I'd be willing to guess that $75M has a lot of other expenditures to cover as well. Things such as insurance, property taxes, improvements and various services are all increasing at the same time. Then there is the whole fact that this team was purchased as an investment and those investors are going to be expecting a return at some point.
I'd bet the real number for payroll increase is somewhere around $40M and we know from this season that we are already over budget on player salaries (currently around $128M). So I'd expect payroll to begin to hover around $160-$165 in 2014 which would still keep us very competitive. Just don't expect the Rangers to run out and sign every free agent this off season. Also, the soft cap is $178M next year and stays at $189M for 2014-16.
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