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Home Maury Brown MLB's Luxury Tax, Revenue-Sharing, the Yankees and the Randy Levine Story

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MLB's Luxury Tax, Revenue-Sharing, the Yankees and the Randy Levine Story PDF Print E-mail
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Written by Maury Brown   
Wednesday, 07 April 2010 11:35
Randy Levine
Yankees president Randy Levine, had
harsh words for Brewers owner Mark
Attanasio over revenue-sharing

The on-going battle in professional sports between high-revenue making clubs and small to mid-revenue makers continues to ratchet up, as Yankees president Randy Levine has, in his normal subtle way, fired away at Brewers owner Mark Attanasio over revenue-sharing:

"I'm sorry that my friend Mark continues to whine about his running the Brewers," Levine told ESPNNewYork.com in a phone interview Tuesday morning. "We play by all the rules and there doesn't seem to be any complaints when teams such as the Brewers receive hundreds of millions of dollars that they get from us in revenue sharing the last few years. Take some of that money that you get from us and use that to sign your players.

"The question that should be asked is: Where has the hundreds of millions of dollars in revenue sharing gone?"

In response, through the Milwaukee Journal Sentinel, Attanasio said:

"I didn't think I was whining," said Attanasio. "I was just stating a simple fact."

[…]

"If you look at his statement, I think he talked about the hundreds of millions the Yankees have put (into revenue sharing), not that we've received hundreds of millions," said Attanasio. "We've received a small piece of that.

"We do get a piece of revenue sharing, and we appreciate it, and we need it, and we use it. We put it to use. It's a matter of record that we use our revenue sharing dollars pretty much every year in our budget."

[…]

"I don't think (Levine) was responding to the Brewers but was making a general statement about what the Yankees are doing," said Attanasio. "It's really an apples and oranges comment."

Luxury Tax (2003-2009)
Click the image above to see total luxury tax monies collected from
2003 to 2009

The story, through the originating ESPN New York piece, and then subsequently through the New York Daily News, NESN, SNY, and USA Today, cite BizofBaseball.com’s Luxury Tax data (click the image provided above to access) to frame some dollar figures around the initial story:

In the initial seven years of the luxury tax, the Yankees have paid teams nearly $175 million in revenue sharing, according to the BizofBaseball.com. That is 92 percent of the total revenue sharing that has been doled out.

The story is a good one, and highlights the concerns around revenue-sharing, but we want to clarify how the Luxury Tax functions in relationship to revenue-sharing:

In the initial seven years of the luxury tax, the Yankees have paid teams nearly $175 million in revenue sharing…

  • It’s important to note that money collected through the Luxury Tax is not part of revenue-sharing. Most of the money collected through the system actually goes back to the players in the form of benefits. Revenue-sharing dollars are derived from local revenues such as ticket sales, local broadcast deals, concessions, parking, etc.
  • The total amount of revenue-sharing money that moved from high-revenue to low-revenue makers was $433 million, according to sources at Major League Baseball. The league would not disclose how much each club paid or received.

That is 92 percent of the total revenue sharing that has been doled out.

  • If you change the above to this, it would be correct: The Yankees have paid 92 percent of the total amount of luxury tax money that has been collected since the system was put in place.

Finally, this clarification isn’t to brow-beat the media (for the record, Colin Cowherd incorrectly cited the percentage on air today, as well). The minutia behind revenue-sharing and the luxury tax is often misunderstood. It was not the first, nor will it be the last time it will happen. For further details on competitive balance in MLB, revenue-sharing, and the luxury tax, consider reading the following on Baseball America: Revenue Sharing Is Making An Impact

Look for more on the competitive balance/revenue-sharing topic later today.


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Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He is available for hire or freelance. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.

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