Major League Baseball Finances: What The Numbers Tell Us

Introduction

Now that the World Series is over, the most interesting part of the baseball season starts: The Hot Stove League. To provide some background for this, key financial statistics of Major League Baseball (MLB) are set forth below.

Income

Consider first the two major sources of income: TV contracts and ticket sales.

a. TV Contracts

According to various sources, ESPN is paying MLB $5.6 billion for the 2014-2021 period or $700 million per year. Fox is paying MLB $5.1 billion for the 2014-2022 period or $567 million per year. Facebook paid MLB $30 million for 25 games in 2019. That means MLB got paid a total of $1.3 billion or $43 million per team.

As noted in Table 1, local TV deals far exceed the value of national TV deals to each team. The table also highlights the huge local TV contracts of the two Los Angeles teams and the New York Yankees.  

In MLB, 48% of local revenues are subject to revenue sharing and are distributed equally among all 30 teams, with each team receiving 3.3% of the total sum generated. As Table 1 suggests, this significantly reduces the differences in teams’ TV incomes.

Table 1. – TV Contract Revenue by Team (mil. US$)

* 2016 payment; 2019 payment larger
Source: Fangraphs

b. Ticket Sales

Data on attendance by team and revenues are presented in Table 2. Noteworthy are the high attendance rates of the Red Sox, Cardinals and Cubs. Revenues are estimated by using the average price per seat for all MLB teams in 2019. The Dodgers, Yankees and Toronto benefit from having the largest stadiums. Boston revenues are limited by the size of its stadium.

Table 2. – MLB Attendance and Revenues

Source: Statista and Baseball Reference

Expenditures

a. Agents

Agents play a major role in determining MLB expenditures. And a number of them do quite well. According to Forbes, Scott Boras is the United States’ most powerful agent with more than $2.3 billion in current MLB contracts under management. Boras, a lawyer by trade, also runs the Boras Corporation, the world’s leading baseball representation agency.

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Disclosure: None.

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