Miami Marlins

Despite new park, Miami Marlins enter season among MLB’s lowest in payroll

Miami Marlins president David Samson speaks to media on Tuesday, October 6, 2015 at Marlins Park.
Miami Marlins president David Samson speaks to media on Tuesday, October 6, 2015 at Marlins Park. hgabino@elnuevoherald.com

The Marlins open their 24th season against the Detroit Tigers on Tuesday amid a feeling of measured optimism. They have a healthy Giancarlo Stanton, a new manager in Don Mattingly and new opening-day starting pitcher in Wei-Yin Chen.

But one thing hasn't changed: The Marlins still spend less money on players than most Major League Baseball franchises.

Four-year-old Marlins Park, which hosts exhibition games between the Marlins and Yankees on Friday and Saturday, was supposed to be a panacea for that, a revenue-generating palace that would finally permit a usually penny-pinching franchise to sustain a competitive middle-of-the-pack payroll.

So why are the Marlins in the bottom three of payroll (along with Milwaukee and Tampa Bay) and spending far less than other teams with much older ballparks?

As it turns out, Marlins Park hasn’t come close to solving their revenue deficiencies, partly because of low attendance and partly because of an issue that has nothing to do the stadium: the team’s TV contract with Fox Sports, which pays less — in most cases, much less — than every other local cable contract in baseball.

“Right now, we are last in the league in revenue, and that’s not where Miami should be,” Marlins President David Samson said. “I don’t expect that to continue.”

The Marlins are projecting an opening-day payroll of $70 million, which will be the lowest or among the two or three lowest in baseball. And nearly $8 million, about 11 percent of that allocation, will be given to a player who’s no longer on the team: catcher Jarrod Saltalamacchia, who was released last May.

When local government agreed to finance the majority of costs for the $634 million stadium project (including $515 million for Marlins Park), the expectation was that the ballpark would allow the team to be in the mid-range of big league payrolls, as team executives speculated two years before the ballpark opened.

“Mid-range” would have meant a $115 million payroll last season. Instead, the payroll was $68 million out of pocket, and $82 million including salaries covered by the Dodgers.

$70M Miami Marlins’ projected opening-day payroll for the 2016 season

$68M The out of pocket payroll for the Marlins in the 2015 season

$115M The ‘mid-range’ payroll in the 2015 season.

In their first four seasons in the new ballpark, the Marlins’ season-ending payroll ranked 18th, 29th, 30th and 30th among 30 big-team teams, according to baseballprospectus.com.

That’s in spite of signing Stanton to a back-loaded 13-year, $325 million contract, the largest in baseball history.

Though some teams in the bottom half of payroll make the playoffs, they rarely win the World Series.

Of the past 15 World Series champs, only the 2003 Marlins (who ranked 25th) were outside the top 16 in payroll, with the defending champion Kansas City Royals coming in at 16th last season.

Eight of the past 15 champs ranked in the top 10 in payroll.

18th Rank of Marlins’ season-ending payroll in 2012 among 30 teams

29th Rank of Marlins’ season-ending payroll in 2013 among 30 teams

30th Rank of Marlins’ season-ending payroll in 2014 among 30 teams

30th Rank of Marlins’ season-ending payroll in 2015 among 30 teams

One big reason for the low payrolls: The Marlins make only $20 million or so in annual local television money from Fox Sports, the lowest of any cable contract in baseball, in a deal that runs through 2020, according to industry sources.

The Marlins are likely never going to collect anywhere near the annual local TV money of the Yankees ($385 million), Dodgers ($334 million) or Phillies ($200 million).

But how can they be so far below the Rangers ($155 million), Mariners ($141 million) and Padres ($70 million), among others?

“We negotiated a deal in 2005 that we thought was the best deal that made the most sense,” Samson said. “And we were wrong.”

The Marlins have been attempting to convince Fox to increase their rights fee as part of a multiyear extension, but conversations haven’t led to a deal.

Fox owns the state’s two most-widely distributed regional sports cable networks, Fox Sports Sun and Fox Sports Florida. If the Marlins cannot strike a deal with Fox, one option would be creating a new network with, say, Comcast.

“I’m not going to talk about leverage or options or negotiations,” Samson said. But “there is no shortage of outlets for live sports content. Everybody who has live content, non DVR-able content, rules the day. There is no acrimony between us and Fox. We signed a deal and we’re all living under that deal. I expect the next deal will look different.”

$385M New York Yankees’ annual local TV revenue

$334M Los Angeles Dodgers annual local TV revenue

$200M Philadelphia Phillies annual local TV revenue

$20M Miami Marlins annual local TV revenue

Even with a huge revenue jump, the Marlins privately acknowledge that they will be hard-pressed to afford to keep ace pitcher Jose Fernandez when he becomes a free agent after 2018. But they also might need a significant jump in revenue to have the financial wherewithal to retain some of their key offensive players.

Consider: Outfielder Giancarlo Stanton’s contract soars from $9 million this season $14.5 million, $25 million, $26 million, $26 million and $29 million the following five. He has an option to opt out of the contract six years into the 13-year deal.

Second baseman Dee Gordon’s new five-year contract jumps from $3 million this season to $7.5 million, $10.5 million, $13 million, $13.5 million and $14 million club option ($1 million buyout) in the subsequent five seasons.

Christian Yelich’s eight-year deal rises from $1 million this season to $3.5 million, $7 million, $9.75 million, $12.5 million, $14 million and a $15 million club option (with a $1.25 million buyout in 2022).

In 2021, if Stanton and pitcher Wei Yin Chen haven’t opted out and if Yelich and Gordon aren’t bought out, the Marlins will owe $74 million to four players: Stanton, Chen, Yelich and Gordon. That’s more than their entire projected payroll this season.

So would boosting their annual TV revenue from $18 million to say, $60 million, allow the Marlins to have a payroll of well above $100 million? Samson won’t commit to a number, because gate revenue (which is well below what the Marlins expected) and sponsorships also play a role.

But “our plan building this team,” Samson said, “was always keeping in mind revenue increases that we expect to see coming down the road.”

But even a payroll of $100 million would have ranked only 22nd last season — well behind midsize markets such as Kansas City ($113 million) and St. Louis ($121 million).

“When we study the correlation between payroll and winning in terms of what percentage of the payroll does an individual player take up, the largest would be, let’s say for us, 25 percent,” Samson said.

With Stanton due to make $32 million in 2022 if he doesn’t opt out, that would mean a payroll of at least $128 million under that philosophy.

But what is Fox’s incentive to substantially increase the Marlins’ rights fee before 2021, unless they legitimately fear the franchise will start its own network after that point?

What the Marlins give Fox is valuable inventory: 150 days of live programming, mostly during summer months when there’s a dearth of live programming.

On the flip side, the Marlins had the fifth-lowest cable ratings in baseball last season, ahead of only four two-market teams: the Angels, Dodgers, A’s and White Sox, according to Sports Business Journal.

“The Marlins have been an integral part of our programming lineup since their entrance into the baseball market in Florida; we are engaged in discussions with the Marlins and have every intention of continuing our television rights deal in the future," Fox Sports Florida general manager Steve Tello said.

So why can’t the Marlins sell their TV rights in Latin American countries and make a bundle that way?

Because MLB controls Latin American rights, meaning the Marlins would receive only 1/30th of any contract.

So the Marlins are potentially stuck with having one the lowest payrolls in baseball for the new few years, unless Fox decides to give the Marlins far more than they’re obligated to pay before the decade ends, or attendance should surprisingly spike, or if owner Jeffrey Loria, 75, decides to sell the team to a suitor with deeper pockets. And Samson has said repeatedly that the team is not for sale.

The Marlins’ revenue deficiencies can also be tied to attendance, though to a lesser extent than the TV deal.

Miami ranked 18th in average tickets sold in its first year in the ballpark (27,400), and those figures plummeted to 29th and 19,584 in the second season at Marlins Park.

In the two years since, the Marlins have ranked 27th (21,386) and 28th (21,632).

“I was involved in Miami getting a team; I thought it would be a great market, and it is a big disappointment in every way,” former MLB commissioner Fay Vincent said last summer, adding that he expected more fans would attend games.

The poor attendance is hurtful, Samson said, because it also means less revenue from parking, as well as retail and food and beverage sales at the stadium. And the number of people who actually come to games has often been substantially below the number of tickets sold.

“We’re not exactly selling out the building,” Samson said. “We haven’t won in this ballpark. I don’t blame the fans. I blame us. We hope we’re right with this core of players.”

Another problem: The Marlins haven’t been able to secure a stadium naming rights deal, which could produce another $5 million or more in annual revenue.

Samson said the Marlins simply haven’t found the right partner but is adamant they will have a naming rights deal in place before the ballpark plays host to the 2017 All-Star Game.

But keep in mind that the Marlins would keep only 66 percent of whatever new money they generate in local revenue because they receive a substantial revenue sharing check every year, a figure MLB and the Marlins won’t reveal.

A CBS report last November estimated that the Marlins receive about $50 million annually in revenue sharing; the team declined to confirm or deny that figure.

The revenue sharing element remains a thorny issue with high-revenue teams, who provide the money redirected to low-revenue clubs.

CBS’ Jon Heyman reported last November that “some big-market teams are said to be upset that the Marlins are the team with the lowest revenue in baseball, and thus they receive the most money in revenue sharing from the highest-grossing teams despite having a new stadium.”

Heyman said there’s “extra unhappiness in this case” because the money is going “to a team with the supposed benefit of a new stadium.”

In January 2010, MLB and the players association essentially forced the Marlins to increase their payroll, with then-MLBPA executive director Michael Weiner citing “our concerns that revenue sharing proceeds have not been used as required.” Weiner died in 2013.

The Marlins increased their payroll from $37 million to $47 million after that public scolding.

MLB executive director Tony Clark declined to answer directly recently when asked by reporters if he’s satisfied with the Marlins’ payroll and whether he believes they’re re-allocating revenue sharing money to payroll.

Samson, citing the high cost of running a big-league team, disputes any suggestion that the Marlins are pocketing revenue-sharing money instead of using it on team expenses and payroll.

The team doesn’t make available its financial records, but the Marlins insist Loria continues to write a check to cover substantial annual losses.

Dennis Moss, one of nine Miami-Dade commissioners who approved the county’s agreement to allocated $161.2 million toward the ballpark project, said he’s not upset about the size of the Marlins’ payroll “because they’re building. I’m going to give them the benefit of the doubt.

“I believe they’re going in the right direction. They signed Stanton. They kept Dee Gordon. They have been willing to extend an extraordinary amount of money to keep these players.”

Bruno Barreiro, another Miami-Dade commissioner who approved the stadium deal, said “there’s no reason they shouldn’t have a competitive team. Salary isn’t the only thing to be competitive [but] they’ve got to start winning, whether the salary is low or high.”

Samson said MLB needs to level the playing field in terms of how much money can be spent on international players. The Marlins tried to sign outfielder Yoenis Cespedes after he defected from Cuba in 2011 but didn’t offer a deal comparable to the four-year, $36 million offer that Cespedes took from Oakland. And the Marlins haven’t made serious bids for most top international prospects since then.

“We need to make the same bids that every other team can make,” Samson said. “Our job is to increase our revenue, but it has to be fair and equitable.”

Andrew Zimbalist, a sports economist and author and professor at Smith College in Massachusetts, said he’s surprised the Marlins’ revenue remains the lowest in baseball, even with a new ballpark.

“In my view, the Miami market is large enough and rich enough and has a good new stadium that there is potential,” he said. “If they are waiting for the fans to show up in larger numbers before spending larger money on the team, they might have to wait an eternity.

“They need to put a good product on the field if they want people to buy it. It wouldn’t be reasonable for Miami fans to say they should be outspending the Dodgers [who had a $270 million payroll last season]. But to say they’re stuck at $70 million, and waiting for the television market to respond, is a self-fulfilling prophecy. This is capitalism. You have to run your enterprise efficiently.”

Samson is convinced that if the Marlins win more, revenue increases would follow. The Marlins haven’t made the playoffs since 2003, the second-longest postseason drought in baseball, ahead of only Seattle.

They have had six consecutive losing seasons and have finished at least 18 games below .500 in four of the past five seasons.

“If we're a year down the line, two years down the line and all of a sudden, we still are winning 65 to 70 games, we wasted four years of Stanton, all of Jose's years, Don Mattingly is angry and unhappy, there's no communication, I'm not sure we would survive that,” Samson said of himself and the team’s other top executives.

Marlins payroll through the years under owner Jeffrey Loria. The first number is payroll at the beginning of the season (excluding contracts being covered by other teams). The second category is payroll at the end of the season and where that ranked among big league teams (Source: Cots Baseball Contracts).

2015

$69,031,500

$63,096,627 (30)

2014

$45,825,400

$52,518,799 (30)

2013

$50,526,900

$42,301,773 (29)

2012

$101,628,000

$89,875,132 (18)

2011

$57,695,000

$61,940,280 (25)

2010

$47,429,719

$47,331,979 (28)

2009

$36,834,000

$37,532,482 (30)

2008

$21,811,500

$27,003,450 (30)

2007

$30,507,000

$33,072,472 (29)

2006

$14,998,500

$21,124,332 (30)

2005

$60,408,834

$56,273,212 (21)

2004

$42,143,042

$50,340,382 (23)

2003

$45,050,000

$63,281,152 (20)

2002

$41,979,917

$40,822,536 (28)

Where last 15 World Series champs ranked in payroll

2015: Kansas City, 16th

2014: San Francisco Giants, 7

2013: Boston Red Sox, 4

2012: San Francisco Giants, 8

2011: St. Louis Cardinals, 11

2010: San Francisco Giants, 10

2009: New York Yankees, 1

2008: Philadelphia Phillies, 12

2007: Boston Red Sox, 2

2006: St. Louis Cardinals, 11

2005: Chicago White Sox, 13

2004: Boston Red Sox, 2

2003: Florida Marlins, 25

2002: Anaheim Angels, 15

2001: Arizona Diamondbacks, 8

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