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2020 MLB Season: Through the owners perspective

By Bill Felber

LOS ANGELES, CALIFORNIA - MARCH 26: People sit on a hill overlooking Dodger Stadium on what was supposed to be Major League Baseball's opening day, now postponed due to the coronavirus, on March 26, 2020 in Los Angeles, California. The Los Angeles Dodgers were slated to play against the San Francisco Giants at the stadium today. Major League Baseball Commissioner Rob Manfred recently said the league is "probably not gonna be able to" play a full 162 game regular season due to the spread of COVID-19. (Photo by Mario Tama/Getty Images)
LOS ANGELES, CALIFORNIA - MARCH 26: People sit on a hill overlooking Dodger Stadium on what was supposed to be Major League Baseball's opening day, now postponed due to the coronavirus, on March 26, 2020 in Los Angeles, California. The Los Angeles Dodgers were slated to play against the San Francisco Giants at the stadium today. Major League Baseball Commissioner Rob Manfred recently said the league is "probably not gonna be able to" play a full 162 game regular season due to the spread of COVID-19. (Photo by Mario Tama/Getty Images) /
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(Photo by Emilee Chinn/Getty Images)
(Photo by Emilee Chinn/Getty Images) /

For the 2020 MLB season, or any season, where does money come from?

An MLB team – any major pro sports entity really – has four broad sources of revenue. Those four are:

1. Sport-wide revenue sharing. This is generally money generated by national network media rights and distributed league-wide based on a pre-determined formula. Amounts vary, but in a normal year Forbes Magazine – the best reference point for such data — estimates that teams could expect to average about $368 million from this source.

For owners of small-market teams, this is an indispensable source of revenue, averaging 37 percent of a team’s normal value, and up to 70 percent for ultra-poor teams such as the Miami Marlins. Fortunately, national media is probably the most secure revenue source in the event games are played, since it tends to be playoff-loaded, and those games would be protected first.

2. Market. The largest and most successful teams rely heavily on local market revenues. Forbes estimates that the New York Yankees, the largest and most successful franchise in the game, derive nearly half their overall value from their market. The MLB-wide average is about 30 percent.

The term, by the way, basically encompasses local media and ticket sales. Ticket sales are almost  guaranteed to be wiped out in 2020, leaving local media as the predominant  source of market revenue. That’s a substantial hit to the game’s richest teams.

3. Stadium revenues. Stadium revenues are those revenues ancillary to ticket sales but tied directly to the facility itself. The two chief categories of stadium revenues are parking and concessions. Several teams also derive revenues from the rental of the stadium for concerts or linked to stadium-area developmental deals.

On average, stadium revenues amount to about 16 percent of a team’s overall revenues, and they are virtually guaranteed to be eliminated in 2020.

4. Brand. This is the money a team gains from the sale of licensed merchandise related to the team’s brand. In a normal year, brand revenue accounts for about 11 percent of team revenue, and the variations are small. This year, given the decreased economic activity in general, those revenues are likely to take a big hit.

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