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Thread: John Henry and Comp. Balance

      
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    Default John Henry and Comp. Balance

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    http://www.boston.com/sports/basebal...x_owner_j.html



    Sox owner wants to overhaul MLB's revenue sharing system

    Red Sox principal owner John Henry is calling for Major League Baseball's revenue sharing system to be overhauled and replaced with a "competitive balanced payroll tax" in an effort to create competitive balance in baseball.

    Henry's comments via e-mail came after he was asked to respond to agent Scott Boras' comments to the Globe two weeks ago in which the super agent said teams aren't spending their revenue sharing money and central funds on player salaries, which is what revenue sharing was intended to do for small market teams. Boras received backlash for his comments from MLB executive vice president Ron Manfred, who said Boras' figures of teams receiving $80-$90 million from revenue sharing and the central fund "not based in reality" and "fantasy land."

    But Henry is certainly going his own way on this very sensitive subject and is certainly not in lockstep with some of his fellow owners on the revenue sharing plan that was adopted in 1997 and distributes the wealth from large market teams to small market teams.

    [HIGH-LIGHT]"Change is needed and that is reflected by the fact that over a billion dollars have been paid to seven chronically uncompetitive teams, five of whom have had baseball’s highest operating profits," Henry responded in an e-mail. "Who, except these teams, can think this is a good idea?"[/HIGH-LIGHT]

    Henry added,[HIGH-LIGHT] "While the Red Sox are in the 16th largest media market we’ve found a way to be very competitive even though we are funding other teams. At the end of the day, the small market clubs still cannot begin to compete with the Yankees and have a very hard time competing with the teams that are struggling to pay them so much. Consequently, a system that directly impacts competition has to replace the current system, that hoped to, but ultimately did not cure competitive imbalances."[/HIGH-LIGHT]

    About $400 million – 34 percent of each team's net local revenue – will be distributed to small market teams this year. Most of that percentage comes from the Yankees, Red Sox, Mets, and other high-revenue teams.

    "We've seen a number of teams that are just sitting back," Boras told the Globe at the General Manager's meetings in Chicago last month. "We have clubs who aren't successful getting $80 million before they ever sell a ticket. The question is always going to be in the end, what are they doing with that money? For most of them, they're paying off their debt to purchase the franchise. So they become owners, debt-free but they have not done a lot to contribute to the success of the game. Those are the things as an industry, certainly the fans have to look at it and realize that kind of revenue is available. The other part of it is I think we've proven time and time again that investment in players produces revenue streams and success points for franchises. Even in an economy where many businesses are struggling in our industry, as I said last year, we've been able to keep revenues at a record level."

    [HIGH-LIGHT]Henry wrote that baseball "needs slotting for amateurs, a worldwide amateur draft and most importantly, an effective competitive balance tax that directly addresses disparity once and for all for baseball."[/HIGH-LIGHT]

    The Red Sox principal owner reiterated that baseball's free market system should continue and that teams should be able to operate as they please, but that those who spend a lot will pay a lot of payroll taxes. [HIGH-LIGHT]"If the Yankees and the Mets spend a billion dollars plus of their investment dollars to build new ballparks, they should be allowed to keep their revenues from that," Henry wrote. "But if they want to spend $200,000,000 annually on payroll, they should be heavily taxed directly on that – and if they want to spend more than that, they should be even more heavily taxed. So should all clubs who spend heavily on payroll – to the extent necessary – to bring the system into balance."[/HIGH-LIGHT]

    [HIGH-LIGHT]Here's how Henry's system would work:

    "It’s a very simple approach in which payroll tax dollars replace revenue sharing dollars and go directly to the clubs that need revenues in order to meet minimum payrolls that should be imposed on each club receiving revenue. Further, players would have to be protected with a guaranteed minimum percentage of overall revenues. This would be a very simple and effective method in reducing top payrolls and increasing bottom payrolls with no tax on revenues," Henry wrote.

    Henry added that "The World Series should be determined by fully competitive teams on the field - not by how much particular clubs can afford to spend. A better solution is to address competition directly so that clubs can generate revenue more equally as teams become competitive across baseball."[/HIGH-LIGHT]

    While Henry, a former part-owner of the Yankees, has no love-loss for his biggest rival, he does believe that the current revenue sharing formula unfairly penalizes the Yankees and other big market teams which generate big revenues.

    [HIGH-LIGHT]"Baseball has determined that the best way to deal with the Yankees is to take as much of their revenue as possible. I see that in direct opposition to the ideals this country was built on. Baseball is a business and should be treated as such. Baseball is also a sport that needs competitive balance in order to prosper. Taxing their revenues and other “large markets” in the way it is presently done, is simply confiscation on an order of magnitude never seen in any industry in America," Henry said.[/HIGH-LIGHT]

    Henry finds the system counter to the manner in which most owners operated in the industries in which they became rich men.

    [HIGH-LIGHT]"It's amazing because owners, some of the most ardent capitalists in the country – who have all made their fortunes through capitalism, have imposed a tax system on baseball they would never sit still for in any of their industries,"[/HIGH-LIGHT] Henry said.

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    Default Re: John Henry and Comp. Balance

    1 billion dollar payout spread among seven teams like the Pirates, all of whom are the most profitable in the sport. Now we have an owner agreeing with Boras. The union will speak on the issue tomorrow.

    Let's see what happens. While I support the Pirates in their approach under this new management, I would be far less supportive if it turns out that this "small market" approach is really a cover for banking profits.

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    Default Re: John Henry and Comp. Balance

    We have been debating/saying that the numbers that Boras and others are throwing out are gross over-exaggerations...but if, now, Henry is correct...then maybe something should be done.
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    Default Re: John Henry and Comp. Balance

    Henry is just a ***** who is ****ed that all the millions he is throwing around isn't getting him past the yankees.

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    Default Re: John Henry and Comp. Balance

    Quote Originally Posted by Lup View Post
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    Henry is just a ***** who is ****ed that all the millions he is throwing around isn't getting him past the yankees.
    Umm...he's got more WS victories than the Yankees do in the last 5+ years. I think that he does make a good point that maybe profits shouldn't be garnered unless teams can prove its going to competitiveness. I think teams SHOULD have to prove to other owners who are freely giving them money where that money is going.
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    Default Re: John Henry and Comp. Balance

    Quote Originally Posted by Lup View Post
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    Henry is just a ***** who is ****ed that all the millions he is throwing around isn't getting him past the yankees.

    He has more WS victories this decade than the Yankees do.

    I don't think that's a valid argument.

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    Default Re: John Henry and Comp. Balance

    Henry is using the Boras comments as a "scapegoat" to ***** about profits. that's what this is all about. Right now, MLB through revenue sharing is taking "revenue" or "profits" from teams that are making the most. The underlying thing in everything Henry was talking about was teams being able to hold onto their revenue and revenue sharing come directly from a tax on payroll amounts.

    I've got a better idea that would solve this... PUT IN A ****ING SALARY CAP AND FLOOR! Seriously. You protect these larger markets profits like Henry wants and is *****ing about, you create competitive balance like Henry is claiming he'd like to see.

    The problem with Henry's "design model" is where do you start taxing? At what payroll threshold do you start taxing? What is an amount of payroll that exceeds that specific limit that gets taxed and who figured that out? Currently, just the Yankees pay the "luxury tax" from their payroll excess but the number has to be so high for that to take place. Nobody is coming forward YET AGAIN with any concrete proof and evidence on smaller market teams making this amount of money, how this money is being had by all teams and where is all going. If you're going to accuse teams then you better be telling the nation everything since you started pointed the finger.

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    Default Re: John Henry and Comp. Balance

    I love that Henry's plan is basically to try to limit the amount the Yankees can spend while still maximizing profits for his team. Not at all a biased source.

    Also, since when is Boston the 16th largest media market? That statement is completely inaccurate. It had been a top 5 market for years until very recently. I believe it's now ranked 7th as Dallas and San Francisco have passed it.

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    Default Re: John Henry and Comp. Balance

    Quote Originally Posted by jnn123 View Post
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    I love that Henry's plan is basically to try to limit the amount the Yankees can spend while still maximizing profits for his team. Not at all a biased source.

    Also, since when is Boston the 16th largest media market? That statement is completely inaccurate. It had been a top 5 market for years until very recently. I believe it's now ranked 7th as Dallas and San Francisco have passed it.
    I forgot about that comment. I was gonna say something about it and forgot. Not to mention that Boston also has like the entire North Eastern states to pull in from as well

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    Default Re: John Henry and Comp. Balance

    I bet if you ask Henry if he supports a salary cap he will say hell no. Out of one side of his mouth henry is trying to sound sympathetic to the plight of the small market teams and out the other side he is saying just quit taking my profits to help the small market teams.
    The Pirates are taking that revenue sharing money and putting it into where it will achieve the best returns long term, scouting and player development, the Draft, building the new Dominican facility. Revenue sharing is supposed to be used to help the have nots be competetive at the major league level. What the Buccos are investing their revenue sharing money in will help them be competetive long term.
    Why should henry ***** about how teams spend that money, as long as they are putting it towards improving the product on the field?
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    Default Re: John Henry and Comp. Balance

    i understand we are talking about hundreds of millions of dollars and baseball has been run this way forever, and everyone hates change, i hate change, those dirty old baseball owners hate change.

    What I cant understand is why baseball (read Selig) won't authorize a comprehensive study on what the impact of a salary cap would be. At the very least it will quiet some critics and pacify people like us for a bit.

    MLBPA obviously doesnt want players to get paid any less than they are getting now. Which is obscenely high. Dont blame them but they should be wary of what it means down the road.

    As clubs are turning inward towards younger, cheaper, and in some cases average talent, superstars or well above average players are going to find that their job market will have shrunk and could conceivably push them out of baseball earlier in their career.

    Teams will realize that spending 25 million dollars a year on a 30 something star might not be as lucrative as 2million on a 22 year old. Also as more teams place higher emphasis on younger players, more below average talent will slip up through the cracks that could hurt competitiveness in baseball further.

    Basically i see baseball as sort of the stock market, everything is going to rise until the point that the market cant hold it self up, and everything is going to come crashing down.

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    Default Re: John Henry and Comp. Balance

    that's already happening to a point. Abreau taking the big hit, and Matsui, Damon and Vlad are going to find out this off season. Players call it collusion, when in fact it's just the market for over the hill players.

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    Default Re: John Henry and Comp. Balance

    Quote Originally Posted by indybucfan View Post
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    that's already happening to a point. Abreau taking the big hit, and [HIGH-LIGHT]Matsui, Damon and Vlad[/HIGH-LIGHT] are going to find out this off season. Players call it collusion, when in fact it's just the market for over the hill players.

    Out of the 3 highlighted here, only Damon can even play in the outfield any more. The other 2 are strictly DH now.
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