TELEVISION REVENUE SHARING AND SALARY CAPS IN MAJOR LEAGUE BASEBALL: A EXAMINATION
This research examines the related issues of television revenue sharing and salary caps in major league baseball. This examination provides (1) a brief history of team revenues, (2) a brief history of team salaries, (3) the major league baseball antitrust exemption, (4) a description and an analysis of television revenue sharing and salary caps as these concepts affect major league baseball, and (5) a proposed work model for television revenue sharing and salary caps in major league baseball.
Major league baseball teams generate revenues from a variety of sources. Although revenues from television contracts generate the greatest contemporary interest, ticket sales continue to be an important source of revenue in major league baseball. The national television contracts negotiated in 1988 represented a 102 percent increase in national television revenues over the prior contracts (Staudohar 33). Local television contracts provide substantial additional revenues for major league baseball teams located in large markets, while teams in smaller market benefit much less from such revenues (Bernstein 40). Total revenues in major league baseball increased from $718 million in 1985 to approximately $1.4 billion in 1990 (Zimbalist xiii).
Revenue generation in baseball began in the 1860s, when a few teams began to enclose their playing fields and charge a small admission fee, typically a quarter, to watch the games (Goldstein 84). Between that time and the contemporary period, owners of major league baseball teams have not always demands that the teams be profitable at least not directly. Anheuser Busch, as example, used the St. Louis Cardinals as a marketing promotional vehicle for Budweiser beer (Zimbalist 32). Anheuser Busch profits stemmed from the sales of Budweiser, and a contending St. Louis Cardinals baseball team was a part of the promotio...