NEWSLETTER
That’s not the sexiest headline, but I think it’s a really important thing to note. Because the general message is: spending a lot on payroll and improving the quality of your team *can* fundamentally change your organization’s financial picture.
The San Diego Padres, as we all know, have been on a quest the last few years to add – *SIGNIFICANTLY* – to their big league roster, whatever the cost. That, despite being in the 5th smallest media market in Major League Baseball. Whether it works or not, in terms of bringing home a championship, remains to be seen. But you could argue it has already worked, at least in the short-term, by turning around the financial picture for the organization.
Get this, from the San Diego Union-Tribune – the Padres are now expected to become a “large market team” for revenue sharing purposes, meaning that they will be paying INTO the system, rather than receiving from it:
While teams do not make their finances public, multiple sources confirmed that based on projected 2023 revenue, the Padres anticipate contributing in ’24 to the fund that helps subsidize teams in smaller markets (clubs that due to their location ostensibly don’t generate as much revenue) ….
The Padres’ increased revenue stems largely from ticket and sponsorship sales, for which demand and price have increased as the team has advanced to the postseason two of the past three seasons and continued to add star players.
When Peter Seidler took over control in 2020, he apparently made it a priority to expand the organization’s spending on star players, in part because he thought it might work out like this. And would you look at that? Spend money to make money or something.
To be sure, maybe this doesn’t last for years and years to come, and we know that the team’s performance on the field may wane relative to the later years of some of their recent contracts (i.e., when guys get older and performance declines, but price tags stay high). But for now, and probably for several more years, the Padres are going to be generating significantly more revenue than they were pre-pandemic. That’s notable!
Does that mean this ultra-aggressive approach would be right or feasible for every organization? I guess I won’t say it definitely is, because maybe there are some edge cases or true challenges … but, let’s be real. Every organization is worth over a billion dollars, and every ownership group has considerable resources. I’m not saying they could EXACTLY duplicate the Padres, but I do think many clubs could potentially create just as much additional revenue as they send out the door in additional spending.
In sum: winning more games, giving your fans more entertainment, and generating more excitement can be good for revenue-generation. Even if that’s all you care about.
