Good read. One of the few articles that isn't blindly accusing the Mets of turning into the Yankees. Not that that is an insult but the Mets and Yankees payroll is still more than $100M apart.
Who's footing the bill?
New revenue fuels Mets' winter spending spree
Posted: Tuesday November 29, 2005 11:58AM; Updated: Tuesday November 29, 2005 12:29PM
The Mets are counting on Carlos Delgado, above, and Billy Wagner to fill more of those Shea Stadium seats next season.
On the day the New York Mets introduced their $13.7-million-per-year first baseman, they reached agreement to pay their new closer $10.7 million while hoping to pay a new catcher about $8 million a year and continued to talk about a certain $19-million-a-year outfielder from Boston. The obvious question, after you get past wondering whether the Mets will end this winter as the team to beat in the National League, is where is all this money coming from?
It's too simple to assign the Mets' spending to the regional sports network the club will launch next year. What the network has done is altered the Mets' philosophy, imbuing a sense of urgency into their planning. As chief operating officer Jeff Wilpon put it, "We want to put an exciting product on the field and on the network. Obviously, waiting for the minor league system to produce is not as exciting."
The Wilpons own 65 percent of the network. "Based on the way they run their other businesses," said one Mets insider, "they will run it as a stand-alone business to be profitable in its own right." Translation: the Wilpons don't want to take from one pocket to put in the other.
Indeed, Wilpon explained that the Mets would be spending like this regardless of the launching of the network. He did allow that the network gives the budget "a little more room."
If the Mets aren't throwing around cable money, then where did the loot come from? First of all, it's not as much of a payroll leap for New York as it seems. The Mets spent $101 million on payroll in 2005 (third in baseball behind the Yankees and Red Sox) and expect to spend between $115 million and $120 million in 2006, which should keep them third and still far from the luxury tax threshold.
Much has been made about the so-called loophole that allows any first-time violators of the luxury tax in 2006 to enjoy a tax-free season. But remember, the tax threshold for 2006 is $136.5 million. "No way,'' Wilpon said, will the Mets even come close to that number. The loophole is a moot point.
New first baseman Carlos Delgado, closer Billy Wagner, a catcher to be determined (likely Ramon Hernandez or Bengie Molina) and Red Sox outfielder Manny Ramirez, who remains on their radar, would cost about $51 million on an average annual value basis. (Privately, the Mets say they won't take on Ramirez without significant salary relief, either with Boston eating some of the $57 million due him over the next three years and/or the Red Sox taking on some Mets' salaries in a trade, i.e. the $22 million still owed Cliff Floyd and Kris Benson.) Here's where the Mets are getting some of the non-TV revenues:
• $30 million coming off their payroll. Money that went to Mike Piazza, Braden Looper, Doug Mientkiewicz, Mike Cameron, Roger Cedeno, Mike Stanton and others is being reinvested in players.
• $20 million in additional ballpark revenue. The 2005 Mets, despite another non-playoff season with only 83 wins, posted the third-highest single-season jump in attendance in franchise history, selling about half a million more tickets last season than they did in 2004. (Feel free to subscribe some of that buzz to the halo factor created by the signing and pitching of Pedro Martinez, a terrific investment.) The Mets figure about $40 in revenue (ticket price, parking and concessions) for every ticket sold. That's an extra $20 million they didn't have from what was generated in 2004.
It gets better for the Mets. They anticipate selling at least three million tickets in 2006 -- another $8 million jump in revenue. And if you don't think New York is the capital of the baseball world, chew on this: next year the Yankees and Mets will draw more than three million fans in the same season and possibly draw a combined seven million fans. Even last season, a year in which neither team won a playoff series, the city of New York alone outdrew the entire National League in 1952, part of the so-called Golden Era of baseball, and the entire sport in 1934. These are the good old days, folks. The game never has been better.
"The biggest variable has always been ballpark revenue," Mets executive vice president David Howard said. "And the key element to increasing your season ticket base is access to postseason tickets. It's what drove sellouts for the Knicks and Rangers all those years. Yankees fans have had postseason tickets for 10 years in a row."
Now Mets fans have a legitimate reason to expect postseason games at Shea Stadium. Nothing is guaranteed, but the Mets did fill their two biggest holes -- first base and closer -- with the two best available players at those positions.
The Mets' appeal goes beyond Shea, too. Do you know the top draws on the road last year? Here's the list: 1. Red Sox. 2. Yankees. 3. Cubs. 4. Mets. Like any commissioner, Bud Selig knows that having two strong teams in New York is good for business.
• $23 million in additional MLB-distributed money from satellite radio, advanced media and coming sale proceeds from the Washington Nationals. The satellite radio money (about $2 million per team) did kick in for the 2005 season, but after payrolls were set. The Mets say they do not count their share of the Nationals profit (about $11.4 million) as operating income, but however they account for it, they can expect a nice check in the mail soon.
The Mets, even with their TV network set aside for a moment, have a good business plan in place. Delgado, Wagner, Martinez, Carlos Beltran, Jose Reyes, David Wright and their catcher to be named all will be under their control through at least 2008, which happens to be their final season in Shea Stadium. That means the Mets should remain an interesting, competitive team in the years leading to their privately-funded ballpark, when their revenues should rise again, even with their debt service factored. And should the Mets become must-see TV, and especially if they return to the postseason, they will have even more money to spend in subsequent winters.