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Marquee Value for A-Rod or Santana? Nearly Impossible PDF Print E-mail
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Written by Maury Brown   
Tuesday, 22 January 2008 11:50

Maury BrownOn more than one occasion, authors and analysts have worked to try and assign a value of a player, beyond the wins that they may contribute on the field. Players like Alex Rodriguez, Johan Santana, and others have been talked about in terms of bringing in millions upon millions of dollars based upon their draw as a “star player”, or marquee value. The numbers lofted out have been extraordinary. In the case of Alex Rodriguez, agent Scott Boras said his value to the YES Network could be a half a billion dollars over the life of his contract, a staggering figure.

Books and articles have been written with large sections devoted to placing a figure on this Star Power dynamic. They roll a laundry list of revenue streams into the conversation… merchandising, television, radio, increase in repeat season-ticket purchases, increased concessions, all based upon deriving a figure based on some model (which is rarely revealed) to create some monetary figure. This may sell books, and may make articles that get read, but the problem is, the figures are derived from some overly simplistic model, or created from inaccurate data. The reason it sells is no one questions the methods or figures. Since there is little published on topic, most assume that the mysterious model is correct, and takes it as truth.

Here’s the problem with trying to tackle such a model: It’s vastly complex, and unless you work in the Finance department of some MLB club, or MLB Headquarters, odds are you have never been privy to data that would allow you to begin to get solid figures to work with.

In other words, it’s analysis by dartboard. (Hmm… $100 million sounds about right. I’ll use that).

Let's get into that list of revenue streams... 

Take sale of merchandising. Here’s how it is broken out:

  • Merchandise sold in the park or in a team store within X miles from the park is team local revenue based on retail margin (and subject to revenue sharing), but the team is subject to licensing fees, which are considered centralized (that figure is not subject to revenue sharing). 
  • Merchandise that is sold through MLBAM or team websites is BAM revenue. BAM retains the retail margin but licensing still goes to MLB Properties and then the teams (centralized).
  • Licensed merchandise sold by retailers is retailer's revenue but generates licensing revenue for MLB Properties, which is centralized.
  • In the case of merchandise with a player name on it, a portion of the sale goes to the MLBPA

Got that? Head hurt?

Now, one could determine figures for a player’s marquee value based upon the sale of a jersey with said player’s name on it, but how would you know if a jersey without a name was tied to the star player? Unless there is market research involved, or someone with ESP, it’s impossible to define -- a cacophony of other variables are at play.

What about the value that a player brings by way of television? At least here, we can try and use ratings metrics to begin with. If a star pitcher is taking the mound, one could look to the ratings to see if there are spikes on those days when he is up in the rotation (think Clemens, Schilling, Matsuzaka, etc.). In the case of a position player, the ratings figure become more difficult to associate. Are people watching because of the player? Because of the team he plays on (brand draw)? Because of the match-up? The numbers are flat in that regard. This much is certain: the value of winning is what drives interest. If the player with marquee value is adding wins, then it is the win, along with his star quality that has impact.

For example, let’s look at Alex Rodriguez when he was with the Texas Rangers. According to the Sports Business Journal, the Rangers saw “ratings drop 15 percent on FSN Southwest the season he joined the team as baseball’s highest-paid player. The RSN posted a 2.0 in 2000 and a 1.7 in 2001. Ratings jumped 19 percent the year after Rodriguez left, from a 2.1 in 2003 to a 2.5 in 2004.”

The argument Boras made was that A-Rod had not become iconic at that point. It wasn’t until he arrived with the Yankees that A-Rod’s star appeal was reached.

Maybe.

Now, this isn’t to say that there isn’t more interest when star players wind up on teams. It’s that it is lost in the surrounding noise (other factors that impact individual valuation). Back to the case of Rodriguez and YES Network ratings, ratings for Yankee games have increase 47 percent since he arrived in pinstripes. Now, is that because of A-Rod? The return of Clemens? The fact that the Yankees are the Yankees? Or, winning? It is, of course, all of the above.

Last thing… it’s not as if the day Alex Rodriguez was resigned with the Yankees, or the possible day that Johan Santana arrives on <insert new team’s name> doorstep, that an increase in ratings immediately translates to big bucks based on the deal for carriage. One would certainly see an uptick in terms of advertisement, but in terms of the television deal, by itself, the player would not impact it. That  revenue comes by way of subscriber fees from cable operators that carry the RSN. In the case of YES, according to the SBJ, YES pulls in about “about $2.25 per subscriber per month from operators.” For YES, that means that rate is locked in over the next 7 years. To try and determine how much a player’s value is worth in 7 years would mean trying to dissect that single player out of the winning and losing of the team, the cycling in and out of other possible players with star draw, and factoring brand draw, as but a few examples.

As I said, it’s all this background noise that makes claims of being able to define a distinct value to a player’s worth, outside of their win values on the field, anything but a way to sell books and articles. In some senses, you're double counting. If the player is adding wins (which increases interest in the team), and has marquee draw, then how do you define whether it was the player's win value, or marquee draw? Could be both. Could be one or the other.

There may be an exception. Someone rare. Someone new. Something wholly unique.

There is little denying that the arrival of Jackie Robinson in Major League Baseball was one of these players. A "new factor", which would parlay itself into star draw to the nth degree. Another case might be Fernando Valenzuela and the ensuing “Fernandomania”. Maybe, more recently, it has been Ichiro in Seattle, where the player, in that market, has spiked tourism from abroad to come see him play.

Maybe.

This is, after all, a discussion about the stars amongst the stars. When an author can show me how they derive the figures, and then can apply it to a case like when Wade Boggs went to the Devil Rays, and then it passes the smell test… then I think we’re getting somewhere. Someone may come up with this formula. Someone may actually be willing to publish it. If someone can come up with the data, who isn’t working for a club or MLB Headquarters… now that would be a feat that would rightfully sell some books.


Maury Brown

Maury Brown is the founder and president of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He is also an author for Baseball Prospectus, Basketball Prospectus and is an available writer for other media outlets.

Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.

 
 
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