Welcome to our deep-dive series on the business of baseball. In this five-part series, we’ll break down how Major League Baseball (MLB) teams generate revenue, which clubs are turning profits (or bleeding cash), why franchise ownership is such a lucrative long-term play, how market size impacts team finances, and finally provide a financial snapshot of all 30 teams. Whether you’re an MLB insider or a casual fan, we’ve got you covered with relatable examples and the latest numbers from the 2024 season. Let’s play ball (financially speaking)!
Money isn’t distributed evenly in baseball. The market size of a team, essentially the population and corporate base of its home city/region, plays a huge role in its financial muscle. Let’s compare large-market teams to mid-and small-market teams and see how location fuels revenue strategy, spending, and on-field success (or failure).
The Titans
Teams like the New York Yankees, Los Angeles Dodgers, New York Mets, Boston Red Sox, and Chicago Cubs occupy the league’s largest markets, and they enjoy outsized financial advantages. Take local TV deals: the Yankees own their YES Network, and their revenue was about $657 million in 2022, by far the highest in MLB. The Dodgers, in glitzy LA, pulled in around $581M revenue in 2022. These teams consistently rank at or near the top in attendance, merchandise sales, and sponsorships. With more fans comes more ticket and concession money; with bigger media markets comes richer broadcast contracts. This translates to much higher payroll capacity. In 2024, the Mets and Yankees both started the season with payrolls in the $270–300M range, something no small-market team could dream of. Big markets also attract star players (who bring their own marketing boost). However, spending a lot doesn’t guarantee wins, notably, the 2023 Mets and Yankees each missed the playoffs despite league-leading payrolls. Still, over time the financial clout often correlates with success: the Dodgers have made the postseason 11 straight years, and the Yankees almost every year, partly because they can afford to pay for depth and talent. Off the field, big-market owners invest heavily in amenities and extras, the Cubs renovated Wrigley Field and developed real estate around it (restaurants, hotels) to further cash in on Chicago’s market, while the Dodgers and Yankees have massive marketing and sales departments to court sponsors.
Perhaps the biggest advantage is resilience: a New York or LA team can weather mistakes (like an expensive player bust) or a downturn in performance and still have money to spend next year. For instance, the Padres’ chairman noted that while San Diego lost $50M+, the Dodgers still turned a profit and could increase payroll. The big market teams are “financially healthy” almost no matter what. It’s like playing with a safety net.
The Underdogs
Now consider the A’s, Tampa Bay Rays, Pittsburgh Pirates, Kansas City Royals, Cincinnati Reds, Milwaukee Brewers, Cleveland Guardians and the like. These teams operate in much smaller metro areas with fewer people and fewer Fortune 500 companies to sponsor them. As a result, their revenues are drastically lower. In 2022, for example, the entire year’s revenue for the Oakland Athletics was about $212M. That is roughly one-third of what the Dodgers made. The Tampa Bay Rays, despite successful seasons on the field, had revenue around $248M in 2022 and continue to struggle drawing fans. The Detroit Tigers, often thought of as a mid-market team, ranked in the bottom third of revenue and profits in recent years, akin to true small-market clubs. When your annual income is $250M but the Yankees top $650M, it’s obvious you’re playing a different financial ball game.
Small-market teams thus rely heavily on revenue sharing. MLB currently pools 48% of local revenues and redistributes to help even the field. So a team like the Pirates gets a chunk of the Yankees/Dodgers pie. Even so, disparities remain, which affects spending. Small-market teams usually can’t retain all their star players (see the Cleveland Guardians losing free agents or the A’s constantly trading veterans before they get expensive). Their margins for error are slim, one bad contract can sink a small market team’s budget for years, whereas a big market club can just shrug and pay luxury tax. On the flip side, small-market teams have become adept at doing more with less. The Rays are the poster child: despite one of the lowest payrolls, they’ve made the playoffs frequently by investing in analytics, player development, and savvy trades. The 2024 Rays yet again contended in the AL East while spending a fraction of what the last-place Yankees did. Similarly, the Brewers and Guardians often field competitive teams by drafting and developing talent, knowing they can’t just buy a new roster. The “Moneyball” ethos originated in Oakland for a reason, if you can’t spend, you must innovate.
Middle Markets
Some teams fall in between. The St. Louis Cardinals and Atlanta Braves are in mid-sized markets but behave more like big-market teams in some ways. St. Louis is a smaller city, but it’s baseball-crazed. The Cardinals regularly draw 3+ million fans, boosting them to top-10 revenue (around $358M in 2022) and healthy profits (~$43M in 2022). That allows St. Louis to sustain a higher payroll than many peers (they’re usually around league-average payroll or above and were valued at $2.55B, pretty high for a mid-market). The Braves have a large regional fanbase across the South and have innovated with their mixed-use Battery development; as a result, Atlanta’s revenue is more in line with big markets (they were #8 in value at $2.6B in 2022) and they spend accordingly. So, market size isn’t everything. Fan passion and smart management count too. But by and large, being in New York, LA, Boston, or Chicago gives a team a big head start financially.
Does Big Spending = Success?
MLB has no salary cap, so big-market teams can and often do outspend the rest. However, the beauty of baseball is that money doesn’t guarantee championships. The 2023 World Series was won by the Texas Rangers (a mid-to-large market team that spent big that year), beating the Arizona Diamondbacks (a mid-market, low-payroll surprise team). In recent years, we’ve seen small markets like Cleveland reach a World Series and Tampa Bay consistently make playoffs. But sustaining success is tougher for small markets, if injuries hit or a crop of prospects busts, they can’t just throw money at the problem. Big markets have the luxury of mistakes: the Yankees can miss on a few free agents and just sign more, whereas a team like the A’s have to nail every draft pick to compete (and lately, they haven’t, hence 100+ losses and a temporary relocation to Sacramento). Financial might also allows large-market teams to retain their cores (e.g., the Dodgers keeping Clayton Kershaw his whole career, or the Yankees extending Aaron Judge for $360M). Small teams often face heartbreak, like when the Royals couldn’t pay to keep their 2015 championship core together, or when Milwaukee traded away star reliever Josh Hader to avoid a future salary hit.
Conclusion
Market size absolutely confers an advantage in MLB, big-market teams generate far more revenue, enabling higher spending on players, facilities, and everything else. This tends to correlate with more consistent on-field success, though it’s not a guarantee (smart management still matters). Large-market teams like the Yankees and Dodgers are financial juggernauts that can flex their muscle frequently, while small-market teams must be efficient, creative, and occasionally cycle through rebuilding when talent gets too pricey. MLB’s revenue-sharing and luxury tax systems provide some leveling, but not nearly a complete balance. The disparities are still huge (in 2024, the top revenue club likely made ~2.5× the revenue of the bottom club). For fans, this means expectations can differ: Yankees fans expect playoffs every year given the resources, whereas fans in Oakland/Sacramento/Vegas or Tampa may celebrate just reaching postseason despite shoestring budgets. In the end, good baseball can come from anywhere, but the big markets have a cushion that the little guys don’t. Teams like the Dodgers, Yankees, and Mets are “financially healthy” almost no matter what, while teams like the Marlins or A’s face constant financial challenges. It’s the eternal MLB storyline of Goliaths vs. Davids, and we all know that sometimes, David can still sling a knockout blow come October.
No responses yet