How Baseball Owners Are Able To Pay Huge Contracts

Fans money only do not make baseball owners and players rich.



Mike Trout, Bryce Harper and Manny Machado are getting more than a billion dollars to play baseball throughout the 2020s and into the 2030s. Major League Baseball is flushed with revenue but it should be noted without Ronald Reagan and the Congress class of 1984 and the class of 1986, baseball owners or sports owners in general, would not be able to pay out a billion dollars in salaries to three players. If baseball or any other American sports league depended on fans to foot the bill, Trout, Harper and Machado would be getting a fraction of that money. In 1984, Reagan signed the Cable TV Act into law and what that did was socialize cable TV. If a subscriber wanted just ESPN or one of the few regional sports networks that existed in 1984, that subscriber would have to take CNN and the Weather Channel. Cable TV system operators were able to bundle cable TV networks into one tier and charge for basic service, or basic service and expanded services. Sports owners found a new revenue source in cable TV and it produced billions of dollars for them.

In 1986, Reagan signed a tax code revision which allowed municipalities to fund stadiums and arenas. Under the right set of circumstances, an owner could sign a contract that gave him or her 92 percent of the venue revenues and left municipalities with the rest to pay down the debt. Because eight cents on a dollar was not enough to pay both principle and interest, other taxes were raised or municipal workers were fired. Owners got all sorts of revenue streams out of new places and taxpayers picked up the tab. Mike Trout has a new deal with Angels owner Arte Moreno. Anaheim has one year left on a deal with Moreno who is looking for a new stadium to go with his lucrative cable TV deal.

Los Angeles Angels catcher Martin Maldonado, center, catches the ball, as Baltimore Orioles’ Manny Machado nears home to score on a single by Chris Davis, with home plate umpire Brian Gorman, right, watching, during the sixth inning of a baseball game in Anaheim, Calif., Thursday, May 3, 2018. (AP Photo/Alex Gallardo)