Mo money, mo problems: how does market size affect teams' spending, and how much revenue should teams put in payroll?

OK, we're back to baseball today, not condiments, and with the Royals set to either spend or save a handful of millions on draft pick Eric Hosmer, money is today's theme.

There will be plenty of time to track the Hosmer scenario* but for some reason I've been thinking recently about how teams spend their money, how much of it they put into the product (read: payroll), and how that may or may not translate to on-field success.

*The vibes I'm getting are that a deal will likely get done, but it won't be easy, and feels like far less of a sure thing than the vibes around Moustakas this time last year.

So, I don't know if what I did here is relevant at all. I think it is. Maybe it's all garbage. I'm sure someone smarter than me will let me know.

But either way, I did all this math and organization and I'm not good at either so you guys are stuck with it.

And you might not like this, but the Royals are actually outspending their rank in media market, revenue, and franchise value.

Who knew?

The Tigers are outspending their revenue rank the most, and it's not even close, so no wonder owner Mike Illitch is set to slash payroll next year.

That $138 million for an underperforming team is 80% of the $173 million the Tigers made in revenue in 2007, according to Forbes.

Now, before we go any further, it probably needs to be pointed out that every year when Forbes comes out with its franchise valuations, owners all over the game tell anyone who will listen that the numbers are bogus, no way do they make that much money, and in what other industry would you have the owner trying to convince the public that his business is not profitable?

But, Forbes knows its stuff, and this is all we have to go on, so until they open their books to prove these numbers wrong, here we go.

Also, I know the Forbes report has been out a few months, so these numbers aren't really new, but I was curious how this would turn out because I haven't seen these numbers calculated like this, and besides, this is a free blog, so what do you want from me?

Anyway, the first number is the rank of each team's media market among MLB cities, the second is its rank in payroll, the third is rank in franchise value, and the fourth is the percentage of a team's total revenue used on payroll.

For purposes of this ranking, I'm putting the LA teams third because even though their city is the second market, there are two MLB teams in a bigger market. And so on with Chicago.

Toronto's market rank doesn't translate over the border, but they would likely rank somewhere between Philadelphia (7th) and Atlanta (12th).

OK, now looking at the numbers...

The Royals, mostly because their $131 million of revenue is next to last in baseball, rank in the middle, 17th, when it comes to spending its resources.

There's a lot you can take from this, like that the Yankees make more in revenue than the entire value of five franchises, including the Royals. As much as revenue sharing is closing the gap, it's still got some room for improvement from the perspective of the lower-money franchises.

Also, if you take 52% of revenue used on payroll as moderately aggressive (that number ties for 10th in MLB), that would give the Royals a $68 million payroll, which, with a few adjustments along the way, might buy the Royals that shortstop they're desperate for (Rafael Furcal?).

If they were Yankee aggressive, and spent 64%, that would give them an $84 million payroll, which, sadly, would only rank 15th in baseball this year.

The good news is that Milwaukee this year is proving you can put together a competitive and exciting team with the #15 payroll in baseball, and also you have to figure the Royals' revenue is going up next year as they open their new/renovated ballpark.

Anyway, here's the chart, digest at your own risk:

Mrkt; Payroll; Revenue; Franchise; % of revenue used on payroll
NYY 1, 1 (209), 1 (327), 1 (1306), 64% (2)

NYM 1, 2 (138), 3 (235), 2 (824), 59% (7)

LAA 3, 6 (119), 6 (200), 6 (500), 60% (6)

LAD 3, 7 (119), 4 (224), 4 (694), 53% (9)

CHW 5, 5 (121), 11 (193), 14 (443), 63% (3)