Alex Rodriguez 2000

Costs & Revenues

The A-rod signing the best player in baseball case’s information provided by Major league Baseball on the Texas Rangers’ 2000 season was used to determine the revenues and costs.

Costs

Cost of Texas Rangers came from 2 ways

1) Player Payroll

2) Administrative

I. Player Payroll

The existing payroll for the Texas Rangers' 2000 season was $70,795,921. Looking at the player payroll for the other MLB teams, payroll amounts varied greatly between the Minnesota Twins $16,519,500 and the New York Yankees $92,538,260. Based on this information, it was assumed, for this analysis, that the Texas Rangers' player payroll would remain constant at $70,795,921, as they could just as easily decrease their payroll as increase it.

II. Administrative

Administrative (operating) expenses were assumed to be similar for each MLB team, and were calculated to be $55,664,927 for the Texas Rangers. This number was calculated by summing up the player payroll for each MLB team, and using the statement that salaries accounted for approximately 50% of total league expenses, this same number was used as the sum of each MLB team's administrative expenses. Since these costs vary little from team to team, this number was divided by 30 to give the administrative expense for the Texas Rangers' 2000 season. Just as the existing payroll cost was assumed to remain constant for the analysis, the administrative expense for the Texas Rangers is assumed to remain constant.

Revenues

We were given the total revenue generated by the Texas Rangers as $126,500,000 for the 2000 season. This revenue was divided into three categories:

-

- Local Revenue

- Central Fund

- Revenue Sharing

I. Local Revenue

The Texas Rangers stated that 87.4% of their total revenue was made up of local revenue, which is equal to $ 110,561,000.00. Local revenue was broken up into the following local revenue sources:

- Ticket Sales

Ticket sales were calculated by multiplying the Texas Rangers'...