The size of the TV market appears to play a huge role in the amount of money that MLB teams are willing to spend on their payroll.
I read a very interesting article on "End of Year" payrolls by Maury Brown. The Biz of Baseball had data on EOY payrolls going back to 1999, so I decided to look at the data to see if I could make any sense of TV market size and MLB payrolls.
First, I made a chart of all teams. It’s a jumbled mess, and about the only thing I knew for sure was that the Yankees consistently spend more than any other team.
Then I decided to break the team spending down by TV Market size. I found a recent report that listed the TV markets and the respective MLB teams. Then I charted the Top Five TV Markets teams. The top three markets each have two teams, so eight teams are represented altogether. The teams (and market size) are:
(1) Yankees and Mets
Then I charted the bottom five TV market teams. The teams are:
Finally, I compared the average payrolls of the clubs in the top five markets with clubs in the bottom five. The left vertical axis represents payrolls, while the right vertical axis represents the percentage the top teams are above the bottom five (on average). The thick green line is the difference %.
If you are a fan of a small-market team like the Royals, this chart is a little disturbing. Both in real dollars and percentage, the small market teams are losing ground to their big brothers. The difference was over 100% in 2004 and 2011.