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Updated: January 25th, 2012 10:45am
Mackey: Despite new stadium, Twins remain small-market in key areas

Mackey: Despite new stadium, Twins remain small-market in key areas

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by Phil Mackey
1500ESPN.com

Why didn't the Minnesota Twins sign Prince Fielder?

Or any other high-profile free agents?

And why won't they raise the payroll beyond $100 million?

Those are questions many fans were asking on Tuesday when news came down of Fielder's nine-year, $214 million contract with the Detroit Tigers.

Well, there are several reasons why scaling back the payroll is a wise move for the Twins in 2012.

And there are a few key reasons why it's unlikely they'll ever consistently spend money with the big dogs.

According to a Forbes list published prior to the 2011 season, the Minnesota Twins -- valued at $490 million -- ranked as the 12th-most valuable franchise in Major League Baseball, thanks to the added value of owning a brand new ballpark.

At $1.7 billion, the New York Yankees lapped the field, with the Boston Red Sox ($912 million) coming in second. Holding up the bottom end were the Pittsburgh Pirates ($304 million), Oakland Athletics ($307 million) and Tampa Bay Rays ($331 million).

As for overall annual revenue, the Twins ranked ninth prior to last season ($213 million), but that number was inflated due to 2010 being the team's first year in Target Field.

In 2010 the Yankees pulled in over $300 million in ticket revenue alone, including luxury suites. The Twins pulled in about $100 million in ticket revenue in 2010, and slightly less in 2011 -- still solid cash flow compared to what was generated at the Metrodome.

The worst teams in baseball, with the worst attendance, pull between $25-35 million in ticket revenue.

But even with massive improvements to attendance figures and revenue streams, the Twins still find themselves scrambling around mid-pack, or lower, in MLB's rat race.

And that's likely to continue due mostly to TV revenue -- or a lack thereof, compared to what other teams are raking in.

According to sources, the Twins' current TV deal with Fox Sports North, which began prior to the 2011 season, brings in $29 million per season -- again, solid cash flow, but Skittles compared to the $150 million-per-year deal the Los Angeles Angels reportedly just struck.

Or the $400 million in revenue earned annually by the YES Network -- a media outlet the Yankees own 34% of. Or even the deal the Texas Rangers reportedly signed, worth an average of $80 million per year for 20 years.

The Tigers' TV deal, according to a December Forbes report, is worth about $40 million annually -- a 10-year contract signed prior to the 2008 season. But because many of Fox's TV deals have opt-out clauses at the halfway point, the Tigers could wind up renegotiating for more money -- perhaps $50-55 million annually.

In 2012, TV revenue drives MLB team salaries more than ever before. Teams that rake in the most cash through lucrative TV deals stand the best chance at landing the best free agents.

And that TV revenue is driven by three main factors: Market size, ratings, and the percentage of TV households that subscribe to cable or satellite.

The Twins traditionally boast a top-five TV rating among MLB teams, but Minneapolis-St. Paul ranks as the 16th-largest market in the United States. Minneapolis-St. Paul also ranks 15th in TV market size -- the number of households that own a TV.

That market-size ranking drops significantly when looking at cable and satellite subscribers in each MLB market.

Percentage of TV households with cable and/or satellite:

Boston - 98%
New York (2) - 97%
Wash., DC - 95%
Seattle - 95%
Philadelphia - 94%
Miami - 94%
Pittsburgh - 94%
Tampa - 93%
Baltimore - 93%
Cleveland - 93%
Atlanta - 93%
Bay Area (2) - 92%
San Diego - 91%
Detroit - 90%
Chicago (2) - 90%
Denver - 90%
St. Louis - 90%
Los Angeles (2) - 88%
Kansas City - 87%
Cincinnati - 86%
Phoenix - 85%
Dallas - 84%
Houston - 82%
Mpls-St. Paul - 81%
Milwaukee - 80%

* List accounts for the 29 U.S.-based teams
** Courtesy of TVB.org

The Twin Cities area ranks ahead of only one MLB team in subscriber percentage.

Maybe people in Minnesota and Wisconsin have better things to do than watch TV.

Again, a $29 million per year TV deal is nothing to scoff at, and it currently brings in more money than the St. Louis Cardinals' TV deal, which reportedly earns them $14 million per year. But according to Forbes, the Cardinals will soon have the ability to opt out of their current deal and attempt to negotiate something much more lucrative.

A Twins official would not discuss the length of the team's current deal with FSN, other than to say, "we are in the midst of a multi-year telecast agreement," but it's believed to be in the neighborhood of 10 years. Even if the Twins did have an opt-out clause, it's unknown if they'd be able to earn more money annually by renegotiating at some point down the road.

The problem with the Twins' current TV situation is there's not a lot they can do to improve it. The market size is what it is, and the subscriber rates are what they are.

This isn't to say the team won't still maintain a $100 million payroll.

But understanding how TV revenue plays into team payroll is important.

Phil Mackey is a columnist for 1500ESPN.com. He co-hosts "Mackey & Judd" from 9 a.m. to 1 p.m. weekdays on 1500 ESPN Twin Cities.
Email Phil | @PhilMackey | Mackey & Judd
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