What The Pirates & Twins Finances Reveal About MLB’s Revenue Divide

There has been plenty of discussion about how owners want a salary cap and how a cap is a non-starter for the players and MLBPA.

But even if the players agreed to a salary cap tomorrow, the disparities in revenue between small and large revenue teams in baseball would remain a difficult to solve issue for MLB owners.

In the past week, two different stories spelled out how the Pittsburgh Pirates and Minnesota Twins face financial issues. 

The standard refrain among many fans is to wonder how teams with $100-$125 million payrolls could possibly be breaking even, or losing money, when national revenues and revenue sharing for smaller revenue teams can reach $100 million or more a year.

Dive Deeper Into The Pirates’ Financial Limitations

Dejan Kovacevic’s in-depth report on the Pirates finances at DK Pittsburgh Sports explained in detail exactly how that can happen. 

In the story, he reported that the team had total operating revenues of $292.4 million in 2024, had an MLB CBT payroll of just under $123 million (which is salaries for the full 40-man roster plus benefits and other expenses) and actually lost money.

And he means actual losses. That $2.2 million loss does not include debt service, depreciation or capital expenditures that could create larger losses for accounting purposes.

According to Kovacevic, the Pirates lost $2.2 million in 2024 because MLB salaries and benefits were just 41.7% of the team’s total expenses. The team had $171.7 million in additional costs for administrative expenses, travel, draft and international signing bonuses, minor league player payrolls, stadium costs and more. According to the story, the Pirates’ debt is at the highest mark of Bob Nutting’s tenure because of loans taken out during the coronavirus pandemic.

How did this happen? I’d recommend reading Kovacevic’s full story for more detail, but it’s worth noting that according to his reporting, the Pirates saw their local TV revenue roughly halved in recent years after AT&T SportsNet folded. That was a nearly $25 million reduction in revenue. And the Pirates  brought in only $84.8 million in ticket and concessions revenue at PNC Park in 2024. That’s one of the worst figures in MLB.

That’s one data point, on a team that has finished fourth or fifth in its division each of the past nine years, and has just one winning record over that timespan. There’s an argument that Pittsburgh’s utter futility over much of the past 40 years has harmed the team’s relationship with its fans.

The Twins Face Similar Problems

But The Athletic’s reporting on the Twins finances is also worth reading. While it didn’t provide the same level of financial detail, it revealed the Twins have taken on $425 million in debt, much of it since the pandemic. And now the Pohlads, Minnesota’s current owners, are looking to sell.

Like the Pirates, the Twins have seen local TV revenue diminish as the RSN model has crumbled and attendance has struggled to return to pre-pandemic numbers. From 2010-2019, the Twins averaged 2.4 million fans per year. Since 2020, that number has fallen below 2 million. Their attendance dropped in 2024 even after a run to the ALDS the previous season.

Pro teams use a “per cap” (per capita) number to estimated expected total spending per fan on a trip to the ballpark. According to DK Pittsburgh Sports, the Pirates’ figure is $51 per fan in stadium and concession revenue. Using the same number for the Twins–which is admittedly very conservative–would account for roughly $25 million in revenue reductions following the drop in attendance.

Between that and reduced RSN fees, the Twins have likely lost $40 million or more per year in revenue in just those two income streams compared to 2019.

While the Pirates spent $123 million on MLB payroll in 2024, the Twins spent $160 million. If the team had the same ratio of other expenses to MLB payroll as the Pirates, that would put the Twins’ total spending in 2024 at $383 million. 

Even if the Twins spent far less on all the other expenses than the Pirates, that would still put their total expenses at well beyond $300 million. At that number, it becomes very possible to start to understand why the team has been taking on debt.

Big-Market Clubs Like The Braves Operate Differently

The Braves, as a publicly traded team, offer a rare window into big-market economics. In 2024, they reported $595.4 million in baseball revenue–more than double the Pirates’ total. The revenue breakdown looked like this:

• $347.9 million in “baseball event” revenue; ie. ticket sales, concessions, sponsorships
• $166.1 million in broadcasting revenue (local and national)
• $48.8 million in retail and licensing revenue (local and national merchandise sales)
• $33.7 million in other revenue

The Braves reported $504.1 million in baseball operating costs and expenses.

Revenues across baseball increased to $12.1 billion in 2024, up from $10.7 billion in 2019, but there are concerns that those increases are becoming more concentrated among larger revenue teams. The Dodgers, Yankees, Red Sox are among teams that are not impacted by the RSN bankruptcies that created local revenue reductions for many teams.

To own an MLB team at this point requires a level of wealth where no owner is digging into couch cushions to come up with dinner money. And at this level of wealth, the cachet of being the owners of one of a select 30-team club is valuable in itself. 

It’s also worth noting that franchises continue to grow in value. The Pohlads bought the Twins for $44 million in 1984 and are looking to sell them for $1.5-$1.7 billion. 

But even that isn’t as dramatic a number as it may seem. If the Pohlads had chosen instead to put their $44 million into a simple S&P 500 index fund in 1984, they would have made significantly more money. John Angelos purchased the Orioles for $173 million in 1993 and sold the team for $1.75 billion in 2024. Again, the stock market well outperformed that rate of increase.

These two recent stories do seem to spell out how smaller revenue teams may actually be struggling in the current MLB economic environment.

But there’s one last wrinkle in the DK Pittsburgh Sports story. It noted that the Pirates were at their most profitable in 2013-2015, when the team was spending the most it has spent to this day on payroll. That’s the last time the Pirates had a winning record, and winning brings with it the reward of more fans and more revenue.

This is the conundrum these owners face. Sports teams rely on fan interest to drive spending, but without an offseason of making significant moves, fan interest can often be a lagging indicator. When the Mets sign Juan Soto or the Dodgers land Roki Sasaki, it helps drive ticket sales and streaming TV subscriptions. If a team goes through an offseason without making significant moves, it can diminish fan interest.

MLB’s Local TV Model Will Change

Even if the team then outperforms expectations, it may take months before that results in increased ticket sales and streaming TV subscriptions. On the flip side, the Padres’ spending spree in 2023 didn’t help the team to make the playoffs (they went 82-80). But it did increase fan excitement. The club drew almost 300,000 more fans than it did during the 2022 season where the team made it to the NLCS. Attendance grew again to 3.33 million fans in 2024 as the team won 93 games.

If you want to understand another reason why commissioner Rob Manfred and MLBs plan to remake TV/streaming contracts in the late 2020s involves pooling the local TV rights, this helps explain it. In part, there is a belief for MLB that they can get larger TV contracts (and potentially more advertising revenue) by pooling the rights.

But such an approach would also reduce the risk of revenue fluctuations for teams. Under the RSN model, local TV revenue did not change significantly when fan interest increased or decreased. Cable subscribers paid for the RSN channels whether they watched them or not, and those RSN passed along hefty rights fees to MLB teams.

For instance, when the Astros were drawing TV ratings too small to be measured at times during a 51-win 2013 season, they still were getting an estimated $75 million a year or more in local TV revenues. Whether a million fans or zero fans watched a game made virtually no difference.

In a direct-to-consumer subscription model, such a decrease in fan interest would dramatically impact TV revenue, because fans have to make an active decision to buy a team TV subscription. 

If fans are excited about the upcoming season, they are more likely to pay the $100 or more for a season-long subscription to watch the team. The ability to pay on a monthly basis makes teams even more dependent on fan sentiment. If a significant portion of a team’s monthly subscribers cancel in the middle of a disappointing season, that’s millions of dollars in expected revenues that will have disappeared. 

If local TV revenues are pooled, owners don’t have to worry about that nearly as much. Yes, teams would lose the bump that comes from subscription bumps if a team has a magical season. But they would also know that they would be protected against dramatic dips in revenue when a 65-win season craters fan interest.

All of this will be the subject of much negotiating and discussion over the next several years. But these recent reports do a good job of explaining why smaller revenue teams may be worried about their spot in the baseball economic landscape.