First of all, the biggest expense of an individual franchise is usually the total of player salaries and benefit plans. Also, each team must pay a sum of money for national and local operating expenses such as stadium operations, scouting and player development, marketing, and ticket operations (Banks 1). .
Local and National Revenue.
With regard to revenues at the operating level, a franchise must begin with ticket sales from all the games they played in a given season. Professional teams earn revenue from local TV, radio and cable contracts also(Banks 1). Other areas of local revenue include stadium signage deals, money from suite sales, and concessions sold in the stadium (www.mlb.com). MLB teams also share an equal amount of money, which was $24.401 million in 2001, as a result of national revenue from Major League Baseball's TV deals and properties (Banks 1). And if a team makes it into postseason play, they stand to make much more revenue.
Analyzing the Oakland Athletics for the year 2001 will better illustrate how a team calculates its revenue at the operating level. The Oakland Athletics earned $24.992 million from ticket sales, $9.458 million from local TV and radio contracts, $2.686 million from postseason play, and $13.932 million in other areas of locally generated revenue (Banks 1). Add to this the $24.401 million that each team earns from the national level and the Oakland Athletics earned a total of $75.469 million at the operating level. (Banks 1) .
With regard to the Oakland Athletics and operating level expenses, they paid $43.821 million in player salaries and benefits, and spent $38.761 million on national and local expenses (Banks 1). Considering these numbers the Oakland Athletics spent $82.582 million in 2001 while only earning $75.469(Banks 1). In other words, at the operating level the Oakland Athletics lost $7.113 million in 2001. The Athletics were not alone however, in 2001 nineteen franchises lost money at the operating level for a combined total of $232.