Is it because small market refers to the size of where they’re located? And the revenue wouldn’t justify, as a businessman, to pay out these large deals?
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Small market does refer to their location. Not sure which sport you are talking about, I assume baseball? New York has huge market revenue because they have a hug market to work with and can make massive advertising and television deals. A team like Milwaukee cannot compete with that. Even if the owners are billionaires (which not all are individual billionaires) many of them are looking at the franchise as a business. They want to make money. So they do not want to pay out more than they can make in any given year.
Most billionaires buy sports teams as personal vanity projects, more so than actual businesses. Most pro sport teams are not super profitable.
Let’s say you own a team in a small media market like Kansas City. Even if you spend top dollar to bring in all the best players, there’s a limit to how many people will watch your games on TV, and a limit to how high you can make your ticket prices. So if you spend a bunch of money, you’ll wind up barely breaking even, or maybe even losing money each year
Not all owners are billionaires, and some long term owners bought when economics were vastly different. Heck, the current owners of the Chicago Bears paid $250 for the team! And the family’s wealth is almost entirely tied up in the value of the franchise. But NFL teams have salary caps and much of the teams’ revenue comes from an even share of league revenue so NFL doesn’t have much of a small/large market issue.
But baseball has huge variances in income based on local broadcast deals, whether team owns stake in local sports channel carrying games, and such and it’s exacerbated by lack of MLB salary cap. You may have recent team buyers who could afford multi-billion purchases in the past few year while others paid only tens of millions a couple decades ago and just don’t have the deep wealth displayed by current team values and player salaries.
One of the reasons billionaires are billionaires is that they’re tighter than a duck’s arse.
Small market refers to the revenue able to be generated by the team – through broadcast rights, ticket sales, concessions, advertising, merchandising, etc.
Small market teams are usually in small cities (Cincinnati, Cleveland, Buffalo, Kansas City, Winnipeg, etc.) and by definition don’t generate revenue necessary to support a large team payroll.
The owner could just float the teams payroll out of their own personal money, but most billionaires didn’t get that way by pissing money down the drain like that.
It’s often more profitable (especially in leagues with revenue- sharing) to be at league minimum salary.
The team has value but you need cash to pay players which many small market teams lack. The teams value is high as it can be moved to a better market
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