MLB News: Winter 2000

MLB, ESPN extend regular season contract through 2005. Hours before the scheduled start of a trial stemming from ESPN's attempt to shift Sunday Night Baseball onto ESPN2 in September, MLB and ESPN settled their dispute with a new contract that amounts to a three-year, $700 million extension of their existing deal. MLB will continue to receive $35 million for the 2000 season and $40 million for 2001 and 2002, as provided in the previous contract - but also gets a $125 million signing bonus and rights fees escalating to $175 million in 2003, $200 million in 2004 and 2005. The new contract shifts contested Sunday night telecasts to Friday nights in September; adds additional highlights shows; and increases the number of ESPN broadcasts from 90 to 108 per season, 44 of which will air on ESPN2. The parties separately extended ESPN Radio's contract with MLB for $36 million over six years.

Owners enhance Selig's powers. Reversing a decision made in January 1994, the owners restored the Commissioner's power to act "in the best interests of baseball" regarding matters subject to an ownership vote. Commissioner Selig can now block trades; can unilaterally determine the owners' labor strategy if they can't agree; and can broaden revenue sharing pursuant to a resolution urging him to "take such action as he deems appropriate to ensure an appropriate level of long-term competitive balance in Major League Baseball." Selig's disciplinary authority was also enhanced: he can now fine teams up to $2 million (up from $250,000) and individuals up to $500,000 (up from $25,000). These powers expire when Selig leaves office. The owners also gave the Commissioner's office full control of all Internet rights, creating a new shared revenue stream.

Final luxury tax bills paid. 1999's taxpayers included the Yankees ($4,804,081), Orioles ($3,475,048), Dodgers ($2,663,079), Mets ($1,137,992) and Red Sox ($21,226). Over the three years of the luxury tax, which expired after the 1999 season, the Orioles and Yankees were far and away the biggest taxpayers: the Orioles paid over $10.6 million, though the Yankees got a lot more for their $9.9 million

Umpires repudiate Richie Phillips. By a 57-35 margin, major league umpires voted to decertify the Major League Umpires' Association and replace it with the Major League Umpires Independent Organizing Committee. Phillips unsuccessfully appealed the decision to the National Labor Relations Board. The new union must hit the ground running: the umpires' labor deal expired on December 31, and MLB wants to shift control of the umpires from the leagues to the Commissioner's office.

Court of Appeals slams MLB on collusion. In an action brought by Steve Garvey for a share of the $280 million fund set aside to pay damages to players affected by collusion in the mid-1980s, the U.S. Court of Appeals for the Ninth Circuit described the owners' behavior as "in many ways as damaging to baseball as the Black Sox scandal of 1919." The court continued: "The scope of the owners' deceit and fabrications in their 1980s efforts to cheat their employees out of their rightful wages was wholly unprecedented, as was the financial injury suffered by the ballplayers." Garvey was awarded $3 million.

MLB cracks down on underage signings. After a six-week investigation, Commissioner Selig directed the Dodgers to close their operations in the Dominican Republic for one year as punishment for falsifying Adrian Beltre's date of birth so he could be signed before his 16th birthday. Beltre lost his bid for free agency, though, as Selig concluded that Beltre and his representatives were aware of the chicanery. The MLBPA has filed a grievance. Investigations into other Latin American signings continue.

MLBPA appeals John Rocker suspension. After Sports Illustrated quoted John Rocker of the Atlanta Braves as insulting, among others, New Yorkers, homosexuals, foreigners and Japanese women drivers, Commissioner Selig suspended Rocker until May 1 and fined him $20,000. The MLBPA appealed the sanction as excessive, even as Braves player representative Tom Glavine spoke out against Rocker. The appeal (still pending at press time) was heard by baseball's new neutral arbitrator, Shyam Das - a naturalized citizen with a suspiciously foreign-sounding name who probably didn't make Rocker's Christmas card list.

Around the Majors

Reds gain Griffey, lose 14,000 seats in 2001-02. The Reds have announced that Cinergy Field's capacity will be reduced from 53,000 to 39,000 in 2001-02. 14,000 outfield seats will be removed after the 2000 season as part of the construction of a new park next door. Meanwhile, the estimated cost of the new park has risen from $235 million to $334 million, including $54 million in infrastructure improvements. The Reds are responsible for all stadium costs over the current estimate of $280 million.

The Reds originally predicted that the reduced capacity would have little effect on attendance, but their view may change now that the club has acquired Ken Griffey Jr. and signed him through 2008 for at least $50 million below his market value. Although the face value of Griffey's contract is $12.5 million/year, he will defer, without interest, $5.5 million in 2000 and $6.5 million in each of the remaining years. With the deferred money due over 15 years from 2009 to 2024, the present value of his nine-year deal is estimated at about $9.2 million/year.

Indians sold to Lawrence Dolan. As part of the $323 million transaction, the Tribe's public shareholders were bought out for $22.66/share. The Indians went public in June 1998 at $15/share, providing investors with a 50% profit in less than two years.

Marlins propose new park in downtown Miami. Marlins owner John Henry wants a new 38,000-seat, retractable-domed park in Miami's Bicentennial Park - and wants the taxpayers to pick up 3/4 of the estimated $400 million cost. Local officials aren't jumping at the chance to do so.

David Glass to bid for Royals. After MLB notified Miles Prentice that his bid for the Royals would not be approved, Wal-Mart CEO David Glass, who assumed control of the club after Ewing Kauffmann's death, expressed his own interest in buying the team. The Royals reported a profit of under $5 million in 1999, claiming it was their only profitable year of the 1990s.

Twins report small profit in 1999. The Minnesota Twins reported a profit of less than $5 million in 1999, thanks to $14 million in revenue-sharing money.

Jeffrey Loria takes control of Expos. The New York art dealer paid $50 million to buy 35% of the team, with the rest retained by the Expos' former ownership group minus Claude Brochu. The Expos have announced plans for a new $200 million outdoor park in downtown Montreal, which they hope to occupy by 2002. The new park will have 36,287 regular seats, 257 club seats behind home plate, 66 luxury boxes and room to add 3,000 bleacher seats in left field, and will be owned by the Olympic Installations Board, the same tax-exempt entity which owns Olympic Stadium. When asked how Montreal fans would react to sitting outdoors in April or late September, Loria optimistically responded, "New York fans don't mind wearing parkas to watch the Yankees in the World Series."

Yankees merge with New Jersey Nets. The new "YankeeNets" entity values the Yankees at $600 million, the Nets at $150 million. With the Yankees' record-setting 12-year, $486 million cable TV deal due to expire after the 2000 season, the YankeeNets seem poised to extract even more money from Cablevision. Towards this end, the YankeeNets named Harvey Schiller, former president of Turner Sports, as chairman and CEO, and are reportedly negotiating to buy the NHL's New Jersey Devils.

Phillies present stadium funding proposal. In a proposal submitted to the Philadelphia city council last November, the Phillies offered to pay $150 million toward construction of a new stadium and pay all maintenance and operating costs. In return, the club asked the city to contribute $90 million toward construction, pay $40 million to raze Veterans Stadium and replace it with a parking lot, and make a one-time payment of $12.5 million in the 11th year of the lease.

Padres contribute $47.8 million more toward new park. The money, which supplements the club's previous $115 million commitment, includes $17.5 million for construction and $30.3 million for infrastructure, including two parking garages.

Mariners deny responsibility for $100 million in cost overruns. With the final cost of Safeco Field reaching $517.6 million, the team and the Washington State Public Facilities District are pointing the finger at each other. The Mariners, who are contractually obligated to pay for the overruns, accuse the government of mismanaging the project; the WSPFD, in turn, attributes the overruns to the Mariners' last-minute design changes and the club's insistence that the park be finished as quickly as possible.

Copyright © 2000 Doug Pappas. All rights reserved.
Originally published in the Winter 2000 issue of Outside the Lines, the SABR Business of Baseball Committee newsletter.

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