MLB News: Spring 2000

Opening Day salaries rise 15%. According to USA Today, the average player on an Opening Day roster this year will earn $1,983,849, up from $1,724,310 last year. The median salary rose even faster, up from $495,000 to $700,000.

Ticket prices up 11.8%. The double-digit increase is misleading insofar as most of it is attributable to Detroit, Houston and San Francisco, the three clubs opening new parks this season. The Astros raised prices by about 50%; the Giants by 75%; and the Tigers by more than 100%. (Click here for a complete table of ticket prices and Team Marketing Report's Fan Cost Index for the 1991-2000 seasons.)

Realignment talks continue. MLB expects to vote in June on a proposal to realign the National and American Leagues. Under the likeliest scenario, the Arizona Diamondbacks and Tampa Bay Devil Rays will switch leagues. Arizona would then join the AL West, with Texas shifting to the Central and Cleveland or Detroit to the East. The AL would retain the current three-divisions-plus-wildcard format. The NL, however, would be divided into four four-team divisions with no wildcard: Montreal, New York, Philadelphia and Pittsburgh in the Northeast, Atlanta, Florida, Cincinnati and Tampa Bay in the Southeast, Chicago, Houston, Milwaukee and St. Louis in the Central, and Colorado, Los Angeles, San Diego and San Francisco in the West. The plan also provides for an unbalanced schedule and rotation of interleague games.

Umps: new bosses, new union. During the off-season, MLB consolidated both leagues' umpiring staffs under a central authority. Crews were broken up and reassigned, with each new crew including at least one umpire from each league. Meanwhile, Richie Phillips lost his last chance to retain power when the NLRB rejected his challenge to the election which designated the new World Umpires Association as the bargaining representative for major league arbiters.

Frank Robinson named Dean of Discipline. As part of its trend toward centralization, MLB named Hall of Famer Frank Robinson as its first vice president of on-field operations. Robinson, one of only eight men in major league history to have been ejected from games in five decades [I'll have much more to say on this topic at the SABR convention], is now responsible for fining and suspending errant players. His duties also include speeding up games and enforcing rules governing uniforms and stadium configurations.

Retired players win royalties from computer game manufacturers. Settling a series of lawsuits filed in Georgia, the makers of several games have agreed to pay retired players the same 8.5-9% royalty which active players receive for use of their names and images. The settlement also includes several hundred thousand dollars in back royalties.

Around the Majors

Comerica Park: lots of luxury suites, relatively few fans. The Tigers expect to earn about $10 million/year from the luxury suites in their new den. The 102 boxes, 12 of which are set aside for single-game rentals, cost between $90,000 and $125,000/season. Half are rented for four years with 6% annual price increases, the other half for seven years with 3% annual increases. However, Comerica hasn't boosted attendance as much as the Tigers had hoped, with average attendance running about 15,000 below capacity. Lesson: fans are smart enough not to pay twice as much to see a terrible team, no matter what the setting.

No cruise-ship cash for new Marlins park. Florida owner John Henry's proposal to obtain up to $320 million in public money for a new stadium by taxing cruise ship passengers $4/day died a quick death when Miami-Dade and Broward County commissioners voted unanimously to oppose the tax and Governor Jeb Bush said he'd veto it.

Surprise! David Glass buys control of Royals. The former Wal-Mart CEO, who has been running the team since Ewing Kauffmann's death, paid a reported $96 million for the franchise - almost $20 million below the competing bid submitted by a syndicate headed by Miles Prentice. MLB, which had rejected Prentice's bid last year, reportedly took all of 40 seconds to approve Glass's. Glass subsequently named five members of his family to the Royals' board of directors.

Dodgers add luxury suites, club seats. In the off-season, the Dodgers added 33 luxury suites ($125,000-$300,000/season each) and a 565-seat "Dugout Club" behind the plate ($195-$225/game each). If all of these seats are sold at full price, the club will recoup the $50 million construction cost in one season.

Expos open season with no English-language broadcasting. When none of Montreal's English-language radio stations met new owner Jeffrey Loria's price, Loria began the season with no English-language radio or TV. Since broadcaster Dave Van Horne was already under contract to the Expos, he's calling the club's games over an Internet-only audio site. Loria also accepted a 20-year, $100 million sponsorship deal with Labatt's, including $40 million for naming rights to the Expos' new park.

Yankees turn eight-figure profit in 1998. In connection with a bond issue floated by the new YankeeNets entity, the Yankees reported operating income of $20.1 million and net income of $12.7 million in 1998, when the club received $11.5 million in postseason revenue. Financial information for 1999 was incomplete. YankeeNets issued $200 million of seven-year bonds at the junk-bond rate of 12.75% interest, but less than $15 million of the proceeds will be used for operations. The remainder will be distributed to the club's owners or used to pay interest on the bonds - in effect, artificially reducing the club's profitability while putting more money in George Steinbrenner's pocket. YankeeNets subsequently bought the NHL's New Jersey Devils for $175 million, furthering speculation that the company plans to start its own sports cable network when the Yankees' deal with MSG Network expires after the 2000 season.

Pirates offer premium seat licenses for new PNC Park. 384 seats behind home plate are available for a license fee of $4,000-$6,000 plus ticket charges of $100-$125/game. (The lucky purchasers will also enjoy unlimited free concessions.) The 2,500 best seats in the infield grandstand will also carry license surcharges of $2,000-$3,000.

Padres announce new stadium plans. Their new 46,000-seat, $450-million park will be constructed in a downtown warehouse district. The park will incorporate a 90-year-old warehouse as part of its left field wall - the foul pole will be affixed to the building, 30 feet of which will be in play - and will feature a grassy area behind center field which can hold up to 3,500 fans. The new park is scheduled to open in 2002.

Cardinals propose new park for 2004. St. Louis estimates that a 47,900-seat park, to be built on the site of a parking garage owned by the Cardinals, will cost about $370 million, which they hope to fund through tax-exempt revenue bonds. Despite record attendance and extensive renovations to Busch Stadium, the Cardinals claim they need more luxury boxes and premium seats. In announcing the proposal, club president Mark Lamping said, apparently with a straight face, that the new stadium "would pay for itself."

Giants' Pac Bell Park an artistic and financial success. To construct the $319 million park without public money, the Giants borrowed $170 million, then sold seat licenses, naming rights, and advertising everywhere one could look. So far, their gamble has been rewarded: the Giants sold out the entire season in advance, and reaped tremendous favorable publicity for using their own money instead of leaning on the taxpayers. The club anticipates that its annual revenues will double, from $60 million to $120 million, easily covering the annual debt service.

Mariners report $2.6 million profit in 1999, thanks to Seattle taxpayers. Some 800 miles north of San Francisco, the Mariners claimed that moving in midseason from the Kingdome to new Safeco Field turned a projected $6 million loss into a $2.6 million profit. Virtually all of the reported gain came from increased advertising and premium-seat revenue - money kept by the club even though it contributed about 10% of Safeco's cost.

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

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