MLB News: Summer 2000

"Blue Ribbon Economic Panel" issues report. See accompanying article.

Owners postpone realignment, adopt unbalanced schedule. After failing to reach consensus on how to realign, the owners shelved the issue for another year. They also approved an unbalanced schedule (clubs in the four five-team divisions will play 19 games against divisional rivals, while AL West clubs play 19 or 20 and NL Central clubs play 16 or 17) and voted not to rotate interleague opponents, except for a scheduling exception which will allow the Astros and Rangers to play one another for the first time.

MLBPA extends labor deal through 2001. Surprising no one, the Players Association exercised its option to extend the current labor agreement through the 2001 season. No word when negotiations for the next contract will begin - before they do, Bud Selig will have to bang some heads together to unite the owners behind a single proposal.

Forbes warns of rising franchise debt. In the article accompanying Forbes' annual survey of franchise values, which ran in the June 12 issue, Michael Ozanian writes that from 1998 to 1999, major league owners' franchise debt rose from 30 cents per dollar of enterprise value (defined as the value of the team minus stadium debt) to 43 cents per dollar, largely due to the Yankees' restructuring and increased use of deferred money in long-term contracts. As a result, Ozanian believes that even if the next labor talks bog down, the owners' collective need for cash flow to service their debt will prevent them from locking out the players.

Richie Phillips' ex-umps reject partial reinstatement. Under the deal offered by MLB and tentatively accepted by the new union, the World Umpires Association, 10 of the 22 umps foolish enough to follow Phillips out the door would have been re-hired, with six more retiring and the remaining six bought out. Phillips' forces rejected the offer, preferring to take their chances in arbitration.

Scott Boras finds yet another draft loophole. Boras guided high school catcher Landon Powell, Baseball America's #2 junior prospect, to free agency by advising him to take the exam for a General Equivalency Diploma and declare himself eligible for the draft by notifying the Commissioner's office. Powell did so - and when the Commissioner's Office failed to notify teams that he was eligible, he slid through the draft unselected and can now negotiate with any club.

Women like baseball, too! According to a report presented to owners at their mid-July meetings, women make up 46% of a typical major league crowd. The report suggests several marketing initiatives directed to women, including "Father of the Year" awards, Ladies' Nights, Mother's Day promotions, a "Women's Corner" on the MLB Website, more player personality stories on daytime TV and in lifestyle sections of local newspapers, and (in the words of the official MLB press release), "in-park promotions designed to entertain - not patronize - female fans."

Around the Majors

Orioles seek authority to sell naming rights. Although their current lease at the government-owned, 100%-publicly-funded Oriole Park at Camden Yards doesn't allow the Orioles to auction the park's name to the highest bidder, the club thinks it should be allowed to do so anyhow. A club lawyer whines, "we deserve the same lease rights the [NFL] Ravens were granted." The Ravens paid the Maryland Stadium Authority $10 million for naming rights to their stadium, then resold them to PSINet for $105.5 million over 20 years.

Red Sox reach tentative, shaky stadium deal. In late July, the Red Sox, the City of Boston and the Commonwealth of Massachusetts agreed on a $665 million package to build a replacement for Fenway Park in the same neighborhood. The deal calls for the state to contribute $100 million for infrastructure; the city to provide $140 million for land acquisition and site preparation and $72.5 million for a new parking garage; and the club to finance the $352 million park. The team would be liable for all cost overruns on stadium construction, and $28 million in overruns for the city's share of expenses. The city's share would be financed by a 0.25% hotel tax; a $5 surcharge on 9,000 parking spaces around Fenway on game days; surcharges of 5% on tickets and 15% on luxury boxes; and a concessions surcharge.

The state legislature has approved the plan, which still faces spirited opposition within the Boston City Council. Even if the Council goes along, local interests have threatened to sue over the use of eminent domain to seize land for the park. And it's far from clear how the Red Sox - which are still owned by the Yawkey Trust and have no capital of their own to contribute - can raise $352 million without crippling the team for years to come.

Reds' managing partner buys naming rights to new park. Carl Lindner, who also owns the Great American Insurance Company, will pay a reported $75 million over 30 years to have the Reds' new stadium called "The Great American Ballpark."

Marlins abandon plan to build their own smaller stadium. Owner John Henry indicated he'd be willing to spend up to $80 million to build a 25,000-seat park which could later be expanded, but abandoned the idea when the club's architects estimated the initial cost of such a park at $180 million.

Twins' bid for outdoor ball rejected. MLB rejected the Twins' proposal to shift a three-game series against the Texas Rangers from the Metrodome to a 25,000-seat temporary park to be constructed near the Mall of America. The Twins touted the stunt as a way of rousing support for outdoor ball in the Twin Cities.

Expos' future remains cloudy. Jeffrey Loria, who last year bought operating control of the club, is buying out 13 local investors. Lending further credence to rumors that he may be planning to move the team, Loria surrendered the Expos' option on the land in downtown Montreal which had been selected for the site of a proposed new ballpark.

Yankees, MSG Network litigate over new cable contract. With the Yankees' landmark 12-year, $486 million cable deal about to expire, the club and MSG Network are battling over the meaning of a clause which gives MSG the right to match any other offer. The Yankees had structured an "offer" pursuant to which the club would sell its rights to a new entity controlled, and 95% owned. by the team. Under this deal, the Yankees would receive $838 million over 10 years, with rights fees starting at $65 million in 2001 and rising, at the rate of 7% per year, to $119.5 million in 2010.

MSG claimed this wasn't a valid third-party offer. It further objected to provisions in the deal which would force it to assume unrelated obligations, such as buying rights to the NBA's New Jersey Nets and giving the Yankees a 25% share of all net income which Cablevision, its parent company, earns from all sports channels in the United States. A state court judge sided with the network, preliminarily enjoining the Yankees from consummating the deal as structured. We haven't heard the last of this battle.

Athletics' interest in Santa Clara apparently blocked by the Giants. With the Coliseum renovated for football at the expense of baseball, and San Francisco's new park easily accessible from across the Bay, the Oakland Athletics are exploring a possible move to Santa Clara County in Silicon Valley. The Giants, who received territorial rights to Santa Clara County in the early 1990s when they were thinking of moving there, say they won't relinquish the territory.

Site of new Phillies park still uncertain. The mayor's office estimated that a stadium in downtown Philadelphia could cost $545 million, or almost twice as much as building in the north lot of the South Philadelphia sports complex. Although the Pennsylvania legislature approved funding for the Pirates and Phillies in the same bill, Pittsburgh's park will open before Philadelphia even breaks ground for its stadium.

Sale of Blue Jays near. Rogers Communications, Canada's largest cable company, is reportedly negotiating to buy 80% of the Blue Jays for roughly $120 million. Rogers also seeks to buy control of Canada's Sportsnet cable channel, in which it currently owns 29.9%.

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

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