News Briefs: Spring 2001

News Briefs: Spring 2001

Opening Day salaries up 13.9%. AP’s salary survey of players on Opening Day rosters or the DL shows an average salary of $2,264,403. Alex Rodriguez & Co. aren’t getting all of it: the median jumped from $750,000 to $975,000. Hal Bodley of USA Today reports that as of Opening Day, 247 players had guaranteed multi-year contracts, which will earn them a collective $3.67 billion from 2002-11. The Rockies lead the pack with $388.8 million guaranteed to 10 players.

Ticket prices up 12.9% for 2001. According to Team Marketing Report, the average major league ticket now costs $18.99. The increase was steepest in cities with new or remodeled parks: Pittsburgh raised prices 82%, Milwaukee 55%, and Cincinnati, where 12,160 seats were removed from Cinergy Field to make room for the new park being built next door, jumped 43.4%. Montreal, Detroit and Seattle are charging less this year, while in the Paying More for Less department, Tampa Bay hiked prices 42.6%.

Forbes estimates average MLB team now worth $263 million. Franchise values range from the Yankees’ $635 million (far above the second-place Mets’ $454 million) to the Expos’ $92 million. According to Forbes, the average team turned a $4.3 million profit on revenues of $105.9 million. Forbesestimates that four of the five lowest-revenue teams, Oakland, Kansas City, Florida and Minnesota, turned a profit last year, while the greatest loss was sustained by the Los Angeles Dodgers. A complete table can be found at www.forbes.com/baseball.

Rumors of contraction circulate. Although most MLB owners and officials have been barred from discussing the topic, Commissioner Bud Selig has freely hinted that MLB is weighing the option of contracting by two to four teams. A two-team contraction would probably involve Montreal and Tampa Bay, with two of the Marlins, Twins and Athletics likely candidates if four teams were dropped.

But contraction is more difficult than it sounds. First, MLB has to persuade owners in the ego-driven world of pro sports to admit failure. Assuming this hurdle can be met, the parties next have to agree on a price – and with Washington, DC interests willing to pay handsomely for a relocated franchise, that price will have to be considerably higher than the present value of the Expos or Devil Rays in their current home. The net cost of a two-team contraction would likely exceed $10 million for each of the surviving clubs. MLB could also expect lawsuits from the affected communities and nasty, embarrassing Congressional hearings, particularly if Washington doesn’t end up with a team.

Then there’s the matter of what to do with the players. Even assuming the inevitable challenges from the MLBPA can be overcome, MLB would be responsible for honoring all existing contracts (including the Devil Rays’ free-agent fiascos) and dispersing all major and minor league players among the surviving organizations. Auctioning them off would reduce the net cost of contraction – but would also mock the rationale for contraction, since the best players would presumably wind up with the “haves.” This highlights the real problem with the arguments for contraction: if, as Commissioner Selig believes, “some teams can’t afford to compete,” lopping off the “least competitive teams” will do little or nothing to improve the relative status of the other “have-nots.” If MLB wants to do something about “competitive balance,” the solution is greater revenue sharing, not contraction.

Nine of 22 dismissed umpires reinstated by arbitrator. While rejecting the heart of Richie Phillips’ arguments, arbitrator Alan Symonette found that former NL president Leonard Coleman abused his discretion by not properly explaining why seven NL umps were discharged, and found that AL umps Drew Coble and Greg Kosc never officially resigned. In addition to Coble and Kosc, Gary Darling, Bill Hohn, Larry Poncino, Larry Vanover and Joe West are to be reinstated. Two more umps, Frank Pulli and Terry Tata, won reinstatement but have said they intend to retire.

Centralized MLB Web operations increase revenues, complaints. Last summer all major league clubs assigned their Internet rights to the newly-created MLB Advanced Media. The new entity has licensed exclusive Web radiocasting rights to all MLB games to RealNetworks for three years. MLB is guaranteed at least $20 million over this period from subscription revenues: a season subscription costs $9.95 through mlb.com, a third of the NBA’s price for half as many games, and includes a $10 gift certificate for MLB’s online store. The startup has not gone smoothly: in addition to the fans who objected to the concept of paying for Webcasts which had previously been available for free, others experienced poor-quality connections or found that they couldn’t connect at all. The newly-standardized Websites have also been criticized as poorly designed and buggy, particularly with respect to in-game updates.

Around the Majors

Marlins reach tentative stadium deal. The plan calls for a $386 million, 40,000-seat park with a retractable roof. Owner John Henry would contribute $120 million, with Miami-Dade County pledging $118 million from hotel taxes and the City of Miami adding $148 million more from a refinancing of city debt and continuation of a city parking surcharge. The plan still requires the approval of local voters and the Florida Legislature, which failed to pass several stadium-related bills before adjourning for the year. The Marlins claim losses of $9.9 million in 2000 and forecast a loss of up to $20 million for 2001.

Twins’ on-field success goes straight to the bottom line. At press time the Twins, with the majors’ lowest Opening Day payroll, had MLB’s second best record. Through 24 home games, attendance was up 86%; corporate sponsorships were up 30%, and TV and cable ratings had virtually doubled. Minnesota’s roster earns $24,350,000 – $9.5 million less than #29 Oakland, $30 million less than the hapless Devil Rays, and $67.6 million less than their divisional rivals in Cleveland. Efforts to obtain a new baseball-only park for the club remain stalled.

Jeffrey Loria increases ownership of Expos to 92%. Loria, who owned 24% of the club when he became managing general partner in late 1999, was the only partner to meet a cash call.

St. Louis lobbying for new ballpark. The Cardinals have offered to contribute $100 million cash plus the land, valued at $20 million, towards a new $370 million facility. The club proposes to finance the public share through bonds financed by the redirection of existing tax revenues, which wouldn’t require a popular vote, rather than the imposition of new taxes, which would. In a potentially related move, Pulitzer Inc., which owns the St. Louis Post-Dispatch, has purchased 4% of the club.

Devil Rays partners oust managing general partner. After three years of on- and off-field incompetence, the Devil Rays’ other investors had seen enough of Vince Naimoli. Naimoli agreed to step down after the remaining partners declared they wouldn’t commit any more money to the team so long as he was in charge. With Bud Selig’s help, the Devil Rays pried John McHale from Detroit to run the club.

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