News Briefs: Summer 2002

News Briefs: Summer 2002

New CBA negotiated without work stoppage. On August 30, the strike date set by the MLBPA, the owners and players reached agreement on a new CBA just hours before the first game would have been affected. The terms are detailed in an accompanying article. The owners subsequently ratified the deal by a 29-1 vote, with only the Yankees opposed.

On eve of labor showdown, fewer fans and more sympathy for owners. In an ABC poll taken August 21-25, 28% of respondents indicated they were baseball fans, down from 44% in March. Respondents sided with the owners by a 38-26% margin. A USA Today poll of fans conducted August 19-21 showed 43% favoring the owners' side, 30% the players'.

Despite Commissioner's warnings, all teams make payroll. The 2002 All-Star weekend was supposed to be the apex of Bud Selig's career in Organized Baseball. Instead it turned into a nightmare which started with a business columnist in his hometown paper urging him to sell the Brewers to someone who could run the club better, and ended with the Commissioner practically booed out of his home park after declaring the All-Star Game a tie.

The day after the All-Star Game debacle, Selig decided to make something else the story. Out of the blue, he told reporters that one club (believed to be the Tigers) might not be able to make its next payroll and another (most likely the Devil Rays) might not survive the season. MLB President Bob DuPuy and Vice President of Administration John McHale quickly disavowed Selig's comments, insisting no club was at risk of going bankrupt this season, but Selig's comments fueled another round of negative publicity for every small-market or debt-laden team.

This wasn't the Commissioner's first bizarre comment about baseball economics this season. In May, while insisting that MLB was committed to contracting by two to four teams, he said that six to eight clubs might not survive another 18 months – thus raising the specter of two to six failing businesses spending millions of dollars they don't have to buy out their similarly situated brethren.

One "aberration" sets AL consecutive-wins record; another leads division by 14 games. In early August Commissioner Selig called the success of the Minnesota Twins, who opened the season with MLB's fourth lowest payroll, an "aberration." Shortly thereafter the Oakland Athletics, who began the year with MLB's third lowest payroll, broke a 96-year-old AL record by winning 20 games in a row. Meanwhile Selig's Brewers have the NL's worst record despite outspending Minnesota and Oakland by $10 million.

MLB's Canadian rights holder buys out last year of contract. The Score, the smallest of Canada's three national TV sports networks, paid C$12 million to buy out its C$20 million contract to air midweek and Sunday night games in 2003.

World Series ticket prices unchanged for 2002. Box seats will sell for $175 and $145, with reserved seats costing $125 and $110, bleacher and general admission running $60, and standing room available for $40. Teams set their own prices for the first two rounds of the postseason, but MLB guidelines recommend a range of $40-$80 for the LCS, $17-$45 for the divisional series. (If the Red Sox make the playoffs, they'd have to cut prices to meet this range.)

MLB and umpires spar over use of computerized ball-strike tracker. The umpires object to MLB's use of the QuesTec Umpire Information System for evaluating their performance, claiming that the device doesn't accurately measure the location of pitches. The World Umpires Association has formed a panel of physicists and engineers to evaluate the equipment.

Around the Majors

Red Sox, vendors battle over access to street outside Fenway. In an attempt to increase concession revenue, the Boston Red Sox have begun erecting turnstiles on Yawkey Way and allowing only authorized vendors to sell in the area directly in front of the park.

Cubs lose bid for more night games, larger bleacher expansion. The City of Chicago rejected the Cubs' request to play 30 night games per year at Wrigley Field instead of the 18 authorized by current law, denied the Cubs' request to erect pillars on the sidewalk to support an expansion of the Wrigley Field bleachers, and directed the club to pay market rent for city-owned land adjacent to the park that the Cubs had been using for free. However, the city sided with the Cubs in their dispute with the owners of nearby buildings who sell tickets to watch Cubs games from their rooftops, prompting the parties to open negotiations over the proper amount

Twins' new stadium proposal dead – for now. The plan passed by the Minnesota legislature this spring wasn't enough to persuade the St. Paul city council to hold a referendum on the necessary taxes – particularly since the Twins refused to commit to contributing their share of the money if the referendum passes, or even to staying in Minnesota. MLB's promise not to contract until at least 2007 may change matters, especially as the period of the Twins' guaranteed existence now approaches the life expectancy of 87-year-old owner Carl Pohlad. With any other owner, the Twins would have a much easier time winning public support for a taxpayer-subsidized ballpark.

Expos remain in limbo for 2003. When Major League Baseball bought the Montreal Expos during the offseason, it was widely assumed that the Expos would be moved or contracted before the 2003 season. This assumption has become much more tenuous now that the owners have agreed not to contract before 2007 and the attorneys representing the Expos' former limited partners in their RICO suit (see below) have vowed to seek an injunction against any attempt to move or sell the team. The draft 2003 schedule shows the club remaining in Montreal.

Fred Wilpon group now sole owner of Mets. After a dispute which spilled into the courts (see below), Fred Wilpon and his Sterling Equities real estate partners bought Nelson Doubleday's 50% of the Mets for a reported $137.9 million. The figure represents half the Mets' $391 million appraised value, after accounting for its outstanding debt.

Yankees have pro sports' most valuable brand name. A FutureBrand survey found the Yankees' brand worth about $334 million, $34 million higher than the #2 Dallas Cowboys and almost $200 million more than any other baseball team. Next on the list were the New York Mets ($135 million), Boston Red Sox ($111 million), Los Angeles Dodgers ($96 million, Seattle Mariners ($86 million), and Atlanta Braves ($84 million). Darren Rovell of ESPN.com reported that the Yankees' figure is comparable to the value of the Four Seasons Hotel brand.

Athletics renew stadium lease through 2007. Oakland will pay $500,000 in rent in 2003-05, rising to $550,000 in 2006 and $600,000 in 2007, plus 50 cents per ticket sold over 2,000,000/year. The lease contains three one-year club options and a $250,000 escape clause if the club wants to break the lease before 2007. Oakland's current deal provides for the team to pay about $1 million/year in maintenance and game-day costs, but no rent.

The Docket

Minnesota news organizations lose bid for Twins documents. Following the settlement of the Metropolitan Sports Facilities Commission's lawsuit against the Minnesota Twins, several news organizations sued for access to the 9,000 pages of documents produced by the Twins and a document filed by MLB which detailed loans made by Twins owner Carl Pohlad's banks. The judge held that documents produced in litigation pursuant to a confidentiality order aren't covered by the state law governing access to public documents.

Former Expos limited partners file RICO action against Loria, Selig, others. The suit, filed in federal court in Miami, Florida, alleges that former Expos owner Jeffrey Loria, his stepson Jeffrey Samson and MLB executives conspired to eliminate major league baseball in Montreal. Unless MLB can get it dismissed on the pleadings, discovery in this well-financed action could prove acutely embarrassing to Selig and MLB. It also complicates MLB's ownership of the Montreal Expos, as the complaint requests an injunction against the sale or contraction of the Expos and plaintiffs have vowed to seek temporary relief if MLB tries to move the Expos out of Montreal.

Mets' valuation briefly heads to court. Last October Nelson Doubleday, owner of 50% of the New York Mets, agreed to sell out to Fred Wilpon, owner of the other 50%, for a price to be determined by a neutral arbitrator. Arbitrator Robert Starkey, selected by Commissioner Bud Selig, valued the Mets at $391 million – considerably less than Doubleday had anticipated, particularly since he claimed that Cablevision's Charles Dolan had offered $500 million for the club in May 1999. When Wilpon sued to force Doubleday to accept the price set by the arbitrator, Doubleday responded that as part of MLB's labor strategy, Wilpon, Selig and Starkey had conspired to "manufacture phantom operating losses" and "depress franchise values." Wilpon and Selig denied the charges – but within days Selig had become personally involved in negotiations, pressuring Wilpon to pay a larger portion of the purchase price in upfront cash. The parties settled there dispute shortly thereafter.

Cablevision loses motion to dismiss Yankees' lawsuit. Cablevision, Greater New York's largest cable operator, has been engaged in a seasonlong dispute with the New York Yankees regarding the terms under which Cablevision would carry the Yankees' new YES network. The dispute wound up in federal court when the Yankees sued Cablevision for allegedly violating the antitrust laws to prevent YES from competing with its own regional sports channels, MSG and Fox Sports New York. Cablevision had offered the Yankees a choice of 55 cents/month per subscriber on a basic channel, or their own pay channel for which they could set their own price and keep all the revenue. YES demanded coverage on a basic channel at a rate of $2/month in 2002, rising to $2.12/month in 2003 and rising again in 2004, but later offered to settle for $1.28/month in 2002, $1.75/month in 2003 and $2.28 in 2004. Cablevision refused.

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