News Briefs: Fall 2002

The Numbers:

Attendance: Down 6.1% overall. The Brewers, Pirates and Tigers all saw drops of more than 20% as the shine of their new ballparks rubbed off to reveal the dreadful teams within, while Jeffrey Loria worked his special magic on the Marlins, reducing their attendance (from an already low base) by more than 35%. Minor league attendance remained essentially steady, falling 0.4% to a total of 38,639,142 fans.

TV ratings: Regular season: Saturday Game of the Week up 12%, ESPN up 10%, ESPN2 up 17%, Fox Sports Net's 25-team regional average up 3%. Divisional series ratings rose 19%, while LCS ratings fell 7% and with an all-West Coast World Series depressing ratings in the East and Midwest, the Series finished with an 11.9 rating/20 share, both all-time lows. This was down 24% from 2001, and 4% below the all-New York 2000 Series.

Clubs supposed to reinvest revenue sharing payments. The memorandum of understanding between the players and owners provides that "each club shall use its revenue-sharing payments to improve its performance on the field." The document doesn't define this standard and says only that the Commissioner "has the authority to enforce this provision."

Draft reforms on indefinite hold. Although early reports had the new CBA establishing a world-wide amateur draft and eliminating compensation picks for free agent signings, when the dust cleared after the last day's frenzied negotiations, MLB and the MLBPA couldn't agree on what they had agreed to. They decided to postpone all changes in the draft pending the report of a joint committee which will study all aspects of the draft and report its recommendations early next season.

New CBA, new penalties for drug offenses. Players convicted of possessing hard drugs can be now be suspended for 15-30 days for a first offense, 30-90 days for a second, with an automatic one-year suspension for a third conviction ,a two-year suspension for a fourth. Players convicted of selling or distributing hard drugs will be suspended 60-90 days and fined $100,000 for a first offense, suspended two years for a second offense. Marijuana use and possession is punishable by fines, but no suspensions. These penalties don't apply to players who come forward and seek treatment, who receive their full salary for the first 30 days of treatment, half salary for the next 30 days. A first positive test for steroids subjects a player to a treatment program; the second through fifth positive tests bring suspensions of 15 days, 25 days, 50 fays and one year, all without pay. However, drug testing officials from other sports have criticized MLB's testing plan as essentially worthless: it doesn't test players during the offseason, and only once during the season or spring training.

Yankees waayyyy over luxury tax threshold. If the 2003 luxury tax (17.5% on the amount of payrolls in excess of $117 million) had been operative in 2002, the Yankees would have paid over $10.2 million on a payroll which, when computed for purposes of the luxury tax, exceeded $175 million. Only two other clubs would have paid any tax: the Texas Rangers (almost $2.4 million) and Los Angeles Dodgers (just over $500,000).

More clubs adopt variable ticket pricing. Six clubs – the Cubs, Indians, Rockies, Mets, Cardinals and Giants – now charge different prices for the same seats, depending on the date, the day of the week, the opponent or the promotion. For example, the Cardinals charge $1/seat more from May 31-September 7; the Giants charge more on Fridays through Sundays; and the Cubs and Rockies have three-tiered plans. The Mets' four-tiered pricing scheme may be the most complicated:

Gold Plan: 17 games, including Opening Day, weekend series against the Yankees, Mariners, Braves and Cardinals, and a midweek series against the Giants: tickets scaled from $16 to $53.

Silver Plan: 21 games, including weekend series against the Diamondbacks, Phillies, Reds, and Rockies and two midweek series against the Braves: tickets scaled from $14 to $48.

Bronze Plan: 27 games, including weekend series against the Expos and Padres and midweek series against the Cubs, Dodgers, Marlins, Expos and Brewers: tickets priced at 2002 level, $12 to $43.

Value Plan: 16 games, including midweek series against the Astros, Phillies, Brewers, Marlins and Pirates: tickets scaled from $8 to $38.

Commissioner to appoint MLB marketing task force. Although the members of the task force haven't been named yet, no panel chosen by Bud Selig will have the nerve to recommend the one action that would do the most to improve MLB's marketing and public image. Nor will they opt for the best alternative: a non-waivable six-figure fine for any MLB executive uttering any variant of "Fans of Team X are kidding themselves if they think their team will ever be able to compete."

Expos' RICO action stayed pending arbitration. Commissioner Selig and MLB President DuPuy won a significant victory when Miami federal judge Ursula M. Ungaro-Benages stayed the RICO action filed against them by the Expos' former limited partners pending arbitration of the partners' claims against companies controlled by Marlins owner Jeffrey Loria. However, the stay allows the plaintiffs to come back to court to apply for injunctive relief should MLB try to move the Expos before the arbitration is resolved.

Around the Majors:

Wrigley Field nears landmark status. The Cubs and the City of Chicago are close to a deal which would allow the Cubs to add close to 2,000 bleacher seats in return for landmark status covering key architectural features such as the scoreboard, marquee and ivy-covered walls.

Pohlad doesn't regret offering the Twins for contraction. During the Minnesota Twins' victory celebration after defeating Oakland in the AL divisional playoffs, owner Carl Pohlad was asked if he felt guilty about proposing the Twins for contraction. "I don't feel guilty in the least," he responded. "Why should I? It was a business decision."

Bernie Brewer gets club-financed A/C. When the Milwaukee stadium authority balked at spending $35,000 to air-condition the mascot's in-game home, the Brewers picked up the tab. "Bernie Brewer is an essential part of the entertainment experience at Miller Park, and we care about his health and well-being," assured new Brewers CEO Ulice Payne. Payne, the former managing partner of Milwaukee's Foley & Lardner, replaced Wendy Selig-Prieb late in the season.

Expos to play 22 home games in Puerto Rico. Pending final approval from the MLBPA, three Expos homestands would be relocated to San Juan, where Hiram Bithorn Stadium will be enlarged from 15,000 to 20,000 seats. MLB is reportedly planning to sell the club during the 2003 season, with interests from Washington, Charlotte and Portland, Oregon among the likely bidders. A wild-card in the process remains the likelihood that the former Expos limited partners who are plaintiffs in the pending RICO action will seek to enjoin any relocation of the team from Montreal.

Cardinals announce new stadium plans. The St. Louis Cardinals have announced plans for a $402 million "Ballpark Village" in downtown St. Louis, including $325 million for a new stadium they hope to construct by 2006. The Cardinals have agreed to pay $50 million upfront; to spend another $60 million developing two adjacent blocks; and to lease the park from a related corporation for at least 29 years at $14 million/year. Additional private money will come from 60 private suites and premium seat licenses for about 10,000 of the park's 45,000 seats. The Cardinals will also be responsible for operating, maintenance and capital expenses.

In late November the Missouri Department of Economic Development approved up to $29.5 million in tax grants, which the club expects to resell for $25 million. At the end of the club's 29-year lease in the new park, the Cardinals must either repay the money with interest or give the state an ownership share in the stadium. Given the likely value of a 30-year-old stadium whose sole tenant will almost certainly be demanding a new facility, I hope those legislators aren't expecting a check...

Copyright © 2002 Doug Pappas. All rights reserved.
Originally published in the Fall 2002 issue of Outside the Lines, the SABR Business of Baseball Committee newsletter.

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