News Briefs: Spring 2003

News Briefs: Spring 2003

Opening day average salary up, median down. 2003's average salary of $2,555,476 is 7.2% higher than the 2002 Opening Day average, but the median continues to drop: $800,000 this year, down from $900,000 in 2002 and $975,000 in 2000.

Ticket prices up 2.8%. According to Team Marketing Report, the average MLB ticket now costs $18.69. The Boston Red Sox charge the most: their average of $42.34 is fully 70% higher than the second-place Yankees. Montreal remains MLB's best bargain, at $9.00 (U.S.). Anaheim and Minnesota posted the largest percentage increase, while Texas slashed prices 11.4% and Tampa Bay's declined by 8.5%.

Surprise! Yankees remain MLB's most valuable franchise. Forbes values the Yankees at $849 million, up 13% in 2002. That's over $350 million more than the #2 club, the crosstown Mets, who are worth $498 million. The Cubs and Twins posted the largest gains in percentage terms, while Bud's Brewers lost 14% of their value. Forbes estimated an average 2002 operating loss of $1.3 million/team, or about $40 million for MLB as a whole. At one extreme, the Mariners earned $23.3 million net of revenue sharing; at the other, the Rangers lost $24.5 million.

More non-US players than ever. 230 of the 827 players on Opening Day 25-man rosters or disabled lists -- 27.8% -- were born outside the United States. This percentage is up from 26.1% in 2001 and 19.0% in 1997. The Dominican Republic, Puerto Rico and Venezuela contributed the most major leaguers, but 14 other countries were represented.

Early season attendance down 4.6%. Meanwhile, minor league attendance has increased by about the same percentage.

Selig says he'll step down in 2006. In late April, Commissioner Selig told a group of sports editors that he will retire when his current contract expires on December 31, 2006. I'll believe it when I see it -- particularly since the Major League Constitution expires the same day, and the new CBA expires on December 19, 2006. MLB won't, and shouldn't, install a new Commissioner just as labor talks are resuming.

Expos' 2004 home still undecided. Major League Baseball still hopes to find a new home, and a new owner, for the Montreal Expos before the 2004 season. These hopes are dimming, however, as local governments aren't opening their wallets as fast, or as far, as MLB had hoped. MLB's attitude was summarized by Jerry Reinsdorf, chairman of the relocation committee. When informed that Washington, D.C.'s stadium financing plan called for a mix of 2/3 public money to 1/3 private money, Reinsdorf responded, "Two-thirds/one-third is fine, but three thirds/no thirds is more of what we had in mind."

Here are the offers being discussed at press time. None has actually been approved by the relevant legislature. In addition, the judge hearing the RICO action against Jeffrey Loria, Bud Selig and others has ordered that while the case is pending (an arbitration against Loria must be heard first), MLB must give at least 90 days' notice of any attempt to move or sell the Expos.

Washington, D.C.: $338 million, including $75 million toward construction of a new park; $15 million to renovate RFK Stadium for interim use; and $48 million for interest and financing costs. The club owner would be expected to contribute another $125 to $150 million. The anticipated $24 million/year in financing costs would come from a 10% tax on concessions, parking and admissions ($10.1 million); a graduated tax on D.C. businesses with more than $3 million/year in gross revenue ($9 million); and a special income tax imposed only on major league baseball players ($4.5 million). MLB and the MLBPA have both voiced strong opposition to the tax.
Northern Virginia: $285 million toward the $400 million cost of a new park, with the bonds to be financed through sales and income taxes at the stadium, including a special levy on the salaries of players and club officials ($8.3 million); an admissions tax ($8.3 million); rental of retail space at the stadium ($1.5 million); a hotel tax in Alexandria and Arlington and Fairfax Counties ($1.5 million); and rental of the stadium for other events ($0.5 million).
Portland, Oregon: Roughly $250 million in state and local support toward a $350 million ballpark. The state's share of $150 million would not be an official obligation of the state; if a new tax on MLB player and executive salaries didn't cover the debt service, either the legislature or a yet-to-be-named guarantor would have to come up with the difference. Local support would come from increases in the hotel/motel and car rental taxes, plus tax increment financing.

All-Star Game winner to get home field advantage in World Series. The MLBPA accepted the owners' proposal on a two-year trial basis. As part of the deal, All-Star rosters will expand from 30 to 32 players.

Original list of contraction candidates revealed. MLB documents which became public in March reveal that in July 2001, MLB officials identified the Anaheim Angels, along with the Devil Rays, Twins and Expos, as possible contraction targets. The plan called for contracting the Angels and moving the Oakland Athletics to Anaheim. This can be called the semifinal list of contraction candidates. The quarterfinal list, prepared in December 2000, contained eight names: the four clubs above plus Arizona, Florida, Kansas City and San Diego. With the Diamondbacks and Angels both winning the World Series one year after being targeted for possible elimination, the Twins and Expos are hoping the pattern repeats itself.

Around the Majors

Angels sold for $184 million. The purchaser, Arturo Moreno, is a fourth-generation Mexican-American whose fortune, estimated at $940 million by Forbes, comes from Outdoor Systems, Inc., a billboard company sold to Infinity Broadcasting Co. in 1999. The purchase price seems surprisingly low: Forbes had valued the Angels at $225 million, and Disney had demanded $250 million for them in 2001. The other clubs owned by giant media corporations, AOL Time Warner's Atlanta Braves and News Corp.'s Los Angeles Dodgers, are also reportedly for sale.

Cubs' ticket scalping plan leads to legal, public relations trouble. Last summer the Chicago Cubs invented a new way to hide revenue from their fellow clubs: scalping their own tickets. The Cubs set up Wrigley Field Premium Ticket Services, a nominally separate entity, and sold WFPTS thousands of prime seats at face value without ever offering them to the public. WPFTS then offered the tickets to the public at scalpers' prices – for the series against the Yankees, $155 for a $30 bleacher seat or $1,500 for a $45 front-row box seat. Several ticketholders sued under an Illinois law which forbids the presenter of a sporting event from selling tickets above face value, and a local judge recently certified the case as a class action. Disclosure of the scheme by Greg Couch in the Chicago Sun-Times (the Tribune seems strangely uninterested...) has infuriated many of the Cubs' most loyal fans, especially those who tried and failed to buy these tickets at the box office. MLB may also be interested, since the tactic seems to be a way for the Cubs to report the face value of the tickets for revenue sharing purposes while actually receiving much more.

White Sox sell naming rights for $68 million. After playing in Comiskey Park for 92 years, the White Sox will call U.S. Cellular Field home through the 2025 season. The deal was announced simultaneously with a 15-year extension of their lease.

Brewers' roof still acting up. Miller Park's pivoting stadium roof has been plagued with problems since the park opened. The pivot system was repaired during the offseason at a cost of $5 million, but now four of the 10 motors that power the system have failed prematurely. According to the contractor, the retractable roof, which was originally budgeted at $46 million, wound up costing $133 million.

Twins win right to keep finances private. The last remaining piece of the lawsuit over contraction was an attempt to local media to gain access to 9,000 pages of financial documents produced by the Twins. A Minnesota appellate court has affirmed a lower court ruling that the state's open records law doesn't apply to these documents, which were obtained by subpoena and subject to a protective order of confidentiality.

Expos' first "home" games in Puerto Rico draw well. Hoping to reduce its losses on the Expos, MLB moved 22 of their home games to 19,000-seat Hiram Bithorn Park in San Juan, Puerto Rico after a promoter guaranteed $350,000 per game. Expanded to an 81-game home season, that guarantee would total $28,350,000, which is more than seven clubs' 2001 home gate receipts. Puerto Rico welcomed MLB by imposing a 20% income tax on player salaries for games played in the commonwealth, though for most players this will simply offset taxes they would have paid elsewhere.

NYC audit claims the Mets owe $3.4 million in back rent. The city claims that the Mets, whose rent payments are tied to revenues, deducted too much of their revenue-sharing payments from the gross reported to the city. Another part of the dispute involves the small, rotating ads located behind home plate. The city's lease entitles it to 10% of scoreboard advertising, but the Mets claim that these small signs, visible primarily from the center field camera, should be treated as TV ads.

Padres prepare to play in Petco Park. The pet supply company paid $60 million for 22 years of naming rights to the Padres' new stadium, which is scheduled to open next April.

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