News Briefs: Summer 2003

News Briefs: Summer 2003

All-Star Game ratings unchanged. Fox had predicted that the publicity associated with awarding home field advantage in the World Series to the All-Star Game winner could boost ratings by 10%. Instead the 2003 game drew a 9.5 rating and a 17 share -- exactly the same as last year’s extra-inning tie. Indeed, the All-Star Game was more popular in Japan than in the U.S., earning a 9.8 rating for a game that aired in Tokyo at 9:30 on a Wednesday morning. Soon thereafter MLB finally opened its first full-time regional office in Japan.

Yankees only club expected to owe luxury tax. I should save this sentence as a macro; the Yankees are almost certainly the only club which will ever owe the luxury tax. After a series of midseason salary dumps, the #2 Mets lowered their payroll-plus-expenses to just under the $117 million threshold. The Yankees were a mere $63 million over the threshold, which will probably cost them about $10.8 million in what MLB has renamed the “competitive balance tax.”

Expos still need a home for 2004 and beyond. To no one’s surprise, MLB missed a self-imposed deadline of the All-Star break to resolve the Expos’ situation. At press time no one knows where they will be playing in 2004, let alone thereafter. Recent developments:

The MLBPA announced its opposition to another split home schedule for the club. Inasmuch as the union must approve the 2004 schedule (a draft of which was due by July 1, though the deadline has been extended), it could block a repeat of 2003's 59 home games in Montreal, 22 in Puerto Rico.
Jeffrey Kessler, the attorney representing the Expos’ former limited partners in their RICO action against Jeffrey Loria, Bud Selig and others, warned that he would seek to enjoin any attempt to move the Expos or schedule all their 2004 home games in any city other than Montreal. Unlike the MLBPA, he remains amenable to a split schedule.
The Oregon legislature passed the first piece of Portland’s stadium financing plan, $150 million of bonds to be secured by income taxes on players and MLB officials and backed by a private guarantor. Portland Mayor Vera Katz, a major baseball supporter, believes that $60 million of the remaining $150-$200 million can be raised from a ticket tax, $25 million more from charter seat licenses, and the balance from some combination of hotel, vehicle and restaurant taxes; tax increment financing; and a contribution from the future owner of the Portland Expos.
Virginia’s bid for the Expos took a major hit when Arlington County said it was no longer interested in hosting the Expos. Neither is nearby Fairfax County. Virginia baseball officials say the state can override local opposition, but unless it does, four of the five leading sites have been removed from consideration. The fifth, near Dulles Airport, is probably too far away from downtown Washington, D.C. to satisfy MLB.
Frustrated Washington, D.C. officials said that while they remain interested in the Expos, they would make no further offers, and would not vote to fund a stadium, until MLB awarded the Expos to Washington.
Monterrey, Mexico has joined San Juan in offering to host all 81 Expos home games in 2004.

Agents, amateur players grumble over draft slottings. Before the amateur draft, MLB distributed “guidelines” for the signing bonuses to be offered players in each of the first 10 rounds of the draft. It subse-quently began policing these “guidelines,” warning clubs not to pay more than the “recommended” bonus – which in most cases was significantly lower than the same slot received in 2002. It’s only a matter of time before someone gets angry enough to sue over this practice.

MLB signs five-year, $500 million apparel licensing agreements. The base value of the new contracts, covering the 2005-09 seasons, is 70% higher than the deals which expire after the 2004 season.

ESPN regains Division Series rights. In a move sure to save baseball fans across America untold anguish, Fox and ESPN have agreed that for the duration of the current contracts, which expire after the 2006 season, ESPN and ESPN2 will air the Divisional Series games that formerly aired on cable outlets F/X, Fox Family and ABC Family. We can now forget about those channels once again.

MLB claims to contribute $76 million/year to Dominican economy. An MLB study showed that 79 Dominicans on major league rosters earned a combined $210 million, some of which made its way back to the Dominican Republic, and that the baseball academies operated by major league clubs contribute another $14.7 million. MLB says it’s directly responsible for 1,200 jobs, indirectly responsible for 900 more.

Around the Majors

Rockies make first cash call. The Rockies’ partners have been assessed $12 million toward the $20 million purchase price of bankrupt limited partner Oren Benton’s shares of the club.

Cubs ticket-scalping action goes to trial. Judge Sophia Hall, who is hearing the case without a jury, heard several days of testimony in mid-August. She has promised a ruling by Nov. 24. At trial, the Cubs admitted reporting to MLB the net revenues from the Tribune Company’s wholly-owned ticket brokerage, rather than their gross revenues, and admitted selling the brokerage $1 million worth of tickets on credit even though the brokerage opened with just $1,000 of capital.

Marlins making noises about new park. The Florida Marlins, who still suffer from the sweetheart lease terms original owner Wayne Huizenga gave himself at Pro Player Stadium, hope to relocate to downtown Miami. The club has reportedly offered $100 million toward a new retractable-roofed park, the cost of which is estimated at between $325 and $400 million.

Proposed Dodgers sale remains in limbo. News Corp. is believed to have reached an agreement in principle to sell the Dodgers to Malcolm Glazer, owner of the NFL Tampa Bay Buccaneers. However, the deal has foundered over NFL cross-ownership rules, which forbid Glazer from borrowing against the Bucs to finance his acquisition of the Dodgers and would require the Dodgers to be independently managed unless Glazer flips the Bucs for an NFL expansion franchise in, or NFL rights to, Los Angeles.

Heavily indebted Brewers seek cash infusion. Brewers President Ulice Payne Jr. tried and failed to persuade a local businessman to invest up to $20 million in the club. The money would have been used to pay down the Brewers’ outstanding debt, which is so high that the club was unable to meet its commitment to contribute $50 million toward the construction of Miller Park. I can’t imagine anyone investing so much in the Brewers without demanding a major voice in club operations – a voice which principal owner and Commissioner for Life Bud Selig is unlikely to offer.

Mets’ alleged rent arrears rise to $4.56 million. A new audit by the New York City Comptroller’s Office shows the Mets owing $1,178,815 for 2001 underpayments, in addition to $3,381,816 owed from two prior audits.

Yankees’ holding company disintegrating. YankeeNets, formed four years ago to bring the Yankees, the NBA Nets and NHL Devils under common management, is expected to dissolve soon. The YES cable network will be retained, but otherwise each entity will go its separate way. YankeesNets founded over – surprise! – differences between George Steinbrenner and the basketball and hockey folks.

Phillies sell naming rights for $57.5 million. For its first 25 years, the Phillies’ new home will be known as Citizens Bank Park. The deal also obligates the bank to spend $1.5 million/year on advertising, about twice what it currently spends. Citizens Bank CEO Steven D. Steinour described the deal as "more than a name on the park. I characterize it as a partnership." He's not kidding: in addition to extensive signage in and around the park, the bank's logo will appear on Phillies stationery, press releases and even tickets.

Mariners’ ticket resale practices attract scrutiny. A Seattle anti-scalping ordinance bans the resale of tickets for more than their face value. The Mariners, who aggressively prosecute on-site scalpers, have found two ways to evade the ordinance for their own purposes. First, the Mariners’ Website allows season ticket holders to resell their tickets at a premium, with the club receiving a percentage of the price, so long as the seller lists a zip code outside the city of Seattle.

Second, the club is now selling tickets with no stated face value. Before Safeco Field opened, these tickets were available to fans who purchased “charter seat licenses” – the right to buy these premium seats at face value. The Mariners now offer the unsold charter seats through their Website on a per-game basis, at a price which falls as game day approaches. Eventually they’re released to Ticketmaster, which sells them at a fixed price. The same seats have a face value when sold as part of a charter seat package, or through Ticketmaster...but not, according to the Mariners, when sold through their Website.

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