News Briefs: Fall 2003

MLB News

Attendance down slightly, but games are shorter. MLB's final, unofficial attendance was 67,667,670 fans, an average of 28,055 per game. The Angels, Red Sox, Cubs and Yankees set all-time attendance records, and 15 of the 30 clubs posted increases, but overall the average was down 0.4% from 28,168. Those fans left an average of six minutes earlier, as the average length of a nine-inning game fell from 2:52 to 2:46.

TV ratings rebound. Fox's regular season ratings rose from a 2.5/8 share to a 2.7/8 share, the highest since 1999. ESPN's regular season ratings were essentially flat, falling from 1.06 to 1.04. Buoyed by the presence of, and early success of, the Cubs and Red Sox, postseason ratings jumped 28% overall, with World Series ratings rebounding by 9% and the LCS rating up a phenomenal 65%.

MLBPA considering collusion grievance. The union's suspicions, relating to the 2002-03 offseason as well as 2003-04, center around clubs' use of a central information bank to learn what other clubs are offering particular players; use of the "60/40" debt rule to deter some clubs from signing free agents; and the perceived effort to flood the market with players to reduce any one player's negotiating leverage.

MLB to sell $1.5 billion of debt notes. FleetBoston will lead the sale of $1 billion in one- year notes and co-manage the sale of $500 million of 10-year notes with Bank of America. This will be MLB's first publicly rated debt sale. The bonds are backed by revenue from television and radio broadcasts, licensing and sponsorship contracts. They will replace some of the $1.78 billion of bank loans and credit lines MLB (as opposed to the individual clubs) had in August 2002, on the eve of the labor showdown.

Failed drug tests mean mandatory steroid testing in 2004. The CBA signed in 2003 provided for random, "survey" testing of players for steroids in 2003, with mandatory testing to follow only if more than 5% of players tested positive. They did, even though the MLB drug testing program has been roundly condemned as ineffective by Olympic testing officials and pro-testing scientists.

Two lawsuits filed against MLB. In the first, Juri Morioka, a Japanese citizen who worked for 15 months as an administrative assistant for MLB, claims she was fired for complaining about anti-Japanese remarks from coworkers in MLB's International Department. The NLRB has already investigated, and rejected, her complaint, but Morioka hopes a federal court will be more sympathetic. I doubt it.

In the second three former players, Richard Moran, Ernie Fazio and Mike Colbern, have sued to force MLB to give them the same pension and medical benefits available to players who retired after 1980. They allege that they were discriminated against when the pension rules were amended to reduce the vesting period for pension benefits from five years to 43 days, and for medical benefits from five years to one day. Other groups of retired players have sued and lost on the same theory – but what makes this one special is that the plaintiffs further allege that by inviting ex-Negro Leaguers to participate in the pension plan on the same terms that they do, MLB unlawfully discriminated against white players.

MLB settles 11-year-old action. Tampa businessman Frank Morsani and his partners had purchased 42% of the Minnesota Twins in April 1984, hoping to buy the rest of the club from the Griffith family and move the Twins to Tampa. He alleged that Bowie Kuhn induced him to back away from the Twins by promising him first crack at an expansion franchise. Instead he was shut out of the expansion process, while also trying and failing to buy and move the Athletics and Rangers. Morsani sued in 1992, but procedural wrangling tied up the action for years. It settled, on undisclosed terms, shortly before the action would finally have come to trial.

Expos back in Montreal for most of 2004 season. At press time, MLB and the MLBPA were close to a deal which would allow the Expos to play 22 2004 home games in either San Juan, Puerto Rico or Monterrey, Mexico. Expos players originally voted down the proposed split schedule, but were reportedly willing to reconsider in return for scheduling concessions and some assurances with respect to the club's payroll.

Their future for seasons beyond 2004 remains murky. Northern Virginia's chances to win the club took a hit on Election Day, when Arlington voters re-elected the officials who had withdrawn two desirable sites from consideration. Washington, DC seems to remain the frontrunner, but recently a group from the Norfolk area surfaced and asked for MLB to consider their market, too.

Around the Majors

Cubs win lawsuit over ticket brokerage. Judge Sophia H. Hall ruled that the club did not violate Illinois anti-scalping laws when it set up a related corporation whose sole business was selling Cubs tickets at scalpers' prices; sold this corporation tickets for premium seats at Wrigley Field that had never been offered for sale to the public; loaned the corporation the money to buy these tickets; and took them back for full credit if they weren't sold for multiples of face value.

Marlins' stadium plan advances. The Miami-Dade County Commission has offered to contribute $73 million from hotel and sports facility taxes toward the estimated $325 million cost of a 38,000-seat retractable-roofed stadium in Miami. The Marlins, who have offered to pay $137 million and to cover cost overruns, will also change their name to the Miami Marlins if the stadium is constructed. The city of Miami and State of Florida are also expected to write large checks toward the proposed new park.

The Marlins' dreadful stadium lease, negotiated by former owner Wayne Huizenga with himself, meant that Huizenga made as much from the Marlins' postseason success as the club did. Huizenga got 30% of the concession profits, 62.5% of the parking charge and all the suite revenue, while the Marlins had to pay for all game-day personnel. The Marlins say that they earned only $6 million from the postseason, less than half what a similarly situated club could expect to earn, and claim to have lost $20 million in 2003. On the bright side, the Marlins, who have never won a division title and have finished above .500 only twice, have now won more World Series in 11 seasons than the Philadelphia Phillies have in 121.

Dodgers sold to Frank McCourt for $430 million. News Corp., which paid $311 million in 1998 for the Dodgers, their Vero Beach spring training facility, and their complex in the Dominican Republic, has agreed to sell the club to Boston developer Frank McCourt and others for $430 million. Commissioner Selig predictably reacted by whining about how much money the Dodgers had lost under Fox, and how the increased revenue sharing under the new CBA would somehow help a club that will pay more.

Brewers slash payroll, fire CEO, alienate entire State of Wisconsin. The Milwaukee Brewers' board of directors forced club President and CEO Ulice Payne, Jr. to resign after Payne revealed that the board wanted to reduce the Brewers' payroll from $40.6 million to $30 million in 2004, and probably maintain it at that level through 2006. The board did, however, come up with the $2.5 million or so needed to buy out Payne's contract. Angry legislators, who narrowly approved the sales tax needed to construct Miller Park after Brewer officials assured them they needed the extra revenue from a new stadium to field a competitive team, now want to audit the Brewers' books, and several prominent voices in the Milwaukee media have called on Commissioner Selig to sell the club.

During the Payne controversy, the Milwaukee Journal Sentinel discussed the Brewers' finances in considerable detail. They're expecting $15 million in revenue-sharing money in 2003 and more in 2004, which means that revenue sharing alone could fund more than half their major league payroll. Existing owners have contributed $44 million in new capital over the past 5-6 years, with Commissioner Selig personally responsible for $13.2 million of this sum. The club's debt would be even higher, except that in 2002 the stadium authority forgave $41.1 million of debt and accumulated interest in return for the Brewers' assuming responsibility for maintenance and repair on Miller Park. The Brewers are reportedly $110 million in debt; they have been trying for months to raise capital, but are unlikely to find much of it until Bud and Wendy Selig are stripped of all official and unofficial authority over the club.

Cardinals stadium construction to begin in early 2004. The Missouri Development Finance Board has approved the sale of $45 million in revenue bonds and the issuance of $29.45 million in tax subsidies. The St. Louis County Council is expected soon to approve a $45 million loan to be funded from the bond issue, with the proceeds repaid from the county's hotel and motel taxes.

The Cardinals must turn over to the state $58.9 million of land and/or marketable securities. The club will contribute $50 million of its own money toward stadium construction. In addition, the company that will own the stadium and lease it to the Cardinals for 29 years will borrow $183 million and obtain $47 million from equity investors. The Cardinals have also committed to spend $60 million developing two blocks of a proposed six-block "Ballpark Village" office and residential development, to be constructed on the site of the present Busch Stadium.

Copyright © 2003 Doug Pappas. All rights reserved.
Originally published in the Fall 2003 issue of Outside the Lines, the SABR Business of Baseball Committee newsletter.

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