News Briefs: Fall 2003
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
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
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,
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
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
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
Originally published in the Fall 2003 issue of Outside the
Lines, the SABR Business of
Baseball Committee newsletter.
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