MLB News: Spring 1997

Player salaries:

Average salary: End of 1996: $1,101,455, up 0.6% from 1995 but still 4.7% below 1994.

Opening Day 1997: $1,383,578, up from $1,176.967 in 1996, $1,071,029 in 1995.

Median salary: $300,000 at the end of 1996 , up from $275,000 in 1995 but below 1994's $450,000. On Opening Day 1997, the median was back up to $450,000.

Revenue sharing: Owners' formula implemented as part of the new collective bargaining agreement, but phased in at 60% level for 1996 (number on left is 1996 figure, number on right is 1997 estimate)

 Contributors  1996  1997 (est.)  Recipients  1996  1997 (est.)  Exempt
 Yankees  $5,800,000  $8,400,000  Expos  $5,500,000  $6,600,000  Rockies
 Indians  $5,700,000  $5,700,000  Tigers  $5,100,000  $6,600,000  Marlins
 Orioles  $5,300,000  $6,900,000  Royals  $5,000,000  $5,400,000  
 Braves  $3,800,000  $6,600,000  Pirates  $4,900,000  $6,300,000  
 Dodgers  $3,600,000  $3,600,000  Twins  $4,700,000  $5,100,000  
 Red Sox  $3,000,000  $3,600,000  Brewers  $4,600,000  $5,400,000  
 Rangers  $2,900,000  $3,300,000  Athletics  $3,800,000  $4,500,000  
 White Sox  $2,200,000  $3,600,000  Reds  $3,300,000  $4,500,000  
 Blue Jays  $1,800,000  $900,000  Padres  $3,000,000  $2,400,000  
 Cubs  $800,000  $225,000  Angels  $3,000,000  $6,300,000  
 Mariners  $600,000  $750,000  Astros  $2,500,000  $3,000,000  
 Mets  $500,000  $750,000  Giants  $966,000  $2,700,000  
 Cardinals    $375,000  Phillies  $670,000  $3,000,000  
       Cardinals  $125,000    

Labor peace at last. On November 26, a week after hard-liner Jerry Reinsdorf signed Albert Belle to a five-year, $55 million contract, the owners reversed their earlier 18-12 rejection of the labor agreement negotiated on their behalf, approving the identical deal by a 26-4 vote. The White Sox, Indians, Royals and Athletics voted No -- in Cleveland's case because, in the wake of the Belle signing, owner Richard Jacobs wanted no constraints at all on his ability to challenge the White Sox. After the vote, Reinsdorf smirked, "Actually, it's good for the White Sox because it dooms the small-market teams. There will be less for us to compete against." At press time Reinsdorf's White Sox had a worse record than the Pittsburgh Pirates, whose entire 25-man roster earns less than Belle.

AP poll: Baseball's popularity still down. Results of a national survey conducted March 5-9:

(1) Do you consider yourself a fan of major league baseball, or not?" 28% Yes, 10% Somewhat, 62% No.

(2) Effect of the labor dispute on fan interest: 26% a lot lower, 21% a little lower, 30% back to normal, 6% higher than ever, 17% don't know/no answer.

(3) "Do you think the cost of attending a major-league game is out of reach for people like you?" 48% Yes, 37% No, 15% don't know/no answer. [Editorial note: since in fact any family which can afford to go out for Saturday night dinner and a movie can afford to attend a major league game, MLB has a major image problem to overcome.]

(4) "Are major league baseball players' salaries too high, too low, or about right?" 73% too high, 1% too low, 18% about right, 9% don't know/no answer. 89% of those who answered "too high" said that other team sports' salaries were also too high.

(5) Interleague play: 54% say it's a change for the better, 12% a change for the worse. 6% say neither better nor worse; 29% don't know/not familiar/no answer.

Local vs. national marketing chaos. Although MLB needed the labor agreement even to get its foot in the door with many prospective national sponsors, labor peace is not enough. As a Nike spokesman explained, MLB allows local clubs to undercut national marketing ties by striking their own deals with competing products: "They'll sell you a national partnership, then ambush you on a local level." Typefying the chaos, Pepsi signed a five-year, $50 million sponsorship deal with MLB even though Coca-Cola products are the exclusive soft drinks in 24 of 28 major league stadiums. The New York Yankees signed a 10-year, $95 million sponsorship deal with Adidas even though other companies hold exclusive rights to manufacture MLB shoes and uniforms, then sought to invalidate MLB's national licensing agreement on antitrust grounds.

1998 expansion teams assigned to leagues. But not without a fight. Before the January league meetings, observers expected the Arizona Diamondbacks to join the NL, with the Tampa Bay Devil Rays assigned to the AL. But unexpected AL opposition soon arose: the Mariners and Athletics wanted Arizona for the AL West, while the Rangers and Royals feared that adding the Devil Rays to the AL would force divisional realignment. To avoid antagonizing the established teams, MLB ultimately exiled the Devil Rays to the AL West, where most road games with three of four divisional rivals will begin at 10 p.m. local time. As an additional inducement, the American League proposed to allow the Devil Rays to swap interleague games with the Yankees: in 1998, Tampa would play the Braves and Marlins, their closest geographic rivals, while the Yankees got "homecoming" games with the Giants and Dodgers. But no one cleared this with the National League, which rejected the swap. The current divisional alignment will last at least through 1999, but MLB is considering sweeping changes in connection with the next expansion, one which may lead to several teams (possibly the Royals and Astros) switching leagues.

Interleague play on the horizon. The first regular-season interleague games in 127 years of major league baseball will be played on Thursday, June 12. The historic first game matches those natural rivals, the San Francisco Giants and Texas Rangers. (Meanwhile, long-suffering Red Sox fans may think MLB's playing a joke on them: their first interleague game is on Friday the 13th at Shea Stadium. No word whether Bill Buckner will let the ceremonial first pitch roll through his legs.) The players have approved interleague play for 1998 and beyond -- but with the proviso that if it's expanded beyond 16 games per team, the DH must be used in all parks.

While this year's interleague games are clustered in two blocks of the schedule, the odd number of teams in each league will mandate at least one interleague series at all times during 1998. And even before interleague play begins, MLB is looking into ways to ensure that regional rivals (Cardinals-Royals, Rangers-Astros) play one another every season. (See below for a chronology of past efforts to adopt interleague play.)

Irabu fiasco. MLB's relations with the Japanese leagues are still governed by a treaty adopted in 1966. The limitations of this treaty became glaringly apparent when, after the San Diego Padres obtained exclusive negotiating rights to fireballer Hideki Irabu from the Chiba Lotte Marines, Irabu insisted he would pitch only for the New York Yankees. Supported by the Players' Association, Irabu remained in limbo through months of negotiations, threatened lawsuits and labor grievances, until the Padres finally traded his rights to the Yankees.

Luxury tax weakened. As originally designed, the new luxury tax was supposed to cost the five highest-payroll teams 35% of the amount of their payrolls over $51 million. But with more than five teams likely to finish 1997 with more than $51 million in salaries, the New York Times reports that the tax threshold has been raised to the higher of $51 million or the midpoint between the fifth and sixth highest payrolls. This makes considerable economic sense -- under the old system, if teams 5 and 6 both paid their players about $54 million, a $1 difference between the two would have cost the higher-paying team $1 million in tax -- but will dilute the impact of the tax on all affected clubs. The lucky five won't be known until the end of the season.

Some Negro Leaguers receive pensions from MLB. MLB's Executive Council has granted pensions of roughly $10,000/year to about 30 ex-Negro Leaguers who reached the majors, but did not play long enough to qualify for the pension plan.

Commissioner search begins for real. MLB has retained an executive recruiting firm to help in the search for a permanent Commissioner. Paul Beeston, president of the Toronto Blue Jays, who is expected to leave his position when the team is sold, remains a front-runner.

Postseason TV rights for Canada sold to cable network. The Sports Network, a Canadian version of ESPN, paid about $12 million for the Canadian TV rights to the playoffs and World Series. According to Baseball America, only about 75% of Canadian homes have cable, and only 70% of those systems carry The Sports Channel, so more than 40% of Canadians will be unable to watch the postseason unless they're within range of American stations.

Team Notes

Anaheim: The California Angels officially changed their name to the Anaheim Angels.

Chicago White Sox: Three months after boasting that the White Sox could afford to pay Albert Belle $11 million/year, Jerry Reinsdorf raised ticket prices by $2/seat and announced that even at the higher rate the Sox were unlikely to break even in 1997. Reinsdorf then began selling single-game tickets to the Cub-White Sox interleague games only in strips of four, bundled with tickets to three less attractive home games, explaining that the move was needed to deter Cub fans from infiltrating Comiskey Park. When none of the Cub-White Sox games had sold out by early May, the White Sox quietly began selling single-game tickets in the conventional manner.

Detroit: The Tigers have secured $145 million in financing for their contribution to the cost of a new stadium, and claim to have leased 50 of the 80 luxury boxes at the new park. Most of these boxes will rent for $75,000/year, with eight field-level boxes costing $125,000.

Milwaukee: Ken Carrano sent on "Storm Warnings," an article on the Brewers' finances from the December 1996 issue of Milwaukee magazine. The article recounts years of behind-the-scenes maneuvering by Bud Selig to acquire total operating control over the Brewers despite holding only a minority interest. Due largely to collusion damages and the disastrous labor strategy presided over by Selig, the Brewers' debt exploded from $3 million in 1990 to $63 million in 1996, forcing the team to rely almost entirely on Wisconsin taxpayers for a new stadium, and to search for ways around the legislatively imposed $250 million cap on the cost of the new park.

Minnesota: As part of his campaign for a new stadium, Twins owner Carl Pohlad released figures showing that he had invested $107.8 million in the team since purchasing it in 1984 from Calvin Griffith. This sum includes $85.6 million borrowed to buy the team, plus an additional $22.2 million in cash. Pohlad claims taxable losses of $72 million, including $12.4 million in 1994, $13.7 million in 1995 and $9 million in 1996; these losses saved the Pohlad family $29 million in federal income taxes. Roger Noll, a Stanford economist and long-time consultant to the MLBPA, told the Minneapolis-St. Paul Tribune that he considered the figures "close to being accurate."

Although the Metrodome is only 15 years old, the Twins have baseball's worst lease. The team pays relatively high rent and receives no parking revenue -- and no luxury box revenue, because even during baseball season all luxury-box money goes to the NFL Vikings. Pohlad's stadium proposal calls for $157.5 million in public money, plus $82.5 million from the Pohlad family and $25 million from naming and concession rights. In addition, Pohlad has offered to give 49% of the Twins to the State of Minnesota, subject to MLB approval. The proposal still faces stiff opposition in the Minnesota legislature, causing Pohlad once again to threaten to move the team.

New York Yankees: When dividing their World Series money, the Yankees didn't forget which of their teammates had served as replacement players during the strike: Dale Polley, Dave Pavlas and Matt Howard were the only three of the 49 1996 Yankees to receive no World Series share. Yankee management subsequently wrote them checks.

Cincinnati: Marge Schott's tenure as managing partner was further jeopardized when General Motors accused her of falsifying sales figures at her Chevrolet dealership to meet sales quotas. Schott settled GM's charges by surrendering the dealership, but MLB reserved the right to look into the matter. Cincinnati officials and the Reds are sparring over the location of the team's proposed new stadium, with the Reds demanding a riverfront location near Cinergy Field and the city offering a site in the Broadway Commons area, a 15-minute walk from the river and near a low-income neighborhood.

Houston: As part of the deal to erect a new stadium for the Astros, Harris County officials have agreed to pay Astros owner Drayton MacLane $19.5 million for operating control of the Astrodome. But the deal hit a snag when the Texas legislature blocked Houston's plans to increase the local hotel tax, an essential element of the stadium financing. Astros president Tal Smith also objected to provisions which could force a second public referendum on the stadium proposal before construction begins.

Los Angeles: At press time, Peter O'Malley was on the verge of selling the Dodgers to Rupert Murdoch's Fox Sports. With Disney owning the Anaheim Angels, both southern California teams would belong to major television networks.

Pittsburgh: Ken Pollock, a $5 million investor in the ownership group headed by Kevin McClatchy, became the second member of the group to sell his stake within the group's first year of ownership.

San Diego: The City of San Diego sold naming rights to Jack Murphy Stadium for $18 million; the park will now be known as Qualcomm Stadium at Jack Murphy Sports Complex. The money's needed to expand QSAJMSC for the 1998 Super Bowl.

San Francisco: The Giants have agreed to a 25-year lease at Pacific Bell Park, scheduled for completion in time for the 2000 season. In addition to paying all construction costs, the club will buy the park's 12.5 acres of land at its market value and pay the city $1.2 million/year in rent, subject to cost of living increases.

Copyright © 1997 Doug Pappas. All rights reserved.
Originally published in the Spring 1997 issue of Outside the Lines, the SABR Business of Baseball Committee newsletter.

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