Summer 1997: Major League Notes

Paul Beeston named chief operating officer of Major League Baseball. Beeston, outgoing president of the Toronto Blue Jays, was named on July 22 to a post which oversees MLB's business operations. Beeston's arrival at MLB's New York office is expected to result in the ouster of Greg Murphy, head of Major League Baseball Enterprises, and could encourage the owners to name Bud Selig permanent Commissioner. In other moves, MLB named Jackie Robinson's daughter Sharon as its director of educational programming and extended the contracts of league presidents Gene Budig and Leonard Coleman by three years, through 2002, and raised their salaries to roughly $650,000/year. [Editorial comment: What is Selig's mystical hold over his fellow owners? With an experienced insider like Beeston handling day-to-day operations, MLB should be rebuilding its public image by naming a widely respected outsider as Commissioner. And given the inherent conflict of interest between the roles, no owner should ever serve as Commissioner.]

Owners, Financial World paint very different pictures of MLB's profitability. Financial World's annual survey estimates that the average MLB team earned $7.3 million in 1996 on revenues of $66 million, and that the average team is now worth $134 million, a 17% increase over 1996. But in late July, MLB claimed a collective loss in 1996 of $185 million ($6.6 million/team) on revenues of $1.85 billion. How to account for the difference? Well, Paul Beeston, MLB's new chief operating officer, once admitted, "Anyone who quotes profits of a baseball club is missing the point. Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and I could get every national accounting firm to agree with me."

Professional Baseball Agreement renewed for 10 years. In the document setting forth the relationship between the majors and the minors, MLB has guaranteed not to reduce the number of farm teams. In return, the minors have assumed responsibility for umpire development (which cost the majors an estimated $5 million/year) and have agreed to pay about $500,000/year more in uniform and equipment expenses. The minors will also pay the majors 3.5% of their ticket revenues in 1998 and 1999, 4% in 2000 and 2001, and 4.5% thereafter -- a change from the previous graduated formula which is expected to generate about the same total revenue. The agreement is scheduled to run through 2007, but can be reopened as early as 2003.

Elderly veterans receive pensions. MLB awarded pensions of $10,000/year to approximately 75 major league and Negro League veterans who retired before 1947, when the pension plan was established.

Atlanta: Effective December 31, 1997, WTBS transforms itself from a superstation to a basic cable network. The move, which will for the first time allow WTBS to collect subscriber fees directly from cable systems, will be accompanied by a reduction in national Braves telecasts from about 125 to about 90/season.

Boston: Another new-stadium controversy. City officials want the Red Sox to rebuild and enlarge Fenway Park, while the Red Sox favor a new site in South Boston. Fenway could celebrate its centennial before this one's resolved.

Cincinnati. The Reds continue to spar with city and county officials over the location of their proposed new park. The team wants a location on the Ohio River near downtown, while government has offered a site in the Broadway Commons district, a mile or so away.

Detroit. The Tigers plan to break ground late this year on a $260 million, 40,000-seat stadium.

Florida. Announcing that the Marlins will lose $30 million in 1997, owner Wayne Huizenga announced that the team was for sale. When asked whether his figures included revenue from the luxury boxes in the stadium he also owns, Huizenga said that this money was excluded because it went to repay the bondholders who financed the stadium. Can the rest of us use Huizenga-style accounting to persuade the IRS that the part of our salaries used to pay mortgages and auto loans isn't really income?

Houston. Surprise! The Astros are reporting cost overruns on their proposed new stadium, The cost of the proposed retractable-roofed park has already risen from $250 million to $273 million. When local officials balked at contributing more than the agreed-upon $180 million in taxpayers' money, the Astros persuaded local businessmen to help make up the difference.

Los Angeles. As Rupert Murdoch moves closer to buying the Dodgers, Peter O'Malley has indicated he's willing to remain as club president following the sale. One article suggested that Murdoch may be considering former junk-bond king Michael Milken to run the team -- which would mean that the Dodgers and the Yankees, arguably MLB's two marquee franchises, would both be operated by convicted felons.

Minnesota. With the Minnesota legislature balking at the team's proposal for a $350 million retractable-roof park, the Twins have hired an investment banker to advise them on a possible move or sale of the franchise. At its June meetings, MLB's Executive Council had directed the Twins to "explore all options open to them regarding the sale and/or movement of the franchise."

San Diego. An Arthur Andersen study commissioned by the City of San Diego has concluded that the Padres and MLB contributed $172.2 million to San Diego County in 1996, and created 3,654 full- and part-time jobs. John Matthew, who works at Arthur Andersen, has requested a copy of the study from its author.

The Docket

Players must be paid during suspensions. In one of his last acts as MLB's impartial arbitrator, Nicholas Zumas ruled on August 11 that all players are entitled to their full salary during suspensions -- even if provisions in their own contracts say otherwise. Zumas' decision, in a case involving Ron Gant, Terry Pendleton and Xavier Hernandez, follows his decision of June 1996 which required owners to pay suspended players who had signed the standard contract. Zumas' decision relied upon language in the CBA which permits additional clauses in the standard player contract only if they provide actual or potential benefit to the player.

Fay Vincent's ghostwriter sues to issue Vincent's "memoir" under his own name. Although the ex-Commissioner backed out of his $300,000 book contract when his manuscript was 90% complete, collaborator David Kaplan has sued in White Plains, NY federal court for the right to publish the work himself. Kaplan, a senior writer at Newsweek, contends that since he and Vincent agreed that they would jointly own the copyright in the book (tentatively titled Baseball Breaks Your Heart), he can use the material even without Vincent's permission.

Retired players sue MLB over publicity rights. At least three suits are now pending. One filed on behalf of 400 retired players has recently been certified as a s class action: this one alleges that MLB is shortchanging the retirees on the royalties due under a contract signed by all parties. Two other actions seek to deny MLB any right to publicize old-time players without their consent. Until 1947 the standard player contract did not grant MLB the right to exploit the players' publicity rights -- one action on behalf of pre-1947 players argues that MLB never obtained their right of publicity, while another, by Al Gionfriddo on behalf of post-1947 players, contends that MLB's rights lapsed when the player retired.

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

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