News Briefs: Winter 1998

Yankees, Orioles top luxury tax payers. MLB's first-ever luxury tax raised less than $12 million. The tax was assessed at a 35% rate on the amount of each club's payroll over $55,606,921 (including $5,100,715 per team in miscellaneous player-related costs). The Yankees, with baseball's top payroll at $68,267,435, paid over $4.4 million; the Orioles and their $67.1million payroll contributed over $4 million more. The Indians ($2 million), Braves ($1.3 million) and Marlins ($140,000) rounded out the list of taxpayers.

For businessmen who had spent the past three years pleading poverty, the owners certainly didn't act like paupers. The tax threshold for 1997, originally set at $51 million, was changed to the higher of $51 million or the midpoint between the fifth and sixth highest-payroll clubs -- which resulted in a $4.6 million increase in the tax threshold, to a level higher than the intended threshold for 1998. In fact, last year thirteen teams had payrolls of over $51 million. The higher threshold, which will be carried forward to raise the 1998 tax threshold and further dilute the effect of the luxury tax, saved the Yankees $1.6 million. Nonetheless, a management source quoted by AP estimated that players' share of total revenues actually fell from 62% to 61%.

Executive Council approves changes in first-round playoff format. The proposed changes would assure the two division winners with the best records of home-field advantage in the first round, and would switch the format from 2-3 (opening in the "visiting" city) to 2-2-1. The proposal must still be approved by the owners, the MLBPA and the networks.

Owners cancel January meetings. The owners cancelled a meeting scheduled for January 13-15. Topics on the agenda for that meeting reportedly included the proposed sale of the Dodgers to Rupert Murdoch, progress on the search for a permanent Commissioner, and possible extension of Marge Schott's suspension as managing partner of the Reds in light of allegations that she submitted false invoices to General Motors on behalf of her Chevrolet dealership.

Angels' boss blasts leaderless MLB. Before a January 15 meeting of sports marketing executives, Anaheim Angels president Tony Tavares condemned MLB's rule requiring a 3/4 majority of each league for many major decisions: "If I find three other morons in my league, whether it's a good idea for the league or if it's not, I can block something." Tavares added that any Commissioner serving under the present system would be powerless, so "anyone that is worth his salt is going to insist on systemic change in league rules."

Team News

Red Sox consider expanding Fenway Park. The Boston Globe has reported that the Red Sox may renovateFenway Park instead of building a new stadium. The renovations, estimated to cost $250 million and take three years (during which the Sox would continue to occupy Fenway), would add seats behind first and third base, push out the playing field and bleachers, and extend the stadium.

Reds may remain in remodeled Cinergy Field. Although in 1996, Hamilton County voters approved a half-cent sales tax hike to fund new stadia for both the Reds and the Bengals, local officials are trying to persuade the Reds to accept major renovations to their existing park. Without promising to accept this alternative, Reds managing executive John Allen has said that the proposed renovations must include natural turf, a stadium club, luxury boxes and a Reds Hall of Fame. County officials say that the renovations could begin after the 1999 season and be completed in time for the 2001 season, without disrupting play in 2000.

Detroit ownership scrutinized for gambling ties. An article by Murray Chass in the January 18 New York Times called into question the status of Marian Ilitch, wife of Tigers owner Mike. Mrs. Ilitch is a principal investor in one of three casino projects planned for downtown Detroit, a definite no-no under MLB's anti-gambling policy. Mrs. Ilitch insists that she is not, and never was, an owner of the Tigers, and Bud Selig supports her -- but for the five years between the Ilitches' purchase of the Tigers and her investment in the casino project, the Tigers' media guide identified her as an owner and member of the club's board of directors.

Dodgers sale still pending. Up to four NL clubs -- the Braves, Cubs, Padres and Giants -- have reportedly voiced concerns about Rupert Murdoch's proposed acquisition of the Dodgers. (Five No votes would be needed to block the sale.) Ironically, the opponents include both regional rivals worried about Murdoch's deep pockets and the other two NL clubs controlled by similar media conglomerates.

Twins remain in limbo. The Minnesota legislature has rejected proposals to fund a new baseball stadium in or near the Twin Cities, but North Carolina businessman Don Beaver's proposal to move the club to his home state is faring no better. Voters in North Carolina's Triad area (Greensboro/Winston-Salem/High Point) will be asked in May to approve a one-cent sales tax on prepared food and 50-cent surcharge on event tickets to pay two-thirds of the cost of a new $210 million stadium. A December poll showed only 20% of voters backing the proposal, with 71% opposed and the rest undecided; another survey showed 61% of Charlotte voters opposed to financing a stadium in their region.

Athletics seek damages from Coliseum Commission. The Oakland Athletics have filed a $48 million claim for revenues lost as a result of renovations to the Oakland-Alameda County Coliseum made at the request of the Oakland Raiders. The matter will be submitted to arbitration.

New Padres park proposed for downtown San Diego. A city-appointed task force has recommended that a new home for the Padres be built in a warehouse district two blocks from the Convention Center and Gaslamp Quarter. The task force also recommended that the Padres contribute at least $100 million toward the cost of the new park, and that any public contribution be put to a vote -- a potential problem, in light of widespread local criticism of the money spent to improve Qualcomm Stadium to meet the demands of the NFL Chargers. The task force estimates that the proposed 42,000-seat park would cost $240 million and could be ready for the start of the 2002 season.

Giants break ground for new stadium. Pacific Bell Park, scheduled to open in time for the 2000 season, is being constructed in the China Basin neighborhood. Its address will be 1 Willie Mays Plaza.

Rangers sold at huge profit. A group headed by Thomas Hicks, owner of the Dallas Stars hockey team, has agreed to purchase the Texas Rangers, the club's stadium lease and additional land near The Ballpark at Arlington for $250 million. The current ownership group paid $86 million for the club and its former home, Arlington Stadium, nine years ago. Texas Governor George W. Bush, who organized the current ownership group but invested only $605,000 of his own, stands to receive $10 million if the sale is approved.

Copyright © 1998 Doug Pappas. All rights reserved.
Originally published in the Winter 1998 issue of Outside the Lines, the SABR Business of Baseball Committee newsletter.

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