News Briefs: Summer 1998

Bud Selig removes "acting" from title. In the least suspenseful election this side of North Korea, Bud Selig was named MLB's ninth Commissioner on July 9. Selig subsequently put his shares of the Brewers into a voting trust and named his daughter to run the club.

MLB yanks three September games from ESPN. Refusing to play second fiddle to ESPN's new NFL contract for Sunday night games in September, MLB refused ESPN's request to shift the season's final three Sunday Night Baseball games to ESPN2. ESPN2 is available in about 60 million homes, compared to 74 million for ESPN. Rights to these games have reverted to the affected clubs, which may telecast them locally. The rest of us, though, are out of luck.

Most World Series tickets to double in price. MLB has announced that box seats for the World Series will cost $150, up from $75 last year. Reserved seats will rise from $50 to $100, with bleachers or general admission rising from $30 to $40, and standing room priced at $25/ticket. Tickets for the LCS will also cost more: box seats rise from $50 to $60, reserved seats from $35 to $45, and bleachers/general admission tickets increase from $25 to $30. Teams set their own prices for the divisional series. By comparison, most seats for the 1998 Super Bowl cost $275. In the NBA, where teams set their own prices, all but the closest premium seats sold for $30 to $90 in Chicago, from $19 to $113 in Utah.

The Teams

Cincinnati. Even without Marge Schott at the helm, the Reds find ways to look cheap. The club is still fighting a lawsuit filed in 1993 by five maintenance workers who failed to receive overtime pay. The Reds argue that they don't have to pay overtime because the Fair Labor Standards Act exempts seasonal amusement businesses from the overtime requirement. A federal appeals court has already ruled that the Reds are not a seasonal amusement business because they maintain a year-round payroll, but the club's trying again, even though their legal fees must be at least ten times the amount at stake. In unrelated news, businessman Jonathan Ledecky has agreed to buy the 1/15 share in the Reds' limited partnership held by Frisch's Restaurants for $7 million, subject to the other owners' right of first refusal to acquire the share. Frisch's paid $1.6 million for the share about 10 years ago.

Cleveland: The Indians raised $60 million through a public offering of four million shares at $15 each. As part of the offering, the Indians had to publish financial data, which showed the that the club earned $3,858,000 in 1993; lost $4,886,000 in strike-shortened 1994, then rebounded to earn $6,746,000 in 1995, $10,159,000 in 1996 and $22,570,000 in 1997. Last year the Indians booked $9,286,000 from the expansion clubs and $6,252,000 from the postseason, while paying $7,186,000 in revenue sharing. Notwithstanding the Indians' success, the shares have lost more than a third of their value since trading began.

Detroit. As of May, the Tigers claim to have leased 32 of the 106 luxury suites in the new park. Fourteen of these suites will rent for $125,000/year, sixteen for $75,000, the remainder for $100,000, with about 10 available for day-of-game rental. The Tigers project completion by Opening Day 2000. If the new park's not occupied by August 4, 2000, the club will be required to repay $55 million of state funds - but since the occupancy deadline has already been extended once, Michigan taxpayers shouldn't hold their breath.

Florida. Marlins' owner Wayne Huizenga continues to talk out of both sides of his mouth. Huizenga, who paid $95 million for the expansion club in 1992, claims to have lost $34 million in 1997 and insists that the club can't make money without a new, publicly-financed stadium - yet he describes his $165 million asking price as "fair...on the low side." Huizenga also demands that the prospective purchaser agree to air Marlins games over his own cable outlet for 27 years, at a price estimated at $2 million/year below the market value of those rights.

Houston. The Astros will remain in Houston at least through 2030 under the terms of a lease recently negotiated for their new facility. The club will pay the Harris County-Houston Sports Authority $7.1 million/year for 30 years after the park opens in 2000, in return for total control of the stadium: the club will keep all revenues and can lease the park to third parties. Since the Authority will pay at least $9.5 million/year for construction costs, the Astros stand to receive a $72 million subsidy in addition to any monies earned from third parties.

Kansas City. A group headed by New York lawyer Miles Prentice III has submitted the high bid for the Royals. The Prentice group offered $75 million; the only competing bidder, a partnership of Chiefs owner Lamar Hunt and utility Western Resources, Inc., offered only $25 million up front, with an additional $27 million contingent on taxpayer-funded improvements to Kauffman Stadium. The sale won't proceed until the Prentice group rounds up more local investors, but with members of Kauffman's family reportedly joining the group and the Hunt group withdrawing its bid, approval seems likely.

Los Angeles. As if new GM Tommy Lasorda's antics haven't done enough damage to the once-proud Dodgers, new owner Fox Broadcasting is now hinting that it may "have to" replace Dodger Stadium. After that, the next move will presumably involve hiring an MTV veejay to replace Vin Scully in the broadcast booth.

Minnesota. Ending for now the club's flirtation with Charlotte, the Twins have signed a new two-year lease on the Metrodome for the 1999-2000 seasons, with three one-year options.

Montreal. Labatt's has agreed to pay $100 million over 20 years, starting in 2001, for naming rights to Montreal's proposed new 35,000-seat stadium. Financing for the stadium remains uncertain as the sale of personal seat licenses lags, prompting renewed rumors that the Expos may move.

New York. Mayor Rudolph Giuliani refuses to let overwhelming public opposition interfere with his crusade to spend at least $1 billion of public funds for a new Manhattan stadium to house his favorite team. A New York Daily News poll conducted during the Yankees' recordbreaking season found 81% of city voters opposed to moving the Yankees out of The Bronx, and 71% opposed to public funding of a Manhattan stadium. By a 54-41% margin, voters opposed the Manhattan stadium even if it were the only way to keep the Yankees from moving to New Jersey. Giuliani's opinion of these voters? "They're just wrong in terms of their own good." Backing this view, Giuliani has blocked a public referendum on the stadium.

Nor has Giuliani asked MLB's richest team to contribute more than a token sum toward the cost of its proposed new palace. However, Mark S. Rosentraub, author of Major League Losers, has calculated that the Yankees could finance a $500 million stadium entirely out of their added revenue from a new park, without reducing their profits.

Pittsburgh. PNC Bank, a minority owner of the Pirates, will pay $30 million over 20 years for naming rights to the club's new $228 million, 38,000-seat stadium, which is scheduled for completion in 2001. This money represents the lion's share of the club's $40 million contribution to the cost of the park.

San Diego. The Padres and the City of San Diego have reached agreement on a $411 million redevelopment project which will include a new ballpark. San Diego will finance $225 million with bonds secured by revenues from its hotel tax. $50 million more will come from the city's downtown-redevelopment corporation, and $21 million more from infrastructure improvements financed by another governmental entity. The Padres will contribute $115 million, including revenue from naming rights, and will be responsible for cost overruns. The 42,000-seat park is expected to be ready for the 2002 season, if the plan is approved by the voters in November.

Seattle. The Mariners' new park will be known as Safeco Field after the financial-services company agreed to pay an estimated $40 million over 20 years for naming rights. The deal will start at $1.8 million/year, with annual adjustments for inflation.

Texas. At the June quarterly meeting, MLB approved the sale of the Texas Rangers for $250 million to media magnate Tom Hicks. Hicks owns more than 400 radio stations in 100 markets.

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

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