How long before Commissioner Selig's term expires?
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Saturday, March 27, 2004

Two Old Pieces Posted to Site.

I've converted two of my old SABR convention presentations to HTML and added them to the site.

In the first, the text of my talk at the 1995 convention in Pittsburgh (the first convention after the Business of Baseball Committee was formed, just before the strike), I summarize the issues in the labor dispute, trash the owners' proposed salary cap, and contend that their stated concerns could be addressed through 30% local revenue sharing.

The second is a handout from the 1998 convention, entitled 30 Years of Collective Bargaining Agreements. It presents, for each season from 1967 through 1998, MLB's minimum salary, average salary, and annual pension contribution, as well as other developments on the labor front.

Friday, March 26, 2004

Cheers and Jeers in Cablevision/YES Deal

Steve Zipay of Newsday breaks down the winners and losers.

In addition to the Yankees, the winners included sports-loving Cablevision homes which had previously paid $4.95/month for the three local sports channels, including YES, which are now back on basic cable. The precedent also bodes well for other regional sports channels that want to stay on basic cable.

Cablevision is the biggest loser. It will be paying the Yankees another $27 million/year, and had to return Fox Sports Net and the MSG Network to basic cable to match YES. Other losers include the millions of Cablevision subscribers who don't watch baseball, who will be paying 95 cents more each month for programs they don't want.

Coincidentally, yesterday the Senate Committee on Commerce, Science and Transportation held a hearing on "Escalating Cable Rates: Causes and Solutions." Committee chairman John McCain said, "When it comes to purchasing cable channels beyond the basic tier today, consumers have all the 'choice' of a Soviet election ballot." McCain also commented on the YES arbitration:

" Just yesterday, consumer choice was dealt another blow. Although a reported 91% of Cablevision customers chose not to purchase the YES Network when given the choice last year, an arbitrator’s decision will compel all expanded basic customers to take the channel. And as one would expect, the rates of these subscribers will go up."

This issue's not going away. In addition to non-fans who don't want to pay for expensive sports programming, some parents groups object that they can't buy Disney or Nickelodeon for their children without also letting "racier" networks like MTV, fX or Comedy Central into the house.
Ballpark Cash Plan Elusive in Legislature

Time could be running out on the Marlins' stadium plans for 2004. State Senate President Jim King said yesterday that the 38 days remaining in the legislative session were "just not enough time" to pass the $60 million sales tax rebate sought by the club.

Stadium supporters competed to see who could make the most inappropriate religious analogy. Marlins president David Samson started strong by proclaiming, "We have 38 days. Didn't it take God like seven to do the whole Earth?," but state Sen. Alex Diaz de la Portilla won with this gem:

"[The stadium plan]'s still on life support. But we are entering Easter now, and if you're a Christian like I am, you believe in the resurrection."

Angels Add TV Games

Arte Moreno strikes again. When he bought the Angels, their TV package called for an AL-low 90 telecasts. Fox Sports has added 28 more, and the Angels have aqueezed dozens more onto four separate broadcast channels. They'll now have 147 local telecasts, plus six national Fox/ESPN appearances.
Prices Will Go Up, But Size of Food Won't

You've slashed payroll to the bone, seen your attendance collapse, lost all credibility in your home market and put your team up for sale. What to do now? Raise concession prices, of course!

Welcome to Brewer Land.

The Milwaukee Journal Sentinel article also notes that Milwaukee will not be part of the new trend toward offering smaller portions for less money. The head of concessions explains, "Eighty-five percent of the people who come here want a nice hot dog, a beer and some peanuts and nachos."

Thursday, March 25, 2004

Whole World in His Hands

Michael O'Keeffe of the New York Daily News concludes that the Yankees' acquisition of Alex Rodriguez will more than pay for itself.

Yankees COO Lonn Trost says that A-Rod could bring another 400,000 fans to Yankee Stadium this season, putting an extra $18 million in the Yankees' coffers. That's $3 million more than the Yankees will pay Rodriguez, without even counting the money they saved by trading Alfonso Soriano and releasing Aaron Boone.

Various experts quoted in the article describe how A-Rod also enhances the value of the Yankees' brand, and how he could be used to boost the club in the Latin American community, and in Latin America itself.

Red Sox fans, it's okay to feel sick now...
Questions Haunt Pawlenty Stadium Plan

Minnesota Governor Tim Pawlenty insists that as a condition of public financing for new stadiums, the Twins and Vikings agree to share some of the resulting increase in franchise value with the taxpayers. Mike Meyers of the Minneapolis Star Tribune explains why this simple-sounding concept would be very hard to implement.

Using the Twins as an example, first, the state and the Pohlads would have to agree what the Twins are worth now. During the valuation process, the Pohlads would have a strong incentive to inflate the club's value. Then they would have to agree on a methodology for determining, when the Twins are sold in two or 20 years, what percentage of the increased value would be attributed to the new stadium, as opposed to inflation, a better local media deal or other factors. Then they would have to agree what percentage of that increase would go to the state.

Good luck...
Marlins Seek $60 Million Break on Sales Tax to Help Build Stadium

Still $115 million short of the $325 million they need for a new ballpark, the Florida Marlins have asked the State of Florida for the right to keep $2 million/year of the sales tax the park will generate for the next 30 years. "And they're essentially asking to borrow a rebate destined for the Orlando Magic basketball team, which has yet to cement plans for a new arena. The idea is that the state would grant the Magic another rebate to use later."

Authors Jennifer Peltz and Sarah Talalay of the South Florida Sun-Sentinel note:

"Since 1993, the state has paid more than $85 million in tax rebates to 14 stadiums and other sports venues, mostly to attract or keep professional sports teams."

Otherwise no tourists would ever visit Florida, you know...

The Marlins have pledged $137 million toward the stadium, and Miami-Dade County has contributed another $73 million. The club recently set a new artificial deadline of May 1 for picking a site and completing the financing.

Panel Removes Premium Tag Cablevision Places on YES

A few more details have emerged regarding the result of the YES/Cablevision arbitration. Cablevision (and most or all of the other cable systems carrying YES) will pay $1.93/month for YES this year, with annual rate increases of 4% through March 31, 2009. YES is now expected to receive about $58 million/year from Cablevision customers alone, up $20 million from last year when YES was a premium channel.

YES is reportedly available in about 8,000,000 cable households. Assuming all pay at Cablevision's rate of $1.93/month, YES's revenues from subscribers alone should reach $15,440,000/month, or $185,280,000/year.
Public Financing of Stadiums Unnecessary, Study Shows

University of Dayton economists Mark Poitras and Larry Hadley have concluded that modern baseball stadia generate enough additional revenue that owners should be willing to build them without a public subsidy:

"With the first season in a typical $268 million stadium expected to produce about $33 million, half the cost of construction would be recovered in five years and all of the cost in 12 years, the study said.

"After 20 years, revenues would exceed construction costs by more than $100 million and by $200 million after 30 years, the study said."

The authors also note that owners forced to spend their own money would likely opt for cheaper designs (no retractable roofs, for instance) that would make their stadia even more likely to turn a profit.

However, Andrew Zimbalist, who reviewed a draft of the report, isn't comfortable with some of the methodology. When most modern stadia receive a public subsidy, an owner asked to build one himself will protest that doing so will still leave his club at a competitive disadvantage. Just because a stadium can be privately financed doesn't mean the owner will finance it if there's any other viable alternative.

I haven't seen the study yet, but I've E-mailed co-author Larry Hadley about it. (Larry has contributed a number of reviews to the Guests section of my Website.) Will post more on this subject as I learn more...

Wednesday, March 24, 2004

Locals Not Swinging at Brewers' Pitch

Two months after the Milwaukee Brewers were put up for sale, no prospective local buyer has surfaced. The club's investment banker, former Deputy Commissioner Steve Greenberg, now of Allen & Co., reports "a significant amount of early interest nationally," according to the Milwaukee Journal Sentinel

The Brewers would be a good buy at the right price. (Insiders expect the club to sell for less than the $180 million they think it's worth.) Several of the club's major negatives are likely to disappear soon after the sale. The locals are so fed up with the Selig family that they'd support any new owner who offered hope, and Miller Park is new enough to generate significant revenue once the fans return. If it lasts a season or two, the new-owner honeymoon would carry the Brewers to the point when their large number of quality prospects at the lower levels should translate into provide major on-field improvement.

Certainly if the Commissioner could get the owners to approve Frank McCourt's woefully underfinanced bid for the Dodgers, he shoud have no trouble winning approval for the sale of his own club.
Decision Said to Favor YES

Richard Sandomir of the New York Times reports that the Yankees' YES Network has won a major victory in its arbitration against Cablevision.

Cablevision had sought to make YES a premium-tier channel, available only to subscribers willing to pay an extra monthly fee, but the arbitrators ruled that for the next six years YES must be available on the expanded basic tier purchased by virtually all subscribers. (Last year about 60% of Cablevision's subscribers paid either an extra $1.95 for YES or an extra $4.95 for a package including YES, Fox Sports Net and MSG.)

However, the arbitrators cut the price the Yankees were charging. Last year's rate was retroactively reduced from $2.12 to $1.85; this year YES will cost $1.93, not the $2.28 sought by the Yankees. Other cable systems will benefit from this reduction, thanks to "most favored nation" clauses in their own contracts with YES. Minnesotans may also benefit: if Yankee games are worth $1.93/month, there's no way in hell the Pohlad family can justify charging $2.20/month for Twins games on their own cable network.

Even at the lower rate, YES will receive $23.16 this year from every household in metropolitan New York that subscribes to expanded basic cable service. That's well over $100 million/year.

Tuesday, March 23, 2004

Nostalgia Prompts Return of Negro Baseball Leagues

Hot on the heels of this article comes The Onion's startling revelation about MLB's latest plan to appeal to African-Americans and memorabilia collectors alike: a return to segregation in separate-but-equal leagues.

"'Some of the greatest baseball players in history were in the Negro Leagues,' Selig said. 'Even so, most of them were relative unknowns in their day. Well, now we have the advantage of working in reverse. By taking talented, pre-established All-Stars like Kenny Lofton, Sammy Sosa, and Gary Sheffield out of the Major Leagues, we make instant Negro League superstars.'"

"While he acknowledged that his plan has its critics, Selig said the 'shadow league' will revitalize baseball.

"'A new generation will get to see the tragic majesty of Negro League play," Selig said. 'Once again, baseball fans will be able to argue over whether or not a black player could make it in the majors, even if the player in question was already there. And maybe, just maybe, the brave Jackie Robinson of a new generation will dare to defy my color line and become a symbol of triumph. That'd really sell tickets.'"

(Sorry, I couldn't resist posting this one. You may remember last year's Onion scoop: "Yankees Ensure 2003 Pennant by Signing Every Player in Baseball.")

Baseball's Future in Hock

Hal Bodley of USA Today reports that the 30 major league clubs have deferred salary obligations to their players totaling $2.8 billion for the 2005-10 seasons. These obligations range from the Expos, who have only $307,500 committed beyond the 2004 season, to the Yankees, who owe $566.7 million. Here's a handy chart summarizing each club's deferred obligations, by year.

The article includes a quote from Commissioner Selig. Bud expresses concern about the level of club debt, but assures fans that "teams have a much more sensitive recognition of their debt and what they have to do about it." He should know about debt: even after $40 million in new equity contributions, his own Brewers are about $110 million in debt.

Note also in this context that teams can commit as much as they want to their players without running afoul of MLB's debt rules. The definition of "Total Club Debt" in the CBA specifically excludes "any compensation paid to Major League Players, including deferred compensation or other commitment under a Uniform Player's Contract."
Baseball's Internet Business May Go Public

Richard Sandomir of the New York Times reports that MLB Advanced Media, the entity which runs and controls baseball's Internet rights, could raise several hundred million dollars for the clubs by selling a minority interest to the public.

After incurring about $70 million of startup costs, MLB Advanced Media is now operating at a profit on revenues of approximately $91 million in 2003. Several insiders say that MLBAM has been independently valued at $1 billion, though at least one outside analyst believes that figure is too high.

A conspiracy theorist might note that if the public offering is postponed until 2006, MLB might be able to use the proceeds to finance the contraction of two teams after the season, as authorized by the CBA. Certainly this means of financing contraction would be more popular among the owners than any plan that took the money from ordinary income streams.

Monday, March 22, 2004

Microsoft, America Online to Play MLB Games

CNet News reports that Microsoft and MLB have agreed on a two-year deal, worth up to $40 million, which gives Microsoft exclusive video rights and nonexclusive audio rights to feed live game accounts through its MSN Premium service in Windows Media format. In addition, America Online and MLB have reached a two-year, $9 million agreement for live audio feeds and 20-minute video highlight packages on the AOL for Broadband service.

The new contracts succeed MLB's three-year, $20 million contract with RealNetworks, which offered similar feeds through its RealOne SuperPass service. MLB will continue to sell video and audio packages through its own Web site, and according to the Associated Press, will continue to offer games in RealNetworks' format.
Decrease in African Americans in Baseball Has Officials Puzzled, Concerned

Gordon Wittenmyer of the St. Paul Pioneer Press surveys baseball's deteriorating demographics among African-Americans. (Sports Illustrated published a long article on this subject last summer.) According to Wittenmyer, the percentage of African-Americans on major league rosters has declined from 27% in the mid-1970s to 19% in 1995, 10% in 2002. The change isn't all attributable to an influx of Hispanics, either: the percentage of white players has risen 6% over the past six years.

Wittenmyer notes that MLB now has only three African-American starting pitchers -- C.C. Sabathia, Darren Oliver and Dontrelle Willis -- and that a disproportionate percentage of African-American major leaguers are second- and even third-generation players like Barry Bonds, Ken Griffey Jr. and Jerry Hairston Jr.

Jacque Jones of the Twins observes that MLB has invested far more in Latin America than in African-American neighborhoods. Of course, one reason is that since Latin American players are exempt from the amateur draft, Latin American academies operated by individual teams pay for themselves by supplying cheap talent.

MLB has operated the RBI (Reviving Baseball in the Inner City) program for more than a decade, and is about to open a $3 million Urban Youth Academy in Los Angeles, but MLB's popularity among African-Americans continues to slide.
2003 Reds Finances May Have Finished in the Black

Citing team sources, the Cincinnati Enquirer says that the Reds earned $2.5 million in 2003, after losing a claimed $27 million from 2000-02.

The Reds fell almost 450,000 fans short of their projected attendance of 2.8 million in The Great American Ballpark's first season. Injuries, and midseason trades of almost everyone of value, didn't help. The Reds expect to open the 2004 season with a payroll of $46 million, down $13 million from Opening Day 2003.
Twins: Still No Deal for Cable, Satellite Service in Twin Cities

You'd think that an owner who believes a $350 million public subsidy for his new ballpark isn't generous enough might at least try not to antagonize members of that public with more naked greed. The Minnesota Twins haven't learned that lesson.

Last year most Twins games were carried on Fox Sports Net North. FSN charged cable operators $1.70/month per subscriber for programming that included the local NBA, NHL and college hockey teams along with the Twins. FSN paid the Twins about $6 million last year, and had offered a multiyear deal worth $12 million/season. That wasn't enough for Jim Pohlad, son of owner Carl ("Contract Me!") Pohlad, who moved ahead with plans to create his own Victory Sports Network.

But there are two problems: Pohlad wants to charge $2.20/month per subscriber for the Twins alone, and he demands that Victory Sports appear on the same "expanded basic" network as FSN and ESPN. None of the major cable systems will meet his terms. As a result, 105 Twins games could be unavailable to most of the state at the same time Pohlad is begging state and local legislators to build the Twins a new ballpark.

Nice timing, guys...
Cubs Plan Surprise for Rooftop Club

Twelve of the thirteen rooftop clubs across from Wrigley Field have signed a revenue-sharing agreement with the Cubs: in return for the Cubs not blocking their views of the field, they will pay the club 17% of their revenues for the next 20 years.

The 13th, "Skybox on Waveland," is located right down the third base line. The Cubs have hired lighting and scenery experts to find a way to screen that property's view without affecting the others. A copyright infringement case brought by the club (a really weak claim, by the way) is also scheduled to come to trial soon. One Cubs insider explained the move:

"We have 12 partners who are compensating us for selling tickets to our games and one that isn't. Carrots for the 12. A stick for No. 13."

Jonathan Arnold, the building owner quoted in this Chicago Sun-Times story, was head of the University of Chicago College Republicans in 1980. That fall he plastered our dorm corridor with cardboard Reagan-Bush posters -- posters conveniently sized so that with one slight bend in the middle, they fit perfectly in the urinals. He didn't believe me when I said I only wanted to make his heroes more visible to residents.

Jonathan called a couple of months ago to talk about this dispute. As he remains the sort who believes that George W. Bush's dangerously liberal economic policies are stifling Americans' freedom, he's not inclined to compromise. He also pointed out that his rooftop's not hurting the Cubs: it's marketed to corporate and other group outings that Wrigley can't accommodate.

Sunday, March 21, 2004

Pawlenty Stadium Plan: Questions and Answers

An overview of Minnesota Governor Tim Pawlenty's stadium-finance plan by Jay Weiner of the Minneapolis Star Tribune. Quick summary:

The proposed retractable-roofed park for the Twins could cost up to $535 million.

The State of Minnesota has offered $110 million through "tax increment financing," through which the state would issue bonds to be repaid from the additional tax revenues a new park is supposed to generate. Economists say most or all of these "additional" taxes represent money that would otherwise have been spent elsewhere in the metropolitan area, resulting in little or no actual economic gain.

The Twins would be asked to contribute 33% of the cost, or an estimated $176.5 million.

The remaining $248.5 million would be paid by the local governments competing for the club, St. Paul and Hennepin County (Minneapolis).
Hey! It's a "real" Weblog now!
Earlier today, David Pinto asked if I had an RSS feed. Since I created the Weblog "on the fly" about a year ago, using an ordinary HTML editor, I hadn't thought about such things.

During this afternoon's NCAA games, I did. I figured out how to use the Blogger software, and how to configure it so that all the old features were still accessible. (After all, the site wouldn't be the same without the Bud Selig countdown clock at the top...)

I hope you'll find the new format at least as user-friendly, as well as RSS-aggregatable. All the old content remains as it was, accessible through the archive. Enjoy!
Season May Be Filled with Giant Problems

Buried at the end of Ross Newhan's latest Los Angeles Times column is the news that baseball's drug testing for minor leaguers, touted by Commissioner Selig as a proposed replacement for the current major league system, doesn't work:

"In the last week, I talked to five players at different camps, each of whom had spent the last two or more years at the minor league level. All said they have never been tested during the winter.

"'We're basically knocking on doors, hoping to find people home,' baseball labor lawyer Rob Manfred acknowledged of the winter program in the minors.

"'We're trying to do the best we can with it, but locating the players is one problem, and there are obviously significant legal issues involving players who live out of the country.'

"In other words, baseball officials armed with passports and specimen cups can't simply start tracking down players in Mexico, the Dominican Republic or any other foreign country, ignoring borders and the laws of those countries.

"If there is not off-season testing of all players on a random basis, if even U.S. players can't be found and tested during the off-season, what's the point?"

Red-Letter Daze Has Blue Blood Boiling

Bill Plaschke of the Los Angeles Times notes that while the Dodgers are in disarray and new owners Frank and Jamie McCourt are being verbally pummeled by dissatisfied fans, the Anaheim Angels are taking the opportunity to invade Dodger territory.

The Orange County-based Angels' TV campaign shows Angel loyalists slapping the club's "A" logo on various signs around Los Angeles County. In Plaschke's words:

"An organization that spent four decades existing meekly at the foot of a fence surrounding its famous neighbor is not just attempting to scale that fence, it's trying to destroy it."

18% of current Angels season ticketholders live in Los Angeles County. The Angels have a better radio outlet, will be telecasting more games than the Dodgers, and could outdraw the Dodgers for the first time in 2004. It could be a long few years in Dodgertown, until the McCourts' money officially runs out and they can be shoved out the door.


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