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Doug's Business of
Baseball Weblog:
June 2003 June 30, 2003: D.C. Stays in Running for Expos Franchise. LINK MLB's not happy at the D.C. Council's newfound backbone, but after swallowing hard, has admitted that the District's refusal to pass a stadium bill until MLB commits to moving the Expos to Washington is not a dealbreaker. No kidding. For all of MLB's bluster, it's not exactly dealing from a position of strength. If MLB doesn't sell the Expos, its only alternative is to operate the club through 2006, absorbing heavy losses and a continued P.R. drubbing, then try to contract the Expos and one other club. If that comes to pass, a Congress which will have had four years of up-close experience with MLB's anticompetitive practices could repeal baseball's treasured antitrust exemption by voice vote. June 30, 2003: M's Put Prime Seats Up for Online Bids. LINK Though not yet in the Cubs' league, the Mariners are solid silver medalists in the Ticket Gouging Olympics. A Seattle ordinance forbids the sale of tickets for more than their stated face value. To evade this ordinance, the Mariners are now selling tickets with no stated face value. The tickets in question are unsold "charter seats" -- premium seats originally offered to fans before Safeco Field opened, for a five-figure "license fee" that simply gave the purchaser the right to buy tickets at their face value. Dozens of these seats went unsold. The Mariners are now offering up to 111 charter seats per game on their Web site. The charter seats are offered at up to $125, with the price declining the longer the tickets go unsold. If they're still unsold as of a few days before the game, the tickets are released to Ticketmaster, where they sell for the same price as regular box or field seats. Thus according to the Mariners, these tickets have a stated face value if purchased as part of a charter seat plan. They have a stated face value if purchased through Ticketmaster shortly before the game. But they magically don't have a stated face value when offered through the club's ticket site, so the Seattle anti-scalping law doesn't apply. Seattle Times consumer affairs reporter Peter Lewis isn't convinced. Neither are the people who have been arrested for doing on-site what the Mariners do on-line. June 30, 2003: Staten Island Yankees Strike Out in Payments to City. LINK The New York City Comptroller's office has concluded that the Staten Island Yankees owe the city more than $373,000 for electricity, signage, parking and late charges. (Here's a link to the audit report.) The parent Yankees must be supplying accountants as well as coaches to their New York-Penn League affiliate. (Thanks to Larry Abraham for the link.) June 28, 2003: Behind in Count. LINK A better than average article from the Los Angeles Times about MLB's attendance decline. The table at the bottom reveals another side of the story. Because new ballparks are smaller than the ones they replaced, average stadium capacity has fallen 12.5% over the past decade. In these new parks, automatic sellouts like Opening Day and Fireworks Night can't attract as many fans as they used to, so to maintain attendance after the new-park honeymoon wears off, clubs have to do a better job of marketing their ordinary, midweek games. June 25, 2003: Williams Eases Push on Stadium Financing and Warner Seeks Firm MLB Commitment. LINK The Mayor of Washington and the Governor of Virginia have decided to stop playing the relocation game by MLB's rules, under which interested local governments are supposed to throw money at MLB's feet until Bud & Co. yell Stop. As it has become increasingly clear that MLB has no intention of yelling Stop anytime soon, the Mayor and the Governor are fighting back. They won't push their stadium bills until after MLB agrees to sell the Expos to their local group. With MLB claiming that it wants to decide the Expos' future by the All-Star break, the executives are sending a signal that MLB has nothing to gain by delaying the decision. It's the right signal to send, but the owners have rarely reacted to any signal softer than a two- by-four between the ears. June 23, 2003: State's Role in Portland Stadium Would Be Ongoing LINK Portland's bid for the Expos encounters more trouble. The state treasurer hasn't endorsed the plan, saying only that he's been "supportive to the extent that I've made it workable." The state's share of funding would be capped at $150 million, with all the money to cover debt service on the bonds theoretically coming from a special income tax on baseball players and executives. If the tax doesn't raise enough money, the alternative source of revenue would be a yet- unidentified guarantor. Who would that be? Portland Baseball Group President Steve Kanter is less than reassuring: "It depends on who the ownership group is, what their banking relationships are, who will be doing the naming rights, et cetera." In other words, nobody knows. In addition, the state intends to look over Portland's shoulder during subsequent negotiations to ensure that the locals don't get too generous. The best news for Portland could be that MLB doesn't seem ready to relocate the Expos for the 2004 season. As of now, Portland's bid seems a distant third to the Washington, DC/northern Virginia rivals. June 23, 2003: New Articles Added to Site LINK I've just posted three articles originally published elsewhere: "Chicago's Official Scalpers," from the June 2003 Boston Baseball; a general news update from the Spring 2003 SABR Business of Baseball Committee newsletter; and my annual "Looking Back" article from the newsletter, with anecdotes about the business of baseball in 1878, 1903, 1928, 1953 and 1978. June 21, 2003: Payne's Pitch for Funds Denied LINK The Milwaukee Journal-Sentinel reports that Brewers president Ulice Payne Jr. recently failed in an attempt to persuade a wealthy local businessman to invest up to $20 million in the Brewers. Watch for further developments. If current trends continue, in a few years the Brewers may no longer be viable without a significant infusion of capital, most likely in the form of a new majority owner. The Brewers' finances have been shaky for years. In February 1996, Brewers vice president Wendy Selig-Prieb told state officials that the club had no collateral to offer for a $50 million loan it was supposed to use to finance part of Miller Park's construction because four separate banks already held liens on the club. Milwaukee Mayor John O. Norquist offered to contribute $50 million if the new park was built downtown. Bud Selig refused, determined to construct the new park in the County Stadium parking lot. Eventually a consortium of local businesses advanced the money. (Here's a timeline of the Brewers' stadium follies.) The December 12, 1998 Forbes, which estimated MLB revenues, profits and values through the 1997 season, concluded that the Brewers had a debt to equity ratio of 97%: roughly $123 million of debt on a franchise worth $127 million. Miller Park was supposed to save the club. It hasn't. Although MLB's 2001 financial disclosures showed the Brewers earning $16 million, net of revenue sharing, in Miller Park's first season, this fell to $9 million net of interest expenses. Attendance fell by 800,000 fans in 2002 and is down substantially in 2003. A contending team could rekindle interest, but the Brewers are at least two or three years from contending. Meanwhile, no rational businessman would invest an eight-figure sum in the Brewers without demanding major changes in a management group riddled with nepotism, plagued by bad business decisions and dominated by a man who should have severed all ties with the club when he became Acting Commissioner in 1992. The new CBA allows the owners to contract by two teams for the 2007 season. If another contraction vote is ever taken, and if the owners were to vote to eliminate the two clubs with the most serious long-term financial problems, the Commissioner and his beloved Brewers could exit the majors at the same time. June 20, 2003: Minneapolis Man's Bats Go Back on the Racks LINK MLB now requires companies which supply bats to major league players to pay an annual $10,000 "administrative fee" and to purchase $12 million worth of insurance. As a result, the number of bat suppliers has dropped from 48 in 2002 to 14 this season. The demand for insurance is reasonable, and MLB says it's taking steps to reduce the premiums through creation of a group policy for all batmakers. But a $10,000 annual "administrative fee"? Sandy Alderson says: "The administrative fee was originally intended to help us defray the costs of inspecting bats, approving bats and for all the administrative work and testing." Even with just 14 batmakers, $140,000 buys a lot of inspections. And it's absurd for all batmakers to pay the same administrative fee. The cost of inspecting each company is largely a function of the number of bats to be inspected, so why should a small businessman who sells to five major league players pay as much as Hillerich & Bradsby, which supplies hundreds? Although the article quotes a small batmaker who blames his troubles on MLB's antitrust exemption, this is one problem not caused by MLB's privileged legal status. Even without an exemption, MLB would still be entitled to establish and enforce objective standards for equipment, and to require its suppliers to maintain insurance on their products. June 20, 2003: Rockies Partners Initiate $12 Million Cash Call LINK Nothing to worry about here: the money's being raised to replace $20 million used to buy the shares formerly owned by a limited partner who filed for bankruptcy. This is the first cash call the Rockies have made. They were an astonishing success in their early years, regularly selling out an 80,000-seat football stadium before Coors Field was completed. Even now the Rockies, who play in MLB's sixth smallest market, draw better than their market size and on-field mediocrity would predict. A lot of teams would be wise to study Colorado's marketing practices. June 17, 2003: Phils Name New Home, Will Bank $95 Million LINK The naming-rights piece of Citizens Bank's deal with the Phillies is worth $57.5 million over 25 years. Citizens has also committed to buy $1.5 million of advertising per year from the club during this period, about double what it currently spends. Bank CEO Steven D. Steinour described the deal as "more than a name on the park. I characterize it as a partnership." He's not kidding: in addition to extensive signage in and around the park, the bank's logo will appear on Phillies stationery, press releases and even tickets. The article includes a chart of other recent MLB naming rights deals. June 16, 2003: Trying to Advance After Striking Out LINK Former major league umpire Bob Davidson, who blindly followed former umpires' union head Richie Phillips off a cliff in 1999, still can't get umpiring out of his system. In an attempt to return to the majors, the 50-year-old Davidson is starting all over at the bottom, calling Northwest League games this summer. I don't know how Richie Phillips can sleep at night. But knowing Phillips, if he can't sleep he'll find someone to blame, then sue them for disturbing his peace. June 14, 2003: Finicky Twins Fans Seem to Be Proving Selig Right LINK Rocky Mountain News columnist Tracy Ringolsby is running away with the title of Most Annoying Baseball Writer in America. His smug, dismissive review of Moneyball reads like a parody: the Valiant Defender of the Conventional Wisdom rushing to support his insider buddies against the Evil Outsiders. Lips planted firmly on his cronies' collective posterior, he warns, "No pencil-neck geek's gonna talk like that about my friends!" Ringolsby's latest cause is defending the wisdom of Bud Selig and Carl Pohlad in proposing to contract the Twins. If those ungrateful Minnesotans aren't flocking to the Metrodome, they don't deserve a team! According to Ringolsby, the Twins are 27th out of 30 teams in average home attendance. They're not. The Twins are actually 20th overall -- and first in their own division. Through a remarkable contortion, Ringolsby even paints owner Carl Pohlad's legendary cheapness as a virtue: "There's only one real complaint anybody could have about the Twins - ownership neglect. It keeps Pohlad from pumping money into the team to sign free agents, but it also has merit. Because Pohlad has no interest in the team, he didn't overreact during the decade of demise in which the Twins went from world champs to chumps." In the non-sports world, an owner who neglects his business has only himself to blame if the customers stay away. Why should baseball be any different? Profits, high attendance and respect must be earned, not simply claimed. Moreover, Pohlad not only neglected the Twins, he misled their fans and the Minnesota legislature in talks over a new stadium, then tried to kill the team through contraction because it was worth more to him dead than alive. The fans don't owe him a damned thing. Finally Ringolsby claims that "Selig's concern all along" was lack of fan support in Minnesota. Nonsense. Selig's only "concern" was the need to find a second team that could be contracted along with the Expos. This brazen suck-up suggests that Ringolsby, having heard of MLB Official Historian Jerome Holtzman's recent health problems, may be positioning himself in case the easiest baseball-writing job in America opens up. June 12, 2003: Bud a bit blurred as a visionary LINK ESPN.com's Rob Neyer may be in for a phone call from the Commissioner for Life after suggesting that calling Bud Selig "hare-brained" is an insult to the hares of the world. After lambasting Selig's latest bright ideas -- more teams in the postseason, fewer regular season games, and special All-Star uniforms -- Neyer summarizes: "We're often told that Commissioner Bud loves baseball, and I believe that he does. Unfortunately, his love or baseball ranks somewhere behind 1) his love of profit, 2) his desire to leave a legacy as an activist commissioner, 3) his love of his fellow owners. Plus, he's delusional. In Commissioner Bud's Fantasy World, everything he's ever done has worked out perfectly, which means of course that anything he wants to do will work out perfectly, too. "But it won't. Selig's a dangerous man, and the sooner we're rid of him, the better." Six years ago, when Selig was touting a radical realignment scheme that would have put every club in the Eastern Time Zone into the AL and everyone else in the NL, I compared Selig to an MTV cartoon character. Since then he's been elevated from Acting Commissioner to Commissioner, given more power to run the game as he sees fit, and received a raise and a contract extension literally days after telling Congress and the public that under his leadership, MLB was hemorrhaging money. Alas, the countdown at the top of this page has a long way to go... June 11, 2003: Katz Urges Cautious Optimism on Portland Baseball Bid LINK MLB's 2003 Extortion Across America Tour visits the Rose City. During three hours of closed-door meetings, MLB's Jonathan Mariner, John McHale Jr. and Thomas Ostertag urged Portland not to demand that the owner of a major league team in Portland contribute $70 million toward the cost of a new ballpark. A Portland official later said, "I think we'll be able to bring that down, and they were certainly pleased to hear that." The discussion centers around Portland's share of the cost. The state's share is set, though even this remains contingent on the Oregon Senate's passing a version of the stadium finance bill previously approved by the lower house. The Senate may not even take up the bill for several weeks. June 11, 2003: The New CBA, Part II (BaseballProspectus.com - subscription required). LINK I write more than you'd ever want know about Article V of the CBA: scheduling, the rescheduling of postponed games, the postseason, and interleague play. June 11, 2003: Would a Publicly Financed Stadium Pay off for D.C.? LINK The D.C. Fiscal Policy Institute says no. The link above leads to its press release; this link leads to a .PDF copy of its report. (I found this link on Neil deMause's Stadiums list, a must-read for those interested in stadium finance issues.) June 8, 2003: Selig Likes What He Sees in His Game LINK Bud waxes philosophical and surveys his legacy as Commissioner. Unsurprisingly, he's quite satisfied with himself. Interleague play has been "very positive"; the very first year of the new CBA has magically produced "more teams with a realistic chance of competing." His next bright idea: reducing the regular season to 154 games to make room for more teams in the playoffs and an expansion of the divisional series from five to seven games. The players will gladly play fewer games for the same salary, but Fox and ESPN have shown no interest in more early-round playoff games, and the NBA's largely meaningless regular season is hardly the model MLB should want to emulate. To the extent Bud's consciously or subconsciously motivated by the desire to see a playoff game in Miller Park during his Commissionership, to give his Brewers any meaningful chance he'd have to let 24 teams into the postseason. A much more positive proposal is a round-robin international tournament in which players from MLB and foreign leagues competed for their home countries. That could indeed be a spectacle likely to heighten worldwide interest in MLB. If held just before the start of the regular season, it would serve as a weeklong commercial for baseball. The regular season would start on schedule; players not participating in this series would simply stay at spring training. June 8, 2003: How Much for Tickets? You Need a Scorecard LINK A New York Times business writer surveys major league clubs' increased use of variable ticket pricing. More and more teams are adopting this way to increase revenue for high-demand games and increase attendance at less desirable games. June 7, 2003: Major Minor Developments: In Baseball's Bush Leagues, Unaffiliated Teams Are Thriving. LINK A nice article from the Philadelphia Daily News about the rise and continued success of the independent minor leagues. Several of author Paul Hagen's points are also strong arguments why fans would benefit from the revocation of Organized Baseball's antitrust exemption and the end of farm systems in their current form:
June 6, 2003: Ticket Sellers Say M's Don't Play Fair. LINK Seattle has a different type of scalping issue. A city ordinance bans the resale of tickets for more than their face value...but the Mariners' Web site allows season ticket holders to resell their tickets at a premium, with the team getting a percentage of the price, so long as the seller lists a zip code outside the city of Seattle. Further complicating matters, the Mariners hire off-duty police officers for security duties that include patrolling for scalpers. Two men arrested for scalping claim that they're the victim of selective prosecution. They claim the Mariners prosecute people like them to protect their own position in the resale market, and that city officials improperly fail to enforce the ordinance against the Mariners. Selective prosecution is a very difficult defense to establish. I suspect it will be impossible to prove here, since the class of defendants alleged to receive improperly favorable treatment (a) operates as a cyberspace middleman rather than an in-person solicitor outside the stadium, and (b) takes at least some precautions to prevent Seattle residents from using the site to violate the law. June 4, 2003: Documents from the Cubs' Ticket Scalping Lawsuit . LINK The attorney for the plaintiffs in the Cubs' ticket scalping case has E-mailed me a variety of documents related to the case. Here's a PDF file of the Amended Complaint. I also have .PDFs of the deposition transcripts of Dan Guza and Carl Rice; here are downloadable text files containing the deposition transcripts of Mark McGuire and Katie Marta of WFPTS. I also have several of the plaintiffs' briefs, if anyone's interested. If anyone from the Cubs or their law firm is reading this, I will gladly post anything you'd like the public to see about the case, too. June 3, 2003: The New CBA, Part I (BaseballProspectus.com - subscription required). LINK In Part One of my walk through the CBA, I discuss Articles I through IV. June 1, 2003: Expos Turn Up Heat on Selig LINK Two months into the 2003 season, the Montreal/San Juan/Your City Here Expos have the majors' fourth best record and lead the NL wildcard race by two games. As Ross Newhan of the Los Angeles Times notes, this highlights the inherent conflict of interest in MLB's control of the Expos. Will the other owners allow the Expos to increase their payroll by picking up a key player for the stretch drive? Commissioner Selig, principal owner of the Milwaukee Brewers, insists the decision is his alone. At least his Brewers, owners of the majors' third worst record, have done their part to eliminate Selig's conflict...so long as the Expos' midseason spending spree doesn't involve relieving the Brewers of Jeffrey Hammonds' $8.2 million salary or Glendon Rusch's $4.25 million. All otherwise-uncredited content on this page is
copyright © 2003 by Doug Pappas. All rights reserved.
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