Doug's Business of Baseball Weblog:

November 2003

November 25, 2003: Cubs Prevail in Ticket Broker Case. LINK

Judge Sophia H. Hall's decision gives new meaning to the term "legal abortion."

The Tribune account says that according to Hall, the plaintiffs failed to prove that the practice of diverting thousands of premium seats to a wholly owned affiliate of the Cubs without ever making them available to the public "violates any law or violates custom or practice," or that the "sale of tickets to Premium from [the Cubs'] discretionary reserves reduced Cubs fans' opportunity to purchase tickets from the box office."

Presumably Judge Hall believed that the public-spirited Cubs would otherwise have given at least 37,000 prime tickets away rather than sell them at their face value. As Greg Couch notes, even the Cubs' own lawyers tried to get out of court as quickly as possible after their "victory."

I hear Michael Jackson wants Judge Hall to preside over his trial. She'd probably rule that the presence of Jackson's semen on the underwear of an 11-year-old houseguest failed to raise the inference of improper sexual contact.

At least this particular atrocity can be corrected by the Illinois legislature through an amendment to the ticket scalping act. Let's hope it does so before the 2004 season.

[UPDATE: Here's a copy of the decision in .PDF format.]

November 23, 2003: What a New Stadium Means to the Marlins. LINK

The Miami Herald conducts a somewhat credulous analysis of the Marlins' finances, one that accepts their claim to have lost $20 million in 2003 (virtually all of which is due to their atrocious stadium lease) and underestimates the value of a new ballpark to the club.

One interesting tidbit: Jeffrey Kessler, attorney for the plaintiffs in the RICO action against Loria, says his clients' involuntary share of the Marlins has been reduced from 6% to 2%, suggesting that Loria has been raising capital by bringing in new investors.

November 23, 2003: Brewers' Books Reveal Struggles. LINK

The Milwaukee Journal Sentinel obtained Brewers financial statements for 1998 through 2002.
    Some highlights:
  • Revenue sharing receipts: $8.1 million in 1999, $9.1 million in 2002 under the old CBA and revenue sharing formula, rising to $15 million in 2003 and forecasts of $20.7 million in 2004, $22.5 million in 2005.
  • Baseball operations spending: $52.4 million in 1998, rising to $75.9 million in 2002. Over this period, the major league player payroll rose from $39.5 million to $52.7 million; investments in player contracts (minor leaguers) rose from $10.1 million to $17.2 million.
  • Team debt: $68.3 million at the end of 1998, peaking at $171.3 million at the end of 2001, now down to about $110 million, thanks in part to up to $44 million in new equity contributions.
  • However, the biggest component of debt reduction was a September 2002 deal with the stadium authority that amounted to trading debt for ongoing expenses. The district forgave $41.1 million of debt and accumulated interest in return for the Brewers assuming responsibility for maintenance and repair on the park.
  • The Brewers, like 28 other clubs, paid $4.1 million in 2002 to support the Expos. That's a total of about $120 million.
A Journal Sentinel guest column by Steve Walters points out that if the current owners sell the Brewers, the depreciation available to the new owners could improve the club's bottom line by $8 million/year for the first five years. One more reason for the Seligs to sell the club...

November 23, 2003: Payne Buyout Complete. LINK

The Brewers are paying between $2.4 and $2.7 million in cash, plus an equity payout, to remove Ulice Payne as club president. A confidentiality clause prevents either side from discussing the details.

To replace Payne, the Brewers' board says it wants "somebody who combines credibility and integrity but has demonstrated management skills." This would be the same "credibility and integrity" found in MLB's unaudited, unsupported cries of poverty over the past 25 years.

This article notes how many others the Brewers have paid to not work or play for them; for example, 2004 "will be the first time since 1998 that the Brewers will have only one GM on the payroll."

November 21, 2003: The Danys Baez Situation. LINK

The Cleveland Indians think they've found a loophole in the CBA which will allow them to reserve Cuban defector Danys Baez for 2004 without paying him at least 80% of his 2003 salary. In this article on the Baseball Prospectus Website, I explain what the Indians are trying to do and why it shouldn't work.

November 20, 2003: Cards Say Stadium Construction Will Begin Next Month. LINK

The Missouri Development Finance Board has approved the sale of $45 million in revenue bonds and the issuance of $29.45 million in tax subsidies. Early next month, the St. Louis County Council is expected to approve a $45 million loan to be funded from the bond issue, with the proceeds repaid from the county's hotel and motel taxes.

The Cardinals must turn over to the state $58.9 million of land and/or marketable securities. The club will contribute $50 million of its own money toward stadium construction. In addition, the company that will own the stadium and lease it to the Cardinals for 29 years will borrow $183 million and obtain $47 million from equity investors. The Cardinals have also committed to spend $60 million developing two blocks of a proposed six-block "Ballpark Village" office and residential development, to be constructed on the site of the present Busch Stadium.

November 20, 2003: MLB to Sell $1.5 Billion of Debt Notes. LINK

Bloomberg News reports that FleetBoston will lead the sale of $1 billion in one- year notes and co-manage the sale of $500 million of 10-year notes with Bank of America. This will be MLB's first publicly rated debt sale.

The bonds are backed by revenue from television and radio broadcasts, licensing and sponsorship contracts. They will replace some of the $1.78 billion of bank loans and credit lines MLB (as opposed to the individual clubs) had in August 2002, on the eve of the labor showdown.

November 20, 2003: Heat on Brewers Increases. LINK

Wisconsin's elected and appointed officials aren't letting the Brewers off the hook. The Speaker of the Wisconsin Assembly has asked the club to "allow a complete and open audit of the Milwaukee Brewers by the non-partisan Legislative Audit Bureau." He explains that the Brewers

"entered into a bargain with the taxpaying public. In return for public support of the stadium project, the Brewers promised to aggressively pursue excellence. Recent events have significantly eroded public confidence in the ability and even willingness of the team ownership to live up to its part of the bargain."

The majority leader of the state Senate is investigating the Brewers' tax exemptions, and a local Milwaukee good-government group seeks "grass roots support for a proposal to aggressively pursue all legal means to make the Milwaukee Brewers financial data available to citizens of the five-county stadium district."

November 17, 2003: Hampton Roads Group Makes Case for MLB Team. LINK

Two financial planners and a stadium consultant met last week with MLB President Bob DuPuy about possibly moving the Expos, or another team, to the Norfolk, Virginia metropolitan area.

Consultant Rick Horrow claims that the group has an "innovative" way to finance a stadium and a "well-capitalized, major group" of investors. What it doesn't have is warm bodies to fill the seats. The Norfolk-Virginia Beach-Newport News area has fewer residents than any current major league market. It's smaller than Indianapolis, Orlando, Sacramento or San Antonio, let alone Portland or Washington, D.C. Norfolk is a fine AAA market, but it's nowhere near ready for the majors.

November 17, 2003: The Stadium Game: Is This The End of the Building Boom?. LINK

Neil deMause, co-author of Field of Schemes, summarizes the status of current stadium proposals in Florida, St. Louis, Boston, Minnesota, New York, Oakland, Portland and Washington, DC.

November 17, 2003: Despite Rift, Payne Wishes Brewers Well. LINK

In the latest news from Milwaukee, the owners who plan to reduce the Brewers' player payroll by $10 million for 2004 have had no trouble finding about $5 million to make club president Ulice Payne, Jr. and several other top executives go away.

Payne stands to receive about $4 million, roughly half to buy out the remaining four years of his contract and the remainder to buy out his option to acquire an equity stake in the Brewers. The other high-ranking executives departing with Payne include Richard Cox, vice president of Miller Park operations; Sarah Harris, vice president and general counsel; and Diane Valenti, executive assistant to the president. Patty Harsch, manager of corporate suite services, may also be leaving.

Executive Vice President Rick Schlesinger and CFO Robert J. Quinn will run the Brewers until a new president can be hired. Good luck; after this incident, no qualified candidate will want to come within 100 miles of the Brewers...unless of course he or she can negotiate a severance clause similar to Payne's.

The payroll cuts and Payne's ouster have led to a week of brutal press for the Brewers, attacks on the credibility and competence of both Bud and Wendy Selig, and calls by angry public officials for an investigation of the club's finances. Here's a handy overview of the Payne dispute, courtesy of the Milwaukee Journal Sentinel, which has been all over the story.

November 15, 2003: Selig Put Millions Into Ballclub. LINK

Bob DuPuy, Bud Selig's personal lawyer and now his personal MLB President, has come to his patron's rescue, assuring the Milwaukee Journal Sentinel that Bud has really, really avoided any involvement with the Brewers since becoming permanent Commissioner in 1998.

Thanks to DuPuy, we also know what Bud's doing with his multimillion-dollar Commissioner's salary: reinvesting it in his hapless Brewers. Over the past five or six years he's contributed about $13.2 million of capital to the club.

November 14, 2003: Updated Free Agent Lists Now Available. LINK

I've updated my master list of free agents through the 2003 season.

In addition, Tom Ruane of Retrosheet has graciously provided me with free agent information from the Retrosheet transaction database, the source of transaction information for the Retrosheet player pages as well as baseball-reference.com.

The Retrosheet data covers 1974 through 2001. It not only lists free agents, but also identifies the club which signed each player to his next contract. The list includes players who were non-tendered or released, as well as six-year free agents and those awarded free agency by an arbitrator. It's a 264K textfile which can be downloaded here.

November 14, 2003: Brewers Payroll At Risk Into '06. LINK

The Milwaukee Journal Sentinel has obtained a copy of the financial report shown to potential investors in the Brewers over the summer. It forecasts lowered salaries through at least 2006.

Even more problematically, the report says that the Brewers' baseball operations budget -- not just major league player salaries, but the cost of benefits, coaches, trainers, managers, and the entire minor league system, including signing bonuses for draftees -- will be $60.58 million in 2004, $60.5 million in 2005 and $61.4 million in 2006. For a club in a new ballpark that expects to receive $15 million from the revenue sharing pool this year and more in the future, that's ridiculously low.

The Brewers say they're paying $8 million/year in debt service. Adding that to the baseball operations budget brings the club's expenses up to about $70 million/year. While the Brewers haven't released revenue figures, MLB's 2001 financial disclosures provide a basis for some reasonable estimates. The Brewers probably receive:
  • $15 million/year (and rising) from the revenue sharing pool
  • $25 million/year (and rising) from national revenues
  • $6 million/year from local radio and TV
  • $50 million/year from gate receipts and other stadium-related revenues. The $50 million figure represents a 40% decline in these revenues since 2001, the Brewers' first year at Miller Park, when they took in $83 million from these sources.
These conservative estimates bring the Brewers' revenues up to $96 million/year. If they spend $70 million/year on baseball operations and debt service combined, that leaves $26 million for other expenses. Where is all that money going?

The Journal Sentinel also reports that the Brewers' offering documents gave prospective investors the opportunity to buy up to $40 million in nonvoting stock Hard to believe Wisconsin moneymen didn't jump at that proposal. Board members now say that any new investors will be able to convert their holdings into voting shares.

In a related story, Wendy Selig-Prieb exonerates her father from responsibility for her mismanagement of the Brewers. "Does he influence my thinking when it comes to the baseball decisions and the decisions I'm involved in? No, he doesn't." She also insists that her family has no intention of removing itself from Brewers' management.

November 14, 2003: Mandatory Steroid Testing to Begin in 2004. LINK

MLB will have mandatory testing for steroids for at least the next two seasons, following the announcement that 5-7% of players tested positive for steroids during 2003's random testing. The current CBA provided for random, anonymous "survey" testing of players for steroids in 2003, with mandatory testing to follow only if more than 5% of players tested positive.

Although MLB is spinning the results as evidence that steroid abuse is relatively uncommon, the actual rate of usage could well be significantly higher. As one expert interviewed by the New York Times noted, MLB's drug tests weren't the random, unannounced tests used by the Olympics. Players knew in advance when the tests would begin, and only 20% of players were randomly rechecked later in the season.

    Penalties for those caught using steroids in the future:
  • First offense: Treatment only.
  • Second offense: 15-day suspension without pay and/or a fine of up to $10,000
  • Third offense: 25-day suspension without pay and/or a fine of up to $25,000
  • Fourth offense: 50-day suspension without pay and/or a fine of up to $50,000
  • Fifth offense: One-year suspension without pay and/or a fine of up to $1 million.

November 13, 2003: Legislators Want to Audit Brewers. LINK

Bud Selig's worst nightmare -- independent auditors reviewing club finances -- could be coming to his own Brewers. Wisconsin legislators from both sides of the 1995 stadium debate are demanding access to the Brewers' books, claiming that the club is breaking the promises it made in return for the stadium subsidy.

Assembly Speaker John Gard told the Milwaukee Journal Sentinel:

"The taxpayers of this state have made a multimillion-dollar investment in this baseball team and taken the club's decisions on faith. This week's revelations of a 'fire sale' at the ballclub have shaken this faith, and it is time for us to actually be given a look at the books and review how the team is managing its finances."

Miller Park was financed in large part by an 0.1% sales tax in Milwaukee, Ozaukee, Racine, Washington and Waukesha Counties. By the time the tax ends in 2014, it is projected to raise $562.9 million for construction and operation of the stadium. A prepared statement issued yesterday by then-Governor Tommy Thompson, now Secretary of Health and Human Services, minced few words:

"The Brewers made it clear that if we built a modern, state-of-the-art stadium, it would provide them with the resources to field a winning baseball team. They promised to go out and get the star players that would allow them to compete for a World Series. The taxpayers stepped up, built the stadium and kept Wisconsin a major-league state. Yet the Brewers have not upgraded the quality of their team, and now they are apparently cutting their payroll further. The Brewers need to put an end to the games. They need to invest in a winning team."

Milwaukee County Executive Scott Walker has asked county attorneys to review the stadium documents for ways to pressure the Brewers. State Senator Michael Ellis said: "The Seligs just scammed the living dickens out of the people of this state." Sources familiar with the Brewers' recent efforts to raise capital claim that the Brewers' board of directors refused to consider proposals that would threaten the Seligs' control of the team. Meanwhile, the Brewers' flagship radio station is reporting that this same board has decided to sever ties with club president Ulice Payne, Jr., the only member of the club's management structure still respected by the Milwaukee business community.

Update: A Journal Sentinel editorial today calls on the Brewers to open their books, and suggests that the Seligs and their cronies consider selling control of the club.

November 12, 2003: Payne May be Done at Brewers. LINK

In an ominous sign for Ulice Payne, Jr.'s future as president and CEO of the Brewers, the club's CFO and Executive Vice President-Business Operations released a public statement without his apparent knowledge and met with the local newspaper yesterday without him. Wendy Selig-Prieb refused comment. Payne, an attorney who left his position as managing partner of Milwaukee's Foley & Lardner last year for a five-year, $7.5 million contract to run the Brewers [update: a later story clarifies that Payne's contract is worth $2.5 million, not $7.5 million], said only that he was "in discussions about my situation."

The other executives appear angry at Payne's attempt to distance himself from the club's decision to slash its payroll to $30 million last year, stressing that Payne was part of the group that unanimously approved the budget.

In related news, the Brewers disclosed that current owners had invested an additional $44 million over the past 5-6 years, including $12 million in fiscal 2002 and $12 million in fiscal 2003. They also confirmed that the club owes $110 million to Citibank and pays $8 million/year in debt service.

Journal Sentinel columnist Dale Hofmann calls on Bud and Wendy Selig to find a new owner for the Brewers and turn over control of the club to the newcomer. "Only the Seligs can salvage the fiscal, competitive and public relations shipwreck that the Brewers have become, and they can do it by giving somebody else a chance."

November 11, 2003: Brew Crew Blues. LINK

A lot of news from Milwaukee, all of it bad. On Saturday, the Milwaukee Journal Sentinel reported:

"The board of directors that runs the Milwaukee Brewers has recommended budget cuts for 2004 so significant that team president Ulice Payne Jr. said he has concerns about the franchise's ability to turn the team around."

The Brewers have reportedly decided to slash their payroll from 2003's $40.6 million to $30 million in 2004, and possibly keep it at that level for 2005 and 2006. Fully half of this payroll will come from other clubs, courtesy of MLB's revenue sharing plan.

The Brewers are reportedly $110 million in debt. They've been trying to raise capital for at least the past six months, without success. Today's Journal-Sentinel quotes a local businessman who put his finger on the problem:

"They (the board) are loath to put up more money of their own because they don't have it. They are loath to bring in new owners because they don't want to give up control. What you have is a stalemate, and the result is a $30 million payroll."

Fans are furious. The head of the Metropolitan Milwaukee Association of Commerce, which loaned the Brewers $14 million for Miller Park and has guaranteed the purchase of millions of dollars of season tickets, says, "if this is the level of investment that is going to show up in the field, we are seriously concerned about the future." He also notes that 32 luxury suites are up for renewal after the 2004 season, which promises to be the Brewers' 12th consecutive losing season. While Milwaukee finally has some decent prospects, they're all several years away.

A leading local columnist has blasted Brewers management: the "directors' stunning arrogance in calling for a 25% reduction in payroll is matched only by their bad timing." The leading local newspaper reminded Wisconsinites that when the Brewers were begging for a taxpayer-subsidized new park, they explained that it was necessary for the Brewers to field a competitive team.

Even with the new stadium, and even with greater revenue sharing, the Brewers are spiraling down the drain. No one will invest in the club so long as current management remains in control.

Bud Selig first got involved in baseball as part of a group trying to keep the Milwaukee Braves from moving to Atlanta. If he wants to keep a major league team in his beloved hometown, he may have to get out of baseball.

November 9, 2003: New Downloadable Local Broadcaster Database. LINK

I've uploaded a new database: a ZIP file containing a comma-delimited .CSV database of all known regular local radio, TV and cable broadcasters, and their stations, since the 1920s. I used this database to compile the broadcaster longevity records posted to the site a few months ago.

As part of my ongoing effort to fill in missing pieces of MLB's historical record, I've also supplied a copy to MLB.com. If you find any errors or omissions, let me know.

November 9, 2003: Monterrey Making Pitch for Baseball. LINK

The Dallas Morning News profiles José Maiz, who heads Monterrey, Mexico's bid to replace San Juan as the Expos' temporary home for 2004. Maiz, who helped pitch Monterrey to the 1957 Little League world championship, now heads the construction company which built Monterrey's ballpark. He's bullish on his community:

"It's no secret why we have the best universities in Latin America here, and that this is Mexico's wealthiest community. The great businesses are steering the future here. That future includes a major league baseball team."

November 9, 2003: Phils' Club Seats Already Gone. LINK

The Philadelphia Phillies say they've learned from overreaching at other new facilities. "We did not overdevelop our premium-seating areas," said John Weber, the Phillies' director of sales. "Other teams did 6,000 or 7,000 club seats. We did only 3,800 or so in a pretty big market."

Citizens Bank Park will offer three types of club seat: 450 Diamond Club seats behind home plate on the field level ($90-$200/game, depending on amenities); 770 Diamond Club seats in other areas, with access to a private lounge ($60); and 2,600 Hall of Fame Club seats on the press level, with another lounge ($42). The Phillies have also leased 69 of their 71 luxury suites. The two remaining 16-person suites list for $115,000 and $120,000.

November 6, 2003: Re-Election of Board Foes Blow to Virginia Baseball. LINK

Northern Virginia's bid for the Expos sustained yet another setback on Election Day, as Arlington voters overwhelmingly re-elected two members of the County Board who had withdrawn Arlington as a potential site for Virginia's new ballpark.

As previously noted, county governments now oppose four of the five proposed sites for a Virginia baseball stadium. The fifth, near Dulles Airport, is too far from downtown.

The bitter whining on the Virginians for Baseball message boards notwithstanding, "losing" the Expos to Washington would amount to saving $300 million in return for having to travel three or four miles farther to attend a major league game. Talk about a fight not worth winning...

November 5, 2003: Miami-Dade Commissioners Approve $73 Million Toward New Marlins Stadium. LINK

The first piece of the Marlins' financing is in place: $35 million from hotel bed taxes otherwise earmarked for convention development, and $38 million in sports facilities taxes. The county's money is conditioned on the deal, including site selection, being completed by March 15, and the Marlins contributing $137 million and covering cost overruns.

On the state level, "State Rep. Stacy Ritter, D-Coral Springs, has requested a bill be drafted to provide the team a $2 million state sales tax rebate annually for 30 years." Click here to E-mail Ms. Ritter about her proposal.

November 3, 2003: Downtown Miami Stadium May Alienate Marlins Fans from Broward, Palm Beach. LINK

Several fans from the north end of the Miami-Palm Beach metropolitan area say bad things about a downtown Miami stadium.

The Marlins say that they draw 40% of their fans from Dade County (Miami), 40% from Broward County (Fort Lauderdale and environs), 13-15% from Palm Beach County, the remainder from further away.

November 3, 2003: Boondoggles, Not Boon. LINK

In what can be read as a companion piece to the article below, Barry Jackson of the Miami Herald observes that new ballparks are no guarantees of financial success. The eight clubs which have opened new parks within the past five years finished a collective 619-676 (.477) in 2003, with only the San Francisco Giants making the playoffs.

The article discusses how various clubs handled their new revenue stream, quoting both team executives and local beat writers. Andrew Zimbalist summarizes the unrealistic expectations of many owners: "In Milwaukee, the ownership is moribund. In Detroit, it's handicapped. And in Cincinnati, it's similar. All these guys were expecting a handout, but you have to fill the seats."

Andy Furman of WLW radio described the Reds' disaster:

"Not only was a new stadium not a panacea, but why do they need a new stadium if the budget was lower than last year? It was a train wreck this season. If anything could have happened worse, I don't know what it would have been. And the new general manager, Dan O'Brien, won't say what next year's budget is. He says it doesn't pertain to the fans."

Instead the club seems to think the solution is to hire Pete Rose to manage the team.

Most fundamentally, in the words of Dave Dombrowski of the Tigers, "You don't recommend adding payroll unless it makes a difference where you are in the standings." Note to agents: take Detroit off your speed dial until at least 2006.

November 3, 2003: The Difference Winning Makes. LINK

John Hunt of The Oregonian notes that Oakland, Minnesota and Florida, three of the four clubs most often mentioned as candidates for relocation, made the playoffs despite playing in what Czar Bud repeatedly describes as outmoded, antiquated and no longer economically viable stadia. The fourth, the Devil Rays, have an ironclad lease. Hunt also observes that for the past two years, Portland's local ratings for the postseason have been higher than most major league cities'.

November 3, 2003: Don King Offers Palm Beach Co. Site for Marlins Stadium. LINK

To start the month on a light note, boxing promoter Don King wants the Marlins to move to the site of a jai alai fronton he owns in Palm Beach County. If they build a domed facility, King has graciously offered to stage boxing matches there in the offseason.

Although King hasn't spoken to the Marlins or outlined the financial terms of his proposal, and although the site is 67 miles north of Miami, King describes the offer as "a marriage made in heaven for Floridians." The Marlins haven't stopped laughing long enough to respond, but Bud Selig reportedly wants to hire King as a special accounting advisor to MLB.

Earlier Entries:

October 2003
September 2003
August 2003
July 2003
June 2003
May 2003
April 2003
February-March 2003

All otherwise-uncredited content on this page is copyright © 2003 by Doug Pappas. All rights reserved.

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