Doug's Business of Baseball Weblog

New Sports Trend: The Team Doctors Now Pay the Team

In a long New York Times article, Bill Pennington reports:

Despite concerns among many doctors and the players' unions over the ethics of putting health care out to bid, about half the teams in the four major North American professional sports are now tied contractually to a medical institution. Industry analysts expect that number to grow significantly.

The teams like the money, and the hospitals like people to think that the teams reviewed all the local medical options before settling on their facilities as the best local option. Medical associations, and players' associations, hate the deals.

"These groups should have to put out a disclaimer: `We paid for the ability to treat these top athletes,' " said Dr. Robert Huizenga, a former team doctor for the Oakland Raiders and past president of the National Football League Team Physicians Society. "What's it say about our profession when the most high-profile jobs are awarded not by merit, but by auction?"

"These arrangements suggest the medical care is not based on a person's expertise but on the depth of his pockets," said Gene Orza, the chief operating officer of the Major League Baseball Players Association.

"Our players do not like this trend in medical-care agreements one bit."

I suspect Mike Colbern will have a few things to say about this, too...
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Baseball Revenue Sharing Going to Prospects

The AP has obtained a list of unaudited revenue sharing payments and distributions for 2003. A total of $220 million was redistributed, up from $169 million in 2002. Highlights:

Big recipients: Montreal ($29.5 million), Florida ($21 million - the other playoff teams must have loved paying this), Tampa Bay ($20.5 million), Kansas City ($19 million), Milwaukee ($16.6 million), Pittsburgh ($13.3 million), San Diego ($13.3 million).

Big contributors: New York Yankees ($52.6 million, or almost 1/4 of the total pool, not counting their luxury tax bill), Boston ($38.7 million), Seattle ($31 million), New York Mets ($21 million, or about $1 million less than they wasted on Mo Vaughn and Roger Cedeno), Chicago Cubs ($16.7 million), San Francisco ($13 million).

Others mentioned: Houston received $1.2 million; Baltimore received $250,000; Cleveland paid $4.8 million.

Spokesmen for the Pirates, Brewers and Devil Rays insist their clubs are reinvesting their revenue sharing money in their farm systems. Bob DuPuy agrees: "But if you look at the number of young teams that appear to have good young talent on the field and good farm systems, you have to come to the conclusion that it appears to be having an impact."

Milwaukee, at least, appears not to be spending as much as it should. The Brewers' balance sheet released as part of the recent financial review shows that the Brewers' operating budget declined in 2003, despite an $8.1 million increase in revenue sharing from 2002 to 2003, and a $7.6 million increase from 2001 to 2002. The major league payroll fell by $6.9 million from 2002 to 2003, while the "baseball operations" budget (scouting, player development, travel and baseball administration) rose just $3.6 million.

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Crucial Hearings Begin in Legal Battle Over Expos Deal

Jeff Blair of the Globe and Mail provides a few more details about the Expos arbitration, which began today.

More than 30 witnesses are expected to testify, including MLB President Bob DuPuy. Bud Selig's testimony has yet to be scheduled. Former MLB President Paul Beeston has already given a videotaped deposition which will be entered into evidence. Plaintiffs' lawyer Jeffey Kessler anticipates a ruling by August.

MLB insists the pending action won't affect the timing of its decision on the Expos' future, even though the federal judge hearing the case has directed MLB to give 90 days' notice before the Expos are sold or moved. That shouldn't be a problem -- even if MLB adheres to its stated timetable and makes a decision by the All-Star break, that would allow a sale or move by mid-October, which is the earliest the club could realistically go anywhere.
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Padres Owner Strikes Riches Near New Ballpark

This AP article describes how Padres owner John Moores is benefiting from the construction of Petco Park. In return for the taxpayers footing most of the bill for the ballpark, Moores agreed to ensure at least $300 million of development in the surrounding area. He bought 21 acres near the park, an area which is now seeing $1.4 billion of development.

But Moores can't be happy with the opening and closing paragraphs of the article, which discuss the fate of Peregrine Systems, the software company he founded, and cashed out of just in time:

Prosecutors say senior managers engaged in a variety of gimmicks starting in 1999 - from selling a phony $19.6 million invoice to a bank, to posting millions of dollars in revenue that was uncertain to materialize.

Since late 2002, three executives, including former chief financial officer Matthew Gless, have pleaded guilty to charges of fraud.

Moores - who sold more than $600 million in Peregrine stock between 1997 and 2001, most of it shortly before the accounting irregularities surfaced - has never been charged with criminal wrongdoing.

Moores declines to comment on Peregrine's downfall, citing his attorney's advice.

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Arbiters to Hear Claims Vs. Loria

The action brought by the Montreal Expos' former limited partners against former owner Jeffrey Loria goes to arbitration on Monday in New York. A three-arbitrator panel will hear the claims. The hearings are expected to run through June 9.

Note to those interested in this case: arbitration proceedings are non-public, and at the end of the process the arbitrators usually issue very brief rulings with little or no explanation. Once the arbitration is completed, discovery on the related claims against Bud Selig and Bob DuPuy can proceed -- but as a practical matter, if plaintiffs can't persuade the arbitrators that Jeffrey Loria violated their rights, they have little chance of winning their lawsuit against the MLB defendants.
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Twins Give Nice Twist to Athletics' "Moneyball"

Murray Chass of the New York Times reviews how the Minnesota Twins have built a repeat division winner through scouting and smart trades, contrasting them to Those Soulless Number Crunchers By the Bay. One of his paragraphs requires a bit more context, though:

Ryan, as it has turned out, traded judiciously. For Milton, he got Carlos Silva, who has become the team's most successful starting pitcher, with a 5-0 record and a 3.11 earned run average. For Pierzynski, he got Joe Nathan, who has replaced Guardado as the closer and has gained 12 saves in 13 opportunities and has a 1.37 E.R.A.

Local Minnesota writers reamed the Twins for trading Eric Milton and A.J. Pierzynski, lamenting the moves as a sign that ownership couldn't or wouldn't pay for a competitive team, or else used the moves to echo the club's demand for a new ballpark. Both of these moves were fully defensible on baseball grounds even before the new players showed what they could do: Milton was overpaid by any reasonable standard and Pierzynski had lost his job to the best catching prospect in years.

Any club, on any budget, can improve itself by drafting well and trading players it no longer needs for those it does. Trading overpaid players and surplus talent is a good thing, whether you're the Twins or the Yankees. Now if Minnesota could just do something about the talent distribution within the organization -- if they could use some of their spare outfielders to DH for their middle infielders, they'd win 105 games.
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Bud Selig Unplugged

The title refers neither to life-support systems nor to cutting him off in mid-speech -- it's a long interview with the Commissioner, conducted by T.J. Quinn of the New York Daily News. A few highlights:

Bud says interleague play was almost adopted in 1973:

"I can tell you just on inter-league play we had a deal done in 1973 and the National League guys killed it. We had a deal done - we had deal done with the commissioner, both league presidents. Frank Dale, who was running the Cincinnati Reds - was also the publisher of the Cincinnati Enquirer - he and I sat and we had a six-game interleague play deal done. It was done."

Not according to my notes, it wasn't.

The February 3, 1973 Sporting News reported that the AL thought the NL would go along if the interleague games were added to the regular season, making it 168 games. However, the AL declined to make a formal proposal because the parties were negotiating a new CBA and the MLBPA had proposed shortening the season to 154 games.

After that CBA was signed, the owners in each league voted separately on interleague play. The September 1, 1973 Sporting News reported that when votes were actually taken, the AL unanimously favored interleague play and the NL unanimously opposed it. Commissioner Bowie Kuhn, a supporter, "resolved" the issue by appointing a steering committee to study the question.

The Commissioner insists he won't approve ads on uniforms (at least for games in the United States -- he'a already approved them for the early Opening Days in Japan): "I'm telling you right now, we aren't going to have advertising on uniforms."

Bud on contraction:

What people never wanted to understand, is that, here's what fueled contraction - it was all owners, but it was really big-market owners. Once we go to revenue sharing, the big clubs have a right to ask, what is the gross revenue of a club? How much did they get in revenue sharing, and what are they doing to change their own internal dynamic? And they had a right to ask the commissioner, "How long can we expect that to go on?" If I would have to guess today, I would have to think, as long as I'm commissioner, we won't have to look at contraction.

Or in simpler terms, "The Expos and Twins were egregiously abusing the revenue sharing system by taking money and refusing to reinvest it in players. With no enforceable way of making them spend the money properly, the owners who were writing them the checks decided they'd rather write one big check (and get the other clubs to share the cost) than an endless series of smaller checks."

Bud on labor issues:

But the problems from our standpoint - the labor union didn't deal with the problems so the problems kept being exacerbated by non-action. We dealt with it - we have a tax, we have a debt-service rule, all those other things, so I'm satisfied we've dealt with our problems.

And it looks like I'll be resetting my countdown clock:

Q: Are you considering retirement after the next CBA?

A: My response to a question was are you still having fun and I said I'm not sure I'd use "fun" to describe what I'm doing. But it's very challenging. I've done this all my adult life and my contact's up at the end of 2006, at which time I'll be 71 years old. I've said to a lot of people, "I promise you now we'll talk about it in the next year." And I'm open to staying but we'll see what happens. So I have two and a half years - longer than that, maybe.

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More Than Two Dozen Negro Leaguers to Get Pension From New MLB Fund

The 27 players affected by the new fund played in at least four Negro League seasons after Jackie Robinson's debut in 1947, but never played in the majors.

In 1997, MLB voted pensions to similarly situated Negro Leaguers who played at least one day in the majors. These 27 won't receive the same benefits, though: while the ones with major league experience receive $7,500 to $10,000/year for life, the ones who never made the majors will be given the choice of $375/month ($4,500/year) for life or $10,000/year for four years.
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Investor Says Group Wants Braves

One Charles Vaughn, last seen trying to move the Expos to Puerto Rico, has announced that he'd like to buy the Atlanta Braves. Interestingly, he made this announcement before contacting Time Warner, which owns the club:

"Our firm would like to get involved with the Braves. We are going on the offensive. We are just going to approach them and see."

Time Warner hasn't indicated any desire to sell the Braves.
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Vacation Time

I'll be away on vacation (or, as I think of it, gathering material for the other side of my site) from tonight through Saturday, May 22. Will update the site when I can, but the updates will be less frequent than usual, especially when I'm around here.

If you see something interesting while I'm incommunicado, post it in the Comments to this message.

When I return, I'll be hosting a chat on baseballprospectus.com at 8:00 PM EDT Monday, May 24. Look forward to hearing from you then!

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Portland Sweetens Its Pot

Portland has cobbled together a package of taxes and fees that city officials say would cover $340 million of the $350 million cost of a new major league stadium. The package includes:

Income taxes on players and team officials: High enough to cover $125 million of stadium bonds.

Ticket taxes: A 10% admissions tax, enough to cover $75 million of bonds.

Concessions and merchandise tax: An 8% tax on goods sold at the stadium, estimated to cover another $25 million of bonds.

Stadium district: $75 million -- "a big, still somewhat amorphous chunk, where the city hopes to collect revenue from businesses within a half-mile or so from the stadium."

Miscellaneous: $40 million from charter seat licenses, tax increment financing and local improvement districts.

Sounds great in theory...but everything hinges on acceptance of these optimistic revenue estimates. The club owner (or, conceivably, another private entity) would be responsible for making up any shortfalls between the revenue generated from these taxes and the money needed for debt service, as well as for covering any construction overruns. Those are potentially huge contingenties liability which are likely to worry prospective owners, and MLB, more than if Portland had simply requested the owner pay $X toward the cost of the ballpark.
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Lamping Is Busy Marketing Ballpark Naming Rights

Naming the St. Louis Cardinals' new ballpark may not be as simple as asking the club's former owner for a large check. The St. Louis Post-Dispatch quotes Cardinals president Mark Lamping: "We're actively marketing the naming rights to companies, both locally and outside the city, and hope to have a deal concluded by the end of the year."

Anheuser-Busch, which already has agreed to a multi-year marketing campaign in the new ballpark, remains the most obvious candidate. Anyone else would not only have to outbid the country's largest brewer for the ballpark in its hometown, but would have to overcome the near-automatic association of the Cardinals with the Busch name.
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Vegas Stadium Funding Still Unclear

Nevada baseball promoters are scrambling to come up with public money for use in stadium construction. MLB wants local taxpayers to pay 2/3 the cost of any new stadium, but none of Las Vegas' proposals would come close to generating the $300 million that ratio would suggest.

Stadium supporters have talked about using tax increment financing, but it may not even be available. The proposed stadium would be adjacent to the Las Vegas Strip, behind Bally's and Paris Las Vegas, but the state law authorizing Clark County's redevelopment authority says that TIFs are intended for "blighted areas." In a masterpiece of understatement, the Las Vegas Sun acknowledges, "The Strip, however, is not generally considered a decaying urban neighborhood."

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Red Sox Dodged a Bullet

My May column for Boston Baseball, in which I discuss Boston native Frank McCourt's undercapitalized acquisition of the Los Angeles Dodgers, and the challenge he faces in his local market from Anaheim's Arte Moreno.

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Vegas' Field of Dreams Won't Come Cheap

Las Vegas may have just taken itself out of serious contention for the relocated Expos. The Las Vegas Sun reports that the local baseball backers want the public to pay some of the estimated $450-$500 million cost of a proposed 40,000-seat, retractable-roofed stadium, possibly through a bond issue to be repaid from taxes on tickets, concessions and parking.

Under state law, any public contribution requires the approval of the Nevada legislature. That, in turn, would require a special session of the legislature, which couldn't possibly meet and approve such a tax before Las Vegas's final proposal to MLB is due on Friday. Without a firm stadium financing plan in place before the owners vote, Las Vegas would appear to have little chance for the Expos -- though both Las Vegas and Portland, Oregon are casting covetous eyes at the Oakland Athletics.
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District Said to Be In Front for Expos

The Washington Times picks up and runs with a comment made by John Alevizos, the man who wanted to move the Expos to Connecticut. Alevizos says that Jerry Reinsdorf told him that MLB's relocation committee had narrowed the potential destinations for the Expos to Washington, Las Vegas and Monterrey, Mexico, and that Washington was the front-runner. A spokesman for Reinsdorf denied that he had identified Washington as the favorite.

Gabe Paul Jr., head of northern Virginia's relocation bid, said no one from MLB had told him that his area had been eliminated from consideration. He also declined to say where a northern Virginia club would play, since all of the leading sites have encountered considerable local opposition.
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Miami-Dade Gives Blessing to Marlins Park at Orange Bowl

By an 8-3 vote, the Miami-Dade County Commissioners have joined the Miami City Commission in endorsing a new ballpark for the Marlins southwest of the Orange Bowl. The vote doesn't come with any more money, though, and the project remains $30 million short of the optimistically-estimated $367 million cost of a retractable-roofed home for the Marlins.

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Now I'm a Shill for MLB!

My cretinous correspondent from the pension suit thinks he has me figured out. On the Web site created to drum up support for the dismissed action, he writes:

"You can see from his article on the pension plight that he did not do his homeowrk and only wrote these two ill-informed articles to curry favor with MLB. Assuming he is a wannabe friend of the MLB attorneys (the real MLB attorneys, not ones who hide behind a hardrive), this hanger-on, this outsider is trying so hard to be recognized and get in the good graces of MLB that he will stoop to calling peers an "embarrassment to the legal profession" even though this lawsuit not only has merit, but the presiding Judge said the alums were morally in the right. He not only writes, but tells anybody who cares to listen that the pension lawsuit is a joke, the attorneys for the alumni are a joke, and that the alumni are tantamount to beggars looking for an undeserved handout. All this to be chummy with real MLB attorneys, guys with class like Rob Manfred.

I think I struck a nerve...
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Ballpark Vending Policies Throw Fans, Workers a Curve

Neil deMause's Field of Schemes site alerted me to this story from the San Diego Union-Tribune. Sportservice, which has concession rights at San Diego's Petco Park, Cincinnati's Great American Ballpark and other venues, is increasingly replacing ballpark vendor employees with volunteers recruited from local charities:

For routine counter work and everyday ballpark fare, however, the company is aggressively recruiting local charities and nonprofit groups to perform jobs normally done by part-time seasonal employees, with the groups getting a share of the revenue. About one in five Petco Park concession workers are volunteers from churches, scout troops, cheerleading squads and other clubs.

Groups are told they can rack up $110,000 per season. But to earn that much, an organization would have to staff a stand for at least 60 games and sell $1 million worth of beer, pretzels and other snacks. Each game is a six-hour commitment and each group must provide its own insurance.

Fans aren't happy: concession lines are longer because the volunteers take longer to do everything. The local health department casts a skeptical eye: the volunteers don't have the same training in the requirements of commercial food preparation. Blue-collar workers are furious: the volunteers are taking jobs that they would otherwise use to supplement their income. And the practice makes a mockery of the job-creation promises so often used to justify public funding of stadiums.
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MLB Drug-Testing Programs Move to Olympic-Certified Laboratories

MLB and the MLBPA have agreed to transfer administration of their drug-testing program to a lab certified by the World Anti-Doping Agency, the INRS-Institut Armand-Frappier Research Center of Montreal. In MLB's press release, Rob Manfred and Gene Orza say nice things about the WADA, but never mention the biggest benefit of switching to this particular lab.

That benefit? The use of a Canadian lab will ensure that all of the 2004 drug testing samples are stored beyond the reach of U.S. prosecutors and grand juries, eliminating the possibility that last month's seizure will be repeated. This was no accident -- MLB chose to have its minor-league testing administered by the WADA-appropved testing program at UCLA, which could certainly have handled the major leaguers' specimens, too.
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Colangelo No Longer Only One Calling Financial Shots

Paola Boivin of the Arizona Republic writes that Arizona Diamondbacks owner Jerry Colangelo now shares decisionmaking authority with the four new investors who invested $99 million in the club this spring.

The four, Canadian cable TV moneyman J.C. Royer and software magnates Ken Kendrick, Dale Jensen and Mike Chipman, have joined Colangelo on a five-man ownership group. Colangelo remains CEO and chairman, but the other four have the right to buy him out. Jensen insists they're all on the same page:

"Honestly, really not much has changed or will change. We're all great baseball fans, but we'll rely on our experts. I see our payroll staying about where it is now.

"But we also know we can't deficit-finance this thing."

Complicating that effort, the Diamondbacks owe $170 million in deferred salaries.

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O's Have Budget Concerns

The Washington Times has obtained an April 29 memo from John Angelos, son of Orioles owner Peter Angelos, in which he asked the club's business/administration, communications, corporate sales and sponsorship, sales and fan services and ballpark operations departments to review operations and propose budget cuts of 10-20%.

Thom Loverro speculates that Angelos may be positioning to sell the club after MLB announces the Expos' destination. One scenario has the Expos moving to Washington, with Angelos receiving a one-time compensation payment of approximately $50 million and then selling the Orioles.
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Expos Not Coming

This headline will be repeated several times over the next two or three months. It debuts in the Hartford Courant, which reports that to no one's surprise but his, John Alevizos' proposal to move the Expos to central Connecticut has been rejected by MLB.

"Jerry Reinsdorf told me the committee didn't believe the region of Central Connecticut had a large enough metropolitan trade area [to support a team]," Alevizos said Monday. "Frankly, I find that a bit ridiculous."

Alevizos had fantasized that the Expos might move to a 34,000-seat stadium to be constructed along I-91 in Wallingford, Connecticut. Wallingford is about 15 miles north of New Haven, 25 miles south of Hartford.
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Fans Hold Baseball to a Different Standard

Richard Sandomir of the New York Times compares the Spider-Man promotion to what other sports do routinely:

Baseball is held to a higher standard than other sports. It can slap signs on every wall, but it cannot sell on-base logos without an outcry. The National Hockey League has let teams paint corporate logos on their ice for more than a decade without being viewed as a greedy sellout.

Golfers, tennis players and bowlers wear apparel festooned with logos meant to be seen by fans, and Nascar will put a sponsor's name on virtually anything.

Sandomir also notes that MLB "is not considered by sports business experts to be as sophisticated a marketer as the NFL," and quotes Denver sports marketer Dean Bonham's summary of how MLB mishandled the situation:

If I were going to put ads on bases, I would have employed a strategy that is best defined as 'crawl, walk, run,'" said Dean Bonham, a sports marketer based in Denver. Placing Spider-Man ads on bases, he added, "was like going from being sound asleep to a full sprint."

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Yanks to Borrow $225 Million

No, not to finance midseason acquisitions -- to refinance debt from the now-dissolving YankeeNets partnership at a lower rate.

According to Bloomberg News, the refinancing will include a $50 million letter of credit and a $175 million term loan that's expected to be syndicated to investors at about 3.75%. The loan will primarily be secured by the assets of the YES Network, with the club itself providing additional collateral.
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Spider-Man Idea Was Way Off Base

Hal Bodley of USA Today criticizes the aborted Spider-Man promotion -- then unaccountably gives Bud Selig credit for killing it:

Within 24 hours, Selig pulled the plug. His reputation and sacred regard for baseball remained intact. He got caught in the web, but quickly found his way out.

In fact, as Richard Sandomir of the New York Times reported last week, Columbia Pictures, not Selig, pulled the plug:

Columbia, which is releasing the "Spider-Man 2" movie on June 30, had monitored polls on ESPN.com and AOL yesterday showing that fans were overwhelmingly against the idea of commercial endorsements on bases during the games, Geoffrey Ammer, president of worldwide marketing for the Columbia TriStar Motion Picture Group, said.

"Fans were saying, 'Whoa!' " he said.

Subsequently, Columbia asked baseball to take the signs on the bases out of the deal.

According to Bodley, Selig had personally opposed the Spider-Man campaign:

The day of the announcement, Selig told me he wasn't thrilled with the promotion but tried to defend it. I told him he was wrong, and his response was silence. He says he reluctantly agreed to the promotion because he has tremendous respect for his executives, including Jacqueline Parkes, MLB's marketing and advertising vice president.

I'll let Bud have the last word here:

"I'm always interested in some of the critics. I don't mind concerns being raised by fans and others who care for the game, but it's the public demagoguery that aggravates me."

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Fan Mail

One of the players most active in pursuing their frivolous lawsuit for pension benefits has written me. I'll spare him the embarrassment of posting his name, but here's what he thinks about me and my writing:

bored to death tonight which automatically made me think of your writing. i guess i won't need a sominex tonight.i think i might have made a comment on one of your articles on former players pensions,boy things are really getting bad if i'm wasting my time that way. good night dougie, make sure your mom tucks you in.

Oh well...
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