FOR IMMEDIATE RELEASE December 6, 2001

MAJOR LEAGUE BASEBALL COMPETITIVE BALANCE WORSENS

At a hearing before the House Judiciary Committee, during which Baseball Commissioner Allan H. (Bud) Selig released individual club financial data, the Commissioner testified that the industry’s competitive balance problem has gotten worse since the release of the Report of the Blue Ribbon Panel 17 months ago.

Updated information provided by Major League Baseball shows that no team other than those in the top one-quarter of payrolls has won a single World Series game in the last seven years. Out of a total 224 playoff games during that period, teams in the lower half of payroll have won only five games, representing a mere two percent of games played, and none have advanced past the first round of playoffs.

The Commissioner has often stated it is important for fans of every team to begin each season with “faith and hope” that their team can compete, and the current system does not allow for that.

“The situation has only gotten worse since that report,” Commissioner Selig said in his written testimony before the House Judiciary Committee. “Our postseason continues to be dominated by high payroll clubs, and those payrolls continue to escalate. Although there has been an occasional exception involving a lower payroll team appearing – but not advancing – in the playoffs, the payroll and performance correlation is unmistakable and powerful.”

The worsening competitive balance is resulting in a "caste system" in Major League Baseball, with only a very small minority of clubs possessing the financial resources to compete. This growing "caste system" of clubs stratified by revenue and payroll disparities is described by the Blue Ribbon Panel: "MLB is now essentially divided into three groups of unequal size: 1) clubs that expect to reach and perform well in the postseason; 2) clubs that hope for an occasional 'dream season' to reach the postseason; and 3) clubs that know going into spring training that they will not make the playoffs."

As examples of this widening "caste system," the 2001 Montreal Expos generated local revenue of $9.8 million and had a payroll of $30.6 million, while the New York Yankees had local revenue of $217.8 million and a payroll of $120.9 million. Additionally, the difference in average local revenue between the top- and bottom-quarter teams has increased 142 percent from $47.7 million in 1995 to $115.6 million in 2001.

The released club financial data shows that the consolidated loss for all thirty clubs in 2001 will be approximately $519 million. It also shows that the consolidated loss from Baseball operations alone will be approximately $232 million, a loss that becomes $345 million when net interest expense is added. The interest relates predominantly to total industry debt that exceeds $3 billion. The $519 million loss includes amortization but does not include income taxes.

Selig added: “Although revenues continue to grow, so do losses… cumulative operating losses over the seven-year period have grown to almost $1.4 billion and now only two teams have been profitable on an operations basis over that period – Cleveland and the Yankees. Not surprisingly, the average payroll per club has grown from $33 million in 1995 to double that -- $66 million in 2001.”

The following includes the Commissioner’s testimony to the House Judiciary Committee plus charts, 2001 Consolidated Industry Forecast, description of how financial information is reported to the Union and the MLB updated supplement to the Blue Ribbon Panel Report.

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Contact: Richard Levin or Patrick Courtney (212) 931-7878