Contraction Follies

On November 4, fans thrilled to the ninth-inning, seventh-game conclusion of the most exciting World Series in years. Two days later, Major League Baseball's owners, led by Commissioner-for-Life Bud Selig, destroyed all the goodwill the Series had produced by declaring that two of MLB's thirty teams would be eliminated during the off-season.

When contraction was first proposed, a major obstacle was the shortage of owners willing to get out of baseball. Disney was looking to sell the Angels, but only to someone who would keep the club in Anaheim. Montreal was the most obvious target, but Jeffrey Loria was determined to operate a baseball team. So was John Henry in Florida. The Tampa Bay Devil Rays were locked into a long-term lease and played in a state whose Attorney General had vowed to stop any attempt to move or fold the team, and whose courts had already held MLB's antitrust exemption inapplicable to issues of franchise movement.

Then Carl Pohlad came to Selig's rescue. Pohlad, MLB's wealthiest non-corporate owner, was frustrated that Minnesotans wouldn't build him a nearly-free stadium after he had pocketed tens of millions of revenue-sharing dollars without reinvesting them in the club. If Selig needed another team to contract, he could have the Twins – for a sizable premium over their market value, of course.

Never mind that the Twins are an original American League franchise with 40 years of history in Minnesota. Never mind that the Twins had won two World Series since 1987, and almost won their division this year. Never mind that the Twins outdrew the Yankees from 1987 through 1994, or that attendance had risen 68% in 2001. Never mind that Minneapolis-St. Paul is larger than Cleveland, St. Louis or Denver, or that local investors (including Clark Griffith, son of the man who sold the Twins to Pohlad) are willing to buy the team. The Twins were the missing piece in Commissioner Bud's master plan, so they had to go.

But Pohlad had forgotten two things. First, on September 26, Twins president Jerry Bell had notified the Metropolitan Sports Facilities Commission, owner of the Metrodome, that the team was exercising its option to play at the Metrodome in 2002. Second, the Twins' lease at the Metrodome provided: "If the Team ceases to play major league professional baseball games for any reason, the Team shall have breached this Agreement and will be liable for such remedies as may be available to the commission at law or in equity, including, but not limited to injunctive relief, and orders for specific performance requiring the Team to play its Home Games at the Stadium during the Term hereof."

Relying on this provision, a local judge enjoined MLB and the Twins from contracting the team or playing home games anywhere but the Metrodome in 2002. The Minnesota Supreme Court rejected MLB's emergency appeal, leaving the injunction in place and directing the intermediate appellate court to expedite consideration of the case. Even on an expedited basis, though, the appeal won't be decided until 2002 – too late for the Twins to be contracted over this off-season.

Another major roadblock is, not surprisingly, the MLBPA. While the owners recognized that they would have to negotiate the effects of contraction with the union, they took the position that the decision to eliminate teams did not have to be bargained. The MLBPA's grievance will not be heard until mid-December – and even if MLB wins, it is unlikely to be able to negotiate the details in time to contract for the 2002 season. MLB wants to allocate players from the affected organizations through a dispersal draft, while the MLBPA would insist on free agency for all affected players.

One man who thinks the players are likely to win their grievance is former Commissioner Fay Vincent, who told ESPN Radio, "I would put my money on Donald [Fehr]'s legal opinion over the owners because Donald is always right and the owners never are." Terming contraction "a public-relations fiasco delivered by the owners," Vincent asked pointedly, "If baseball is suffering financially as much as they say they are, then where are they going to get the money to buy these teams out?"

Contraction also met with swift legal opposition. Minnesota Senator Paul Wellstone and Michigan Representative John Conyers introduced bills to strip MLB of its antitrust exemption with respect to franchise matters. Conyers explained, "Any time 30 of the wealthiest and most influential individuals get together behind closed doors and agree to reduce output, that cannot be a good thing for anyone but the monopolists." Conyers has asked MLB to produce a host of financial and other documents – notably including studies on contraction or relocation, and any studies on territorial rights to San Jose, New Jersey and Washington, DC. The attorney generals of Minnesota and Florida have vowed to sue if clubs in their states are contracted; as a pre-emptive move, Florida's Bob Butterworth has subpoenaed financial records and all contraction-related documents from MLB, the Marlins and Devil Rays.

Bud Selig will testify before Congress on December 6. At that time he promises to show that even though MLB's gross revenues have risen from $2.1 billion to $3.5 billion since 1997, this year 25 clubs lost money and MLB posted a collective loss of over $500 million. He can expect to be asked why clubs that are supposedly hemorrhaging money would (a) pay a nine-figure premium to buy and fold two teams, or (b) award a three-year contract extension to the man who led them into such desperate straits.

Whatever Selig tells Congress is unlikely to undo the damage to MLB's reputation, and his own, caused by the contraction announcement. If MLB was truly determined to eliminate two teams, it could have simply bought them, proclaimed their dissolution, and presented the MLBPA and local officials with a fait accompli. Selig's announcement that two unnamed teams would be contracted was widely viewed as a bluff to force the MLBPA into givebacks, and to pressure governments in Montreal, Minnesota, Miami and Oakland into subsidizing new stadia. Such tactics are resented in ordinary times; when used even as the aftermath of the September 11 bombing wreaked havoc on state and local government budgets across North America, they're despised. Selig compounded the public relations debacle by telling Minnesotans to "look in the mirror" when looking for someone to blame for the prospective loss of the Twins, suggesting that any city unwilling to subsidize its local team didn't deserve one.

And Selig's justifications for contraction ranged from the disingenuous to the ludicrous. In MLB's official press release announcing the contraction vote, Selig stated: "The problems facing the potentially affected teams will not be resolved by either changing ownership or changing location. Merely transferring existing problems to another ownership group or another city would only exacerbate the problem, not resolve it." In other words, MLB already had the best possible owners, located in the best possible cities: Washington, DC was a worse baseball market than Montreal, and no one could run the Twins better than Carl Pohlad. When critics noted that Selig's own Brewers stood to gain from the elimination of the Twins, Selig called the suggestion of a conflict of interest "childish" and "inane." Selig's assertion to the Milwaukee Journal-Sentinel that "St. Louis is closer to Minneapolis than Milwaukee is" should also surprise anyone with a map

In that same press release, Selig declared, "This action, though difficult, should not surprise anyone who is familiar with the economics of the game. Our industry has significant financial problems that we are trying to address in a myriad of ways. Contraction is one step toward addressing the industry's problems." Yet barely a year before, MLB's own hand-picked "Blue Ribbon Economic Panel" had unequivocally concluded, "If the recommendations outlined in this report are implemented, there should be no immediate need for contraction." MLB implemented none of these recommendations before voting to kill two clubs.

On November 7, Selig told, "I honestly believe that we can get this done by the end of November." Not quite. At the end of November, MLB still had thirty teams. It also had a lawsuit in Minnesota; a grievance filed by the Players' Association; an investigation by the Florida Attorney General; and a Congressional effort to revoke its antitrust exemption...not to mention an expired labor agreement which could produce another work stoppage before or during the 2002 season. MLB had consistently misplayed its hand, alienating fans, angering commentators and infuriating elected officials while moving no closer to either its stated goal of contraction or its implicit goal of new stadia and concessions from the MLBPA. And Bud Selig had a raise and a new three-year contract extension...

Copyright © 2001 Doug Pappas. All rights reserved.
Originally published in the Fall 2001 issue of Outside the Lines, the SABR Business of Baseball Committee newsletter.

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