2001-02 Running Commentary on Labor Issues

October 7, 2002: Pohlad: No Guilty Feelings About Contraction

Moments after his Twins stunned the Oakland Athletics to advance to the ALCS, Pohlad offered no apologies for trying to have the team killed during the 2001-02 offseason.

"I don't feel guilty in the least. Why should I? It was a business decision, and if you had to pay the bills of $15 to $20 million every year, how do you think you would make the decision?"

Oh really? Which years were you losing $15 to $20 million, Carl? Not 2001: MLB's own numbers showed the Twins with an operating profit of $536,000, net of revenue sharing. Not 2000, when the Twins' $21 million in revenue sharing exceeded their entire player payroll by more than $5 million. And how much of these "losses" represent payments from one pocket of Carl Pohlad, Inc. to another?

I'd be cheering wholeheartedly for the Twins to win the World Series, except that any success would go right into the pockets of this superannuated reptile.

September 16, 2002: Carl "Contract Me!" Pohlad Richest Man in Minnesota

Net worth $2 billion and rising, according to Forbes. "Reaped $1 billion selling assets to Wells Fargo this year ... wants taxpayers to pay for new stadium."

The Twins are guaranteed to survive four more years, through the 2006 season. Life expectancy tables give the 87-year-old Pohlad about 5-1/2 more years.

Go Twins!

September 6, 2002: Brewers, Pirates Gain Most Under Revenue-Sharing Plan

ESPN's Jayson Stark crunches the numbers to find that -- surprise! -- no one benefits more from the new revenue sharing formula than the Commissioner's own Brewers. Just a coincidence, I'm sure...

August 30, 2002: Summary of New 2002-06 CBA

Everything I've learned so far about the new labor deal, with some background and explanation.

August 28, 2002: Labor Dispute Much Like The One Staged in 1985

(ESPN.com article)

August 21, 2002: Fehr: Owners attacking salary structure

Here's a chart, compiled from data in Fehr's memo and from MLB's 2001 financial disclosures, showing how the owners' and players' proposals would affect high-payroll clubs.

(all figures in $ millions)
NY Yankees Seattle Mariners NY Mets Boston Red Sox
2001 revenue sharing (26.5) (18.8) (15.7) (16.4)
Players' proposal, when fully implemented (51.4) (27.0) (23.7) (23.5)
Owners' proposal (86.9) (32.3) (35.8) (34.2)
Reported 2001 profit/loss 8.2 14.8 (5.2) (13.7)
Adjusted 2001 profit/loss, if players' proposal in place (16.7) 6.6 (13.2) (20.8)
Adjusted 2001 profit/loss, if owners' proposal in place (52.2) 1.3 (25.3) (31.5)

August 20, 2002: John Moores: "I'll Shut Down for 2003 If Necessary."

Easy for Moores to say: he dumped over $600 million of stock in Peregrine Systems before it tanked -- and before it announced it may have overstated earnings by $100 million. Most owners don't have this cash cushion.

August 16, 2002: Bridging the Gap

(Baseball Prospectus article)

My proposal to resolve the current dispute over revenue sharing and a luxury tax.

July 31, 2002: Labor coverage from MLB.com

Major League Baseball's Website is a multimillion-dollar disaster area, but at least they've finally gathered all of their material on the labor negotiations in one place.

July 23, 2002: Labor Negotiations: What Happens Next?

(with Gary Huckabay - ESPN.com)

July 19, 2002: CNN/Money: Chris Isidore column

(several quotes)

July 10, 2002: Dupuy Disinforms

(Baseball Prospectus article)

June 11, 2002: Village Voice: The Baseball Wars

(a couple of quotes)

May 31, 2002: ESPN.com chat wrap

May 31, 2002: Naimoli: Rays Won't Get Axed

With the Twins off the list of potential contractees, there's a great big bull's eye target on the roof of Tropicana Field.

The Devil Rays have always been the obvious second target, but they have four factors in their favor: an owner who doesn't want to sell, a long-term stadium lease believed to be as strong as the one which blocked contraction in Minnesota, a state Attorney General who's made clear he'll sue if MLB tries to eliminate either of the Florida teams, and a decision of the Florida Supreme Court (Butterworth v. National League of Professional Baseball Clubs, 644 So.2d 1021 (1994)) holding that MLB's antitrust exemption is limited to the reserve system and does not apply to decisions relating to the sale and location of franchises.

If MLB goes after the Devil Rays, the battle here could get very ugly, very quickly.

May 30, 2002: Numbers reveal teams not nearing bankruptcy

(ESPN.com article)

May 29, 2002: MLB settles suit over Twins lease; club safe through 2003.

The settlement comes after the Minnesota legislature approves a plan that could lead to a new stadium in the Twin Cities area -- and as it was becoming clear that the judge presiding over the case was about to order MLB to turn over sensitive financial information to the stadium authority.

Coincidence? I think not.

May 21, 2002: Fay Vincent: "There isn't a plan. The owners don't know what to do."

The last real Commissioner doesn't think much of his successor's strategy. Fay Vincent, whose business acumen made him a very rich man long before his involvement with baseball, thinks that while many clubs indeed have financial problems, MLB's poisonous labor relations and years of lying about its finances have left the owners with few viable options.

Vincent suggests that since the banks won't let the owners take a long strike, they should give up their fantasies of forcing major concessions from the MLBPA and strike a quick deal with the players. He also makes the point that outsiders won't be convinced that MLB's financial problems are real until teams file for bankruptcy.

Instead Selig seems determined to drag baseball through months of uncertainty and bad publicity on the labor front, and to keep crying poverty while providing no objective evidence that any real problem exists. Selig is to MLB as a whole what Jeffrey Loria is to ownership: an incompetent, in far over his head, whose every day in a position of authority devalues the industry he's supposed to oversee.

May 17, 2002: Selig: 6-8 teams could fold without major economic changes.

Are these the same teams which were going to fold if MLB didn't win major labor concessions in the last round of negotiations? More fundamentally, Selig's whines prove that the owners aren't even close to a rational strategy. If so many teams are in such deep trouble, then MLB's contraction plan is beyond stupid: the other owners would save hundreds of millions of dollars by letting them fail instead of buying them out at a premium. Not to mention the lunacy of having (by Selig's count) 4-6 teams which are themselves teetering on the brink of extinction paying millions they don't have to the owners of other failing teams.

This statement is also tantamount to an admission that when the inevitable showdown comes, the owners will have to blink. If, as Selig says, most clubs have exhausted their lines of credit, how can they afford a strike -- particularly one which threatens their postseason TV money?

May 2, 2002: Strike a symbolic blow against contraction.

As suggested by Andrew Siegel on baseballprimer.com, one way for fans to register their distaste for MLB's franchise extermination is to select as many Twins and Expos as possible for the All-Star team. MLB's Web site allows each E-mail account to cast up to 25 All-Star ballots.

Have fun!

May 1, 2002: Jerry Colangelo won't be fined for breaking MLB gag order on labor matters.

In March, MLB reminded owners: "[T]he policy prohibiting club communications with the union, club-to-club communications on labor and public comments on labor remain in place. The fine for violation of this policy is $1 million."

Notwithstanding this directive, Arizona Diamondbacks owner Jerry Colangelo recently showed a copy of the club's finances to Curt Schilling, Brian Anderson and Rick Helling in an unsuccessful attempt to persuade them that MLB's finances are as bad as Bud Selig claims. Selig's spokesman told the Arizona Republic that Colangelo would not be fined. By contrast, John Harrington of the Red Sox was fined $500,000 for telling the Boston Globe, "You're not going to see a lockout happen again."

One of the year's safest bets: no owner who echoes Selig's apocalyptic tone will ever be fined for speaking out on labor matters, while any owner who publicly deviates from the party line will be immediately slapped back into line. Like so many other MLB rules under Czar Bud, the gag rule will be selectively enforced and ignored whenever convenient.

April 29, 2002: Text of bill pending in Congress to repeal MLB's antitrust exemption as it relates to contraction and franchise relocation.

This is the bill introduced in response to MLB's threatened contraction of the Expos and Twins. Like the Curt Flood Act, it's much longer than it needs to be because the minor leagues have such clout in Congress that no baseball antitrust bill can pass without saying in about three different ways that it will have no effect on the minors.

Nobody wants to be portrayed as the Representative who killed the local AA team, even though the recent experience of independent minors like the Northern League suggests the minors could survive on their own.

April 26, 2002: Friday Afternoon with Bud

(Baseball Prospectus article)

April 5, 2002: Opening Day average salary up 5.2%.

MLB salary increases compared to revenue growth:

Year 1997 1998 1999 2000 2001 2002
% change in previous year's revenues 28.2% 16.5% 19.9% 11.4% 20.4% 6.7%
% change in current season's salaries 19% 6% 17% 17% 13% 5.2%

Source: 2001 Blue Ribbon Panel update.

Notice the pattern here? The owners already know how to keep salaries from rising faster than revenues. Not signing the Derek Bells of the world to long-term contracts is a good start...

April 5, 2002: MLB throws tantrum over Forbes article.

Practically foaming at the mouth, MLB's Rob Manfred called Forbes' conclusions "the type of journalism one expects from a supermarket tabloid" and accused Forbes of being more interested in selling magazines than in printing the truth.

Of course, MLB defines "the truth" as accepting its tales of woe despite all the circumstantial evidence -- increasing franchise values, steadily rising non-player expenses, the fact that even "failing" teams demand $150 million to be "contracted" -- to the contrary. MLB was especially upset that Forbes rejected MLB's party line even after Manfred personally walked through the numbers with author Michael Ozanian.

I can't tell whether MLB's Powers That Be are deliberately lying, or have just been crying poverty for so long that they actually believe their own nonsense. But MLB itself has said that between 1996 and 2001 total revenues grew by $1.773 billion, while player salaries rose just over $1 billion. If the owners' losses increased during that period, they have only themselves to blame.

March 28, 2002: Forbes releases estimates of MLB's 2001 operating income.

The Forbes estimates bear little relation to the "official" figures released by MLB. According to MLB, its 30 clubs collectively recorded $232 million in operating losses for 2001, while Forbes estimates a collective profit of $75 million.

According to Forbes, the average franchise is now worth $286 million. Franchise values rose 10% in 2001, and the average owner has enjoyed 12% annualized appreciation since purchasing the team. So much for the owners' cries of poverty...

For purposes of the rule which forbids clubs from incurring debt of more than 40% of franchise value, MLB values clubs at twice their 2001 revenues. Forbes suggests the true figure is about 2.4x revenue. That's a difference of $19.2 million in debt per club, or $576 million for the 30 teams.

March 26, 2002: Owners pledge not to lock out players during 2002 season.

The owners also pledged not to unilaterally implement new terms and conditions of employment during the 2002 season or postseason. These are nice symbolic gestures and should win the owners some favorable publicity, but they're basically meaningless.

If the owners were going to lock out the players this year, they would have done so by now. A spring training lockout costs the owners almost nothing; even if it extends into the regular season, the players would lose their first paychecks while the owners lose their most poorly attended games. Similarly, the owners know that any attempt to declare an impasse and implement new terms would provoke a players' strike. The players' leverage increases as the season advances, particularly if labor trouble threatens the postseason, then falls to near zero the day after the World Series ends. If the owners plan to impose their terms on the players, they'll do so in the offseason -- say, the day players are first allowed to file for free agency.

March 20, 2002: March Madness: Has Selig Gone Too Far This Time?

(Baseball Prospectus article)

March 20, 2002: Implications of the 60/40 rule

(short version - quote in Village Voice)

March 13, 2002: Players respond to owners' first offer.

The MLBPA's strategy is straightforward: give the owners all they want on the "competitive balance" front, so long as it doesn't take money out of the players' pockets.

Making draft picks tradable is long overdue. Under the current system, a club which thinks a top prospect will demand more than it's willing to pay must pass on that prospect and draft a less desirable, but more signable, player. Such a club would be much better off if it could trade its pick for a later choice plus a selection in another round, or a later pick and a prospect.

I'm not thrilled with the "competitive balance" draft, which as implemented would allow ineptly-managed large-market teams like Baltimore to take the 26th best player from a club like Oakland, but once again, from the players' perspective it's a free "concession." So is expansion of the draft to foreign countries.

Meanwhile, the players continue to oppose any form of "luxury tax" on high-payroll clubs, and have proposed a smaller increase in revenue sharing. The players have offered to increase revenue sharing from 20% of local revenues to 22.5%, to be divided according to the same formula presently used; the owners want to share 50% of local revenues, divided according to a formula that would give more to middle-market clubs.

March 12, 2002: MLB suddenly to enforce 60/40 debt rule.

MLB's rules have long restricted the amount of debt a club can carry. Such debts aren't supposed to exceed 40% of the club's value. The rule had been ignored for years...but on March 7, Commissioner Selig declared that it will be enforced as of June. Clubs with too much debt could be fined or lose a share of their national media money.

Under Czar Bud's decree, clubs will be presumptively valued at twice their annual revenues, minus the amount of their revenue sharing payments. Debts are defined broadly to include loans to owners, stadium debt...and the present value of long-term player contracts. The MLBPA should be filing its grievance any day now.

Selig claims, "The reason it wasn't enforced for a while was the economic fallout from the 1995 strike." At best, this is one more example of Bud's arbitrary and selective enforcement of MLB's rules, retroactively punishing owners who've spent more on players than Bud would like. At worst, it's yet another grotesque case of Selig, he of the permanent conflict of interest, twisting the rules for his own benefit.

In 1995, Bud's Milwaukee Brewers were so far in debt they couldn't borrow money to contribute to the construction of their new park. Forbes estimated that as of the 1997 season, the Brewers' debt had risen to an incredible 97% of franchise value. Selig said nothing about the 60/40 rule.

But the Brewers' new park opened in 2001. The first-year attendance spike sent club revenues to a record $113 million. Isn't it amazing how the Commissioner suddenly decided to enforce the rule just when his own club could finally meet the standard? Just coincidence, I'm sure...

March 7, 2002: Paul Beeston resigns as MLB President/COO; Robert DuPuy replaces him.

This is not good news. Among MLB's top brass, Beeston had the best relationship with the MLBPA. Robert DuPuy is Bud Selig's personal lawyer. When last seen, DuPuy was assuring the Senate Judiciary Committee that "Major League Baseball has not abused its exemption, but instead has used it to benefit the sport and its fans."

On the bright side, if DuPuy leads the owners into another labor confrontation, he'll probably screw it up. He's the genius who told the Minnesota Twins to sign their 2002 stadium lease even after the club had already been targeted for contraction.

According to the February 10 Washington Post, DuPuy concluded that while the Twins might lose in the trial court and the intermediate appellate court, "he saw no way that the Minnesota Supreme Court would rule against baseball." DuPuy based this conclusion on the Minnesota Supreme Court's 1999 decision upholding MLB's antitrust exemption, assuming that it would be equally willing to apply the "laws don't apply to MLB" principle to allow the team to disregard the unambiguous language of its stadium lease. Oops...

March 3, 2002: Owners can't even talk to one another about labor issues.

Today's column by Murray Chass of the New York Times quoted an astonishing memo circulated at Bud Selig's direction by Rob Manfred, MLB's chief labor lawyer.

After urging the clubs to present a united front, Manfred concluded: "Finally the commissioner has asked me to remind you that the policy prohibiting club communications with the union, club-to-club communications on labor and public comments on labor remain in place. The fine for violation of this policy is $1 million" (emphasis added).

Think about it: owners and front-office personnel will be fined $1 million if they discuss labor matters with one another. The Iraqi Parliament has more freedom. In a multibillion-dollar industry whose largest investors include Disney, News Corp., AOL Time Warner, and the Tribune Company, a car dealer from Milwaukee not only sets labor policy, but disciplines his employers for discussing the wisdom of his chosen course among themselves

Does Selig have photos of all the other owners in compromising positions? They recently learned that he had "inadvertently failed to mention" a bridge loan from Carl Pohlad, made in direct violation of MLB's rules. What else is he hiding -- and will the owners ever allow themselves to admit that their emperor has no clothes?

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