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Baseball's Mexican standoff
By Jackson Murphy
Baseball has always had a hard time figuring out if it is a business or simply the national pastime, or both. The sport is at another such crossroads. The possibility of ending the 79-year-old exemption from antitrust legislations, an expired contract with the players, the elimination of two teams, and over $500 million in losses in the last season makes the situation look grave.
Earlier this year Major League Baseball (MLB) owners voted (28-2) to contract the league and eliminate two teams because, according to baseball commissioner Bud Selig, the league is losing money. But it is pretty hard to tell congress that things are 'doom and gloom' while Charles Dolan is reportedly willing to drop $365 million for a 54 percent stake in the Boston Red Sox.
But there are problems. Four teams accounted for more than half the industry's loss. Toronto ($52.9 million), Los Angeles ($45.3 million), Montreal ($38.5 million), and World Series Champions Arizona ($32.2 million) were all big losers in 2001. But that means that the other 26 teams aren't doing too badly, doesn't it?
The players, no different than any other union, went running to their pro-labor pals in the Democratic Party for help. But unlike the average union, players make millions and many of them act like spoiled brats. Consequently in the midst of war, Democratic Senator Paul Wellstone (Minn.) helped to introduce a bill to revoke baseball's antitrust exemption. Forget war, the Democrats want to know why as many as fifty or sixty fat cats (What the Democrats would classify as 'rich') on two teams may be out of a job. Welcome to the party pals.
Fans tend to side with the players. A recent CNN/USA Today/Gallup Poll asked baseball fans, "Do you favor or oppose the baseball owners decision to eliminate two teams from the major leagues?" 54 percent opposed and 37 percent favored.
Maybe it is just that after so many years in business the owners don't have a clue what they are doing. In testimony, Minnesota Governor Jesse Ventura made an excellent point and was typically candid. "Mr. Bonds is going to get over $100 million, no doubt. Mr. Jason Giambi, they've said he'll go well over $100 million," Ventura said. "The problem out there is they're paying their employees too much money."
This just in: Yankees sign relief pitcher Steve Karsay to a new four-year $20+ million dollar salary. $5 million a year for a pitcher whose career record is 24 and 34 and has a career earned run average of 4.00. Is it any wonder the league is in financial trouble?
Ventura itching for a body slam went on to say that, "Major league baseball is really no different than OPEC, it controls supplies, it controls prices with absolutely no accountability."
For its part, MLB is playing hardball. Tom Farrey of ESPN.com reports that MLB started the very first 'sports based' Political Action Committee to lobby government and get their message out-this, in addition to the $3.9 million given by owners in the 1999-2000 election cycle. Their spin is that the industry is in dire straits and that they need to eliminate two teams before next season and need to lobby government to make sure it happens.
Look no further than the Montreal Expos (68-94 in 2001) for proof of financial trouble. MLB has a point here, no one watches them, nobody cares about them, and they are losing nearly $40 million a season. Stick a fork in them-Montreal is done. MLB points out that there is an evolving caste system that divides the league between those teams that do, those that luck out, and those perpetually hitting the showers.
As examples of this widening "caste system" MLB points out that, "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."
Hard to believe all this conflict comes barely a month after the most memorable World Series in years, a season that saw Barry Bonds hit 73 homeruns, and let's not forget the whole Ichiro craze. But in the last seven years only two teams (The Indians and the Yankees) have been profitable on a continual operations basis while the league in total has lost $1.4 billion. Who is running this league? The CEO of a 'dotcom-dotbust'? Enron?
Forbes magazine says that MLB made $100 million last year. Selig says it lost $519 million. Selig says that San Francisco lost $100,000; the Giants report they made $1-5 million. The players don't trust anyone. It is a typical Mexican standoff with all sides lying. Or is it more like the tired Abbot and Costello routine? Who's on first? Who! Forget it!
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