Archive for Friday, December 7, 2001

s plan to eliminate two baseball franchises

December 7, 2001


— Baseball commissioner Bud Selig took his case for eliminating teams to Congress on Thursday and was greeted by skeptical committee members and hostile questions from Minnesota's governor.

Selig testified before the House Judiciary Committee, which is considering legislation to repeal baseball's 79-year-old antitrust exemption.

He said baseball owners would suffer a $232 million operating loss this year and claimed it was largely due to players' salaries caused by free agency and salary arbitration.

Minnesota Gov. Jesse Ventura, another witness who was seated next to Selig, doubted the commissioner's claims of large losses by owners.

"That's why I have a hard time believing it, Mr. Selig, that they're losing that kind of money and still paying the salaries they're paying," Ventura said.

"That's asinine. These people did not get the wealth that they have by being stupid."

Ventura also expressed doubts about the need for a new stadium for the Minnesota Twins, which along with the Montreal Expos is believed to be slated for elimination. Selig claims the Twins need a new ballpark to survive, but the Minnesota Legislature has failed to support public financing.

Some congressmen appeared dumbfounded by Selig's vague answers to some questions.

When Rep. Robert Wexler, D-Fla., asked Selig to say on a 1 to 10 scale whether the Florida Marlins would remain in existence, Selig responded, "We're there now and let's hope it all works out."

Wexler didn't know what to say and was asked by committee chairman James Sensenbrenner if he was speechless.

"With all due respect, if fans are going to get those kinds of nebulous responses from the commissioner of baseball, there's almost a compelling reason from the whole lot of us to support the legislation so we can get some direct answers," Wexler said.

Rep. Anthony Weiner of New York City ripped Selig with a sarcastic comment on the Milwaukee Brewers, the team the commissioner used to own.

"I've been particularly impressed with your management of the Brewers, because it's always a good weekend when the Brewers come to town," Weiner said.

Sensenbrenner, who is from Wisconsin, drew laughs when defended his home state team, "Those words will be stricken from the record."

Selig campaigned for the owners' bargaining position in their labor negotiations with players and said it would help small-market teams such as the Cincinnati Reds.

"The bottom line is the system needs to be fixed," he said. "Cincinnati is the prototype of why we need to change the system. If baseball is to succeed, it needs to succeed in middle America. "The fight is here, to be very candid with you, for the Cincinnatis of the world."

Union head Donald Fehr did not attend the session because of the union's executive board meeting in Texas, but his brother, Steve, spoke for players and opposed Selig's view.

"The players have long believed it is not in their interest to accept a salary cap," Fehr said. "They are, in general, opposed to a salary cap. They believe in a market-based system."

Selig released an unprecedented amount of financial information on the 30 major league teams to the committee.

"Although revenues continue to grow, so do losses," Selig said. "It has also become clear that there are clubs that generate so little in local revenue that they have no chance of achieving long-term competitive and financial stability."

While the Arizona Diamondbacks were a success on the field, winning the World Series in just their fourth season, they were a bottom-line bust, with an operating loss of $32.2 million, according to the documents.

That was the third-highest operating loss in baseball, trailing only Toronto and the Los Angeles Dodgers ($45.3 million).

Eleven of the 30 teams had operating profits before revenue sharing, led by the New York Yankees at $40.9 million. Seattle was second at $34.3 million, followed by San Francisco at $19 million and Milwaukee at $14.4 million.

After revenue sharing, which redistributed money from baseball's high-revenue teams to low-revenue clubs, nine teams had an operating profit. That was cut to five teams after interest was factored in.

Baseball's operating loss came on record revenue of $3.5 billion. The report showed an additional loss of $112 million in interest costs, which includes borrowing to fund teams' payments for new ballparks.

An additional $174 million was added in amortization essentially depreciation of a portion of teams' asset value resulting in an overall loss of $519 million, the report said.

Montreal had an operating loss of $38.5 million, which was cut to $10 million after revenue sharing. Minnesota had an $18.5 million operating loss, which became a $536,000 operating profit after the revenue sharing money was redistributed.

The Yankees paid $26.5 million in revenue sharing, the most of the 30 teams, cutting their operating profit to $14.3 million on revenue of $242 million. They had the highest regular-season gate receipts, $98 million, followed by Boston at $89.7 million.

Montreal was last with just $6.4 million in gate receipts. Florida was 29th at $16.8 million and Minnesota was 28th at $17.6 million

The Yankees led in local broadcasting money at $56.75 million, followed by the Mets at $46.25 million and Seattle at $37.9 million. Montreal was last at just $536,000, Milwaukee was 29th at $5.9 million, Kansas City 28th at $6.5 million and Minnesota 27th at $7.2 million.

Baseball's operating loss, while high, was not a record. In 1994, when players struck in August and the World Series was canceled for the first time in 90 years, the sport had an operating loss of $363.7 million, according to records previously obtained by the AP.

In 1995, the first year after the strike, the industry lost $326.3 million on operations, a figure cut to $197 million the following year as business began returning to normal.

Congress, which historically has deferred to baseball owners, is not likely to pass a baseball antitrust bill anytime soon, and President Bush former controlling owner of the Texas Rangers hasn't expressed an opinion.

Owners want major concessions from the players' union, as they have had in each negotiation since the 1976 labor contract that created the current system of free agency and salary arbitration.

Since 1976, the average salary has risen 42-fold, from $51,000 to about $2.15 million, while baseball's revenue has grown 19-fold from $182 million.

Since the 1922 U.S. Supreme Court decision creating the antitrust exemption, Congress has altered it just once. In 1998, lawmakers approved a bill that President Clinton signed that made labor relations of major league players subject to antitrust laws.

But the change meant little because the Supreme Court ruled two years earlier that unionized employees may not file antitrust suits.

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