Posted on 12/06/2001 1:41:30 PM PST by NYCVirago
Commissioner Bud Selig will testify today before the House Judiciary Committee in Washington that the Los Angeles Dodgers topped the roster of Major League Baseball's 25 unprofitable teams last season with a $69 million loss.
A report Selig will unveil will also claim that Major League Baseball lost more than a half-billion dollars last season.
Selig is seeking to eliminate two of the 30 major league teams, and his testimony will come before a committee that includes Representative John Conyers Jr., a Michigan Democrat, who is the House sponsor of a bill that would strip baseball of its antitrust exemption as it applies to eliminating or moving teams.
Conyers, who asked Selig to appear, said yesterday that the financial data in the report was inadequate. The players' union, which has a copy of the report, is likely to challenge the figures.
The figures in the report show that the Yankees were one of five profitable teams, making an $8.2 million profit from their baseball operations after deductions for revenue sharing and interest on loans and deferred salaries. The Mets lost $5.2 million, the report says.
The Yankees outdid the Mets on every financial level, the report says. The Yankees had $24 million more in gate receipts and $8.5 million more from media payments. The Yankees' player costs were almost $19 million higher. The Yankees also paid $26.5 million in revenue sharing, as against the Mets' $15.7 million.
The report says the other profitable teams were Seattle, with $14.8 million; Milwaukee, with $9.0 million; the Chicago Cubs, with $2.9 million; and Kansas City, with $1.5 million. Kansas City, a classic small-market team with only $19.5 million in gate receipts last season (the Yankees led baseball with $98 million), made a profit because of nearly $16 million in revenue sharing, the report said.
The report paints a picture of worsening finances. Revenues of $3.5 billion were offset by expenses of $3.8 billion. The operating loss, $232.2 million, rises to $344.7 million after interest expenses.
The loss widens to $518.9 million after amortization costs, which reflect how much owners paid to buy their teams. The report does not break down each team's amortization. It also shows that industry debt has nearly tripled since 1996, to $3.1 billion from $1.1 billion. The figure does not count deferred compensation to players.
The report has not been audited by baseball's accounting firms and is based on team figures that have not all been audited. A baseball official said it was too soon after the season to have audited all the numbers.
The report, which Conyers provided to The New York Times, details the sport's financial woes at a time when Selig is seeking to eliminate two teams. He has not identified the clubs, but they are believed to be the Montreal Expos and the Minnesota Twins.
Despite the wealth of data provided by baseball, Conyers said it was inadequate because it lacked specifics on stadium debt, salaries and fees paid to owners, and "related-party transactions" (the movement of money between divisions of companies that own teams).
"It's games like these that require Congress to repeal baseball's antitrust exemption," said Conyers, who in 1998 was co-sponsor of a law that overturned the part of the exemption regarding labor relations.
Sandy Alderson, executive vice president of baseball operations for Major League Baseball, said the industry exposes itself to criticism when it releases its financial figures, primarily over whether the disclosures are complete.
"You can argue about accounting principles around the edges, but the thrust of the numbers is clear," he said. "The industry is losing a lot of money. Many of the teams are on the way to financial bankruptcy. It doesn't bode well for the game."
Yet one leading expert on sports finance, Prof. Mark Rosentraub of Cleveland State University, said baseball's profits and losses, even properly audited, were irrelevant to whether the sport deserved its continued exemption from antitrust law. "What baseball is doing is framing the argument around losing money, but the real question is, how is this industry performing and what is it doing to deserve protection from free market forces?" he said.
Rosentraub said that if the antitrust exemption were fully repealed, "nothing would change unless Congress forced them to break into separate American and National Leagues that would compete with each other, so that if the American League contracted Minnesota, it wouldn't prevent the National League from going into Minnesota."
Among the witnesses today, besides Selig, will be Jerry Bell, the Twins' president, and Jesse Ventura, the governor of Minnesota, who has argued against public subsidies for a new Twins stadium. Steve Fehr, a player agent, will speak on behalf of the players association.
The report shows that the Twins lost $3.8 million last season but would have lost substantially more without $19 million from revenue sharing. Minnesota's $58.3 million in revenue was baseball's second lowest total, after Montreal's $34.1 million.
Montreal's finances provide a picture of failure: only $6.4 million in gate receipts, $536,000 in media revenue and sales from marketing, and other areas of only $2.8 million. It lost $10 million even after receiving $28.5 million in revenue sharing.
The Dodgers are a fascinating case, given their successful business history under the O'Malley family before their sale to Rupert Murdoch's Fox empire for $311 million in 1998.
The team produced $143.6 million in revenue last season (including $27.3 million in media payments, largely for the sale of its cable television rights to its owner, Fox), but had $116 million in player salary and benefit costs, second to the Yankees' $117.9 million.
You're 100% right about the Yankess. I find it extremely hard to believe that with their cable contract (worth over $80 million) that they only made a profit of $8 million. Bunch of crap!!!!!
By the way, keep me in mind for future pings. Thanks.
Selig has got to be a DemocRAT, the Lying Stinking piece of dreck.
When you factor in TV and radio contracts, ticket prices, parking, food, merchandising, luxury boxes, etc., it's even harder to believe that the Yankees made under $9 million in profits. Their merchandising alone is a multi-million dollar industry.
As for pinging, I will add you to my list, which consists of people whose names I remember from baseball threads!
WOW I can hardly wait to invest....BARF.
It looks like a lot of items aren't counted in these numbers. If baseball is doing so poorly, and Bud Selig is its commissioner, wouldn't the owners be ready to hang him? Instead, he just got a three-year contract extension!
It's currently illegal to have incentives for specific statistical achievements and I hope to god it stays that way. You start having incentive clauses for homers, stolen bases, etc. and you'll warp the game. Guys will be stealing in the 7th inning with their own team down by 8 runs, etc.
Exactly. No one plunks down 100-300 million of their own money and watches it lose money year after year. They do fine. There is no reason for the antitrust exemption. Why they get special rights is beyond me.
patent
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