2 major league teams in peril

MILWAUKEE -- Baseball commissioner Bud Selig said Wednesday his sport's debt problems have grown so severe that one team is in danger of being unable to pay its players Monday when checks are scheduled to be distributed.

If it happens, that team likely would be forced out of business, thereby throwing baseball into turmoil at a time when the owners and players are engaged in increasingly angry labor negotiations.

Major league players typically are paid on the first and 15th of every month during the regular season, and Monday, July 15, is the next payroll day.

Selig also said a second team is so deep in red ink it may not be able to finish the season.

Selig declined to name either team, saying he didn't want to put additional pressure on owners as they attempt to trade their highest-paid players and obtain loans that would allow them to stay in business.

However, he did say that unlike last winter when he arranged loans that kept "two or three" teams afloat, he has no choice but to allow the two clubs in question to fail.

"That's it," Selig said Wednesday in an interview with a small group of reporters in his downtown office. "I'm done. Major League Baseball's credit lines are at the maximum. We've done everything we can to help people by arranging credit lines. Frankly, at this point in time, we don't have that luxury anymore.

"If a club can't make it, I have to let 'em go. I'm a traditionalist, and I hate all that. It pains me to do it. I just don't have any more alternatives."

Industry sources have indicated Selig arranged financing that may have kept the world champion Arizona Diamondbacks and Tampa Bay Devil Rays afloat last winter. He steadfastly refused to engage in speculation about which teams were in trouble now, except to say the club in the greatest jeopardy "will surprise you."

While Selig steadfastly insisted no more financing is available, he also confirmed that some owners believe the players and their union won't believe the sport's financial problems are serious until a team or two winds up in bankruptcy.

However, he emphasized allowing a team to go out of business was not a bargaining chip in labor talks.

"I've been told that," he said, "but it's just not true. It would have enormous financial and legal implications for every team."

While the idea of a team failing during the regular season seems incomprehensible, Selig said baseball teams are carrying unprecedented debt loads. In recent years, many team officials have cited rising player salaries, falling attendance and stadium costs for the growing red ink.

Each major league team has a $72 million credit line through Major League Baseball, and Selig said "around 20 teams" have reached their limit. In addition, many teams have separate loans arranged through individual banks.

"Our total debt is $3.5-$3.6 billion," he said. "It's stunning. Right now, there's nowhere else to go. Some clubs have enormous debt. Some of it is stadium debt, but it's still debt you have to pay off. There are teams in debt by hundreds of millions of dollars.

"People want to question the losses. Nobody who has ever seen the numbers questions them. People ask why we don't share our numbers. Guys, we've shared everything. There's nothing left to share. No one ever questions the veracity of these numbers except those that want to question them for some other reason."

Of the team in immediate danger, he said: "I'll be frank, I don't know if they'll make it or not."

Selig's comments come at a time when labor talks are reaching a critical stage. Owners and players return to the bargaining table today, and if no real progress is made in the next few weeks, players appear ready to walk off the job, just as they did in 1994.

Players will strike -- or at least set a strike date -- to gain leverage in the negotiations and because they're convinced owners intend to unilaterally implement a dramatically new labor agreement after the season.

Selig and the owners believe the disparity between the teams has grown so large that only a few clubs can compete for a championship each season.

If the season ended today, six of the eight playoff spots would go to teams ranked in the top 10 in payroll. Only two teams out of the top 10 -- the St. Louis Cardinals at 13th and the Minnesota Twins at 27th -- would make the playoffs.

Meanwhile, five teams are on a pace to lose 98 games, and all five of them are ranked in the bottom 11 in payrolls.

To remedy this disparity, the owners want to contract two teams and to increase revenue sharing between clubs from around 20 percent of local revenues to around 50 percent. They would also like a 50 percent luxury tax on payrolls above $98 million.

The players have proposed much more modest increases in revenue sharing, saying any dramatic differences might slow the growth of player salaries.

Selig said another work stoppage like the one that forced cancellation of the 1994 World Series would be painful, but that the game's economic system must be changed to allow teams other than the New York Yankees, Los Angeles Dodgers and New York Mets to regularly compete for a championship.

While Donald Fehr, executive director of the Major League Players Association, said the differences in each side's proposal are "bridgeable," Selig painted a much different picture.

"There are significant differences," he said. "Nobody wants a work stoppage less than me. The other side of the coin is that we have problems that need to be dealt with. We can't continue to ignore them and make believe they don't exist. That's all I hear from the clubs, from the fans.

"The path of least resistance would be to maintain the status quo or something close to that. I tell you that baseball as we know it can't survive that. I know people don't like to hear that and say, `There they go again.' I am telling you that the game we're sitting around here talking about is not going to survive by maintenance of the status quo. It just can't happen."

As Fehr begins a tour to brief players on all 30 big-league teams on the state of negotiations, Selig said he's considering making his own tour of clubhouses to guarantee players hear his side of the story as well.

He said several players, including some prominent ones, have encouraged him to do this.

"One guy told me last night, `Why can't you come and talk to these guys?' " Selig said. "Before this is over, I may do that. We're walking off a cliff if we have another work stoppage."

At times, Selig seemed close to acknowledging another work stoppage is inevitable. Given the game's history, it's unlikely real negotiations will take place until a strike date looms. If players do strike, it'll be the ninth work stoppage -- player strike or owner lockout -- since 1972.

Still, Selig said the system must be changed even if it means enduring another work stoppage.

"You know how much I love the game," he said. "I don't like the position I'm in. But somebody is going to have to have the courage to fix it. This is going to be my last job. I've been in this sport all my adult life. This is a painful ordeal.

"The solutions are painful, very painful. They've been let go too long. Regardless of whose fault it is, it doesn't make any difference. I can't take my eye off the ball."

Oh, my - I am so heart broken over this. How about we arrange for the Federal Government to pay Bud some bailout money. That way we can preserve our "national heritage". BARF!

If it weren't for the fact that a relatively few players make up literally millions of dollars of the payrolls of these teams, I might could have sympathy. And even though I am impressed with someone who can throw/catch/hit a baseball as a lot of these guys can, I will never believe that that skill is worth the millions that some make.

I mean, come on - these guys PLAY A GAME for a living! Lets put things in pespective....

The teams already bleed local cities and states for tax incentives, millions in stadium construction and upkeep, etc. If a team is not self supporting, then goodbye - "you are the weakest link".

I agree with duckman and others who have posted similar sentiments. Major League baseball has become a bunch of overpaid prima donnas.

They work with the assumption that their adoring American public will pay ever-increasing amounts for tickets and that the TV networks will continue to supply huge amounts of cash to keep them in a life to which they have obviously become accustomed.

I grew up loving baseball and still do but the strike in 1994 really stretched my loyalty. The threatened strike this year will push it over the ledge.

One other thing. If we don't see another World Series like last year and they revert back to Yankees-Braves contests, that seals it for me.

I loved baseball as a kid, going first to San Francisco Seals games with my dad (who'd been offered a contract by the Seals in the mid-1920s) and then to the Giants games after they moved out from the Polo Grounds. I played with great enthusiasm but no particular skill growing up. I also remember local semi-pro teams in small towns everywhere. Baseball used to be the national pastime in the summer, but its soul has been gone for 20 years or more, at least.

If baseball cannot make money, it's because the cost of putting on the show is greater than what people are willing to pay. The owners and players have to make a choice: cut costs or quit playing. I would love to see the game return to its roots, but I don't think that will happen. I just hope soccer doesn't replace baseball.

I blame this almost entirely on the players. The baseball game I loved 30 years ago no longer exists. Free agency, arbitration, and ungodly salaries have destroyed the game.

I grew up as a diehard Dodger fan, but today I hardly know who is on the team, and it hardly matters. The players will certainly be different next year. Kids can hardly have a baseball hero anymore, because he's likely to be playing for the archrival next year.

To hell with the game. It died a long time ago, in my opinion.

If I was a player, and I could get millions, I would. I see nowhere that says an owner has to pay these salaries. It all started when the first player demanded a multi-year, multi-million dollar guaranteed contract, and the owner agreed.

Remember, for there to be a seller, there has to be a buyer.

For owners to complain about spiraling costs is ludicrous, because they are obviously not doing anything to control costs. Then, with municipalities spending non-fans money on stadiums, via taxes, it help costs to keep escalating.

Plus, owners also put themselves under the illusion that they could get a new stadium on demand from municipalities by merely threatening to move the team. For a while, this worked, which allowed costs to keep spiraling. However,these threats are becoming empty, because voters are a little smarter about such games, and politicians are in fear of losing their jobs if they continue to cave to the demands of sport franchises.

. . . the club in the greatest jeopardy "will surprise you."

It just occurred to me that this might be the New York Mets. They've got a very high payroll, and from what I understand they went through a recent assessment process that produced some unexpected results (this assessment was needed because one of the partners is selling his half of the team to the other).

In 1994, I was in favor of the players striking as I am in favor of any person getting paid what someone else is willing to pay them. Then baseball goes out and expands....again. A few things need to happen:

1) A salary cap needs to be instituted. Normally I am all in favor of capitalistic businesses but the disparity of the big market teams (Yankees) versus small market teams (Pirates) isn't good for the game...unless you're a Yankee fan. Salary caps work extremely well in the NFL. That would be an ideal model.

2) There needs to be contraction. Cut out 6 teams (4 NL 2 AL). I don't want to hear about baseball losing money when they are overextended. This move will have the added bonus of improving play as at least a third of the pitchers have no business in the league.

3) Everyone needs to enforce the contracts that they sign. MLB needs to standardize penalty clauses for holding out for renegotiations. If the players don't like it, sign only one year deals.

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Don't forget that AAA boys are also "professionals". Heck, rookie leage players are "professionals. The financial problem isn't the players, it's the owners.

They agree to pay huge contracts for mediocre talent, and then whine about being broke. There are starting pitchers who have never had an ERA under 4.50 earning $4-5 million a year. There are middle relievers earning $2-3 million.

I can't fault the players for taking the money if it's there

I can, however, fault them for their strikes and threats of strikes. They claim they strike because of the salaries earned by the bottom tier players. The major league minimum is a few hundered thousand a year, and this isn't a sport where most players are going to suffer injuries that will shorten their life (like football). Heck, their mandated minimum per diem for food on the road is more than what my wife earns in a day at work.

If they want better salaries for the bottom tier players, they have to recognize it will come at the expense of the top tier players, which is what almost every team's union rep is.

It'd be real simple to accomplish this. Set a salary cap and a minimum salery expense (to avoid things like what Florida did after winning the series). Then raise the minimum salary. That would alleviate the very problem that the players claim is the true reason for strikes.

Wanna bet they wouldn't agree to it?

I was at a party and a guy asked me if I liked sports. I told him that I was involved with the shooting sports and that I shot in 5 competitions a month. He then informed me that he meant the ball sports and that I wasn't interested in "sports".
I thought that actually being out there and playing meant that I was interested in sports and not watching a TV program.
Our numbers are increasing. We have gone from half a dozen shooters to 40+ and the competitions and matches now take all day.
It wasn't a surprise to find out that the Kansas City Chiefs gave money to the anti-gun people because they didn't want anyone switching sports.
I also see more people exercising in the parks. It looks like people have stopped being couch potatoes while watching sports to taking an active role.

The players have proposed much more modest increases in revenue sharing, saying any dramatic differences might slow the growth of player salaries.

When teams like the Rangers offer contracts to players that are more than the book value of the team, it's obvious that the game cannot continue as it has been. Alex Rodriguez contract is valued at $250,000,000 and the Rangers attracted 1.3 million in attendance last year for home (2.3 million home and road) I know that there are also television revenues, concessions, parking, etc. However, we're talking about one player costing the equivalent of 1 dollar a ticket for both home and road games for ten years, or $2 a ticket if you consider home games. That's 1 out of 44 players it takes to put on a major league game, not even considering that there are a boatload of costs other than player salaries. Players claim "the fans come to see us." Yeah, but how many are going to come and see you play wearing t-shirts and cutoffs playing with broomsticks in the abandoned Kmart parking lots?

Player salaries currently have no basis in economic reality. Another factor is that there are so many more sports options for fans than there were forty years ago. I can't fathom baseball maintaining it's popularity, even if they were doing everything correctly (and they're certainly not) simply because of this increased competition, particularly with cable programming giving publicity to what were formerly niche sports.

I wouldn't want to see MLB go away, even though I seldom watch it. I do want to see the sport go back to some semblence of reality in economic models. Will quit worrying about it at all when major league sports teams get their hands out of the taxpayer back pocket for stadium deals, etc.

the disparity of the big market teams (Yankees) versus small market teams (Pirates) isn't good for the game...unless you're a Yankee fan.

Yeah, and long term, it's not even good for them. Everybody wants their team to win, but how many people sit on the edge of their seats waiting for the outcome of the last Harlem Globetrotters-Washington Generals game?

Salary caps work extremely well in the NFL. That would be an ideal model.

One advantage the NFL has in doing that is almost complete revenue sharing (since all regular season games are on networks). The revenue differences among teams are from ticket sales, exhibition game TV/radio, and regular season radio. Those are minor compared to the network money.

Baseball can't achieve the same level of revenue sharing, but it can do one thing on local TV revenue: split it 50-50. In other words, if the Yankees are playing the Twins, the local Yankee TV money generated by that game should be shared by the two teams, not by the Yankees alone. Without the second team there's no game. That would do a lot to ease revenue disparities, and it's a reasonable approach.

Owners complaining about high salaries only have themselves to blame, of course. "Stop me before I kill again".

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One might miss next payroll, commissioner says