Baseball91's Weblog

August 24, 2010

The Selig Statue: The Flow of the Revenue Stream of Big League Clubs


Minutes ago in Milwaukee,the Bud Selig statue was unveiled at Miller Park, to commemorate a time in baseball history. The unveiling comes on the leak of the financial statements of the Pirates, Mariners, Rays, Marlins and Angels –things which owners never would do in the strike years of 1981 as well as 1994 when a players’ strike wiped out the last eight weeks of the season. The year without a World Series.

According to the thesis of journalist Pat Reusse, it is now in baseball “incumbent” to sell 2.4 million tickets – average 30,000 over an 81-game schedule – “to be considered successful at the gate. You can beat the system for a few years, but to stay competitive for a longer haul teams no longer can flinch at the idea of a $100 million payroll.”

Despite a projected attendance of 2.7 million people, Milwaukee Brewers owner Mark Attanasio told the Milwaukee Journal-Sentinel that the team will lose money this year. “I think it’s a foregone conclusion that we are going to lose money this year. I don’t see any way that’s not going to be the case….We did everything we could to do that with a big push with pitching. We threw a lot of money at it and it didn’t work.”

Somewhere in that statement was the announcement that Doug Melvin won’t be back next year. Because, as Attanasio said, “If you can’t stand the heat, don’t go into the kitchen. We are committed to putting a winning team on the field.”

Even before any notes about invoicing them for 2010 post-season tickets, the Minnesota Twins announced in a letter to season ticket-holders, per-game price hikes for 2011 just for season-ticket packages (full, 40-game and 20-game) ranging from 3 to 9 percent. Single-game pricing hasn’t come out yet. This, after averaging an attendance of more than 40,000 per game, with revenue streams, not including national television money, local radio and television money, or without suite revenue, of more than $240 million.

Because in the nature of sport, losing is part of the game. Consecutive losing seasons are inevitable, and fans are fickle. The day will return when Minnesota fannies will not be filling those 40,000 seats every night and day.

https://baseball91.wordpress.com/2011/08/17/when-you-absolutely-positively-needed-it-overnight-overnight-millionaires/

“The numbers indicate why people are suspecting they’re taking money from baseball and keeping it — they don’t spend it on the players,” said David Berri, after stumbling on his win as the president-elect of the North American Association of Sports Economists, about the Pirates of Pittsburgh. When you live in affluent times, economists branch out into new areas. Like the North American Association of Sports Economists. “Teams have a choice,” according to David Berri, and they “can seek to maximize winning, what the Yankees do, or you can be the Pirates and make as much money as you can in your market. The Pirates aren’t trying to win.”

Yesterday Deadspin released information on the revenue stream of the Pittsburgh Pirates. And Maury Brown was discussing on his radio show today all of the repercussions. With the best record in the National League, the San Diego Padres carry the second-lowest payroll, next to Pittsburgh, in baseball at $37.8 million which is less than what the Cubs are paying two players combined. The Pirate payroll is reportedly $34.9 million. And David Berri is offering his insight about all of it. From revenue-sharing, gate receipts, television and radio revenues, amounts from MLB Advanced Media, and the Central Funds.

Perhaps with his own concern for still present real estate bubble, the leader of the North American Association of Sports Economists might not have noticed that this year Tampa Bay is competing for first place with his Yankees after having gone to the World Series in 2008, with a payroll less than half that of their division rivals in Boston and New York. And Carl Crawford won’t be back. But who has time to read the sports page when you were going to be taking on the presidency and had a real job. I think.

There is no information available if David Berri is married. Or was. Or about the money he spent on housing, indicating if the Berris themselves weren’t trying to win. Or whether Berrai was spending his money on his kids. Or just his wife. Or his feeling about the Cubs. With the third-highest payroll in baseball, new owner Tom Ricketts’ team played 10 rookies last Wednesday and were still trying to win.

David Berri did not answer how much exactly someone deserved, to play baseball. And if the price would be the same in New York, Nebraska, or Utah. Berri himself is a 41-year old graduate from Nebraska Wesleyan University in Lincoln in 1991, with an economics major. He is now an associate professor at Southern Utah University having authored of two books, Stumbling on Wins: Two Economists Expose the Pitfalls on the Road to Victory in Professional Sports, and The Wages of Wins. Mostly about professional basketball. Apparently about the relationship between finances and winning. He pursued his Masters and doctorate at Colorado State University, an NCAA institution with cable television. Watching from a distance. Like a pigeon oversees a statue.

Maybe Berri was too busy talking to the South American Association of Sports Economists to notice, but Pittsburgh has complied with the rules for revenue sharing, spending $23.2 million in 2008 and $21.2 million in 2007 for player development. According to the Commissioner’s office, where Pirate club president Frank Coonelly used to work. Or maybe Berri was too busy talking to the Central American Association of Sports Economists. Or just at the World Cup. Like Paris Hilton.

“The numbers indicate why people are suspecting they are taking money from baseball and keeping it,” said David Berri, who has moved to Dubuque, to California, to Utah with his PhD. “The Pirates aren’t trying to win.” Like the Nebraska Cornhuskers across town from Nebraska Wesleyan University used to.

Though it did seem a little early, the White Sox sent in mid-August a note to season-ticket holders with a big exclamation point, advising that “post-season invoices are on the way!” Maybe for economic reasons, since in the post steroid age when it was “incumbent” to sell 2.4 million tickets, the White Sox would not be there. But with an expectation more money meant more wins, with more than 50 games left, the message was: “We are currently in a battle to make the post-season and in order to process and deliver all post-season tickets by the end of September, we are invoicing you for the 2010 post-season at this time.”

It was after 1994 that the steroid era began, undetected, with all of the concern of a regulator from the Security and Exchange Commission in the first decade of the New Millennium. When Bud Selig took over, as acting commissioner in 1992, and permanently, in the age of consensus, in 1998. The things which could come out of work stoppages. Like the requirement to operate a business like the clowns wanted the circus run. As if the clowns had a stake in all of this, when people no longer laughed, and old clowns would one day die. Like Marvin Miller.

You cannot attend Major League Baseball games and not detect that some of the clowns in the commissioner’s office were micro-managing the game. The messages on those scoreboard, the control of all umpires, or their uncontrol, the partnerships with broadcasters who seldom criticized the home team. In the age of consensus, it was all the same. Along with the “we are invoicing you” message. The commissioner’s office was instructing each club on the same rules of baseball operation, and threatening huge fines to any owner who offers criticism of the rules under the basic agreement, as to the luxury taxes paid by the “pseudo-large market” teams, about revenue sharing.

After the unveiling of the steroid era by Congressional hearing, little change had come. The system was fixed, front office executives collaborating now with the Players’ Association, to avoid work stoppages. At least until the release of those financial records, it was all about maintaining the status quo. The goal was good television ratings in October, so the Yankees did enough each year, with wild cards, to obtain those good national television ratings. When the New York Times was even allowed to buy a stake in the Boston Red Sox, and finally the Red Sox won a World Championship. Everybody was happy, under the circus tent.

That unveiling of the Bud Selig statue, after the steroid era had come to an end. Baseball owners had been through a lot. Actually about the time of 2004, the Murdoch News Corporation was losing an estimated $30 million to $60 million a year operating the Dodgers, and was desperate to sell. The Dodgers! One of the “pseudo-large market” teams, like the Mets and the Red Sox. And the Yankees.
After all the great growth of the game, after the strike of 1994, with finally the unveiling of the steroid era in those Congressional hearing. With only perjury charges left to decide.

Bob Nutting and Pirate club president Frank Coonelly (formerly of the commissioner’s office) called a press conference yesterday to say.“ It’s important the team not be in the kind of financial shape it was in in 2003 and 2004, when we were struggling and making bad decisions purely driven by financial constraints and pressure.” During the steroid era, in 2003, as the steroid era continued, under former owner Kevin McClatchy, the Pirates’ debt-to-equity ratio had exceeded Major League Baseball’s standard and the Pirates were forced to asked Bob Nutting, then a minority partner, now the principal owner, for money to fund operations in 2003. The Nutting Family made the loan to the Pirates which partly was converted into a $20 million equity stake. The standard of debt-to-equity ratio established by Major League Baseball’s basic agreement of 2002 which expired at the end of the 2006 season?

At about the same time as Mr. Nutting was bailing out Pittsburgh, Frank McCourt had used in 2004 his Boston parking lot to buy the Dodgers from Murdoch’s News Corp. Frank and Jamie McCourt have come a long way from their early days together when Jamie had lent $1,000 to Frank to start his development company which became the McCourt Group.

That bubble in sports. Was there any reason for the owners to flex their muscle in 2006, when money was so cheap? Cheap money for the operation of any business. As the value of franchises rocketed like a Sammy Sosa homerun, in October 2006, Donal Fehr said: “With the new labor contract, baseball’s drug-testing rules will also be extended through the 2011 season. When both sides agreed to toughened drug testing last November, they said that deal would run through the next labor contract.” Is it now a consensus that there never had been “toughened drug testing?” The current collective bargaining agreement which had been worked out quietly in October 2006, behind the scenes by the then soon-to-be fired Chicago Cub President Andy MacPhail, the baseball executive who had not taken a player to arbitration since at least a time prior to 1995.

Peter Gammons reported in October 2006 that the new basic agreement made “relatively minor changes to the previous agreement and doesn’t alter baseball’s drug rules.” At the same time, it was reported that both sides “would consider adding testing for Human Growth Hormone.” Four years later, I think those baseball players are waiting news of such testing for major league ball players.

It sounds like the story of Countrywide, my own home mortgage holder, until they ran into trouble. With the leak of the financial statements of the Pirates, it has been noted the Pirates are carrying considerable debt, though the Boston Globe reports a belief this debt is only a fraction of that of some other clubs. “It is common for major league teams to owe such debt ….owners aren’t burdened by the debt because franchise values historically rise each year, meaning most teams could be sold for a substantial profit.”

Planted in front of Miller Park, the bronze, 7-foot statue designed and produced by Brian Maughan, shows Mr. Selig’s right hand extended. Under Selig, franchises never would release the books to the players union or to the municipalities as Selig implored civic authority to release tax moneys for new stadiums.

In Milwaukee, if you were selling 2.7 million tickets and losing money, the owner just was clueless in his overall baseball operation. Maybe listening too much to those sports economists like David Berri (who has moved as often in his short professional career more than the Atlanta Braves had in the past 50 years). Or busy paying for the costs of Selig’s statue. Because when two teams played, losing would always be part of the game, as Brewer fans learned so well at the feet of Bud Selig. Negotiations of a new basic agreement, with the usual leaks yesterday, signified that the same arguments in the years of 1994 and 1981 would be back, over a philosophy of cutting expenses and raising prices. The Cubs went to arbitration this year with Ryan Theriot for the first time since before Andy MacPhail had been hired. The bubble in real estate would be affecting national elections and the future of baseball. And maybe a ball club somewhere would be concerned about having to raise ticket prices.
 

 

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2 Comments »

  1. “Going to war as a nation?”

    “Ah …. in a way, yes. Waging war on behalf of fans, with the players. Our own players. The ones that we helped to develop. And rightly so, this war. It was a type of Civil War. Because one day, the fans would recognize — the hearts and minds — that they were really paying these salaries and would begin to revolt against their own local team. And just stay away.”

    https://www.youtube.com/watch?v=xcwJt4bcnXs

    Comment by baseball91 — December 11, 2014 @ 8:34 PM | Reply

  2. It was like those wedding vows? In a Western world, where fewer and fewer people stayed married ….got married, “for better or for worse? In good times and in bad? Through sickness and in health? Til death due us part.”

    As an example, look at the CLEVELAND franchise over the past sixteen years.
    ATTENDANCE IN CLEVELAND SINCE 2001.

    WHERE, AS PART OF BASEBALL OPERATION, ATTENDANCE REFLECTED HOW THE LOCALS MEASURED UP AGAINST THE FANS IN THE REST OF THE LEAGUE, IF YOUR CITY WAS REALLY A BIG LEAGUE CITY:

    2016 1.591 MILLION 13th out of 15 (28 out of 30) AMERICAN LEAGUE CHAMPIONSHIP SERIES
    2015 1.389 MILLION 14 out of 15
    2014 1.437 MILLION 15 out of 15
    2013 1.573 MILLION 14 out of 15 WILD CARD TEAM
    2012 1.603 MILLION 13 out of 14
    2011 1.840 MILLION 9 out of 14
    2010 1.392 MILLION 14 out of 14
    2009 1.766 MILLION 13 out of 14
    2008 2.170 MILLION 9 out of 14 ……………. The Great RECESSION occurs.
    2007 2.376 MILLION 10 out of 14 AMERICAN LEAGUE CHAMPIONSHIP SERIES
    2006 1.998 MILLION 11 out of 14
    2005 2.014 MILLION 12 out of 14
    2004 1.814 MILLION 12 out of 14
    2003 1.739 MILLION 12 out of 14
    2002 2.616 MILLION 4 out of 14
    2001 3.176 MILLION 3 out of 14 AMERICAN LEAGUE DIVISION SERIES
    SIX OUT OF SEVEN YEARS FROM 1995 THROUGH 2001, CLEVELAND HAD BEEN IN POST-SEASON BASEBALL and FINISHING FIRST OR SECOND IN THE AMERICAN LEAGUE IN ATTENDANCE.

    Comment by baseball91 — October 12, 2016 @ 2:22 PM | Reply


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