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In the red

Selig claims $519 million in losses before Congress

Posted: Wednesday December 05, 2001 7:17 PM
Updated: Sunday December 09, 2001 1:12 AM
  Bud Selig presented his case for contraction on Capitol Hill on Thursday. AP

WASHINGTON (AP) -- Baseball's operating loss was $232 million this year, including a major league-leading $52.9 million by the Toronto Blue Jays.

Commissioner Bud Selig, summoned to testify Thursday before the House Judiciary Committee to explain the need to eliminate two teams by next season, released an unprecedented amount of financial information on the 30 major league teams.

"Although revenues continue to grow, so do losses," Selig said in testimony prepared for the committee. "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 report, obtained Wednesday night by The Associated Press.

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

Bottom Line
2001 operating profits/losses
N.Y. Yankees  $40,859,000 
Seattle  34,266,000 
San Francisco  19,000,000 
Milwaukee  14,385,000 
N.Y. Mets  8,292,000 
Chicago Cubs  4,797,000 
Boston  2,712,000 
Cleveland  1,881,000 
St. Louis  1,869,000 
Baltimore  1,460,000 
Detroit  533,000 
Houston  - 1,214,000 
Pittsburgh  - 2,984,000 
Colorado  - 3,415,000 
Chi White Sox  - 5,687,000 
Oakland  - 7,113,000 
Anaheim  - 9,569,000 
Cincinnati  11,056,000 
Atlanta  - 14,360,000 
Texas  - 15,689,000 
Kansas City  - 16,134,000 
San Diego  - 16,151,000 
Minnesota  - 18,533,000 
Philadelphia  - 20,865,000 
Tampa Bay  - 22,843,000 
Florida  - 27,741,000 
Arizona  - 32,152,000 
Montreal  - 38,519,000 
Los Angeles  - 45,343,000 
Toronto  - 52,927,000 
Total   - 232,241,000 
Click here for balance sheet
 
 

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.

Legislation to eliminate baseball's 79-year-old antitrust exemption was introduced in the House and Senate following the vote by major league owners last month to eliminate two teams before next season.

While no teams were selected, the Montreal Expos and Minnesota Twins are the likely candidates, and Minnesota's congressional delegation pushed for the hearing.

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.

In the meantime, the introduction of the legislation set the stage for another trip to Capitol Hill by Selig, who has clashed with congressmen at several hearings in recent years.

The players' association often doubts claims of losses, and union head Donald Fehr is expected to respond to Selig on Thursday in Irving, Texas, where the players' executive board is meeting. While the figures haven't been audited, baseball's early accounting has usually been within 5 percent of the final totals.

"The idea that somehow what I have presented today is not an accurate picture of the industry's economics is sheer nonsense," Selig said in his prepared testimony. "It is disappointing that union head Fehr is not here to verify my statements, but anyone who would state otherwise is just plain misinformed or is engaged in deliberate misstatement."

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.

Selig claims the Twins need a new ballpark to survive, but the Minnesota Legislature has failed to support public financing.

Minnesota Gov. Jesse Ventura, who has opposed a publicly funded ballpark but has been more supportive in recent weeks, also is scheduled to testify. The other witnesses are Twins president Jerry Bell and Steve Fehr, the brother of the union leader and a player agent.

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.

 

Related information
Stories
2001 profits and losses
Quotes on baseball's financial status
CNNSI.com's John Donovan: Labor primer
Why antitrust exemption is important to owners
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