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The Bucks Stop Here
Richard Hoffer
July 29, 1991
Spiraling salaries and a potential loss of TV loot imperil baseball's prosperity
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July 29, 1991

The Bucks Stop Here

Spiraling salaries and a potential loss of TV loot imperil baseball's prosperity

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That little auction that major league baseball recently ran to bring two new expansion teams into the National League—"Who will bid 95 million dollars for the worst team in baseball? Who will bid 95? I've got 95! I've got 95! Sold to the man with the video rental chain!"—may have inspired more confidence in the game than the national pastime deserves. Just because there were a half dozen civic-minded entrepreneurs like Miami's Blockbuster Video owner Wayne Huizenga around, all waving their $95 million checks, does not mean major league baseball is once more flush. In fact, it may be in more trouble than ever. Here's Jerry Reinsdorf, the chairman of the Chicago White Sox, who just scored a $3 million cut of the National League's expansion jackpot: "Disaster is coming."

You go around baseball and you hear pretty much the same thing. There is astonishing gloom all over. After all, what does $3 million buy you these days? You barely get one season's use of Bud Black, a pitcher with a lifetime .500 record and a four-year, $10 million contract with the San Francisco Giants. Baseball is set to haul in $190 million in expansion fees for new franchises in Miami and Denver and continues to enjoy national TV contracts that pay each team about $14 million a year, yet eight to 10 teams were said to have lost money last season. Disaster may not be the correct word. "How about cataclysm," suggests Peter Bavasi, who ran three different teams before becoming president of Sportsticker, a company that provides scores and results for media and retail subscribers. "Or catastrophe."

This is a familiar story so far. Except for the collusion years of 1985 to '88, when the owners conspired to hold down salaries (for which an arbitrator has ordered them to pay $280 million in damages), baseball moguls almost always have wailed against the prevailing economy. This is owner mischief-as-usual, according to one point of view. "You go through The Sporting News for the last 100 years, and you will find two things are always true," says Donald Fehr, executive director and general counsel of the Major League Baseball Players Association. "You never have enough pitching, and nobody ever made money."

What's different now is that the owners are not only crying poor, some of them are acting poor:

•On June 23 the Seattle Times reported that Mariners owner Jeff Smulyan is seriously behind schedule in repayment of the $40 million he borrowed to purchase the team in 1989.

•Minnesota owner Carl Pohlad predicts a $5 million loss by the Twins despite the departure of expensive players such as pitcher Frank Viola in 1989 and third baseman Gary Gaetti this spring.

•In Houston, the Astros remain unsold, with an asking price of around $100 million. Don't be afraid to offer less. Owner John McMullen has been looking for a buyer for more than a year.

•In Baltimore, Eli Jacobs has indicated a willingness to sell the Orioles less than two years after buying the team from the estate of Edward Bennett Williams.

•In Montreal, Charles Bronfman finally unloaded his majority share of the Expos last November after the club had been on the market for a year. Only $65 million of the selling price could be raised from a consortium of private businesses. The other $33 million was kicked in by the city of Montreal and the province of Quebec.

The clubs that are ailing have been somewhat overlooked in a year when their better-off brethren made millionaires out of 220 players, fully one-third of the major league work force. Times can't be too tough, you would think, if the owners can afford to pay no fewer than 32 players at least $3 million a year. Average player salaries have continued to go up about 40% a year, to $900,000 this season. Yet the business outlook is bleak.

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