Plenty of small items to clean up amongst the mess that is baseball today:

  • First, contraction. At this point, it seems safe to say that baseball
    won’t be eliminating any teams before the 2002 season. The lawsuits
    currently pending will slow the process enough to kill it by means of a
    pocket veto of sorts.

    That alone is a major embarrassment for the owners, who would have minimized
    the damage they inflicted on themselves via contraction if they had managed
    to execute it swiftly. Of course, the owners’ failure to bring the Players
    Association into the discussion is just evidence that either they didn’t
    realize that a swift move was the best path, or they never really intended
    to eliminate two teams in the first place.

    There remains an incredibly simple solution to the problem of disparity in
    baseball, once you realize that "disparity" means "the
    Yankees have too much money." The Expos are the one baseball franchise
    whose viability is in any serious doubt. While the fan base for baseball
    exists in Montreal, the ill will created by the current ownership–and even
    more so, by its predecessor–will be difficult to overcome. The Yankees’
    extraordinary revenue base is a function of an enormous market that, even
    split with another major-league team, still dwarfs that of any other team.

    So the solution is simple: move the Expos to the New York area. The Brooklyn
    Cyclones of the New York-Penn League averaged 7,800 fans per game in their
    first season in a stadium with a listed capacity of just 6,500. The Lakewood
    (N.J.) Blueclaws, located in Ocean County, averaged 6,889 fans a game in
    their first season, mixing in 301 standing-room-only tickets per game as
    well. The independent Long Island Ducks averaged 6,155 fans per game
    (capacity: 6,002) despite their stadium’s location well into Suffolk County.

    The populations are there: the Newark, N.J., metropolitan area has more than
    two million people; Brooklyn has nearly 2.5 million people; and Nassau and
    Suffolk Counties (i.e., Long Island) have more than 2.7 million people. The
    fan bases are there. Adding a team to the New York area, particularly to
    northern New Jersey, would reduce the potential market for the Yankees,
    creating parity without alienating huge swaths of the fan base.

  • Have you heard about the 25 guys who had natural monopolies and still
    couldn’t make money? It’s a little hard to swallow. Bud Selig claimed that
    25 of the 30 teams in baseball "lost money" in 2001, and that on
    industry revenues of $3.5 billion, the 30 teams lost a combined $500
    million. I can’t begin to tell you what a crock of pea soup that is.

    One scam is the revenue figure. Baseball teams are notorious for hiding and
    transferring revenue to affiliated companies. The Braves, for example, book
    relatively little in local broadcasting fees, because they are owned by the
    same company that owns their broadcast affiliate, TBS.

    • MLB earned about $417 million this year from its national TV contract
      with Fox.

    • MLB earned about $250 million this year from its national TV contract
      with ESPN.

    • The 30 teams sold more than 72 million tickets this year. At an average
      ticket price of $15, that’s about $1.1 billion in revenue. At an average
      ticket price of $20, that’s $1.45 billion in revenue, and that’s probably
      still short, because we’re not considering club seats and luxury boxes.

    • Each team earns at least $5 million per year in local broadcast
      revenues, with the Yankees likely to earn well above the $52 million they
      received in the last year of their contract with the Madison Square Garden

      Conservatively, this adds up to another $600-$750 million.

    • Fans bought $2.4 billion worth of MLB-licensed merchandise in 1999. MLB’s
      cut isn’t known, but it’s above $150 million.

    A back-of-the-envelope calculation yields about $3 billion in revenue from
    just five sources. Still to tabulate: a national radio deal with ESPN; local
    radio revenues; concession and parking revenues; and sponsorship revenues,
    including lucrative stadium naming rights deals that run several million
    dollars per year for the teams that have them (currently about half do). Let’s
    see the Braves get their $50 million from TBS before we take this revenue
    figure seriously.

    But that’s not all there is. On the expense side, there’s even more
    flexibility for the creative accountant. Several writers have noted owners’
    abuse of favorable rules on depreciation of player contracts in force at the
    time a franchise changes ownership. Owners who purchase a team by means of a
    holding company–which just about any businessman worth his salt will
    do–also get to place a ridiculous accounting fabrication called
    "goodwill" on their balance sheets to account for the difference
    between the price paid for the team and the book value of the assets
    acquired. That’s a cool $100 million or more in some instances, and it’s
    written off slowly over a period of 40 years. In the 1990s, 21 teams either
    changed hands or came into being, so there is probably $40-$50 million in
    aggregate goodwill amortization each year among baseball teams. And so on…

    And there’s still a third problem with Bud’s pronouncement: nobody cares.
    Really, nobody cares if baseball teams lose money. They are natural
    monopolies run by experienced businessmen, often with some form of
    government subsidy. They need to learn to control their costs, even if it
    means not buying that shiny new Juan Gonzalez you had your eye on
    this Christmas.

  • Finally, there’s the Red Sox, who are for sale–finally. Many insiders
    expected team chairman John Harrington to declare himself chairman-for-life
    and hold on to the team as long as possible, even though the terms of the
    Yawkey Trust’s charter mandated a quick sale. It appears, however, that
    Bingham Dana, the prestigious Boston law firm handling the sale, will be
    taking final bids this week. While it has been widely reported that
    Harrington is obligated to sell the team to the highest bidder, there’s
    quite a bit more to it than that.

    Selling a baseball team is not exactly the same as selling a regular
    company. The remaining owners must approve any change in ownership of a
    franchise in Major League Baseball, and approval has, in recent years, been
    a difficult hurdle for would-be owners. So Harrington’s obligation is to
    sell the team to the highest-bidding ownership group that will be approved,
    which puts a rather heavy burden on his and Bingham Dana’s shoulders.

    The problem is that the group widely expected to throw the most money at the
    team, led by Tom Werner and perhaps soon to include John Henry, is the least
    desirable bidder now that Roger Marino is no longer in the running. Bringing
    one owner with a lurid history back into the game is bad enough, but
    bringing two would be tragic.

    The Red Sox are one of baseball’s crown jewels. After the Yankees and
    Dodgers, and perhaps the Mariners (thanks to Ichiro Suzuki and
    Kazuhiro Sasaki), the Red Sox are arguably the best-known baseball
    franchise in the world. They boast one of the most dedicated fan bases.
    Right now, they have three of the most exciting players in baseball on their

    Should MLB approve the Werner/Henry group, the league would be putting this
    brand equity at risk. Tom Werner led the ownership group in San Diego in the
    early 1990s that took a team coming off of back-to-back winning seasons and
    dismantled it, trading away top players and getting almost nothing in
    return. It did this, in 1993 and 1994, despite a promise to season-ticket
    holders before the 1993 season that it would not execute such a fire sale.

    John Henry’s record isn’t as damning, but it’s hardly encouraging. He has
    waged a publicity campaign against his own franchise, complaining about the
    inadequacy of the 12-year-old stadium in which the Marlins play, and
    regularly questioning the franchise’s long-term viability in southern
    Florida. The stadium situation in Boston is a minefield right now; is Henry
    really someone MLB wants to insert into the fracas?

    Baseball owners have an obvious interest in seeing teams on the block sold
    to the highest bidder. But when one of the game’s best assets is being sold,
    ensuring that it ends up in the hands of the best custodians is even more
    important. Tom Werner’s team does not fit the bill.

Keith Law is an author of Baseball Prospectus. You can contact him by
clicking here.