Baseball Panel Urges Revenue Sharing

N E W  Y O R K, July 14, 2000 -- Baseball’s latest economic study committeerecommended a vast increase in revenue sharing and possiblefranchise moves, but it did not say the sport needs a salary cap.

To increase competitive balance, the committee today urgedbaseball to impose a 50 percent luxury tax on payrolls above $84million; proposed sharing 40 percent to 50 percent of local revenues afterballpark expenses; and recommended that national broadcasting andlicensing revenue be distributed unequally to assist low-revenueclubs, provided that they meet a minimum payroll of $40 million.

The New York Yankees, with a payroll of about $115 million,would have to pay a tax of about $15 million, under the committee’sproposed formula. Minnesota has the low payroll, about $20 million.

The panel recommended that players born outside the UnitedStates be included in the amateur draft, that there be an annual“competitive balance draft,” and that baseball relocatefranchises “when necessary to address the competitive issuesfacing the game.” No specific cities were mentioned.

In addition, the panel said baseball should expand its domesticand international promotion of the sport.

Haves and Have-Nots

“We do not pretend to believe these changes will be easy oruniversally popular,” said former Senate Majority Leader GeorgeMitchell, one of the panelists. “We do believe them to be asolution to the alarming disparities between baseball’s haves andhave-nots. We offer them to the commissioner, the ownership ofMajor League Baseball, the players and to the fans of the game.”

Also on the panel were former Federal Reserve board chairmanPaul Volcker, Yale president Richard Levin and politicalcommentator George Will.

Baseball has not moved a team in almost 30 years.

“If an area doesn’t want to support a team, that answersitself,” Volcker said.

“Clubs that have little likelihood of securing a new ball parkor other revenue-enhancing activities should have the opportunityto relocate,” Mitchell said.

Three Teams Had an Operating Profit

For now, the committee opposed eliminating teams — an idea thatis being discussed by owners.

“We would not look to a contraction except as a last resort,”Volcker said. “I don’t think that the industry should excludeit.”

To support its contention that baseball has a growing revenuedisparity, the committee released dozens of economic charts, amongthem one that showed the Yankees generated the most revenue lastseason, $177.9 million, while Montreal generated the least, $48.8million.

In 1995, the first year following the strike that wiped out theWorld Series, the Yankees led baseball with $97.7 million inrevenue, while Montreal had the least, $27.6 million.

According to the report, only the Yankees ($64.5 million),Cleveland ($45.9 million) and Colorado ($12.4 million) generated anoperating profit from 1995-99.

San Francisco had the largest operating loss from 1995-99 ($97million). Toronto lost $87.6 million and Anaheim lost $83.3million.

As an industry, baseball had an operating loss of $212 millionlast year on revenue of $2.787 billion.

Team Elimination Opposed — For Now

Before the meeting, owners appeared set to put off the issue ofrealignment until 2002 and there was talk they might even discussgetting rid of the Montreal Expos and another team.

Colorado owner Jerry McMorris first discussed this so-called“contraction” idea a year ago.

When asked about it last weekend, commissioner Bud Selig said:“I don’t want to rule anything out because there’s no questionthat we do have to solve that problem, because [disparity] isgetting worse by the day.”

While contraction may not be on the agenda, two owners, speakingon the condition they not be identified, said the idea is beinggiven increased attention because of Montreal’s inability to get anew ballpark.

“It is being taken more seriously,” McMorris said Thursdaynight. “It’s just because of disparity and how do we find our wayout of difficult situations.”

If baseball decides to shrink, its central fund, which getsmoney from national broadcasting and licensing contracts, could beused to buy back the Expos along with one other team, one of theowners said.

“If we disappear, they’re going to have to come up with anotherclub that could produce as many Guerreros and Martinezes andWalkers,” Expos manager Felipe Alou said, referring to VladimirGuerrero, Pedro Martinez and Larry Walker, who became stars inMontreal.

While there is no obvious choice for a second team, Florida,Minnesota and Oakland have failed to get new ballparks, and TampaBay has seen a big drop in attendance.

Realignment Objections

As for realignment, Texas wants out of the AL West, where it haslate TV start times for intradivision road games. But the ChicagoWhite Sox, Kansas City and Minnesota were against the plan to placesix teams in the AL Central and just four in the AL East and ALWest.

In addition, Arizona objected to the plan, under which it wouldmove from the NL West to the AL West.

Selig, several owners said, does not appear ready to call for avote on realignment soon, effectively putting it off until the 2002season at the earliest.

“I think most likely significant realignment will be put off ayear,” said Houston Astros owner Drayton McLane.

The two owners who spoke on the condition of anonymity confirmedMcLane’s assessment that no realignment would take place for 2001.

The one change owners were to hear today is the format for nextseason’s schedule: Teams will play division rivals 18 times eachinstead of 12 or 13.

And in another new twist, the Astros and Texas Rangers will meetin interleague play for the first time.