Money talks but what is it saying?

August 11, 1994|By Jon Morgan | Jon Morgan,Sun Staff Writer

Forget slugging percentage, earned run average and the batting performance of Tino Martinez when he faces left-handed pitchers with men on base.

If major-league baseball players go on strike tomorrow, their statistics-crazed fans will have only one set of numbers left to ponder: profit and loss.

This will prove a frustratingly elusive figure for devotees of a sport in which even the most arcane element of play is reduced to a number.

Team owners say most of them are losing money and that, as a group, they would lose $100 million this season even without a walkout. But there are plenty of reasons to be skeptical, and some financial experts say the owners' contentions are as phony as the juiced-ball theory.

Attendance, which topped 70 million last season, has been up in seven of the past nine years. Ticket prices have surged at about twice the rate of inflation. And a wave of rhapsodic literature and nostalgic architecture has re-established the sport as the national pastime.

Toss in monopoly powers bestowed by the Supreme Court to no other sport, lucrative tax advantages, a long line of cities and investors trying to get into the game, and a fan could be excused for having to sit out tonight's seventh-inning stretch in puzzlement.

This is a sport in crisis?

To be sure, Major League Baseball has its problems. Average salaries, which this season hit $1.2 million, increased by a third over the past four years. Network television finally followed through on its threats not to bid up the price of carrying games, costing each team about $5 million.

But average ticket prices are up 21 percent over the past four years and attendance by 24 percent (aided by a pair of new teams). And several cities, facing the real or imagined threat of losing their teams, have ponied up hundreds of millions of public dollars for cash-generating stadiums such as Camden Yards.

Nevertheless, acting Commissioner Bud Selig said last week that 12 to 14 of the 28 major-league clubs projected operating losses this year.

"It's not the worst business to invest in, but if you're going to invest tens of millions of dollars, you don't want to invest in baseball," said Orioles owner Peter G. Angelos, who contends that he and his investment group took the plunge out of a sense of civic obligation.

"It's not a bad business for the Orioles. But the Orioles have Camden Yards," said Mr. Angelos, who estimates that the majors would lose $200 million to $300 million during a strike.

Other teams that have not been treated as well by their fans and taxpayers are finding the going considerably rougher and may not be able to survive much longer, he said. Mr. Angelos has suggested that his fellow team owners open their books to public scrutiny to make the case, something they have declined to do.

"Minnesota is for sale. Oakland is for sale. Pittsburgh is on the financial ropes. San Diego is not a viable operation. Montreal is not making money. Seattle is not making money," he said.

But officials have been pleading poverty for as long as there has been baseball. In 1881, former player and founding executive Albert Spalding said, "Bankruptcy stares every team in the face."

Rising franchise values

In fact, no team has gone bankrupt since the Philadelphia Phillies went under in World War II, and franchise values have increased at a mind-boggling rate, suggesting higher profits than the owners have acknowledged. The Orioles, for example, were sold for $13 million in 1979, $70 million in 1988 and $173 million in 1993.

The owners of the two newest teams, the Florida Marlins and Colorado Rockies, paid $95 million each in franchise fees to get into the game last year.

"There may be a few teams near the bottom that may be breaking even or even losing a little money. But I don't think there is a crisis," said Andrew Zimbalist, an economics professor at Smith College and author of "Baseball and Billions," a book about baseball finances.

Mr. Zimbalist, a one-time paid consultant for the players union, said the owners artificially inflate their losses through a variety of means, including paying themselves multimillion-dollar "consulting fees" or masking lucrative deals with affiliated companies, such as television stations or breweries.

Overall, Mr. Zimbalist predicts teams will earn slightly less revenue this year because of the new TV arrangement in which national game broadcasts are produced and marketed by Major League Baseball in affiliation with NBC and ABC. Without a strike, the arrangement probably would have netted each team $9 million to $10 million, Mr. Zimbalist said. The old CBS/ESPN deal brought in $15.3 million per team.

Local television and radio revenue -- which on average pays each team as much as network TV -- probably will be up this year, as will merchandise and concession sales, Mr. Zimbalist said.

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