Selig Paints Bleak Picture of Baseball Finances to Congress
WASHINGTON – Major League Baseball commissioner Bud Selig painted a bleak picture of the sport's finances to a skeptical Congress on Thursday, saying efforts to revoke part of baseball's antitrust exemption to save two teams from folding would harm the sport in the long run.
Several lawmakers harshly questioned Selig's financial assessment, noting the sport's steady rise in franchise values and ever-escalating player salaries, and placed the blame for baseball's ills on greedy owners who put profits before fans.
Selig told a House Judiciary Committee hearing that 25 of baseball's 30 teams lost money last year and the sport's operating losses were $232 million. Adding debt and franchise depreciation, the industry lost $519 million, he said.
Last month's decision to fold two unidentified teams, believed to be the Montreal Expos and Minnesota Twins, is only part of a long-term solution to baseball's woes that include increased revenue sharing and constraints on player salaries, which must be negotiated with the players' union, Selig said.
``We believe certain clubs have no prospect of long-term competitiveness on the field or financial viability off the field,'' Selig said. ``That is why baseball has made the decision to contract by two teams.''
The plan to fold the Twins and Expos sparked an uproar among Twins fans and lawmakers from Minnesota and elsewhere, resulting in a bill to revoke a portion of the sport's antitrust exemption dealing with relocation and contraction.
Rep. John Conyers, a Michigan Democrat who co-sponsored the bill, said baseball brought its current troubles on itself but was forcing fans and local communities to pay the price.
``One way or another, baseball's antitrust exemption -- an historical anomaly which cannot be justified on any economic or legal grounds -- will be eliminated,'' Conyers said.
But Selig said the exemption had served baseball and its fans well, preventing the relocation of a number of struggling franchises in the 1990s.
``Middle of the night relocations that baseball has in the past been able to prevent might occur in the future,'' he said, referring to the late-night move of the Baltimore Colts football franchise to Indiana in the 1980s.
Baseball's antitrust exemption protects it from lawsuits on a variety of issues, including a team's right to move or the folding of a franchise. It was granted in a 1922 Supreme Court decision that baseball was a sport, not a commercial business.
No other sport enjoys similar protection, and most have been hit with waves of lawsuits and franchise moves. Since the last baseball team moved in 1971, when the Washington Senators became the Texas Rangers, there have been seven moves of football franchises, seven in basketball and nine in hockey.
Minnesota Gov. Jesse Ventura, a former professional wrestler who also testified at the hearing, said the Twins would not be a target for dissolution if the state would come up with a new taxpayer-financed stadium that would boost revenues, which the legislature has repeatedly blocked.
``Building new stadiums is a prerequisite for everyone to keep their franchises,'' Ventura said, adding a new stadium to replace the 20-year-old dome where the Twins play would not satisfy baseball. ``They will come back to us in five to eight years and say 'That's not good either, we need another one.'''
UNABLE TO COMPETE
Jerry Bell, the president of the Twins, told the panel his club could not compete without significant changes in baseball's financial structure or a new stadium.
``The Twins have a difficult time arguing against the need for industry contraction, even though we certainly understand that we are vulnerable to it,'' he said.
Committee Chairman James Sensenbrenner of Wisconsin noted the rising value of baseball franchises, and questioned why a member of the blue-ribbon panel that recently reported on baseball's dire financial future, former Sen. George Mitchell of Maine, wanted to join a group buying the Boston Red Sox.
Selig said the outlook for big-market franchises such as Boston was much brighter than for a market like Minnesota or Kansas City, where local broadcast and marketing contracts do not produce enough revenue to stay competitive.
Several lawmakers pressed Selig about why baseball refused to allow the Expos to move to northern Virginia or Washington, where two ownership groups have been trying to attract a team.
Rep. Henry Hyde, an Illinois Republican, asked if Selig was protecting Baltimore Orioles owner Peter Angelos, who has opposed a franchise move to the Washington area.
Selig said relocation of a franchise was ``a viable option'' but not until the sport had worked out its other financial problems. ``We have looked at the possibility of relocation and have not ruled it out in the near future,'' he said.
Despite Selig's support, the prospects for quick contraction are hazy. The announcement prompted a legal battle in Minnesota and a grievance from the player's union.
A court hearing on the Minnesota lawsuit is scheduled for later this month, while the player's union says any contraction must be negotiated as part of a new labor pact. The old agreement expired after the World Series.
Congress is unlikely to pass a revocation of the antitrust exemption anytime soon, and baseball has a friend in the White House in President Bush, former owner of the Texas Rangers.