All around the country, fancy new baseball stadiums are rising, multimillion-dollar monuments to the proposition that survival in the 21st Century is predicated on the almighty revenue flow.
The Seattle Mariners will move into their new palace in July. Next year the Giants, Brewers, Astros and Tigers will inhabit their new parks. The Padres, Reds and Pirates have stadiums on the drawing board.
All those teams were able to persuade taxpayers or local governments that the only way for them to compete with the sport’s fat cats was to start building. The Expos, Phillies and Marlins are desperately trying to make that argument as well.
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But for downtrodden baseball teams, the new reality is a terrifying one. After years of begging for a new facility as the vehicle of their salvation, they are finding that the edifice itself might not be enough to bridge the ever-increasing payroll gap.
“I think we all have this mantra: Give me a new park, and we’ll be able to compete and win,” said Expos General Manager Jim Beattie. “Well, it takes more than that. There are going to have to be some things that change within the game itself.”
That explains why baseball’s owners cast such a covetous eye toward the recent contract agreement reached by the NBA. It has three things baseball lusts: an overall salary cap, individual salary maximums, and a system that gives players a specific percentage of revenue.
Talk is increasing that some baseball owners already are settling in for the mother of all labor fights when their contract with the players expires after the 2001 season.
Yet owners face a Catch-22. Many think they must change the economic system to save the game, but the cost of such change–another long, bloody work stoppage–could damage the sport seriously.
Commissioner Bud Selig, who pulled the plug on the 1994 World Series, vows to avoid another prolonged labor war. But union chief Donald Fehr recognizes that the NBA agreement might embolden baseball’s owners.
“It serves as a focal point for some owners, especially those with cross-ownership,” he said. “They say what a wonderful thing caps are. The fact is, the NBA has had caps for two decades. None of their prior negotiations has had an effect on ours, and I don’t think this one will. There’s enough difference in the two sports, and the circumstances of the owners.”
Selig, as owner of the Milwaukee Brewers for three decades, knows all too well the hopeless outlook clouding the teams in small and, increasingly, middle markets. And as one who masterminded the construction of upcoming Miller Park, he recognizes that a new stadium is not a panacea.
“Without it, they have no chance,” he said of small-market teams. “But even with it, there has to be considerable reform to the system.”
That conclusion has been reinforced this winter by another bout of lavish spending–“irrational exuberance,” as Padres owner John Moores termed it–including the landmark $105 million contract Los Angeles gave pitcher Kevin Brown. That will push the Dodgers’ payroll to nearly $88 million this season.
The Yankees, Orioles, Mets, Braves, Rangers and Indians aren’t far behind, while seven teams–the White Sox, Montreal, Minnesota, Florida, Kansas City, Pittsburgh and Oakland–will have payrolls under $25 million.
This winter almost $1 billion has been paid to free agents, with six players shooting past the previous record of $12.5 million in annual salary. All the while, the link between spending and winning is growing more ironclad–as is the link between not spending and losing. Baseball executive Sandy Alderson estimates that 15 to 18 teams will go to spring training this year without a realistic chance of making the World Series.
Even with the infusion of new revenue sources from a stadium, teams still face the discouraging prospect of treading water, or falling further behind. Kevin Mather, the Mariners’ vice president of finance and administration, says teams typically raise their revenue between $15 million and $30 million annually when they move into a new ballpark.
“It’s like a bicycle race,” said Alderson. “If you pedal hard enough, you can draft behind somebody for a while, but then you fall back. What’s the point?”
And so you have Milwaukee GM Sal Bando saying: “To compete in a small market, you need to increase revenue, and you do that by getting a new stadium. But that may not be enough because salaries are escalating so fast, it just puts you in the same spot.”
You have John McHale Jr., Tigers president and CEO, saying: “Our ambition was to create a situation where we could be in the upper half of clubs in revenue and therefore in the upper half of clubs in payroll. We thought that would give us a fighting chance to compete on an annual basis. But that upper half has gotten so stretched on a year-to-year basis, you wonder now if the prize will go only to those in the top quartile.”
What about revenue sharing among owners? That is the solution to the disparity crisis that the players union endorses.
The current revenue-sharing plan, which will be fully implemented in 2000, transferred about $100 million from the top six clubs to the bottom six last year. That will rise to $140 million in 2000. The difference between the revenue of the top team, the Yankees, and the bottom team, the Expos, has been estimated at $135 million.
Any increase in revenue sharing would almost certainly have to be tied to guarantees that the money be used to improve the product on the field.
Another subject drawing increasing scrutiny is the prospect of struggling teams simply going out of business.
“I frankly fear we may be looking at contraction of franchises as time goes on,” said Houston Astros President Tal Smith. “I hate to see any market deprived of major-league baseball because it’s a grand game, but the reality is it’s almost impossible to operate in some of these areas, or compete.”
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Another frightening proposition is that two spending behemoths, the Dodgers and Yankees, are contemplating their own new ballparks. If that happens, middle-market teams may not stand a chance.