Contraction Could Lead to Labor Pains

Hearts have barely stopped racing, less than 48 hours after the last play of a World Series so riveting, so exhilarating that America fell in love with baseball all over again.

So it is almost incomprehensible that major league owners will assemble in a hotel meeting room this morning to discuss ridding themselves of two teams.

Baseball fever? Catch it, except in Minneapolis and Montreal, where the bigwigs might just kill your team instead.

The timing is so strange, so bizarre that it makes oddly perfect sense that the voice of reason in the matter is a former professional wrestler nicknamed “The Body.” If owners pull the plug on the Minnesota Twins and Montreal Expos and proclaim baseball’s financial woes solved, Minnesota Gov. Jesse Ventura says owners will only be kidding themselves.

The word of the day is contraction, the industry term for terminating teams, up for discussion and possibly a vote as owners meet today in Chicago. Under the most widely discussed scheme, a chain reaction that would include the Walt Disney Co. selling the Angels to Florida Marlin owner John Henry, major league owners would address what they insist is an economic crisis in the sport by eliminating teams for the first time since the 19th century.

“If they think eliminating two teams is the fix that baseball needs, I will go on record and say that they’re badly mistaken because it’s not going to change anything,” Ventura said on his radio show. “You will still have the haves and have-nots. And I think if they continue down this road, you will end up with about 10 teams.”

Is he right?

Yes. Commissioner Bud Selig and other top baseball officials bemoan revenue disparity as the source of competitive imbalance--in other words, teams that make more money can pay more for players and thus have better chances to win.

But the difference in local revenue--money made on local television contracts and at the ballpark in ticket sales, suite rentals, concessions and parking--is far greater among the richer teams than among the poorer.

In 1999, a study commissioned by Selig reported that the New York Yankees made $176 million in local revenue, followed by the New York Mets at $132 million, a difference of $44 million. The Expos made the least local revenue at $12 million, but 11 teams were within $44 million of the Expos. Getting rid of the Expos won’t help the Pittsburgh Pirates get to the World Series.

So what’s the point?

With the agreement with the players’ union up for renewal, owners believe contraction would serve as a dramatic first step in demonstrating the necessity to control costs, particularly salaries.

More frankly, many owners are sick and tired of throwing tens of millions of dollars per year into a revenue-sharing pool to bail out franchises that have faint hope of moving into a new, cash-generating ballpark or otherwise making more money.

The Expos and Twins aren’t the only teams that fit that description, are they?

No. The Florida Marlins, Kansas City Royals, Oakland Athletics and Tampa Bay Devil Rays all fit too, but Selig won’t force out an owner unwilling to sell. Minnesota owner Carl Pohlad, 86, weary of fighting for a baseball-only stadium and unable to find a local buyer, says he is willing to sell.

Other teams up for sale are the Boston Red Sox, the Devil Rays and the Angels. The Red Sox, one of baseball’s cherished franchises, have attracted numerous bidders. The Devil Rays, perhaps baseball’s worst franchise, have a long-term lease that anchors them in Tropicana Field and a state attorney general vowing to enforce that lease.

And the Angels?

Relax, Orange County, your team is not folding. The Angels’ lease binds them to Edison Field through 2016, and major league officials believe Orange County is a terrific market, given a championship-caliber team and a first-rate marketing program, neither one of which Disney, in its ownership, has provided.

Disney preserved baseball for Anaheim, buying the Angels at a time former co-owner Jackie Autry was threatening to move the team, and did a dandy job transforming cold, cavernous Anaheim Stadium into cozy Edison Field, with money-making luxury suites and all.

But Disney wants to sell, and Selig might be able to broker this deal: Expo owner Jeffrey Loria, who wants out of Montreal, will buy the Marlins from Henry, who in turn will buy the Angels from Disney. Henry, who grew up in Apple Valley and founded his commodities trading firm in Newport Beach, would satisfy Disney’s insistence on a buyer with local ties.

So who would play for the Angels, Tim Salmon or Preston Wilson?

Probably Salmon, possibly both. Under the most likely scenario, Salmon and his Angel teammates would remain in Anaheim and Wilson and his Marlin teammates would remain in Florida, although there has been talk of allowing Loria to take a few Expo players to Florida and allowing Henry to bring a few Marlin players to Anaheim.

Loria and Henry could fight to move their rosters intact, but the Angel players would not fit nearly as economically into a dispersal draft as the younger and cheaper Expo--and Twin--players.

It is unlikely any team would agree to pick up the remaining $50 million owed to Mo Vaughn or $40 million owed to Salmon, liabilities that could add another $90 million to the cost of contraction.

How much would contraction cost?

In April, Forbes magazine estimated the franchise value of the Twins at $99 million and the Expos at $92 million, though reports suggest owners might pay as much as $150 to $250 million to buy out each team.

That would mean each existing owner would pay as much as $11 million to $18 million, with the possibility of making the money back by the end of the decade because owners would no longer contribute millions in pooled revenue to the contracted teams and would split their shares of national television fees and profits from licensing, merchandising and the Internet.

Loria would pay a premium to Henry for moving from Montreal to the larger South Florida market, and Henry would pay a premium to Disney for moving to the larger Southern California market. Forbes valued the Angels at $198 million and the Marlins at $128 million. Henry has met with Disney executives to express his interest in buying the Angels, but no purchase agreement has been negotiated because of the uncertainty over how much money Loria would get.

In addition, although Selig insists excessive expansion is a root of baseball’s current economic mess, the owners could probably cover their costs for contraction some years from now by adding two teams and charging an expansion fee well above the $130 million the Devil Rays and Arizona Diamondbacks paid in 1995.

Does the players’ union need to approve contraction?

There is some debate on whether owners can unilaterally eliminate two teams--and 50 jobs for players--but there is no debate that player contracts cannot be assigned to other teams without union consultation. Players traded in the midst of multiyear contracts can demand subsequent trades, which could skew a dispersal draft.

Owners could offer to add two spots to the rosters of each of the 28 remaining teams, making up for the loss of 50 jobs with the addition of 56. Those jobs would probably be filled by players making near minimum wage, so the union would not necessarily accept that offer.

Contraction makes no sense outside the context of a new labor agreement, as Ventura suggested, although analysts dispute whether contraction is the first of several economic changes owners hope to implement or whether it is simply a bargaining chip to be played during negotiations with the union.

If Henry couldn’t get a new ballpark built in South Florida, and Loria couldn’t get a new ballpark built in Montreal, why should Selig believe Loria could get a new ballpark built in South Florida?

Selig does not necessarily believe that, but contraction elsewhere would increase the urgency there. Selig dispatched former San Diego Padre president Larry Lucchino to assess options for a new ballpark for the Marlins, who could be in danger of extinction or relocation--perhaps to Washington, D.C.--if owners defer consideration of contraction until next year.

Wouldn’t it be easier just to let Loria move the Expos to Washington now?

Contraction demands the elimination of two teams. If one were disbanded, the major leagues would have an odd number of teams, causing scheduling problems. What’s perhaps more important, no other market without major league baseball appears economically strong enough to support a team, and the availability of Washington and Minneapolis would leave two markets available to compete in case of future relocation--or to join in future expansion, which also makes no sense unless two teams are involved.

The Washington market also presents the threat of lawsuits:

* If another team moves there, Baltimore owner Peter Angelos might sue on grounds a D.C. team unjustly encroaches upon the Orioles’ turf.

* If contraction occurs, groups working to attract a major league team to Washington might sue, threatening baseball’s cherished federal antitrust exemption by arguing owners abused their monopoly by dissolving a team rather than moving it.

Who else might sue?

The most likely party is a government authority that runs a stadium built with public funds and loses its major league--or minor league--team because of contraction. On Monday, the Metropolitan Sports Facilities Commission in Minnesota passed a resolution raising the possibility of legal action.

Baseball lawyers have examined leases all year, and presumably Selig would not keep calling contraction “a viable option” if lawyers had advised him otherwise. So when does all this happen?

Maybe today, maybe never. Selig says “the issue of contraction has a thousand moving parts,” and the failure of one part could jeopardize the entire scheme.

Pohlad, under withering pressure in Minnesota, could decide to keep the Twins, which could stop contraction now or put the Marlins at risk of going out of business. Loria could buy the Devil Rays instead of the Marlins, leaving Henry stranded in Miami and Disney in search of another buyer for the Angels.

Owners could vote to approve contraction today, but even if they did, it is uncertain whether they would vote to kill the Expos and Twins immediately, or only after a reprieve, or simply authorize Selig to implement contraction as part of a labor agreement.

If there is a 2002 season--a big if given that the end of a labor agreement historically means a players’ strike or owners’ lockout--looming deadlines on contract renewals and free agency would seem to demand that owners get rid of teams this month or wait another year to consider that option.