Business of Baseball Report

Expansion in New York and Boston?

Business Week’s Michael Mandel wrote about an idea that could help bring parity to the league. He claims that by adding an additional team in both New York and Boston, the resources available to the New York Mets, New York Yankees and Boston Red Sox would be diluted. Blogger Mark refutes some of Mr. Mandel’s claims over at Sports Biz Blog.

In addition to the arguments that Mark presents, the addition of teams to the New York and Boston areas would face stiff resistance amongst the ownership group. A change in the territory of a team requires a 75% vote, and it’s unlikely any of the owners would vote to take away a precious asset—the exclusive territory of a given team—from one of their own.

Washington Nationals Sale and Stadium Developments

It’s been about three weeks since I did a “regular” Business of Baseball Report, and there have been several developments with regard to the Washington Nationals. Wall Street bond raters have come back and said they’re unable to give the stadium construction bonds an investment-grade rating unless some changes are made to the stadium bill. The three technical amendments are merely corrections in the wording of the bill, but the concern is that, by opening up the bill, stadium opponents will try to derail the whole thing by revisiting the financing portion of the stadium bill.

D.C. Council Chairwoman Linda Cropp, who at one time was a leading critic of the bill, plans on using procedural rules to block the attempt of the stadium opponents. She feels the city must honor their previous agreement as long as the stadium costs don’t rise too high.

The other issue that has to be ironed out is the stadium lease. D.C. Councilman Vincent Orange appears to be willing to play hardball by introducing legislation requiring Major League Baseball to announce the owner of the Nationals before the stadium lease is signed. On the other hand, MLB isn’t willing to choose an owner until the particulars of the lease are agreed upon. Orange is also hoping that he can use the legislation as a way to entice MLB to choose a local owner. The major issue is that the District’s Chief Financial Officer, Natwar Gandhi, has said that the annual rent payment would need to be $6 million a year in order to cover the city’s debt obligations. MLB have been unwilling to offer a guaranteed amount, and Wall Street is refusing to approve the financing plan until the lease payment is set.

D.C. Mayor Anthony Williams and the city council will also be reviewing a private financing deal with Deutsche Bank. Orange introduced a resolution to asking the mayor to allow the council to take one last look at the deal. The bank is willing to pony up $246 million in exchange for a lease payment and revenue from the stadium.

Meanwhile, MLB Commissioner Bud Selig is meeting with the prospective buyers as the decision to choose a new owner moves forward. MLB’s president and chief operating officer, Bob DuPuy, said that he and Selig are hoping to have a final vote on the sale at the final owners meeting of the year on November 16-17, 2005. Two local groups and former Mariners owner Jeffrey Smulyan appear to be the three front runners as the sale of the team hopefully comes to a close here soon.

MASN Once Again Pleas to Comcast

The Mid-Atlantic Sports Network (MASN) has once again submitted a request to cable giant Comcast to carry the network on its cable service. The hope is that more fans will be able to watch the Washington Nationals next season. Only DirecTV and another smaller cable company, RCN, carried MASN in 2005.

This latest request came shortly after the Montgomery County court dismissed a lawsuit filed by Comcast alleging that the Baltimore Orioles breached their agreement by signing on with MASN after the 2006 season. Under the agreement, Comcast was supposed to have an exclusive negotiating window until November, 2006 and they claim that the Orioles announcement to go with MASN was a breach of their agreement. The case was dismissed in two different courts because the respective judges concluded that MASN wasn’t an independent third party and was basically an extension of the team.

Minnesota Governor Uses the “R” Word

This past weekend, Minnesota Governor Tim Pawlenty admitted that it’s possible that, if the state doesn’t pass a stadium bill soon, that the Minnesota Twins might relocate to a different city. Twins owner Carl Pohlad has waited twelve years to get a new stadium for the Twins and he’s threatened moving the team and even dissolving it through contraction. Now he’s been in discussion with the league over what to do with the latest snag.

Earlier in the year, the state legislature had a bill on the table, but time ran out before the session ended. A special session was called, but the state needed to resolve budget issues before the stadium bill could be brought to the table. The governor has said he’d call a special session, but only if the bill was guaranteed to pass.

Hennepin County Commissioner Mike Opat, who helped engineer the sales tax bill that would have brought the new stadium to the county, blames the governor for the lack of progress. The current deal that’s on the table, which involves a sales tax increase in the county, expires at the end of the year.

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