Business of Baseball Reportby Brian Borawski
June 22, 2005
Orioles Ask for FCC Involvement in Comcast Case
Last week, the Baltimore Orioles asked the Federal Communications Commission (FCC) to force Comcast cable into carrying Washington Nationals games that are currently produced by the Mid-Atlantic Sports Network (MASN). This move by Peter Angelos has escalated the battle between Comcast and the Orioles and in effect has turned the Orioles from a defender into an aggressor. For decades, the FCC has been against intervening in private contractual disputes, so it will be interesting to see what the response is.
Comcast is sticking to its guns in the whole matter. The company is still claiming that MASN is unlawfully attempting to take what are basically the rights to televise the Orioles. Comcast said it'd be willing to pay upwards of $20 million to televise the very same Nationals games that MASN is paying for.
The big losers in this are the Washington Nationals' fans. While it appears that Peter Angelos is coming to bat for the team by helping get the games on television, you have to remember that he has the $20 million that MASN is paying the Nationals on the table that needs to be recouped. If the games aren’t on Comcast, there’s no way to make that money back without the biggest cable company in the country on board.
Nationals Windfall is MLB’s Gain
By simply moving the Montreal Expos to Washington D.C., the team has gone from one of the biggest money-losing franchises in the sport to the top half of the teams in the league. When you combine strong attendance, solid sponsorship and television deals, and one of the lowest payrolls in the league, it makes for a solid combination and the team stands to make close to $20 million in profits this year. If they make the postseason, it’s projected they could stand to make another $5 to $10 million more.
With most MLB teams selling for two to three times their revenue, the sale price of the Nationals could easily exceed $400 million based on their projected revenue of $129 million. Throw in the fact that the team will be getting a $535 million publicly funded stadium in a couple of years, and it all equates to one of Bud Selig’s most ambitious and profitable moves to date.
Union Workers to Build Nationals' New Stadium
Washington D.C. Mayor Anthony Williams announced last week that the city reached an agreement requiring local unions to hire and train hundreds of D.C. residents to build the Nationals' new ballpark. This deal was in the works for nearly a year and will force companies that plan on bidding for the job to either have union shops or agree to have the workers join a union. The unions in turn agreed that half of all new workers will be Washington D.C. city residents.
When the agreement was announced on home plate at RFK Stadium, there was a corresponding protest happening outside of the park. Several people feel that by forcing the use of union labor, costs will increase and overruns are sure to happen. Protestors also felt this was a payoff by the mayor because the unions backed him in the last mayoral election.
Agreeing on a Number
Miller Park, the home of the Milwaukee Brewers, opened for business more than four years ago. The stadium district board announced last week exactly how much money it took to build the stadium. When the final tab was calculated by Benes & Krueger, an accounting firm that specializes in construction projects, it was determined that the cost of the stadium was $392 million dollars. What’s interesting is that the Legislative Audit Bureau did its own audit three years ago and came up with what was thought to be a conservative cost of $413.9 million, so the number prepared by Benes and Krueger will most likely be questioned and debated in the legislature.
Twins Stadium Won’t Help Hennepin County's Economy
Experts on the stadium development subject have debated the argument that building a stadium in a certain location does not neccesarily mean the economy surrounding that location will thrive. A large portion of Neil DeMause and Joanna Kagan's excellent book on the stadium subject, Field of Schemes, explains how stadiums rarely have a substantial positive effect on the local economy. They don't hurt, but they very rarely help as much as the proponents say they will. And it's an argument that's been used by every single owner and team that's tried to get some sort of subsidy or handout from the state, county or municipality in which the team wants the stadium built.
That's what makes the recent statement from Jerry Ball, the president of Twins Sports, Inc. and the lead man in the Twins' bid for a new stadium, puzzling. For the first time that I've read, a stadium proponent has come out and said that the stadium won't spur business activity around the proposed site of the stadium.
To people who have studied the subject, this isn't a huge revelation. And while it's refreshing that someone on the other side of the argument has finally conceded the point, I highly doubt it will stop them from their pursuit of building their stadium on the public dime.
Florida Marlins team president David Samson announced last week that the Marlins were still exploring their options with regard to the snub they received by Florida state lawmakers. The June 9 deadline that was thrown out by MLB chief operating officer Bob DuPuy came and went, and to date, neither side has given anything up. To be continued, again.
Brian Borawski is a member of SABR's Business of Baseball Committee and writes about the Detroit Tigers at his own website, TigerBlog. He welcomes comments, questions and suggestions via e-mail.
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