Baseball Strike Could Hurt Owners
Tuesday, July 23rd 2002, 12:00 am
By: News On 6
NEW YORK (AP) _ Empty seats are staring at baseball.
After the last work stoppage, attendance dropped 20 percent and it still hasn't completely recovered. If players strike again to defend against the economic changes owners say they need, expect at least a similar drop.
That would leave average attendance at about 22,000 _ 9,000 below the 1994 level. If that happens, count on ownership changes in several markets.
By demanding major changes from one of the nation's strongest and most militant unions, commissioner Bud Selig has backed himself into a corner, leaving himself with three alternatives:
_ Negotiate quickly before a strike date and get the best deal he can;
_ Try to outlast the players, which means not playing the World Series in 2002 and possibly in 2003;
_ Fold before a strike date, which seems unlikely since nearly all owners back him.
``Nobody understands the heartache of a work stoppage more than I do,'' Selig said at the recent All-Star game. ``It is a nightmare. We've had eight of those now. On the other hand, as I have said to the owners often, I'm on the horns of a very difficult dilemma. A work stoppage is everything people say it is, and the status quo is also very, very serious, and poses very serious problems. So, that's the dilemma we have to work our way around.''
In 1993, the last full season before the last strike, baseball had $1.87 billion in operating revenue and the teams claimed a $36 million operating profit _ not including expansion fees.
Operating revenue dropped to $1.21 billion in 1994, when the strike wiped out the final 52 days of the regular season and the postseason. It bounced back to only $1.78 billion in 1995, when the end of strike canceled the first three weeks. Revenue didn't start returning to normal until 1998, when it was $2.48 billion.
In nine full seasons under Selig, the teams claim they have had operating losses each year, a total of $1.74 billion. Selig even says he should have allowed teams to file for bankruptcy rather than let them borrow money from baseball's central fund during cash-flow crunches.
``I've helped two or three clubs out in the past year or two, and yes, I now understand in retrospect that maybe it would have been better to let them go,'' he said.
Some owners say the advantage of filing for bankruptcy is they can escape big contracts given to underproducing players. Generally, in bankruptcy court, the corporation is given broad rights to terminate contracts.
However, the players' association would argue that since the collective bargaining agreement is negotiated on behalf of all 30 clubs together, the 30 clubs as a whole are responsible for the obligations.
``It's a fascinating argument. I'm not sure how it would play out,'' said David Skeele, a professor at the University of Pennsylvania Law School who specializes in bankruptcy.
Ever since Selig took over as the top owner on labor matters following 1981's 50-day strike, owners have tried each time to get large givebacks from the players. That led to 1985's two-day strike, 1990's 32-day spring training lockout and the 232-day strike of 1994-95. Given the attitude of the owners closest to him, it appears another long strike is likely.
``I think their leadership is so militant, so inflexible,'' Texas Rangers owner Tom Hicks said. ``There has been absolutely no progress made whatsoever. This is a union that they've gotten their way, they've won every time. So they don't feel they have to do anything to compromise. I think they are misreading what's going on this year.''
With former Rangers owner George Bush in the White House, owners do not appear to be worrying about government involvement in baseball's labor talks. During the Clinton administration, the National Labor Relations Board voted 3-2 in 1995 to seek the injunction that restored the terms of the previous contract, causing players to end their strike.
``The political environment is different in Washington, so I think we feel very comfortable that if we're going to fix baseball, we have the ability to fix baseball,'' Hicks said. ``If the players strike, I think the 50 percent luxury tax would be replaced by a different perspective from the owners, probably a hard cap.''
But while Hicks has enough money to survive a long walkout, some other owners do not. And agent Tom Reich, who helped Mario Lemieux gain control of the Pittsburgh Penguins from Roger Marino in bankruptcy proceedings in 1999, had a warning for them: The least wealthy owners could lose their entire investments.
``As far as the bankruptcy option, there will be plenty of them if the postseason is lost,'' Reich said. ``The first thing that would happen is that the owner equity would be wiped out.''