Wednesday, November 7, 2001

CHICAGO Major league baseball owners yesterday overwhelmingly voted to contract two teams before the 2002 season starts, setting up the first elimination of any major U.S. sports franchise since 1954 and baseball’s first reduction since 1899.
Commissioner Bud Selig said the final choices on which teams will not see next season have not been made. But the ability to generate local revenue will be the primary factor in the decision, and the Montreal Expos and the Minnesota Twins are by far the game’s laggards in that category. Both teams have failed to top $35 million in annual local revenue since 1995. The New York Yankees, by comparison, reap more than $200 million a year in local revenue.
A formal selection of the two teams is expected by midwinter, industry sources said.
“It makes no sense for major league baseball to be in markets that generate insufficient local revenues to justify the investment in the franchise,” Selig said. “The teams to be contracted have a long record of failing to generate enough revenues to operate a viable major league franchise.”
“We’re treading on historic ground here. No modern [major] sport has done this,” he said.
While the contraction decision generated instant protests around the country and will prompt a raft of lawsuits when the teams are selected, Selig yesterday promised labor peace with the players, at least in the short term.
The current labor accord has expired, and owners yesterday also voted not to lock out the players or implement a freeze on the free agent signing period set to begin later this month. The terms of the current agreement will remain in effect during talks toward a new deal.
That decision, however, did little to appease the union.
“Today’s announcement … is most imprudent and unfortunate,” union chief Donald Fehr said yesterday. “This decision has been made unilaterally, without any attempt to negotiate with the players, apparently without any serious consideration of other options, including relocation, and seemingly with little concern for the interests of the fans. We consider this action to be inconsistent with the law, our contract and, perhaps most important, the long-term welfare of the sport.
“This is the worst manner in which to begin the process of negotiating a new collective bargaining agreement,” Fehr said.
The contraction vote also represents a significant setback for the Washington area’s efforts to get a team. Bidding groups in both the District and Northern Virginia hoped the owners would seek to move a team to the area rather than eliminate it.
Selig said relocation may prove helpful “down the road” but added it would not be of use to baseball now. A written statement issued by baseball went on to say that “there exists no prospective market for fielding a stable, competitive and economically viable franchise for next season.”
“By shifting teams, often you just shift problems,” Selig said. “If you just shift a club without any other changes [to the economic structure], you’ve just moved problems from area A to area B.”
The myriad details and questions contraction brings such as what happens to the players on the contracted teams, the team employees and the minor league affiliates will be settled over the next several months. Most of those issues are subject to approval by the players association.
Until the final choices are made and announced, each team has been instructed to proceed on its normal offseason business, such as signing players and selling season tickets.
The owners of the contracted teams will receive payments estimated at between $165 and $250 million each. It had been widely suggested within baseball circles that the money be used instead to help build new stadiums for the troubled franchises. The NFL already has a program in place in which owners can tap into the league’s significant line of credit for funds to be used in stadium construction.
Two obstacles, however, prohibit that from happening: lack of both funds and willingness among the fellow owners. The money to be paid to the contracted owners essentially will be a simple redistribution of the more than $40 million a year currently paid to them in revenue sharing, industry sources said. If the owners receive a lump sum payment, the annual payments will serve the debt obtained to generate that lump sum.
Even if funds were available, Selig said he has no intention of following the NFL’s lead on stadium development.
An economic study commissioned by Selig and released last year said franchise contraction would not be needed if its numerous suggestions such as enhanced revenue sharing and minimum payrolls were enacted. To date, none has. Selig yesterday backed off that report and said the game’s economic landscape had changed since the report’s release 16 months ago.
“We’ve simply had a deterioration since then,” Selig said. “We took this step because we felt it was a necessary one.”

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