- The Washington Times - Monday, June 24, 2002

We have found a new state of being for the beleaguered sports franchise.
There already is the ordinary cellar-dweller category, including teams like the Detroit Tigers. There also is the fallen but once proud team, an apt description for the Baltimore Orioles. And there is the hopelessly adrift team, a club like the Cincinnati Bengals.
Now we have wards of the state.
In less than five months, baseball's Montreal Expos, the WNBA's Charlotte Sting and the Buffalo Sabres of the NHL each have had their franchise operations assumed by their respective leagues, and in the case of the Expos, their entire equity as well.
Sports teams, and some entire leagues, have gone bankrupt before. And league assumptions of struggling teams is not entirely a new concept either. But the increasing frequency and depth of the takeovers, and the strong likelihood of more to come soon, provides yet another dark window to exactly how far the sports industry has fallen from its late 1990s heyday.
Consider the case of the Sabres, still technically owned by fallen cable giant John Rigas, but now in name only. The estimated $150 million debt on the club is far more than any guess on its full market value. The takeover, expected for weeks, was done as a pre-emptive strike in an attempt to keep the club from being sucked into bankruptcy along with Adelphia Communications Inc., chaired by Rigas until recently. Because of the frequent and improper shuffling of corporate money by Rigas from Adelphia into personal ventures, including the Sabres, Adelphia is by far the hockey team's largest creditor.
Despite the depth of the mess, the NHL intends to run the Sabres as close to normal as possible until a new buyer is found, and few changes in draft or free agent strategy are expected.
But just as when the Expos and Sting were taken over, a litany of questions immediately arise. How far can the Sabres really go in altering their payroll level or roster makeup without league approval? Can they freely make trades? How much detail about their day-to-day activities is being handed over to rival clubs? How long can the club stay afloat without Adelphia's previously unpublicized but liberal backing? Does the takeover really protect the Sabres from financial ruin?
NHL commissioner Gary Bettman last week did his best to mollify the concerns, but his general answer to all those questions was that only time will tell.
"The league is not financially responsible for the obligations of the Sabres," Bettman said. "We are going to have to arrange financing [for the team], which we are in the process of doing, and the club will be operating on a budget for the interim and we will continue to operate business as usual."
Looking up the St. Lawrence River to Montreal, however, the business-as-usual credo while a ward of the league is easier said than done. The Expos, still trapped in MLB commissioner Bud Selig's Quixotic contraction campaign, have made only minimal progress forward while a league-owned team. The team is playing better, standing second in the NL East entering the weekend, and its trading activity can be described as fairly normal for any club, particularly given the looming presence of another work stoppage.
But the club's attendance is again by far MLB's worst, the rampant bleeding of red ink continues, and the Expos can't sell the idea of a secure future to either themselves or their fans. MLB president Bob DuPuy has been long on the record that nobody within baseball wants the league's stewardship of Montreal to continue into 2003.
"No league wants to end up in the position of owning a team. The central office is not in the business of operating individual franchises," said MLB spokesman Vince Wladika. "But sometimes circumstances become out of one's control and you have to act. It's not the best situation, no doubt. But you run the team the best you can, and fortunately, [manager] Frank [Robinson] and [general manager] Omar [Minaya] have been doing a good job."
Going forward, leagues simply have no choice but to prepare for more such team takeovers. The current malaise of the sports industry, complete with falling attendance and TV ratings, is well documented. Plenty of teams from coast to coast are struggling now just to meet weekly payrolls. And the leagues, buttressed by their massive, multi-year contracts with TV networks and corporate sponsors, have far stronger credit than any individual team.
That's part of the reason why the NFL a few years back started an internal loan program to help its teams build new stadiums, and the NHL and baseball have tried to help Canadian teams battered by that country's inferior dollar.
"Each of these [assumed] teams and their situations are a bit different," said Jeff Phillips, senior vice president with Houlihan, Lukey, Howard & Zukin, an investment banking firm that often works within sports. "But we've certainly seen leagues get more involved and try to keep their clubs and more solid footing."

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