- The Washington Times - Saturday, October 19, 2002

ANAHEIM, Calif. Major League Baseball will end 2002 with a total industry loss of more than $800million for the year, MLB executives and owners said yesterday. The total is easily the worst in baseball history and a whopping 54 percent higher than a year ago.

Baseball enjoyed improved TV ratings at the national and most regional levels this season and now basks in the current frenzy over the all-California World Series starting here tonight. But those gains were more than wiped out by a 6 percent drop in overall attendance, a 12 percent increase in average player salaries, drastic increases in off-field costs like stadium insurance and massive losses by the two Canadian teams fueled by that country's weak dollar.

"The losses are very real," San Francisco Giants owner Peter Magowan said. "This is an industry that needs to generate more revenue."

The Giants, one of only a handful of teams to turn a profit in 2000 and 2001, have a chance to do so again this year only if the World Series goes a full seven games.

MLB's $800million is an aggregate figure that includes all operating costs, interest expenses, amortization costs and depreciation. The operating loss will be closer to $500million.

Last year commissioner Bud Selig testified before Congress that baseball posted a 2001 operating loss of $232million and a total loss of $519million once interest and depreciation were included. Those figures were widely criticized by Congress and fans nationwide. Forbes Magazine calculated a profit of $74.2million for 2001.

But once the 2002 season began, many teams continued to suffer financially, and new money entering the game was hard to pinpoint. The Toronto Blue Jays, who posted $70million (Canadian) in losses just between January and September, needed a $5million grant from MLB's central office in midseason to ease their burden. Other teams, such as Tampa Bay, Florida and Milwaukee, curtailed spending significantly. And Montreal, owned and operated by MLB owners, continues its highly unprofitable state as a ward of baseball.

A heavy increase in industry losses this year was projected before the season started, said MLB spokesman Rich Levin.

MLB Players Association officials declined to comment on the new figures. The union also had been dismissive of the reported 2001 losses but remained contractually limited in what it could say publicly on the subject. Since the union and MLB owners reached a new four-year labor deal Aug.30, however, union leaders have taken a much friendlier tone toward management in general.

Despite the new labor deal, which calls for vastly increased revenue sharing among teams and a luxury tax on the payrolls of high-spending teams, significant losses for the next several years are likely for baseball. Current television contracts with Fox and ESPN do not expire for several years, ticket prices rose this year by the smallest percentage since 1995 and the ongoing sluggishness of the economy likely will prevent a torrent of new sponsorships in the near term.

"We're in a down cycle right now like virtually everybody else," Magowan said. "That doesn't mean it will last forever. In fact, I believe a recovery is coming."

Meanwhile, Selig and MLB president Bob DuPuy met yesterday in Milwaukee and will travel here today for the start of the World Series. Among the items they discussed was the fate of the Expos in 2003. No firm decision has been made, but constraints on time and an ongoing lawsuit involving former limited partners of the Expos point to the team returning to Quebec for another year. Playing a handful of Expos games in sites like San Juan, Puerto Rico, remains under consideration, MLB officials said.

The Expos have a tentative lease in place to return to cavernous Olympic Stadium next year and require only a directive from Selig and the owners to sign it.

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