[MLB] Financial Wars On Again

justtxyank · Nov 20, 2009

There is a financial problem in baseball, but it's not the one the media has led you to believe.

http://msn.foxsports.com/mlb/story/10392772/Boras-Manfred-war-of-words-an-un

What you are about to read is a nasty exchange between Scott Boras, the game's most prominent agent, and Rob Manfred, baseball's chief of labor relations.

Manfred says Boras is lying when he portrays the sport's finances in glowing terms. Boras says Manfred is biased because he works for the owners.

The real story is much deeper. And much more disturbing.

The free-agent market opens Friday, and tension is rising between representatives of the players and owners.

The players' side says that baseball is doing remarkably good business, even in a harsh national economy. The owners' side says that baseball is not immune to the economic downturn, and teams are adjusting accordingly.

By 2011, when the current collective-bargaining agreement expires, baseball will have completed an unprecedented 16 straight years of labor peace. But that peace is now threatened — threatened by the increasing hostility and historic distrust between the two sides.

Many agents and some union officials suspect that the owners are again engaging in collusion, an illegal conspiracy to hold down salaries.

Enter Boras.

In recent weeks, Boras has pointed out frequently that baseball had its highest revenues in 2008, $6.6 billion, and its second-highest in '09, a number that the union estimates is about $6.3 billion, or just 5 percent lower.

I called Manfred on Tuesday to ask his reaction to Boras' remarks. He responded by making apparent reference to a recent Boston Globe report in which Boras was quoted as saying that some teams are getting a combined $80 million to $90 million per season from revenue sharing and baseball's central fund — and spending little enough on payroll to turn handsome profits.

"Just like when he does a player negotiation he lies about the numbers in order to get the price up, now he's taken that to the macro-economic level and lying about industry numbers in order to get player (contract) numbers up," Manfred said. "There is no one club getting $80 or $90 million in combination from revenue sharing and Central Baseball. Not one."

Boras cast doubt on Manfred's statements generally, saying he "has never disclosed information about funds that teams get from Central Baseball or revenue sharing."

"Rob Manfred works for the owners, has always worked for the owners," Boras said. "The information I've gathered is from documented, substantive sources — the Daily News, the SportsBusiness Journal. I stand on the record of documented information, not on the basis of information of someone who is biased due to his employment."

The money from baseball's central fund includes revenues from licensing, properties, national-television contracts and advanced media. According to the New York Daily News, each team received $35 million from the fund in 2008.

On Wednesday, however, two club presidents — Frank Coonelly of the Pirates and one American League executive who asked to remain anonymous — insisted that the $35 million figure is inaccurate. Yet, Boras claims the number will be higher — perhaps as high as $46 million — in 2009.

Manfred, speaking generally about Boras' view of the sport's finances, continued, "What he's talking about is a fantasy, an absolute fantasy. We are in a very difficult economic time and anybody who misstates the numbers in an effort to create the impression that baseball is insulated from these difficult economic times is misleading you."

The Daily News' Bill Madden, writing in August, said that the Pirates received over $40 million in revenue sharing in 2008. That number, combined with the reported $35 million from the central fund, would put their income at over $75 million before they ever sold a ticket.

Coonelly, however, said the Pirates' income from Major League Baseball was "well below" that $75 million figure. He said his club received substantially less than $40 million in revenue sharing last year, but declined to say what the specific numbers were.

Boras said there is a way to settle the discrepancy — by requiring clubs in the next collective-bargaining agreement to disclose the amount of money they receive from the central fund and from revenue sharing.

The players could ask for such a stipulation because they agree to revenue sharing as part of the CBA. The central fund also is linked to the revenue-sharing plan.

"Fans have a right to know what money their team is given," Boras said. "If clubs don't want to disclose it, then don't accept the subsidy. If they do want to accept it, disclose it. Their choice."

The players' union is informed of the amounts each team receives, a major-league official said.

In the Boston Globe report, Boras is referring to certain teams that boast $200 million or more in revenues but spend between $50 million and $70 million in payroll.

Manfred countered by saying that only 10 of the 30 teams had revenues of $200 million or more. Boras welcomed that news, saying, "Rob is making a very important admission there."

"The Atlanta Braves are No. 12," Boras said. "Their records are public. They're (owned by) Liberty Media. They're making $180 million. Their payroll is what? Around $100 million. Then you add $30 million (in expenses) for administration, the minor leagues, the draft, other things. So they're pocketing $50 million a year."

John Schuerholz, the Braves' club president and former general manager, responded, "This is absolutely absurd. We'd like to see those numbers."

Boras estimated that another 10 to 12 teams are between $160 million and $200 million in revenues. He made specific mention of the St. Louis Cardinals, the team that last summer traded for his premier free agent — left fielder Matt Holliday — and is now trying to re-sign him.

"The St. Louis Cardinals are listed as the 10th team in revenues," Boras said. "The St. Louis Cardinals are making over $200 million (in revenues). They're a team that describes themselves as a mid-market team."

Cardinals president Bill DeWitt III said his team has hovered around No. 10 in payroll rankings despite being only the 24th-largest market in the majors, according to Nielsen. DeWitt cited strong attendance as the reason why the team is able to outspend its comparatively small-market size.

"I think we can defend ourselves very well, as far as the commitment level that we put into payroll and the product," DeWitt said.

Boras is not the only one on the players' side who views the sport as financially robust, merely the most vocal. As agents and union officials brace for a slow-moving free-agent market, Boras sums up their doubts with a simple question: "Where is the money going?"

Another agent, speaking on condition of anonymity, says teams not only are benefiting from high revenues, but money is coming off their payrolls. The Cardinals, for example, should have spending power — they are losing nearly $40 million in free-agent salaries, the agent says.

And so the debate is on. Again.

The owners paid $280 million to the players in damages after being found guilty of collusion three times in the 1980s. They also paid $12 million from money already earmarked for players as part of the 2006 CBA to settle — with no admission of guilt — unfiled claims of collusion from '02 and '03 along with other pending grievances.

The two sides agreed last month to push back the deadline for a collusion grievance until the end of the offseason, after the current market plays out.

The market opens in mere days. Actual data on spending soon will be available.

The early rhetoric, though, is ominous.
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[MLB] Financial Wars On Again

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