The commissioner, wearing a dark pinstriped suit and a serious look, documented what he called "staggering" losses. He claimed that baseball's 30 owners lost nearly $519 million in 2001. He said that of the more than half-billion dollars in losses, $232 million were incurred in baseball operations largely due to player salaries, free agency and arbitration.
Selig said that 25 teams lost money in 2001, led by the Los Angeles Dodgers with a $69 million loss.
The Phillies were among the teams to lose money, according to Major League Baseball. According to MLB figures, which had not been audited, the Phils brought in about $81.5 million in revenue in 2001. The team's operating costs were listed at about $102.3 million. The team's deficit was listed at $20.8 million, but $11.7 million of that was recouped through revenue sharing.
Selig's facts and figures were met with skepticism.
Forbes magazine, which frequently has claimed that baseball is healthier than it says, once again scoffed at the mathematics. The magazine said baseball made a $130 million profit in 2000 and was on target for higher profits in 2001.
"There are ways to doctor the numbers that, while not illegal, can give the appearance that the industry is losing money," senior editor Michael Ozanian said. "If baseball were in the dire straits it claims to be in, why would team values be soaring?"
Selig's testimony also was met with skepticism by those at the hearing, particularly Minnesota Gov. Jesse Ventura, who left little doubt that he believed baseball owners were to blame for their problems because they had created the system under which they live.
Ventura, called to testify because his hometown Minnesota Twins are a candidate to be eliminated, plainly said that he did not believe owners were suffering such huge losses.
"I have a hard time believing that, Mr. Selig," Ventura said in a booming voice. "I have a hard time believing they're losing that kind of money and paying those kinds of salaries. That's asinine. These people [the owners] did not get the kind of wealth they have by being stupid."
Steve Fehr, outside legal counsel for the players' association, also questioned baseball's mathematics at the hearing.
"It's not always the numbers on the page," Fehr told lawmakers. "The problem is the numbers not on the page."
The distrust of Major League Baseball's accounting peaked yesterday when representative John Conyers (D., Mich.) told Selig that baseball's figures were "way too general." Conyers asked to see "real records."
In prepared testimony, Selig expressed exasperation toward those who question MLB's accounting.
"The idea that these figures are not accurate is sheer nonsense," he said. "Anyone who says anything else is clearly misinformed or engaging in deliberate misstating of the facts."
The skepticism that Selig encountered was understandable given some of things going on in major-league baseball these days.
If baseball is in such bad financial shape, why are the New York Yankees on the verge of signing Jason Giambi to a seven-year contract at about $17 million per season?
OK, so the Yanks have the sport's highest revenue ($242 million), so maybe they aren't a great example.
Still, if baseball is in such bad financial shape, why is a bevy of bidders looking to spend between $350 and $400 million to buy 53 per cent of the Boston Red Sox?
If baseball is in such bad financial shape, why is Jeffrey Loria, owner of the Montreal Expos, a contraction candidate, eager to buy the Florida Marlins, another team that MLB says is losing money?
"What am I missing here?" U.S. Rep. James Sensenbrenner (R., Wis.), the chairman of the House Judiciary Committee, asked Selig.
Yesterday's discussion of baseball's finances was timely because the sport's labor agreement has expired. Owners say the long-term viability of franchises hinges on restructuring the game's economic system and getting the players to accept some form of salary restraint. The players say they will never do that.
Selig has proposed contracting two teams - most likely Minnesota and Montreal - because he doesn't think they ever will generate enough local revenue to be successful.
Some lawmakers have proposed stripping baseball's precious 79-year-old antitrust exemption - which allows it to act independent of some business laws - as a way to stop contraction. Selig warned that taking away baseball's antitrust status would lead to some cities to losing their teams in unapproved "midnight relocations," the likes of which have been seen in the NFL.
Ventura, who sat next to Selig during yesterday's four-hour hearing, argued that baseball was an out-of-control monopoly and urged Congress to repeal its antitrust privilege. Repealing the antitrust agreement will not be easy. President Bush has veto power and he is, of course, a former baseball owner.
Jim Salisbury's e-mail address is email@example.com.
2001 Profits and Losses
Baseball teams' operating revenues, operating expenses, operating profits (or losses in parentheses), profits or losses after revenue sharing, and profits or losses after interest costs for the 2001 season. All numbers are in thousands. Teams are ranked by operating profit.
Teams Revenue Expenses Opp. P/L After RS After Int
NY Yankees $242,208 201,349 40,859 14,319 8,230
Seattle 202,434 168,168 34,266 15,475 14,793
San Fran. 170,295 151,295 19,000 12,692 (139)
Milwaukee 113,350 98,965 14,385 16,129 9,001
NY Mets 182,631 174,339 8,292 (7,377) (5,225)
Chi. Cubs 129,774 124,977 4,797 (1,771) 2,894
Boston 176,982 174,270 2,712 (13,726) (13,675)
Cleveland 162,242 160,361 1,881 (11,373) (14,242)
St. Louis 132,459 130,590 1,869 (6,360) (7,322)
Baltimore 128,302 126,842 1,460 (5,347) (13,732)
Detroit 106,791 106,258 533 5,660 (10,694)
Houston 124,629 125,843 (1,214) (6,399) (9,455)
Pittsburgh 108,706 111,690 (2,984) (1,202) (5,879)
Colorado 131,813 135,228 (3,415) (9,444) (11,522)
Chi. WSox 111,682 117,369 (5,687) (9,888) (7,625)
Oakland 75,469 82,582 (7,113) 3,407 (532)
Anaheim 91,731 101,300 (9,569) 25 (4,953)
Cincinnati 70,887 81,943 (11,056) 2,348 (285)
Atlanta 146,851 161,211 (14,360) (25,007) (23,868)
Texas 134,910 150,599 (15,689) (24,433) (31,249)
Kansas City 63,696 79,830 (16,134) (137) 1,474
San Diego 79,722 95,873 (16,151) (7,483) (10,298)
Minnesota 56,266 74,799 (18,533) 536 (3,791)
PHILLIES 81,515 102,380 (20,865) (9,113) (9,352)
Tampa Bay 80,595 103,438 (22,843) (10,459) (17,880)
Florida 60,547 88,288 (27,741) (9,180) (10,820)
Arizona 125,132 157,284 (32,152) (36,584) (44,358)
Montreal 34,171 72,690 (38,519) (10,002) (12,837)
Los Angeles 143,607 188,950 (45,343) (54,450) (68,887)
Toronto 78,479 131,406 (52,927) (43,097) (42,504)
Totals 3,547,876 3,780,117 (232,241) (232,241) (344,732)
SOURCE: Associated Press