Some stats are easy to figure. For example, player salaries are up 28 percent from last year; attendance is down but the drop is microscopic, less than one percent. Now the knotty problem: 11 of the 28 major league clubs have gone to baseball`s new bank for loans, some for the maximum $35 million. Does this mean that 40 percent of the clubs are headed for the poorhouse?
This would appear to be the immediate assumption. But Tom Gage, veteran Detroit baseball writer, offers a different view. Says Gage: ”The owners are preparing for the next round of negotiations with the Players Association.”
I concur, not completely but certainly in part, because the owners have set up what could be described as their own savings and loan. And like any group enterprise, there are attractive advantages: in this instance, lower interest rates with less collateral.
I called an owner, whose club went to the window for the $35 million max, and asked for his intrepretation. Were he and his fellow moguls simply taking advantage of a good deal? Or were they en route to financial doom?
His reply:
”Anybody who thinks that it`s a sign of financial desperation is incorrect. But it doesn`t mean we don`t have serious economic problems.”
We have heard this song before, that the grand old game is sagging and in near-collapse, mostly under the weight of the soaring player salaries. Yet, only one club in the last quarter-century, the ill-fated Seattle Pilots, went belly-up. This was in 1970 when a federal bankruptcy judge ordered the Pilots sold and, in effect, approved the club`s move to Milwaukee.
Other than that there have been no distress sales in our time. Just the opposite. Like the sun, the value of a club always rises. Two weeks ago the Seattle Mariners were sold for $100 million, $13 million more than Jeff Smulyan had paid for the club in 1989. Eight years before that, George Argyros paid $13 million.
And so the Seattle club, in a small and virtually isolated market, in 12 mostly barren seasons, multiplied almost eight times in value. Many other examples abound: The Cubs and White Sox, both purchased for approximately $20 million in 1980 and 1981, today would bring $150 million, possibly more.
Tom Monaghan bought the Detroit Tigers in 1983 for $43 million. At the time it seemed to be a remarkably high price. Monaghan`s pizza empire is reportedly in depression; he has the Tigers for sale. His asking price, I would assume, is in excess of $100 million.
These numbers seem to suggest that the best and quickest way for a profit is to sell, particularly now. The average player salary is $1,085,190 up 28.4 percent from last year, up 343 percent since 1982, up 1,975 percent since 1976 when the players won free agency. The players` union insists, perhaps correctly, that owner income, especially in the large-market cities, has kept the pace.
Whatever, there is the likelihood of a major management-labor struggle ahead, either before or after next season. The owners want a salary cap, what they now call ”revenue participation” and are expected to renew their demand that player salaries do not exceed 48 or 50 percent of the gross revenue.
