February 21, 2003, Friday, BC cycle
All-star lineup delves into business side of baseball
SECTION: Sports News
LENGTH: 635 words
DATELINE: NASHVILLE, Tenn.
A struggling stock market has caused some owners to cut back on spending, a top baseball official said Friday.
Sandy Alderson, executive vice president for baseball operations in the commissioner’s office, cited “lousy investments” by Texas Rangers owner Tom Hicks and the difficulty of AOL Time Warner Inc., the parent of the Atlanta Braves.
“I can tell you Tom Hicks is probably a lot more conservative than when he signed Alex Rodriguez,” Alderson said Friday at a conference on baseball economics. “Part of that is the recent history of the Rangers, given their success or failure on the field. But also a part is perhaps lousy investments in telecommunications. His investments have suffered dramatically.”
Alderson, a former president and general manager of the Oakland Athletics, said the sport’s economics are affected by the finances of the owner or ownership groups that operate teams.
“Each owner has very different considerations,” he said. “There’s no question that there’s less unity among the owners than the players. I think it has to do with the competing motivation and the turnover. Tax laws promote turnover every five or six years. Clubs that think they can afford a big loss for three or four or five years, when the paper tax loss disappears, those losses are no longer palatable.”
Some agents have said part of the drop in salaries for some free agents could have been caused by management collusion against free agents, which would be a violation of the sport’s labor contract. Owners contend the drop was caused by the overall economy and by baseball’s new labor contract, which increases revenue sharing and places a luxury tax on high-payroll teams.
“Everywhere I go, people say, ‘Well, the players obviously lost because some contracts are down and some players are finding it difficult to find new jobs,’ ” said Steve Fehr, a lawyer for the union and the brother of players’ association head Donald Fehr.
Steve Fehr also said others point to teams such as the Yankees and say nothing has changed.
“Hopefully, things are somewhere in between,” he said.
Economists, lawyers and writers attended the daylong conference at Vanderbilt.
The conference mixed scholarly papers on antitrust law, competitive balance and contraction with more practical debate on the best player of all time.
Among the papers presented were “Thinking About Competitive Balance” by Allen Sanderson of the University of Chicago and John Siegfried of Vanderbilt University; “The Case for Baseball’s Special Antitrust Immunity” by Gary Roberts of Tulane Law School; and “The Economics of Baseball Contraction” by Roger Noll of Stanford. Those papers and others will be published in the Journal of Sports Economics.
“Academics learn things by making extreme assumptions,” said Siegfried, a Vanderbilt sports economist who helped organize the conference. “That’s why when we say, ‘Let’s kick out the Yankees,’ we don’t really think that’s ever going to happen.”
Despite the new labor contracts, the Yankees have raised their payroll from $138 million at the end of last season to $150 million.
In a paper titled “Labor Relations in Major League Baseball,” Smith College economist Andrew Zimbalist noted that George Steinbrenner paid only $8.5 million for the Yankees 30 years ago.
“Steinbrenner may feel a bit like a Las Vegas gambler who is playing with house money,” Zimbalist said, comparing him with John Henry, who heads the group that bought the Boston Red Sox last year.
“Although the marginal perspective would argue that Steinbrenner and Henry should apply the same criteria when contemplating the signing of a free agent, the different psychology generated by an owner’s paid-in capital and debt position is likely to be significant,” Zimbalist said.