Friday, March 31, 2006


Baseball Conflicts? On Steroids!

So, there's a minor uproar over George Mitchell being named to head up Major League Baseball's steroid investigation. Of course, much of the criticism should be directed at the fact that the "investigation" is only going to be concentrated on the period AFTER steroids were banned from baseball, i.e. AFTER the 2002 season when MLB and the players association came to a policy on performance-enhancing substances (though most were illegal). This would be after the McGwire and Bonds home-run breaking seasons.

That said, the real outrage here is not that Mitchell -- president of Disney (owner of ESPN which has a baseball package AND is airing a Barry Bonds "reality" series) and who also sits on the board of the Boston Red Sox -- has a conflict of interest. It is that this is just the latest of a series of conflicts in which baseball's corporate overseers have engaged over the last half-decade -- and which no one has called them on it.

Keep in mind, Major League Baseball is the only major sport that has an antitrust exemption. Now ask yourself if any sports league -- or any business entity would be able to get away with the following series of events without raising the eyebrows of a few federal regulatory boards.

I have long-time reader and DC-area resident, the appropriately-named "ERA", for mining through Wikipedia and other sources to dig up this fine chronology of Major League Baseball's ludicrous off-the-field shenanigans of the last half-decade (and they want to shine the light on baseball players for the last three years?) Give me a break.

Here we go:

2002: After a 30-0 vote, Major League Baseball formed Expos Baseball, LP to buy the Expos for US$120,000,000 from Jeffery Loria. MLB runs the Expos (Side note: With MLB running the Expos, the team is artifically impaired from making any end-of-season trades over the next two years; with Montreal residents clearly seeing that MLB has no serious interest in keeping the team in the city, attendance withers).

2002: Jeffery Loria
buys the Florida Marlins from John Henry with MLB's blessing. Loria becomes the co-defendant (along with Commissioner Bud Selig) in a RICO Act lawsuit filed by the former minority partners of the Montreal Expos, the team Loria previously owned. The minority owners (many of whom were now minority partners of the Marlins) claimed that Loria and Selig deliberately defrauded the minority owners and devalued the team for personal gain. The case was sent to arbitration in 2004 and was settled for an undisclosed sum.

2002: John Henry
assembles new ownership team, which includes former Senator George Mitchell, and purchases Boston Red Sox -- again, with MLB's blessing. (Note how the attempted contraction of the Minnesota Twins -- a more-than-viable team -- figured in all of this).

2003: Florida Marlins, owned by Jeffery Loria,
become world champs by winning MLB's World Series.

John Henry hires Theo Epstein as General Manager of Boston Red Sox.

Boston Red Sox, owned by John Henry, become world champs by winning MLB's World Series.

MLB officially announces that the Montreal Expos would move to Washington D.C. in 2005. Jerry Reinsdorf, owner of the Chicago White Sox and Chairman of MLBs Relocation Committee, has oversight on the Expos move to DC.

2004: November 15, 2004, a lawsuit by the former team owners against MLB and former majority owner Jeffrey Loria
is struck down by arbitrators, ending legal moves to keep the Expos in Montreal. Major League Baseball had agreed at the time that the franchise was moved to Washington, D.C., to sell the team to an owner or ownership syndicate.

December 2004: The move to Washington is imperiled when
the D.C. City Council tries to change details of the stadium financing. The council votes on December 14 to require 50 percent private financing for any new stadium; MLB ceases promoting the Nationals and announces that it will consider seeking other markets. A week later, the council approves an amended plan that is a slightly better deal for the city. Mayor Williams signs the stadium financing package on December 30.

2005: The Washington Nationals debut. Nationals' midseason attendance surpasses Expos' 2004 total attendance. The final attendance for the 2005 season is 2,731,993, a figure that tops the previous three seasons in Montreal combined (2002-2004) and was 11th in MLB. White Sox owner Jerry Reinsdorf still expresses disappointment
in first season attendance figures. (Side note: As part of the agreement to move into DC, the MLB-owned Expos/Nationals surrender a large portion of their television rights and profits to Baltimore Orioles owner Peter Angelos who claimed that the presence of the Nationals would damage Orioles profitability. In baseball's bizarre economics, local television rights are one of the few ways teams can bring in significant revenue; MLB effectively undercuts much of the fiscal latitude the Nationals future owners will have, potentially condemning them to permanent second-tier status.)

2005: As, MLB narrows list of possible owners of the Washington Nationals to eight groups, it sets
the purchasing price at $450 million -- the highest ever for a baseball team.

October 2005: The Chicago White Sox, owned by Jerry Reinsdorf,
world champs by winning MLB's World Series

October 31, 2005: Red Sox GM Theo Epstein rejects a three year, $1.5 million per year contract and
walks away from his position.

November 2005: "Major League Baseball states that
it would not select an owner until the stadium financing plan was finalized, but finalization of the plan has been stalled due to the letter of credit issue."

November 2005: Rumors circulate that
Epstein is about to be named Washington Nationals GM once new owners are announced.

December 2005: Several dates for sale of the team have been set and missed by the DC Council for finalizing the building of a new baseball stadium.

December 21, 2005: DC Council
fails to approve stadium funding by deadline.

December 22, 2005: The Washington Post reports that Major League Baseball had
explicitly ordered bidders not to offer to pay cost overruns on the stadium if they are awarded the franchise. "Similarly, no bidding groups should be in communication with the press about these issues."

Again, MLB is a cartel with an antitrust exemption.

January 19, 2006: (Maybe realizing that MLB wont be naming Washington Nationals owners before 2006 season?) Theo Epstein and Red Sox management make a joint announcement that Epstein is
returning to the organization with the expanded title of General Manager and Executive Vice President.

March 2006: DC Council approves funding for $611 million new baseball stadium, less than a day before deadline imposed by Major League Baseball to
go to legal arbitration.

So, there we have it -- a congressionally-protected sports cartel flips ownership of various teams, drains the worth of another team, purchases it on the cheap, practically forces a community at gunpoint to plunge millions into a publically-financed stadium, cuts an obscenely-favorable television package in the name of the new team -- but gives the bulk of the profits to a third team. Worst of all, the team owners smack-dab in middle of all of these questionable deals all, conveniently enough end up as World Series winners: Florida Marlins, Boston Red Sox and Chicago White Sox.

And, from that pool, emerges a former Senate majority leader who happens to have connections with two different other teams.

Conflicts of interest?

"Conflicts" -- on steroids, is more like it.

UPDATE: Jeff Herz and I must have been tapping into the same muse. Great chronology here on the life-and-times of baseball owner Jeff Loria, which expands on the MLB shenanigans outlined above.

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