SBD/Issue 237/Leagues & Governing Bodies

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  • MLB Investigating Source Of Leaked Team Financial Reports

    While Having Suffered 18 Straight Losing Seasons,
    The Pirates Made A $29.4M Profit In '07 and '08

    MLB is "narrowing down the search for who was behind the leaks of team financial reports that reveal how profitable" the Pirates are and how much they, the Marlins and Rays "receive in revenue-sharing from wealthier clubs," according to a source cited by Richard Sandomir of the N.Y. TIMES. The AP detailed the Pirates' financial statements on Sunday, and Deadspin.com yesterday posted similar data of the Marlins, Rays, Mariners and Angels. Marlins President David Samson yesterday said the release of those documents is a "breach of fiduciary obligation and duty by the leaking party." Samson: "It’s a crime, and it will be followed up intensely by Major League Baseball and its member clubs." Sandomir notes MLB teams "do not see one another’s financial reports, but receive a general accounting of where they rank compared with the other 29 clubs in profitability." The documents offer "various glimpses into the generally rosy financial state of five teams, regardless of their records." The Pirates, who have recorded 18 consecutive losing seasons, earned a $29.4M profit in '07 and '08 due in part to $69.3M in revenue sharing. The Marlins received nearly $92M in revenue sharing in '08 and '09 and produced a net income of $33M in those years. Similarly, the Rays received $74M in revenue sharing in '07 and '08 and "total net income in those years of a little more" than $15M. Author Vince Gennaro, a consultant to several MLB teams, said, "If I were Major League Baseball, I’d be much more concerned if the Yankees’ numbers were released. It would present a dramatic disparity and you’d begin to wonder how you can retain an economic structure that allows teams to earn such disparate amounts of money" (N.Y. TIMES, 8/24). A baseball player agent said, "This is precisely the type of financial documents that MLB has been trying to keep secret for years" (SPORTINGNEWS.com, 8/24).

    TRUE HOLLYWOOD STORY: Angels officials yesterday "confirmed the authenticity of the 16 pages pertaining to their organization" that appeared on Deadspin. The documents "cover a range of financial figures including net income, revenue-sharing payments and postseason revenue" from '08 and '09. Angels VP/Communications Tim Mead: "It's a breach of confidential information. We're going to let it run its course and the appropriate people are looking into it." The documents revealed that the Angels "generated a net income" of $10.7M last year and $7.08M in '08. The Angels also paid $16.4M in '09 as part of MLB's revenue-sharing program, and $14.7M the previous season. The documents also identified a "third minority owner" of the franchise as the Pope family, which "purchased a limited partnership interest of 2%" for $3.45M in '06 (L.A. TIMES, 8/24).

    RAY OF LIGHT: In St. Petersburg, Stephen Nohlgren notes while the Rays' financial documents end in '08 and thus "don't reveal how much the Rays made or lost last year or this year," they may "lend some support to owner Stuart Sternberg's contention that he is now losing money." The Rays consider their net income as the "money they make from operations, minus interest payments and other deductions that come into play outside of the operating balance." It is "how much cash they have at the end of the year." The team's net income in '08 either was $4M or $218,509, "depending on which line on the financial statement you use." Also of note, revenue in '08 reached $161M, up 20% from $134M in '07, while expenses were $147M, up 31% from $112M the year before. The Rays also earned $63M in '08 from revenue sharing, "national TV and merchandising" from MLB, and Nohlgren notes that is "why small-market teams can make money by keeping salaries low" (ST. PETERSBURG TIMES, 8/24).

    Samson Says Cost-Cutting Measures
    Were Needed To Keep Marlins Alive

    WELCOME TO MIAMI: In Miami, Adam Beasley notes Samson yesterday on a conference call argued that the 42-page document "vindicated the club's cost-cutting actions over the past five years -- even though the data showed the team turned an operating profit of roughly $49 million over the two seasons in question." The Marlins prior to the '08 season "dealt popular -- but expensive -- stars Miguel Cabrera and Dontrelle Willis to the Tigers for prospects to slash payroll." Samson yesterday said that the trade was "among many moves designed to ensure the survival of the ballclub." He added, "We could have had Cabrera and no ballpark. We always made our decisions on the long-term viability of the ballclub" (MIAMI HERALD, 8/24). In Ft. Lauderdale, Sarah Talalay notes Samson yesterday "changed his long-held contention the team wasn't making a profit and instead said the documents prove the team has been saving its dollars to pay for its new baseball-only ballpark under construction in Little Havana." He said, "It basically confirms everything we have said over the years of how we've operated the team. It's about making sure baseball would be secure in South Florida" (South Florida SUN-SENTINEL, 8/24).

    SOUNDS FISHY: In Miami, Greg Cote writes under the header, "Now We Have Proof Florida Marlins' Frugality Was A Poor Excuse." Marlins fans now "know why the club fought so hard to keep its finances a secret even as the city and county wanted full disclosure during negotiations" for its new ballpark. Cote: "It's because what you see when the curtain is thrown open and the light pours in is an owner who could have spent much more on players and still made money. What you see is a ball club that was crying poverty with pockets full" (MIAMI HERALD, 8/24). In Ft. Lauderdale, Dave Hyde wrote, "I have no problem with companies making money. That's the point of being in business. But when you trade Cabrera based on lies? When you lose this season because you won't invest a few million into a bullpen? ... When you cry poor to the city in a time of public crisis and get a $600 million stadium? Without showing any financial records?" It is "not surprising," however, and it "reminds you of what's really important to the Marlins" (SUN-SENTINEL.com, 8/23).

    TRYING TO MAKE AN EXTRA BUC? Sports business experts contend that the leaked financial documents "are an indictment of Major League Baseball's revenue-sharing system." The records also "appear to show the Pirates are sticking to their grassroots plan to restore the franchise to respectability." Business of Sports Network Founder Maury Brown said, "I've never felt that Bob Nutting is cheap. I felt that what might be happening is that they're cutting margins to allow for profitability in some way, shape or form. But, lately, there's been more spending going on." Forbes National Editor Mike Ozanian: "The Pirates' spending is in line with other teams, as far as the development of players. But they spent a lot less than other teams for their major league payroll. It's a great illustration of why the revenue sharing system doesn't work" (Pittsburgh TRIBUNE-REVIEW, 8/24). A Pittsburgh TRIBUNE-REVIEW editorial states the Pirates' financial statement is "not the prettiest of pictures," but it does "much to address the long-running criticism that the Pirates' ownership group has been taking profits at the expense of fielding a winning team." It appears that there is "not a lot of excess cash to run the kind of development programs and player acquisitions of franchises in the larger market." The editorial states it is "probably remarkable that the Pirates, this season's worst team in Major League Baseball, have the programs and players that they do" (Pittsburgh TRIBUNE-REVIEW, 8/24).

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  • World Hockey Summit Kicks Off In Toronto, But Is It Just For Show?

     

    More than 300 delegates gathered at the Hockey HOF in Toronto last night to kick off the four-day World Hockey Summit, which is "designed to draw some of the sport's biggest names into an open public forum," according to Sean Fitz-Gerald of the CP. Canada women's hockey F Hayley Wickenheiser was on "one of four rotating panels, asked to discuss the 'state of the game' alongside" Lightning GM Steve Yzerman, player agent Don Baizley and German men's team head coach Uwe Krupp. Wickenheiser said that the women's game "needs improved access to facilities and stronger international leadership to strengthen the game in some of the weaker countries." Wickenheiser: "I kind of look at it as more of a call to action for the hockey community to say, 'Look, what can we do to really grow the game here?'" Meanwhile, NHL Deputy Commissioner Bill Daly, IIHF President Rene Fasel and KHL Chair Slava Fetisov were on "another panel discussing pressing issues such as international contract disputes." Daly: "We're on a different road than we've been in the last couple of years (with the KHL). We obviously have had some misunderstandings and differences of (opinion), and you only bridge those differences of (opinion) by continued dialogue. And I think we've improved the level of dialogue in recent months." Daly added that he "does not think either league is interested in ... what he called a 'classic' player transfer agreement" (CP, 8/23). The NATIONAL POST's Matthew Coutts notes a discussion of the "role of agents was one of four hot-stove panels." Maple Leafs President & GM Brian Burke, CAA Sports Hockey co-Head Pat Brisson and player agent Don Meehan "spoke on the relationship between an agent and a young talent" (NATIONAL POST, 8/24).

    SUMMIT JUST FOR SHOW? THE HOCKEY NEWS' Ken Campbell wrote the World Hockey Summit is a "case of an event that has so much potential it probably won't deliver much of it." But that "doesn't mean the R&D camp and the World Hockey Summit are a waste of time -- far from it." Campbell: "Contrary to popular belief, the NHL is not constantly tinkering with its rules, at least not any more than most other leagues. ... And just because the league is trying out new and sometimes radical concepts, doesn't mean it will necessarily implement them." He noted the "same goes for the summit." Campbell: "It may not result in anything tangible this time around, but when you get that many hockey minds in the same room, there's bound to be some meaningful dialogue" (THEHOCKEYNEWS.com, 8/23). The NATIONAL POST's Bruce Arthur writes the summit "could use some fixing." Arthur: "It's great that they are going to discuss things, even if it's more likely that any progress will be fueled by healthy debate over a few beers after the panels are over than it will during the panels themselves. Putting everybody in the same room is usually a good thing, unless it is the NHL and its players negotiating a CBA, or the players trying to choose a leader. But this Hockey Summit is not a United Nations of hockey, with binding resolutions. It's talk. It's a show" (NATIONAL POST, 8/24). Univ. of Toronto's Rotman School of Management Associate Dean Richard Powers: "I don't see a whole lot coming out of this. To the extent that they can go back and use any of this stuff, I think that's questionable. This is PR 101 for the NHL" (TORONTO STAR, 8/24).

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  • Will Arjun Atwal's PGA Tour Win Help Launch Golf In India?

    Arjun Atwal Is The First Indian To
    Win On The PGA Tour

    Arjun Atwal won last weekend's Wyndham Championship to become "the first Indian to win on the PGA Tour," and SI's Alan Shipnuck as part of GOLF.com's weekly roundtable wondered if Atwal can "become the Se Ri Pak of India, which is to say, a figure that changes the demographics of professional golf." Shipnuck wonders if Atwal's win "will inspire more Indians -- and younger ones -- to come to the U.S." because it would "be nice to see more of them over here." SI's Gary Van Sickle wrote Atwal's "success fits with golf's continuing storyline of globalization." But SI's Rick Lipsey wrote, "Having been to India several times and played scores of rounds there ... I can confidently say that nothing will change the demographics of golf in India, at least for the foreseeable future. Golf in India is a game for the rich. Indians love cricket, cricket and cricket, and golf is so far off most everybody's radar that even if Atwal wins the Masters, golf will remain a hyper niche sport in India." SI Golf Group Managing Editor Jim Herre noted, "There may be 2 billion people, but a very small percentage of them are golfers. As the middle class and leisure time grow, perhaps that will change" (GOLF.com, 8/23).  

    FOLLOW THE LEADER: REUTERS' Amlan Chakraborty wrote Atwal's win fuels India's hopes "of celebrating a maiden major victory in the not too distant future." Professional Golf Tour of India Dir Padamjit Singh Sandhu believes that "a major win for an Indian was now a distinct possibility." Sandhu: "It is clearly a defining moment for professional golf in India. This win will act as a strong catalyst to the growth of the sport in the region." Golfer Gaganjeet Bhullar: "I expect the victory to change the face of Indian golf. It would inspire the young golfers ... to work harder." Bhullar: "Maybe India's time has come and we are close to winning a major in the near future" (REUTERS, 8/23). Golfer Gaurav Ghei, who in '97 became the first Indian to qualify for the British Open, said, "(It's) undoubtedly the biggest thing to happen to Indian golf. (It's) an achievement that most of us never even dreamt of" (AP, 8/23).

    SAVE THE DATE: In California, Larry Bohannan reported while the '11 PGA Tour schedule will not come out for another month or so, the Bob Hope Classic "will be played Jan. 19-23." But there could be "holes in the schedule that will need filling" as the Tour has "taken some of its fall events and moved them into regular-season spots" over the last few years. Bohannan asked, "How long can the tour keep plugging holes in this way? But more to the point, how many holes will there be in 2011? And what about 2012?" Wyndham announced it that would "extend its sponsorship" of the PGA Tour event in Greensboro, N.C., through '12, and next month "we'll hear more talk about the status of Deutsche Bank's commitment to its event in Boston." The question there "doesn't seem to be if Deutsche Bank wants to be involved" but if the company wants to "be involved at the same financial commitment it has now." Bohannan wrote the schedule changes show that the "woes of the tour aren't over yet." Corporations are "still re-evaluating how much money to spend on advertising and marketing and where to spend that money." For some companies, the PGA Tour "apparently isn't the right place" and that "is threatening the very existence of tour events" (Palm Springs DESERT SUN, 8/22).

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