Wednesday, December 15, 2004
You can't get there from here - Macro version
How this got all f*d up, Part I. From 1999 until the deal was brokered.
1999
Jeffrey Loria, a questionable businessman, buys the Expos and promises to make the team competitive. John Henry buys the Marlins from salary-dumping Wayne Huizenga.
Early November 2001
After a fantastic season and World Series, MLB is inexplicably begins its "contraction is cool" phase. It is generally the consensus that this is done more as a negotiating ploy with the Players Union than out of actual fiscal concern.
MLB has the idea to contract the Twins since Pohlad would sell the team to them with no strings attached, but it faces strong opposition. The Union, which historically has beaten MLB, is wholeheartedly against contraction and the loss of jobs it entails. The public and press denounce the idea. It doesn't help that the teams he talks of contracting are not the team currently losing the most money or the team with the worst economic future. Government holdups still loom. Minnesota courts hold the Twins to playing in the Metrodome in 2002. The federal government threatens the anti-trust exemption and basically laughs at MLB's "showing their books" because all baseball would present to Congress is a meaningless summary of losses. At this point Selig presented the highly dubious numbers of over 500 million in losses for MLB in 2001, and only 6 teams being profitable.
Still jockeying for position however, MLB realizes it's much easier to contract a team if MLB owns it. It can buy the Twins, but it needs another team for balance and most owners have no interest in selling (even though they are supposedly hemoragghing money)
Late Novemeber 2001
John Henry, Marlins owner, has a chance to own the Red Sox. Loria, would rather be in sunny Miami than Montreal, where poor decisions and little spending has kept the team struggling. MLB sees an opportunity to get that team it needs.
MLB works it so Henry gets the Red Sox (for $660 million, $90 mill less than the former ownership could have gotten from another bidder), Loria gets the Marlins for $158 mill, and MLB gets the Expos for $120 mill.
Essentially Henry got his team on the cheap, Loria paid $30 million to get to move ownerships, and MLB got a team for 120 million as opposed to the 250 million originally cited, the lowest price paid for a team in full in years (though above supposed market value).
But given all the opposition, MLB is still forced to table contraction until 2003
August 2002
MLB concedes rather quickly and quietly to the Union and there will be no contraction for the length of the CBA (until 2007). This leaves MLB with two options.
1) Keep the Expos until 2007 and hope that the situation changes so that the view of contraction outside the league will be more favorable
2) Sell the Expos at the most profit, worry about contraction if necessary in 2007.
Because the relative stability of the league, option 2 was more favorable. The quest then became making the Expos as profitable as possible in order to sell them for the highest profit
2003 - September 2004
MLB procedes to gut the Expos. After letting Loria take most of the scouting and internal staffs to Florida, they run the Expos on a shoestring budget. Free Agents walk or are dealt early for prospects. Things get so bad that in 2003, while still quasi in a pennant race, the Expos are not allowed any September call-ups. By dropping operating costs to a minimum, this ensures maximum profit for a potential buyer.
To make the Expos even more potentially profitable, they would like to move the team out of Montreal and into the United States. MLB has contact with several areas interested in MLB, most notably Northern Virginia, Washington DC, Norfolk, Portland, and Las Vegas. MLB favors the DC/NoVA area as it has favorable demographics (a large, wealthy population) that would probably generate the greatest profits. It is also an attractive and powerful metro area. If given the choice MLB would probably take DC propoer, but it is wary about Baltimore Orioles' owner, trial lawyer Peter Angelos who has said on numerous occasions that he considers DC part of his team's "circle of influence" (my choice of words, not his).
MLB continues to entertain offers but only half-heartedly, hoping for a deal which saddles MLB and the potential owners with as little cost as possible. They use the time to test expansion into Latin America with the Expos playing some of their home games in Puerto Rico. The games are popular, but not profitable enough to make this a feasibility.
September 20th or so, 2004
After months of playing DC and NoVa against eachother claiming time and again that a decision is imminent, Virginia blinks first. Governor Warner, a strong baseball supporter, balks at using "moral obligation" bonds for building a baseball stadium. These bonds had only been used in the past for public works projects and the use of them as a key component of the deal is a dealbreaker for the governor. Most agree that the use of these bonds is risky but they bring down the cost of stadium financing considerably. Without it, MLB could probably not get full public financing of the stadium.
Sept 25th or so, 2004
Seeing NoVA as a dead end, MLB brokers a deal with Washington DC. The deal is the sweet-heart one that MLB had been waiting for, guaranteeing minimal cost to MLB and the potential buyer. With this deal the profit on the sale of the Expos should be close to the maximum they can assume they would get.
Next the micro version; From the deal until now.
1999
Jeffrey Loria, a questionable businessman, buys the Expos and promises to make the team competitive. John Henry buys the Marlins from salary-dumping Wayne Huizenga.
Early November 2001
After a fantastic season and World Series, MLB is inexplicably begins its "contraction is cool" phase. It is generally the consensus that this is done more as a negotiating ploy with the Players Union than out of actual fiscal concern.
MLB has the idea to contract the Twins since Pohlad would sell the team to them with no strings attached, but it faces strong opposition. The Union, which historically has beaten MLB, is wholeheartedly against contraction and the loss of jobs it entails. The public and press denounce the idea. It doesn't help that the teams he talks of contracting are not the team currently losing the most money or the team with the worst economic future. Government holdups still loom. Minnesota courts hold the Twins to playing in the Metrodome in 2002. The federal government threatens the anti-trust exemption and basically laughs at MLB's "showing their books" because all baseball would present to Congress is a meaningless summary of losses. At this point Selig presented the highly dubious numbers of over 500 million in losses for MLB in 2001, and only 6 teams being profitable.
Still jockeying for position however, MLB realizes it's much easier to contract a team if MLB owns it. It can buy the Twins, but it needs another team for balance and most owners have no interest in selling (even though they are supposedly hemoragghing money)
Late Novemeber 2001
John Henry, Marlins owner, has a chance to own the Red Sox. Loria, would rather be in sunny Miami than Montreal, where poor decisions and little spending has kept the team struggling. MLB sees an opportunity to get that team it needs.
MLB works it so Henry gets the Red Sox (for $660 million, $90 mill less than the former ownership could have gotten from another bidder), Loria gets the Marlins for $158 mill, and MLB gets the Expos for $120 mill.
Essentially Henry got his team on the cheap, Loria paid $30 million to get to move ownerships, and MLB got a team for 120 million as opposed to the 250 million originally cited, the lowest price paid for a team in full in years (though above supposed market value).
But given all the opposition, MLB is still forced to table contraction until 2003
August 2002
MLB concedes rather quickly and quietly to the Union and there will be no contraction for the length of the CBA (until 2007). This leaves MLB with two options.
1) Keep the Expos until 2007 and hope that the situation changes so that the view of contraction outside the league will be more favorable
2) Sell the Expos at the most profit, worry about contraction if necessary in 2007.
Because the relative stability of the league, option 2 was more favorable. The quest then became making the Expos as profitable as possible in order to sell them for the highest profit
2003 - September 2004
MLB procedes to gut the Expos. After letting Loria take most of the scouting and internal staffs to Florida, they run the Expos on a shoestring budget. Free Agents walk or are dealt early for prospects. Things get so bad that in 2003, while still quasi in a pennant race, the Expos are not allowed any September call-ups. By dropping operating costs to a minimum, this ensures maximum profit for a potential buyer.
To make the Expos even more potentially profitable, they would like to move the team out of Montreal and into the United States. MLB has contact with several areas interested in MLB, most notably Northern Virginia, Washington DC, Norfolk, Portland, and Las Vegas. MLB favors the DC/NoVA area as it has favorable demographics (a large, wealthy population) that would probably generate the greatest profits. It is also an attractive and powerful metro area. If given the choice MLB would probably take DC propoer, but it is wary about Baltimore Orioles' owner, trial lawyer Peter Angelos who has said on numerous occasions that he considers DC part of his team's "circle of influence" (my choice of words, not his).
MLB continues to entertain offers but only half-heartedly, hoping for a deal which saddles MLB and the potential owners with as little cost as possible. They use the time to test expansion into Latin America with the Expos playing some of their home games in Puerto Rico. The games are popular, but not profitable enough to make this a feasibility.
September 20th or so, 2004
After months of playing DC and NoVa against eachother claiming time and again that a decision is imminent, Virginia blinks first. Governor Warner, a strong baseball supporter, balks at using "moral obligation" bonds for building a baseball stadium. These bonds had only been used in the past for public works projects and the use of them as a key component of the deal is a dealbreaker for the governor. Most agree that the use of these bonds is risky but they bring down the cost of stadium financing considerably. Without it, MLB could probably not get full public financing of the stadium.
Sept 25th or so, 2004
Seeing NoVA as a dead end, MLB brokers a deal with Washington DC. The deal is the sweet-heart one that MLB had been waiting for, guaranteeing minimal cost to MLB and the potential buyer. With this deal the profit on the sale of the Expos should be close to the maximum they can assume they would get.
Next the micro version; From the deal until now.
