DC, MLB feud a primer in bad business decisions

Major League Baseball, one of the world’s most popular professional sports leagues, is a lucrative multi-billion-dollar global business. But for all of its success, MLB certainly hasn’t handled the relocation, sale, and stadium construction project for the league-owned Washington Nationals with grace or aplomb.

In fact, I could even go so far as to call the current state of things in the Nation’s Capital an unmitigated disaster. Let’s review.

Right before the 2002 season, with contraction ostensibly on the mind, the 30 Major League Baseball owners collectively purchased the Montreal Expos in a deal that saw ownership teams rotate from Montreal to Florida and from Florida to Boston. The cost: a paltry $120 million.

As the owners and players’ association hammered out a new basic agreement in 2002, contraction slid off the table. However, it was clear from attendance figures that Montreal could not sustain the Expos. Whether this was because of an apathetic and poor ownership group or fan dissatisfaction, the world will never know. But for a few years, the Expos’ owners worked with a few locales to find a new home for the Expos.

On September 29, 2004, the day of the last Expos game in Montreal, Major League Baseball announced that Washington, DC, would be the new home of the Montreal Expos. One aspect of the move would eventually prove highly contentious. Major League Baseball worked out a deal with the “winning” city that the city would have to guarantee a stadium for the new team. This is a point of contention that could prove to be MLB’s undoing in the District of Columbia.

Over the last year, Major League Baseball and the Washington City Council have played politics. And they’ve played it poorly. Three council members in favor of the stadium deal were voted out of office. No lease has been ratified by the council. Currently, the mayor of Washington is calling for a new stadium while Marion Barry, an entrenched but troubled DC politico, claims to have enough votes to shoot down the lease. Major League Baseball won’t pay more than $20 million if the stadium construction suffers from cost overruns. Meanwhile, estimates by the city’s financial officer has the cost of the stadium up from $535 million to nearly $700 million.

It’s a bloody mess, and that capsule summary doesn’t even begin to address the complexities and backroom dealings that have gone on between Mayor Anthony Williams, Major League Baseball, and various members of the D.C. city council. But details aside, there is little doubt that this debacle could have turned out well for both groups.

First, Major League Baseball is certainly to blame. The owners know that when they finally sell the rechristened Nationals, they should pull in upwards of $450 million. Spread among the other 29 teams, that’s $11.38 million per team. Nearly everyone could afford their very own Johnny Damon! So of course, these businessmen wanted to ensure themselves the best possible team. While this money could have gone to a privately funded stadium, that plan wouldn’t have made much business sense to a bunch of owners driven by their desire to see a better bottom line.

While the owners have stood firm in their insistence that a stadium be secured before selling the team, the team itself is suffering under their watch. The team’s lack of an owner means that no money is available for free agents, and team leaders are leaving for more lucrative pastures. Esteban Loaiza, a mainstay of the 2005 Nationals rotation, jumped ship for a fairly low sum of $7 million a year. The ownerless Nationals were priced out of the A.J. Burnett sweepstakes and don’t have the resources to field a competitive team next year. In the tight NL East, this team has a near-lock on fourth place.

Meanwhile, the owners were supposed to be in place by the All Star Break, by the middle of August, the end of the regular season, the start of the playoffs, the end of the World Series, before Thanksgiving, before 2006, before the next presidential race, before I retire. Currently, fans aren’t siding with Major League Baseball. No one is sympathetic to a money-making business trying to have someone else pay for its facility. The Expos/Nationals will continue to flounder and will continue to lose fan support as this saga drags on.

Next, Mayor Anthony Williams carries his fair share of the blame. Why would Williams negotiate a deal that forces the District to fund the stadium with no help from local counties and other states? After all, the Nationals do draw a significant number of fans from the Maryland and Virginia areas. It’s not fair for a city with high crime, high poverty, and poor schools to foot a $535 million stadium bill to go along with another $100 million in upgrades to the existing public transit system. In fact, Mayor Williams allowed Major League Baseball to claim an upper hand that it didn’t really have. Had Williams stood firm on a claim that MLB had to find private funds for the stadium, chances are that the move still would have gone through.

Finally, there is the city council. They’re in danger of losing the Nationals. Now, I don’t think the council should accept a bum deal. Instead, they should take a firm stand against this lease but do so in a way that encourages MLB to find an owner and find the funds to build the stadium. There are ways to procure funds that don’t involve bilking the D.C. taxpayers for years on end.

So then, how would do I think this whole debacle could have been avoided? Easy.

I think the owners should have sold the Nationals as soon as it was decided that Washington, D.C., was the team’s new home. With a new ownership group in place, the council could have worked out a deal for a stadium that involved public and private funds. The new ownership team could have built public support by investing in the team and showing Washington that they had a potential winner on their hands. With an ownership group in the place, stadium talks would have wrapped up by now.

Currently, the situation is worsening. Some of the groups bidding for the team have told council members that they will cover the cost overruns, but Major League Baseball is telling potential bidders to stay quite on the issue. They want to squeeze every last cent out of Washington, D.C.

In the end, this saga should serve as a warning to other cities. Don’t let Major League Baseball stick its talons into your potential tax coffers. At the same time, the cities should learn that stadiums built with public funds do not deliver on their lofty economic promises.

So as this tale stumbles to the finish line and either a stadium deal is reached or the process goes to arbitration, the failed sale of the Washington Nationals is one more black mark on Major League Baseball. Too bad this one’s happening in a city whose leading political institution already has its regulatory eye on professional sports. There’s nothing like giving your critics more ammunition.

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1 Response to “DC, MLB feud a primer in bad business decisions”



  1. 1 Talking Baseball » Looking ahead to baseball in 2006 Trackback on December 24, 2005 at 10:50 pm
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