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Skimpy wallets don't bode well for a relocation by Rays

ST. PETERSBURG — Neither politicians nor voters seem inclined to build a new stadium for the Tampa Bay Rays, yet the drumbeat persists that low revenue could soon spell trouble for baseball in the bay area.

"Baseball is just not going to stand for it anymore,'' principal Rays owner Stuart Sternberg told reporters during spring training. "They'll find a place for me. They won't find a place here though,'' in Tampa Bay.

Commissioner Bud Selig, who personally pressured Minnesota and Miami to build stadiums, might soon focus on Tampa Bay, Sternberg said.

Meanwhile, journalists recently speculated that baseball will eliminate the Rays through contraction, that is, reducing the number of teams in the big leagues.

Is this just standard "build-a-stadium'' innuendo? Or could some shift be afoot? Sports economists and others who follow the game play down any notion that Major League Baseball will move or eliminate the team.

And St. Petersburg Mayor Bill Foster said the city will fight any push to move the Rays. "We've truly played out all scenarios,'' he said. "You always want to prepare for the what ifs.''

Still, tensions within baseball promise to stoke Rays speculation as the season unfolds. Baseball's collective bargaining agreement expires this year. Though Selig and union chief Michael Weiner have denied contraction is on the table, individual owners could float the idea to pressure players, who presumably would lose jobs under contraction.

Labor negotiations also give owners a chance to change the way they share revenue with one another. That could strain relations between cash cows such as the Yankees and their low-budget cousins such as the Rays.

Lastly, Miami's new stadium should open next year, leaving only the Rays and Oakland with venues that baseball hates.

"It seems clearer to me by the day that we're going to be the last man standing," Sternberg said during spring training. "So it's up to us, to everybody, to figure out how to get it right.''

Sternberg declined to elaborate on his hints. Journalists who have written about contraction — such as Bill Madden of the New York Daily News and Mike Ozanian of Forbes magazine — cite anonymous sources, so it's hard to judge their credibility. But here are a few key issues that could impact the future.

Revenue sharing

Major-league teams share about 30 percent of their local revenue. This fuels the notion that other owners are hot to find the Rays a new home.

Even with three years of pennant contention and relatively cheap tickets, Rays' attendance has remained in the bottom fourth of 30 teams. The Rays pull in good TV numbers, but will not cash in on that popularity until their contract with Fox Sports Florida expires in 2016.

So for years, the Rays have typically withdrawn $30 million to $40 million from baseball's revenue sharing pot, sometimes more than any other team.

A handful of big-money teams such as the Yankees and Red Sox pay the bulk of revenue sharing and stew the most when a team such as the Rays doesn't pull its weight.

But attendance — which is the Rays' biggest downfall in making money — is no longer the be-all and end-all of baseball balance sheets. Revenue not driven by attendance, like television contracts and merchandising, is increasing in importance.

The Texas Rangers recently signed a 20-year television deal reported to be worth at least $1.6 billion. If the Rays' next TV deal even gets close to that bonanza, it might generate more new money than any stadium could.

New media, such as MLB.com, is baseball's fastest growing revenue source, to the tune of $22 million per team last year, said Mark Rosentraub, a professor of sports management at the University of Michigan.

Baseball also is coming off a banner year, collecting about $7 billion in 2010, according to BizofBaseball.com, a respected website that tracks the industry.

"Why would anyone want to upset the apple cart?" Rosentraub asked. "You have a guaranteed revenue source now. That's why you're just not going to get smaller market or mid-market teams agreeing to changes that could disrupt this, and that includes contraction or relocation."

Contraction

There was only one "major'' league in 1899 — the National League — when baseball last contracted, dropping from 12 teams to eight.

Three of those teams, Baltimore, Cleveland and Washington, helped form a new, competing American League, which by 1902 outdrew the National League 2.2 million fans to 1.7 million. The two leagues merged the next year, forming Major League Baseball as equal partners.

"The last time baseball took away teams, they got a whole new league that competed with them," Rosentraub said. "I don't think they want to go there. … That's why any talk about contraction just isn't serious."

Contraction raises all sorts of problems. Baseball needs an even number of teams so every team has an opponent for lucrative weekend games. One-team contractions don't work. It has to be done in twos or fours.

Owners of contracted teams would have to be compensated — a hit of $700 million or more for two teams. Suits could arise over long-term television and player contracts, not to mention from any cities with stadium leases.

Litigants could challenge baseball's antitrust exemption and try to force baseball to reveal closely guarded details about finances and internal strategies.

Contraction also would create a labor war, said Jordan Kobritz, a former owner of a minor league team who teaches sports management at Eastern New Mexico University. "Baseball is in the best shape financially of any of the major sports" and doesn't want labor strife that could spoil it, Kobritz said. "This is not the time you start rattling the C word."

Contraction also would antagonize politicians from cities and states to be stripped of baseball.

"Congress is not going to stand by idly and watch two teams disappear," Kobritz said. "That's the last thing Major League Baseball needs. They don't want to get dragged before Congress again so soon after this steroid mess."

Contraction "is a shell game that Major League Baseball plays for leverage,'' said sports journalist Jonah Keri, who published a book on the Rays last month called The Extra 2%: How Wall Street Strategies Took a Major League Baseball Team from Worst to First.

Speaking on a BizofBaseball podcast, Keri said the Rays play in a bad stadium in a horrible location. That will have to change eventually. But the team is well managed, he said, succeeding on the field and drawing healthy television ratings. New stadiums typically come after about 10 years of maneuvering, Keri said.

"The Rays just started down this road in 2007 or so, so we've still got a long way to go."

Relocation

To relocate, the Rays would have to have to find another city lucrative enough to overcome the expense, turmoil and legal hurdles of leaving town.

When Miami and Oakland were free to leave bad stadiums, they didn't move to Portland, San Antonio, Charlotte or Las Vegas, and that was before nationwide antitax sentiment tamped down on publicly financed stadiums.

Baseball might consider moving the Rays to an existing market. It did that when it bought the Montreal Expos in 2002, moving them to Washington, then selling them to an eager new owner for a $300 million gain. The Nationals owner gave the Orioles a sweetheart TV deal in exchange for invading Baltimore's territory.

In theory, that could work in New York, whose huge population and corporate clout could easily support a third team. In metro New York, baseball could turn a $300 million team into an $800 million team, creating wealth to buy off St. Petersburg and help compensate the Yankees and Mets.

Maybe some billionaire would be willing to buy the Rays and make major television concessions to the Yankees. Maybe baseball owners could reduce revenue sharing a bit to placate the Yankees and Mets.

Mets owners already want to sell part of the team because of debt and fallout from Bernie Madoff's Ponzi scandal. Some observers think they may have to sell the entire team. Sternberg has denied any interest in the Mets, but speculation continues.

"If Sternberg is going to buy the Mets, and believe me, that has been talked about, could the quid pro quo be that he allows the Tampa Bay franchise into the area?'' ponders Kobritz, the sports management teacher.

Such a shuffle would face huge hurdles, Kobritz said, but is more likely than contraction. "I'm not saying it would happen. I'm just saying that it's a possibility.''

Perhaps the biggest blockade of all? St. Petersburg, said Rosentraub, the professor of sports management. The city has a contract with the team through 2027.

"It stops there," he said. "You have a mayor who said he wants them to stay. The 29 other owners aren't going to risk getting sued and losing that antitrust exemption. It just won't happen."

Skimpy wallets don't bode well for a relocation by Rays 04/24/11 [Last modified: Tuesday, April 26, 2011 8:39am]

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