TV Vital to New Baseball Teams
THE National League of major league baseball blasted a mighty home run out of the ballpark this week - awarding expansion teams for two fast-growing United States cities that are important television markets: Miami, Fla., and Denver, Colo. The issue now is whether the home run will be upheld by the ultimate judges of organized baseball - the owners of the 26 teams representing the National League (NL) and its rival, the American League (AL). After a committee representing team owners approves the decision, nine of the 12 NL teams and eight of the 14 AL teams must ratify the two sites. Startup will be in 1993.
Beyond the decision to place the first ever major league teams in Florida and the Rockies, there is another question: Whether expansion - as opposed to shifting existing franchises with financial problems to Miami and Denver, or other cities - is the best long-range solution for rejuvenating a sport facing some difficult times of late.
An industry with revenues of around $1.2 billion and pretax profits of over $200 million, the national pastime faces slipping attendance at some parks, soaring ticket prices, and expensive contracts for players signed as free agents.
Despite all the hand-wringing, ``I'm upbeat'' about baseball's future prospects, says Lawrence Ritter, a professor of finance at New York University's Stern School of Business and author of perhaps the most acclaimed book ever written about the game, ``The Glory of Their Times.''
``Everybody [in the sport] is making a mint,'' laughs Mr. Ritter. ``Are the players wringing their hands? And if the owners are doing so badly, why don't they move?'' he asks. ``Have bat, will travel.''
Ritter says television is now the driving force behind the sport and that expansion into two new viewing markets will add thousands of fans. And despite high ticket prices that make it harder to get to a stadium as often as in the past, he says youngsters ``are as much in love'' with baseball as ever, ensuring the game's future.
According to baseball commissioner Fay Vincent, the Miami/Denver recommendation of an NL expansion committee will likely be accepted by the team owners this week or during the next several weeks. Owners have been meeting in Los Angeles and are expected to wrap up their quarterly business today.
The expansion committee passed over Washington D.C., which has been without baseball since 1971, Tampa-St. Petersburg, Fla., Orlando, Fla., and Buffalo, N.Y.
The Miami franchise goes to H. Wayne Huizenga, owner of the Blockbuster video chain, the Denver franchise to an ownership group involving Aldoph Coors Company. The new owners must each pay a $95 million entry fee and start-up costs of around $25 million.
Expansion dollars will be divided among existing teams; in a departure with past tradition, Commissioner Vincent ruled last week that 22 percent of the money (about $42 million) will be shared by the 14 AL teams. The remaining $148 million will go to the 12 NL teams.
Denver's team will play in Mile High Stadium for two years, and subsequently in a new downtown stadium - Coors Field - which has yet to be built but has been approved by area voters.
Why Miami? ``We've got the seventh largest media market in the United States,'' says Mr. Huizenga. ``We've got the demographics: 4.3 million people; many of them are retired and closely follow baseball. We've got a large Hispanic population, and as a group they tend to be strong baseball fans. And we've got the stadium.'' Joe Robbie Stadium, which is half-owned by Huizenga, holds about 50,000 people.
Huizenga also notes that Miami is the main US economic gateway to Latin America, where baseball is enormously popular. Currently there is no major league team south of the US border, though there is in Canada (Montreal and Toronto).
Experts say it is no coincidence that the awarding of the two franchises comes at a time when many teams are struggling financially - and when TV revenues are dropping. Thus, they could use the expansion dollars. Indeed, a number of owners are reportedly eager to sell their franchises, although they deny it publicly; teams said to be on the block include the Detroit Tigers, Houston Astros, and Kansas City Royals. The franchises are valued at between $80 million and $100 million. And New York financier E li Jacobs, owner of the last-place Baltimore Orioles, has indicated a willingness to sell his franchise, valued at about $120 million.