I was watching Bud Selig, commissioner of baseball and owner of the Milwaukee Brewers (Wouldn't that be just a little conflict of interest in other industries? To be fare, Selig put his controlling interest in the team into a trust when he became commissioner, and the Brewers are now run by his daughter. But it's his team, and there's no question that he remains the owner at core.), testify before the house judiciary committee on CSPAN 2 last night (reminding me of how incredibly entertaining CSPAN can be as a sort of cartoon theater), and, well, I laughed a lot but it was pretty depressing. Selig answered about one in four questions directly; for the most part he hemmed and hawed and did his best to take up each house member's allotted five minutes by stuttering endlessly through his stock answers. You got the impression he didn't even understand the point of contraction (clearly not a single member of the HJC did) other than a money grab by the non-contracted owners (fewer teams you're obligated to share your revenue with) and an attempt to strongarm the players' union (incidentally one of the best organized, strongest, and most interesting unions in America).

Some facts: Selig is claiming that the sport lost $519 million last year (or approximately the cost of four Jason Giambi contracts or two A-Rod contracts) and that only five of the 30 teams were profitable. Forbes Magazine, on the other hand, claims that 20 of the 30 teams were profitable and that the sport made 130 million. The sport's revenues this past year were $3.5 billion dollars. When he was the vice-president of the Toronto Blue Jays, Paul Beeston famously said, "I can turn a $4 million profit into a $2 million loss, and I can get any major accounting firm in the country to agree with me. All I need is a sharp pencil and a good eraser." He is now baseball's Chief Operating Officer. Not that roughly half of this $519 figure, which Selig kept intoning "came from three separate audited reports," is the debt of four baseball clubs owned by media conglomerates, which, as we all know, have more good hiding spots for their income than a mangy dog has ticks. You figure it out.

I guess what I'm saying is that I don't fault the players for much of anything, even though I believe their salaries are absurd. They're just playing the same free market economic game that nearly all Americans play, and they happen to play it particularly well -- more power to them if they can get some rich sap to give 'em 20 million a year to swing at a piece of horsehide. It's the billionaire lords of baseball, who use the threat of relocation to mug their communities for new taxpayer-funded ballparks that cost hundreds of millions, then overpay their employees by hundreds of millions and blame their employees for it, then go before the U.S. Congress cyring poor, even as they're lining their pockets with personal salaries that don't show up on the audited ledger sheets, even though they know that they'll be able to sell their teams for hundreds of millions than they paid for them, claiiming that they can't run their business anymore if their precious antitrust exemption (a relic of 1922, a time when the business of baseball bore about as much resemblance to today's industry as Osama bin Laden does to Chelsea Clinton) is taken away fromt hem, and claiming that making two teams with 30-year-plus histories (one of which has won two World Series in the past 15 years, or two more than the supposedly major market Boston Red Sox and Chicago Cubs combined, which has a hundred year existence, previously as the Senators, which contended for a division title last season, and which made money last year!) disappear will somehow magically fix the industry which is supposedly bleeding their coffers dry -- they're the ones who really make me angry. They (led by Selig) are a blight on this great game.

From the Village Voice:


There's a joke baseball owners like to tell: "How do you make a small fortune owning a baseball team? Start with a large fortune! We're sure that gets big laughs at whatever Hilton the horsehide tycoons hole up in these days. But then, these are the same people who kept a straight face last week when Bud Selig announced that baseball lost $500 million in 2001.

Half a biollion schoendiensts sure sounds like a lot of cash to the casual observer, which is no doubt what Beezlebud hopes to impress upon Congress in his testimony this week. But as sports economists Rod Fort notes, while he has no doubt that Selig "will be reporting dutifully what all those owners told the IRS, that's not the gauge of the value of owning a baseball team." Among the fiscal tricks Selig can use to transmute gold into red ink:

  • The IRS allows teams to depreciate their players, even while simultaneously deducting player-development expenses. "If I try that, people in shiny shoes come to my door," says Fort, noting that a recent exam of the San Antonion Spurs' books revealed that losses of $10-14 million turned into real profits of $2-3 million once depreciation was discounted.
  • Corporate-owned clubs can easily hide income by, say, charging their broadcast outlets next to nothing for TV rights. (The Atlanta Braves and TBS are prime suspects here.) More direct approaches are available as well: George Steinbrenner once carried a $25 million charge on the Yankees expense sheet for a cable-contract consultant -- by the name of George Steinbrenner.
  • Appreciation of team values invariably wipes out any losses once the team is sold, a fact that seems recession-proof, if recent reports are true of a $500 million offer for the Mets (purchased in 1980 for $21 million) and $390 million for 50 percent of the Red Sox.
So as the numbers trickle out from Selig's testimony this week -- and oh, will they trickle -- remember the words of Paul Beeston when he was Blue Jays veep: "Anyone who quotes profits of a bseball club is missing the point. Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss, and I can get every national accounting firm to agree with me." Beeston is now baseball's chief operating officer. Draw your own conclusions.