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Why eliminate Twins? Money and leverage
by Jim Souhan

In the past 10 days, the baseball doomsday scenario called contraction has progressed from far-fetched rumor to imminent threat.

How can Major League Baseball consider folding the Minnesota Twins, a 41-year-old franchise that has won two World Series in the past 15 years, that was the first American League franchise to draw 3 million fans in a season and that is coming off its best season in nine years?

While the possibility of contraction remains dubious to some economists and baseball observers, a variety of baseball officials, lawyers and economists have provided reasons why the Twins could become victims of contraction at the owners meetings in Chicago on Tuesday and Wednesday.

Some say there have been signs all along that contraction is a possibility and reason that, in the eyes of owners and management figures, the Twins are a logical choice.

"It seems to me that this is almost the logical working out of the fact that we have a commissioner that acts not in the best interests of baseball but in the best interests of the owners," said Paul Anton, chief economist at Anton, Lubov & Associates in Minneapolis. "So, I'm afraid, this makes sense in the world of baseball."

How can eliminating a once-proud, currently-promising franchise -- along with the poorly supported Montreal Expos -- make sense?

Twins and other Major League Baseball employees, politicians, economists, local ballpark advocates and business leaders, and potential buyers of the franchise offered myriad reasons:

Owners have had little success negotiating collective bargaining agreements with the powerful players' association, and the current agreement expires this week.

If the owners can wipe out 50 jobs before beginning those negotiations, they feel they will gain valuable leverage.

  • Even after paying the owners of the eliminated teams from $200 to $250 million, the remaining 28 owners will make up that money by saving the revenue-sharing cash they would have contributed to those teams, and by collecting the eliminated teams' share of the national television contract and licensing revenues over a number of years.
  • Eliminating the Expos eliminates baseball's foremost money pit -- the Expos ranked last in attendance and have no hopes for building a stadium.
  • Eliminating the Twins serves two purposes for commissioner Bud Selig -- it would be a threat to other cities that have been unwilling to build new, revenue-producing stadiums, and it would open a sizable market where baseball could relocate a struggling franchise or even an expansion team.
  • Professional sports leagues have always relied on moving or contracting teams to make their leagues more profitable, or to appease owners. But no major league team has moved since the Washington Senators became the Texas Rangers in 1972. No major league team has folded since the National League contracted from 12 to eight teams after the 1899 season.
  • The potential obstacles usually cited when experts downplay the threat of contraction -- including lawsuits -- are insignificant in the realm of a multibillion-dollar industry willing to pay $500 million in contraction fees.
  • Minnesota is the largest baseball market to steadfastly refuse to approve or build a stadium.
  • The Twins are more likely to be victims of contraction than franchises such as the Florida Marlins or Tampa Bay Devil Rays because the owners of those teams have more assumable debt than Twins owner Carl Pohlad, and might fight contraction through the courts with help of their attorney general. Pohlad reportedly is eager to accept contraction and has just one year left on his Metrodome lease.
  • Pohlad, after years of speculation he would never relocate the Twins because he wants to protect the family name in Minnesota, might be willing to cite the lack of stadium support as an excuse for taking a huge check and getting out of baseball at a time when the team payroll is about to take a major leap, and his last connection to the clubhouse (manager Tom Kelly) has just retired.

Pohlad's baseball peers have noticed the franchise's financial struggles and inability to procure a publicly financed stadium. This spring, at a spring training site in Arizona, a major league general manager was asked by the Star Tribune about contraction.

"I'd get rid of the Twins," the GM said. "That area has shown no willingness to support baseball in the current climate."

Early signs

Key members of two local ballpark groups saw contraction as a threat months ago.

Mark J. Oyaas, a lobbyist and staff member of New Ballpark Inc., wrote a memo in April outlining his concerns over contraction. He also shared his fears with members of New Ballpark Inc., a Minneapolis business group that has been pushing for privately funded stadium.

In that memo, he listed three reasons he believed contraction would be "Carl's last swindle," citing the reasons as "overwhelming, albeit circumstantial, evidence that the Twins' ownership is running little more than a scam to provide the Pohlad family 'cover' in anticipation of contraction of two or more teams by the owners that comprise the governing board of Major League Baseball."

Oyaas' reasons, paraphrased:

  • That baseball has considered contraction since opening the last wave of expansion because of an internal view that baseball can't support 30 teams -- as indicated by the Florida Marlins' liquidation of their roster after winning the '97 World Series. Oyaas quoted Giants owner Peter Magowan as saying Minnesota and Montreal are the two most likely candidates for contraction.
  • That baseball would include contraction in the upcoming collective bargaining agreements (which is now surely going to happen.)
  • That the Twins' unwillingness to work with New Ballpark Inc. -- which tried to find a way to build a privately-funded ballpark such as San Francisco's Pacific Bell Park -- was strangely "bone-headed ... unless the desired outcome is not to build a new ballpark but to stall and wait until contraction."

    In his memo, Oyaas noted that the accepted payment for contraction was $250 million -- one figure now being cited by some baseball sources.

    Oyaas concluded, in April: "The current effort is little more than a means to placate fans and protect the Pohlad legacy in the community ('Hey we tried')." And that the Pohlads' lobbying efforts were merely the cost of setting up a $250 million payday.

    Karla Blomberg, chairwoman of Minnesotans for Major League Baseball, a study group brought together by the Twins, said she came to believe earlier this year that contraction was a credible threat. Her group, like New Ballpark Inc., brought in Giants senior vice president and general counsel, Jack Bair, to discuss the difficulties of baseball's revenue sharing arrangement, and Bair convinced her group that contraction was a viable financial option.

    "Everybody gets more of the pie because there are fewer teams," she said. "There's more enthusiasm for the teams that exist. And then when they decide, 'Here's a community that really wants baseball,' they can say, 'We can take this team off the shelf and sell it to you for a high price.'

    "It's so simple, in my mind, that it's hard to see how people might not recognize it."

    Simple math

    Blomberg, Oyaas and other experts say the math is indeed simple. Contraction will cost from $14 million to $18 million per team -- less than Texas shortstop Alex Rodriguez made this season.

    The cost to the 28 remaining teams will be defrayed by lower revenue sharing payments and a larger share of television and licensing revenues. And, possibly, by collecting future expansion fees.

    "What this almost sounds like is the owners saying, 'We'll contract to where everybody is making money and has built a revenue-generating stadium,' " Anton said. "They can cash out the lesser owners and everybody else can stay in the game and make tons of money."

    Baseball would certainly benefit from having a market where it can threaten to relocate other struggling franchises. Some baseball officials call it the "The Wild scenario."

    That is, when the Minnesota North Stars stunned the state by leaving for Dallas, Minnesota and St. Paul, in particular responded by building a state-of-the-art arena and paying a huge expansion fee to regain an NHL franchise -- the now popular Minnesota Wild.

    Selig has used threats of relocation or contraction in the past. Last July he told members of Minnesotans for Major League Baseball, "Without a new stadium, there's no chance to succeed here. You need to get it done."

    Last July, baseball also released its Blue Ribbon Panel report. That report urged more revenue sharing; it also espoused relocation and contraction as possible options to revitalize the game.

    "They studied this game for 18 months, they looked at all the books, and they came out and said a number of things had to be done," said Rep. Harry Mares, R-White Bear Lake, a stadium proponent. "And their bottom two points were that relocation should be required if their criteria were not met, and number two was contraction.

    "If Carl Pohlad says he wants contraction, he's got the respect of all the owners, he's served on all the committees, they like him, and he and the commissioner have been close for years.

    "I've studied this whole process and I believe Bud Selig has his ducks in a row. He's not going to do or say anything about this unless he has the votes."

    There are obstacles to contraction:

    • The powerful Players Association would fight the loss of jobs. (Officials from the Players Association are telling their members that contraction cannot be enacted in time for the 2002 season.)
    • Potential lawsuits from minor-league affiliates with contracts to work with Major League teams.
    • Potential lawsuits from the state and city, or workers dependent on the team.

    But several lawyers said they believe lawsuits against a multibillion-dollar industry willing to pay millions in contraction fees would not be problematic.

    Attorney Clark Griffith, son of former Twins owner Calvin Griffith, said he sees no sense in contraction. "It's like saying there's something wrong with my heart, so I'm going to cut my feet off," he said.

    And yet he said there would be few meaningful obstacles to contraction.

    "The minor league teams can be bought out, fairly cheaply in this context," he said. "Minor league organizations are linked to the major leagues by the professional baseball agreement. They are subject to commissioner's powers in certain ways. If there are contracts with major league teams to supply them with baseball players for next year, MLB simply steps in and causes those contracts to be fulfilled, by supplying players or affiliate teams or money.

    "The only damages that can be brought by the minor leagues -- or a lot of other potential claimants -- are contract damages, which are money damages. You can't compel a Major League team to stay in business to simply comply with a minor-league team contract.

    "Where there are potential lawsuits -- whereby a court can stop contraction -- everything's a money damages issue. There's no specific performance stuff here, such as a 30-year lease which argues that you have to be there."

    The Twins have a one-year lease at the Metrodome, and Metropolitan Sports Facilities Commission executive director Bill Lester said neither his organization nor any Metrodome employees would likely gain much via a suit.

    He said the commission makes about $500,000 off the Twins during a calendar year. "And people who work here are not guaranteed a minimum number of dates and are not specifically tied to the Twins," Lester said.

    Why now?

    Why would Pohlad, who saved baseball for Minnesota by buying the Twins in 1984, get out now?

    People with knowledge of Pohlad say he believes efforts to gain a new stadium are doomed, he's fearful of paying an ever-rising payroll simply to keep his current team together, and he's not sure he wants the team to be a future burden to his family.

    Jim Pohlad, one of Carl's three sons, recently told the Star Tribune that he would like to run the team. That was before word leaked that his father was willing to accept a check for contraction.

    If the Twins are eliminated, they would hardly become the most celebrated parting of team and locale.

    In 1984, The Colts left Baltimore under cover of darkness to relocate to Indianapolis.

    When Cleveland Browns owner Art Modell's fight for a stadium became rancorous, he moved his team to Baltimore, where they became the Ravens and won the Super Bowl in 2001. This year the expansion Browns are playing in a new stadium in Cleveland.

    The hockey North Stars left Minnesota, the football Rams left Los Angeles, the baseball Giants left the Polo Grounds and the baseball Dodgers left Ebbets Field.

    Perhaps one of those team owners would have been willing to fold rather than move, if offered a big enough check.

    "I've been trying to get civic and political leaders to take this notion seriously," said New Ballpark's Oyaas. "Part of the doubting is due to the hangover from Carl's supposed attempt to move the team to North Carolina in '97. So people wouldn't believe this even if it were true.

    "We had hoped, with our organization, to keep the level of activity to a point where the league couldn't say, 'Well, they're not doing anything in Minneapolis.' But, at this point, I believe in my heart of hearts that we're the ones to be contracted."

    Oyaas says he's heartbroken. But not surprised.