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…. Lies, damn lies, and statistics

Over at the Sports Economist, Phil Miller has an article examining the recent lack of investment in the team the St. Louis Cardinals will be fielding at their new ball park this season:

…. the team can’t increase payroll for 2006 for a simple reason: The owners have reached into their own pockets to pick up much of the cost for building the new ballpark, and resources are limited.

…. This raises the old question of whether new capital in baseball (a stadium) enhances fans’ willingness to pay for players. Suppose that fans spend an additional $50 million to watch their team perform in a new stadium. How much of that $50 million was spent so fans could experience the amenities and atmosphere of the new stadium and how much was spent on the players?

Giants fans will tell you that the increase in a teams’ revenue stream generated from a new ballpark does not translate to payroll increases. In fact, regardless of what the team says, I’d tell Cardinals fans to expect the team to spend less money (relative to expectations) over the next five to ten seasons, not more. I’ve been listening to Peter Magowan and Brian Sabean talk about how tough it is to make their mortgate payments almost from the minute the paint was dry on PacBell. Here’s what Cardinals team Chairman Bill DeWitt said 2004:

“The new stadium will provide us with increased revenues and the ability to have a higher payroll. We should be in a more competitive position.”

In 2001, the late, great, Doug Pappas wrote that…. “Shortly after it opened, owner Peter Magowan told ESPN that the Giants were meeting their $20 million annual debt service from in-stadium advertising alone.”

That statement was conveniently forgotten almost immediately, as the Giants, since the Opening Day 2000, have consistently refused to make an effort to bring top-flight free agents to SF, engage in the strange strategy of ridding themselves of their first-round draft picks (too expensive, they say), and replenish the ranks of their team with bargain-basement free agents and waiver-wire pickups. In response to these complaints, Magowan suggests that his ownership group absorded a huge amount of debt when they bought the team:

…. The “mortgage” is approximately $20 million a year. In addition, we also contribute approximately $5 million in taxes and rent to the city. This, though, is just a part of the financial commitment our ownership group has made. We bought the Giants for $100 million. We invested another $120 million to pay for cash losses, most of which were incurred in the Candlestick era, and then we put ourselves on the hook for $170 million for our privately financed ballpark.

If you add this all up, our cumulative investment is over $350 million.

If that’s the case, then the Giants do have some defense for the constant stream of second-tier free agents (Edgardo Alfonzo, et al) we’ve been seeing these last four years. Nevertheless, in my opinion, Cardinals fans can expect the same line of BS Giants fans have been hearing. New ballparks make enormous amounts of money. When people, any people, suddenly find themselves with spectacular amounts of cash, they find it hard to let go of it, regardless of circumstance.

UPDATE: Biased Giants Fanatic has correctly pointed out (all over the freakin’ internet) that I’m not correct, and that the Giants payroll has risen just about every year since Magowan’s been in charge. Here’s Doug Pappas’ numbers, as researched by BGF:

1996 – $34.6M
1997 – $44.1M
1998 – $48.5M
1999 – $46.1M
2000 – $54.2M
2001 – $63.3M
2002 – $78.3M
2003 – $82.4M
2004 – $82.0M

OK. In my defense, I’d argue that Magowan has misrepresented the Giants revenues vs. costs, regardless of the payroll increases. The Giants have told us (many times) that their mortgage payments ($20 million) essentially represent the cost of one or two superstar players, and as such, we fans should consider the ballpark as an extra A-Rod.

In fact, it was just August of last year that I found out that the Giants mortgage payments are deducted from their luxury tax and revenue sharing responsibilities, meaning that at the very least, that $20 million dollars they keep telling us is preventing them from signing players like, for instance, Vladimir Guerrero; is in fact, not a true loss; and in reality, acts as an advantage that aids them in saving money even though their revenue stream would appear to put them among the teams that have to contribute large amounts to the Kansas City’s of the league.

It is this misrepresentation that irritates the thinking baseball fan, and makes the $5 million dollars they throw away on Neifi Perez, or the $18 million dollar extension they thoughtlessly give to a declining and soon to be out of baseball Kirk Reuter so exasperating. They are lying to us virtually every time they speak, and the fact that the franchise has increased in value by more than 100% since Magowan took over makes it so hard to accept the never-ending stream of mediocre players they are forcing down our throats.

There is no question they could raise the payroll by at least $20 million dollars. None. I’m no accountant, but even an idiot like me knows that a franchise worth almost half a billion dollars could find $20 million in about fifty different ways. The Giants haven’t won a championship in 54 years, and have only been in the World Series three times since moving to San Francisco. Bonds is almost done. Pare the payroll down to $40 million for three seasons after he retires, and break the bank while he’s here.

Any other strategy is, quite simply, a terrible waste. Giants fans deserve better.


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All commentary is the opinion of John J Perricone unless otherwise noted.
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