MLB's Daft DC Scheme

From The New York Sun

The great Chicago grifter Yellow Kid Weil, when asked if he felt guilt over having bilked marks for millions of dollars over the course of his long and glorious career, invariably said he didn’t.

“I never cheated an honest man,” he said, “only rascals. They wanted something for nothing. I gave them nothing for something.”

You have to wonder if Weil’s autobiography, “Con Man: A Master Swindler’s Own Story,” is required reading around the offices of Major League Baseball. It really should be.

The absurd tale of MLB’s relations with Washington, D.C., reads like one of Weil’s dafter schemes. It’s hard to say whether it’s more difficult to believe that MLB has had the audacity to make the demands they’ve made, or that Washington has acquiesced. It’s equally hard to say whether MLB officials are playing the role of Weil, or that of greedy victim.

MLB, which purchased the Montreal Expos in 2001 with the intention of dismantling the franchise, has been trying to get someone to take the team off its hands for years. They have wanted this done on their terms, though, meaning that only municipalities willing to pay for a new stadium for their new team were seriously considered. The more debt attached to the franchise, after all, the lower the profits for the current owners when it is eventually sold.

After years of shilly-shallying, missed deadlines, and interminably protracted negotiations, MLB thought it had finally struck gold a few months ago when it cut a deal with Washington Mayor Anthony Williams and announced that the Expos would be moving to the nation’s capital. Most attention has focused on the unusual political situation the mayor and the moguls found themselves in when the lame-duck City Council of Washington refused to approve the deal, citing concerns over everything from the city’s liability for cost overruns on the new park to the very idea of publicly financing a structure meant for private profit.

This situation was finally resolved over the last week as opponents of the deal approved it, bizarrely creating no legal mechanisms to ensure the private financing on which opposition to the deal was initially founded. Instead, they have settled for vague assurances that half the stadium will be privately paid for by unspecified parties and a deal that will split the cost of insurance for cost overruns with MLB.

Weil would chortle with glee, though, at the part of the deal to which less attention has been paid, as it is seemingly a pure baseball issue, rather than a public policy one: Washington is buying into a crippled franchise, institutionally restrained so that it will never be able to compete. Meanwhile, the cons are making off in all directions with the spoils.

The deal in place makes a few curious concessions to Baltimore Orioles owner Peter Angelos, who has long claimed, somewhat implausibly, that D.C. baseball would deal a damaging blow to his club. Angelos will thus own the team’s television rights - forever. Should the Nationals somehow manage to make more profit than the Orioles in a given year, they will have to hand that money over to Angelos. MLB comes in for a nice cut as well - it, not the team or the city, will keep the money made by selling off the naming rights to the new stadium.

It’s obvious that the team will be damaged goods, due both to recent mismanagement and the ceiling that will be placed on its revenues. Washington shouldn’t even want it. Why, then, has the city approved a deal to fork over hundreds of millions of dollars to MLB while investors are lined up around the block to buy the team?

In the case of the city’s politicians, they want a team and a stadium - or more specifically, the political credit for having made D.C. a “major league town” - without paying for it. (Or, more accurately, being seen to pay for it). Happily for them, if unhappily for taxpayers, between the illusory private financing and the fact that the federal government is willing to eat a large amount of a new utility tax to pay for a new ballpark, it seems they will be able to get away with claiming the city will pay almost nothing for the park.

As for the potential owners, there’s quite a lot for them in the deal. Probably not a good or profitable baseball team, mind you, but the associated tax breaks involved with owning a sports team, which are not to be lightly dismissed, and year-round rights to the new stadium for nominal rent. From their perspective, things look good. The public doesn’t seem to be too well represented by anyone, but that’s to be expected. The voters of Washington, D.C. are largely poor and black.

Where’s the con, then? It’s on MLB. While everyone involved wants something for nothing, they’re the ones who will be getting nothing for something. (District taxpayers will be getting the same-but as the whole sorry episode has shown, that’s what they were going to get in any event.)

To be sure, the 29 owners of the Nationals will enjoy fat profits. They bought the team for $120 million and sank around $70 million into it; the sale price is expected to be around $400 million. That’s a great deal of cash - nearly a whole year of Armando Benitez’s salary for every team!

In exchange for that, they’re putting a team with a ceiling on its potential profits and an organizational infrastructure that bears every mark of years of penny-pinching administration by MLB into one of the nation’s most prominent markets. What a deal! For a whole $7 million in profit apiece they’re turning a franchise that could in different circumstances be one of the game’s crown jewels into the sick man of baseball. MLB has done a spectacular thing, managing to play both the con and the mark and to scam itself out of a gold mine. Even Yellow Kid Weil never saw such a thing; but I doubt he’d be surprised.



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