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Looking for Brew's Clues
2003-11-25 01:28
by Mike Carminati

A beggarly account of empty boxes [i.e., box seats].

óWilliam "Author" Shakespeare, "Eddie" Romeo and "Jorge" Juliet

The Brewers seem to be imploding by degrees, a littlemore each day. First, we hear that they will be cutting payroll by 25% down to $30 M from a reported $40.6 M in 2003. According to ESPN, this would be the lowest payroll in baseball. Then president Ulice "We Hardly Knew Yas" Payne Jr. splits with the club over the issue, necessitating an estimated $2.7 M buyout of his five-year contract. Now it appears that the club has been hemorrhaging money and that the owners including alleged non-owner, commissioner Bud "Probity" Selig, have been contributing to keep the Brew Crew afloat.

As the supernova that is the Brewers expands, they may even be required to open their books to an unhappy public that wants to know what happened to investing in the team after the community had invested in a new stadium. The Milwaukee Journal Sentinel got its hands on some of the Brewers book, but apparently cook booksóor rather cooked booksówere all that could be found. The Brewers have a lot of 'splainin' to do. Take a look at the numbers for yourself (the bold columns were added by me):

Operating Revenue19981999200020012002Diff% Diff
Home Gate30.89 31.00 34.00 77.30 62.20 31.31 101.36%
National Broadcasting 15.90 17.56 17.84 18.62 22.32 6.42 40.38%
Local Broadcasting5.69 4.10 5.21 5.87 6.37 0.68 11.95%
Shared rev. from MLB8.10 9.19 6.44 1.54 9.10 1.00 12.35%
Other (Unreported)12.79 3.58 4.51 6.57 4.41 (8.38)-65.52%
Total73.37 65.43 68.00 109.90 104.40 31.03 42.29%
Operating Expenses
Team Payroll39.45 48.43 42.60 50.62 52.72 13.27 33.64%
Other Baseball12.96 14.25 18.71 21.69 23.23 10.27 79.24%
Other (Unreported)17.00 18.46 18.72 25.92 30.01 13.01 76.53%
Total Op Exp69.41 81.14 80.03 98.23 105.96 36.55 52.66%
Capital contributed by partners10.00 10.00 0.00 0.00 11.72 1.72 17.20%
Debt (Notes Payable)61.50 81.50 101.50 117.60 115.40 53.90 87.64%
Non-recourse notes0.00 51.69 54.32 50.69 10.62 10.62 N/A
Net (2.16)(22.34)2.01 6.67 30.38 32.54
Operating Revenue- Expenses3.96 (15.71)(12.03)11.67 (1.56)(5.52)
Diff(6.12)(6.63)14.04 (5.00)31.94 38.06

So payroll, which increased only 33.64% compared to 79.24% for other baseball expenses and 76.53% for unlisted expenses, is being named the culprit. However, team payroll as a percentage of the total operating expenses fell from 56.84% in 1998 to 36.31% in 2002. Additionally, the 2004 payroll will be below the 1998 figure; not to mention that 2003 and 1998 had about the same payrollówith the additional $1 M in revenue sharing, they are almost identical. So of all of the expenses, team payroll seems the least worthy of blame and of cutting.

Add to this the fact that team revenue has been increasing even with an inferior product on the field. Home gate revenue doubled between 1998 and 2002 with the opening of Miller Park, and over all revenue outstripped payroll increases (42.29%). The only revenue that went done went unreported anyway (and was most likely due to the one-time 1998 expansion fees that Milwaukee and the rest of the pre-existing teams gouged the Diamondbacks and Devil rays for.) Consider that team payroll as a percentage of total operating revenue shrank from 53.77% in 1998 to 42.77% in 2002. And in 2004 without any increased revenue, the reduced team salary would translate into just 28.74% of revenue.

The lowly Brewers were a business that increased revenues by almost 50% in five years while increasing salaries by a third. In most industries that would be heralded as a minor miracle. Add to this the fact that the company was handed a state-of-the-art facility, leaks notwithstanding, and you would have many businessmen salivating in these recessionary times.

However, the bottom line is much different because of the Milwaukee ownership's inability to shore up debt and limit expenses. If you or I ran such a business, we would lose our jobs. But in baseball the owner gets promoted to commissioner. The admissions that Selig contributed to the team indicate that he is still the owner and therefore, at conflict with the proffered position of the commissioner. Unless we are to believe that Selig contributed out of the goodness of his heart, which would make him all the more incompetent in my book.

So Selig, the man who as a minority stock owner tried to block the Braves move from Milwaukee and who decries their leaving at every public opportunity, this man is the putative leader behind the dismantling of an already abjectly poor Brewer club in the last few years, culminating in the planned payroll cut for next year. This is the man who cannot decide the Expos fate and whose victory over the players in last season's labor wars is quickly fading in the rearview mirror. This is the man who was prepared to lop off two teams two seasons ago that have been in a pennant race ever since. It would be interesting to see the Brewers fade into the sunset on his watch.


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