By: Evan Weiner
If you really want to know which way the economy is going, check out how sports owners actually spend their money. That is a far more reliable guide than whatever Federal Reserve Chairman Alan Greenspan is saying.
In case you haven’t noticed, many baseball teams have cut their payroll – including the New York Mets – because they apparently aren’t so confident in the Bush administration’s ability to create jobs that pay enough money for people to buy their product.
Mets owner Fred Wilpon has chopped his payroll by millions of dollars. He spent an estimated $110 million on his 2003 team, and it is expected that this year’s model will cost about $90 million. He seems to be betting that our region won’t pick up enough to encourage consumers to buy extra tickets or allow sponsors to pay more for advertising. Wilpon might have gotten more revenue from those sources with a better product on the field, but the Mets didn’t sign Miguel Tejada or Vladimir Guerrero, who each might have helped the team get better.
Yes, Wilpon did sign Kaz Matsui, an unknown quantity, and Mike Cameron, a proven commodity, but neither player is in the same league as Tejada or Guerrero – or Alex Rodriguez.
The Mets went to “John’s Bargain Store” looking for steals and came up with retreads like Scott Erickson, Shane Spencer, Todd Zeile and Karim Garcia, with the hope that they can help propel the team into a divisional race.
According to the SportsBusiness Journal’s look at the more than 150 Major League free-agent signings through the middle of January, those players took an average pay cut of $796,000 or 26.6 percent less than their 2003 contracts. What the 30 teams will actually pay players in 2004 won’t be known until the regular season starts next month and the official numbers come in.
While Wilpon was cutting back and joining the likes of the Pittsburgh Pirates and the Milwaukee Brewers in slashing payroll, George Steinbrenner went to Tiffany’s and added to his star-studded roster. Could Steinbrenner be betting that the New York economy will become more robust, or does he just have a lot more franchise money to play with?
Either way, back in December 2000 when Rangers owner Tom Hicks signed Rodriguez, he was probably banking on a strong economy, as Texas Gov. George W. Bush was about to become president. Hicks was one of Bush’s major benefactors in his Texas gubernatorial races and in the 2000 presidential campaign. Hicks had purchased the Rangers from Bush and his partners in 1998 for some $250 million. He thought that A-Rod would be a great addition to his roster and marketing plan and was prepared to outspend his fellow 29 owners, including Wilpon, to land the shortstop.
In the fall of 2000, when the New York economy was in far better shape, Wilpon could not justify spending $252 million to bring Rodriguez to his team, even though Rodriguez desperately wanted to be a Met.
Hicks had made the decision to sign Rodriguez on the shortstops’ terms and seemed to think it would be good for his Rangers business. That is what owners do. They commit themselves to a player and set payrolls. They also gauge their markets and figure out whether their communities have the financial wherewithal to spend vast sums of money for entertainment.
Things did not work out for Hicks financially, and he started to cut payroll after the 2002 season. He attempted to trade Rodriguez to Boston, but the proposed deal for Manny Ramirez fell through. Red Sox owner John Henry, who lost out to Steinbrenner, now says he wants a salary cap. Henry and his fellow owners really want to cut payroll because the economy can no longer support the high cost of big league professional sports.
The majority of Major League Baseball teams, like many companies, are cutting back. And since all of those teams are owned by some of the richest leaders of American industry, you don’t need a scorecard to see that these guys aren’t putting their money on Bush’s economic recovery plan.
Evan Weiner is a commentator on “The Business of Sports” for Westwood One’s Metro Networks.
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