Dirty Rotten Scoundrel
added 12/19/2000 by Ray Kerby
Tuesday was a day of contrasts. In one moment, Drayton McLane makes his "poor man" case. In another, he's signing Jeff Bagwell for $17 million a year. OK, so which is it? The morning began with a flurry of rumors about the imminent extension of Jeff Bagwell's contract, something we fans have been waiting to hear for a long, long time. But at the same time, we were treated to another sad story by team owner Drayton McLane about the escalating salaries in baseball. In particular, he was bemoaning the size of the contract given to Alex Rodriguez and the trickle-down effect it was having on his attempts to re-sign Bagwell. Fortunately, by the end of the morning we were all relieved to learn that McLane had indeed managed to scrape up the $85 million necessary to retain the services of the best hitter in the history of the organization. I'm sure that he'll tell his grandkids that, thanks to Rangers GM Tom Hicks, he was forced to rummage through the loose change in his couch to find the extra few million necessary to keep Bagwell.
Before we all start feeling sorry for McLane, let's revisit some pertinent facts. First, he was a billionaire before he bought the team and he will be a billionaire after he eventually sells it. He's not going to be needing for money anytime soon. Secondly, McLane extorted the city of Houston into subsidizing a new stadium for the explicit purpose of generating more revenue. I still vividly remember the day that McLane threatened to move the team because he was losing money. Whether or not he was right to make such threats, the fact remains that those threats were indeed made and Enron Field was constructed as a bribe to keep the team here. I never thought I'd see a day when Houstonians would kick out their football team and yet pay to keep their baseball team, but it did warm my heart.
And, most importantly for this discussion, Drayton McLane is making money hand over fist on this team. Since baseball owners are notoriously secretive about their finances, it is admittedly difficult to find hard numbers to support that statement. But it's not hard to find ballpark numbers (pardon the pun) that make it pretty clear that, while Drayton may be crying to the press, he's laughing all of the way to the bank.
Let's start with 1999, the most recent season for which we have hard financial numbers. According the Hoover's Online and MLB, these are the revenue and payroll numbers for each team in 1999, ordered by revenue (figures in millions of dollars):
As you can see from the table, the Astros ranked 14th in overall revenues in 1999, which places them squarely in the middle market among the 30 teams. Their payroll was 10th in the majors, although this is a little deceptive since their payroll was a full 20% lower than the 9th-ranked D-Backs. Still, I don't think anyone would consider the Astros' payroll to be too far out of line with the teams that have similar revenues. Of course, 1999 was purportedly the year that the team was operating "at a loss" in anticipation of the revenues expected from Enron Field in 2000. If that were the case, then a case could be made that at least 10 other teams were also operating at a loss that season.
In the 1999 off-season, Astro fans were bludgeoned with the salary-cutting trades that sent Mike Hampton and Carl Everett to the Mets and Red Sox, respectively. We were given the line that their contract demands made them unaffordable to the team. After all, the Astros were not expected to raise payroll in 2000; the introduction of Enron Field would simply allow them to no longer lose money. And since the free-agent market that winter was weak, many fans including myself were willing to give the benefit of the doubt to Drayton McLane. After all, no one really wanted to commit a lot of money long-term to mediocre players when the real blockbuster free agents would be available after the 2000 season.
So what happened in 2000? Unfortunately I don't have any revenue numbers available, but nevertheless the final payroll totals are revealing:
Now we can see the damning indictment of McLane's decisions. Of the 30 major-league teams, 28 increased their payroll over 1999, with the Astros having the smallest payroll increase of the 28. By holding their payroll relatively steady, the Astros dropped from 14th to 20th in the payroll ranking of teams. Only the Rangers and the Brewers actually decreased their payroll in 2000, and the Rangers are clearly going to significantly increase their payroll in 2001 with the signings of Alex Rodriguez, Andres Galarraga and Ken Caminiti.
Like the Astros, the Giants moved into a new stadium in 2000. But instead of keeping their payroll steady, the Giants increased it by over $13 million to take advantage of their new revenues. In fact, they actually spent more in salary than the Astros in 2000, even though the Astros had a $21 million advantage in revenue in 1999. These facts make it hard to swallow the line that the Astros' break-even point in payroll is $60 million.
Finally, the Astros are still not planning to increase their payroll budget in 2001. This decision has prevented them from making any significant free-agent signings this winter, which is what many fans thought Drayton was holding out for last winter. So while Mike Hampton, Alex Rodriguez, Manny Ramirez, Mike Mussina, and many, many other impact players were finding new homes, who did the Astros get? A mediocre shortstop and a middle-aged middle reliever who hasn't pitched in over a year.
Fortunately, the team was able to sign Jeff Bagwell yesterday without having to raise his 2001 salary. This means that there won't be any immediate pressure to trade high-priced veterans Moises Alou and Billy Wagner before next season. But if McLane insists on holding the line on his unreasonable $60 million payroll limitation, many of the team's veterans are going to have to go to make room for Bagwell's $17 million salary next season. At this point, all we can do is hope that either McLane sells the team to an owner who is committed to fielding a competitive team or, less likely, that he decides to stop lining his pockets and raises the team's budget enough so that the team can be competitive in the long run.