Financial windfall is distant goal for clubs Distribution tilted toward World Series

THE BALTIMORE SUN

More than bragging rights are at stake as the Orioles return home today in their quest for a world championship. There's money.

Lots of it.

The team, which says it will post its first profit in five years this season, could generate an additional $9 million in net income if it gets to the World Series and plays the maximum 10 postseason home games, said Orioles vice chairman of finance Joe Foss.

But the Orioles will have to beat Seattle, grab the American League pennant and be competitive in the World Series for that kind of payoff. Baseball's postseason financial structure is stacked strongly in favor of the winners, and barely rewards the also-rans.

"It's not a bonanza. It's not even a significant financial return to the club unless you happen to be lucky enough to get all 10 games in here," Foss said.

A sweep, such as the one the Orioles may be about to deliver to the Mariners, is satisfying for the fans, but not the most enriching game plan for the teams.

The reason: the rules for distributing riches during the regular season, when the home team keeps most of the gate, are thrown out when the playoffs begin.

In fact, today's game isn't even an Orioles home game, in the strictest sense.

Major League Baseball is the host. It sets the ticket prices and collects the money. The cash paid by television and radio networks to broadcast the games also goes to baseball's front office, for distribution to the member clubs.

The commissioner's office isn't shy about suggesting how the games should be presented. It sends each club a three-ring binder in the summer full of rules.

"It's like you're throwing a wedding for someone else. We're the hall," said Mike Lehr, the Orioles' executive director of marketing and broadcasting.

Even the crab-cake celebrations are choreographed from baseball's New York headquarters. After a World Series, the home team is expected to throw a party, according to the rulebook. Nearly 2,000 invitations must be set aside: 700 to be distributed by baseball officials, 100 for the visiting team, eight each for baseball teams not playing in the games, 850 for reporters and broadcasters, and 24 each for the American and National League front offices.

That's only one of the club's extra costs. It has rented 1,100 extra seats, hoisted banners, brought on extra security, and otherwise prepped and primped. Altogether, the team figures it will spend about $200,000 a home game to put on the show.

But the Orioles should take in $500,000 in revenue, for a profit of about $300,000, on today's game alone. And that number climbs the further the Orioles go.

In the early rounds of the postseason, Foss said, "Your ticket revenue basically covers the cost of putting on the games. The profit comes from concession revenues."

Fans come to these games hungry to spend. Average outlays go from $10 a head for a typical game to $20 for a World Series. Attendees buy more souvenirs, drink gallons more beer and linger for more food in the postseason. In the skyboxes, orders for grilled chicken sandwiches and light beer give way to upscale menus of baked salmon and chardonnay.

At an ordinary summer game, fans at Camden Yards spend about a half-million dollars on concessions. The team figures today's sold-out crowd will spend about $700,000, in part because the gates will be opening a little early. The celebratory mood really blossoms if the team makes it to the World Series, when concession spending is expected to hit $1 million a game.

After the state and the team's concessionaires take their cuts, the club is left with about 40 percent, or $280,000 for tonight's game (and a whopping $400,000 for a world championship match).

The ticket revenue requires more patience -- and success. Baseball's central office doles out the gate receipts, handing over the biggest chunk to the eventual winner. "Going all the way with the maximum number of games played drives up your revenues substantially," Foss said.

In the 81 home games of the regular season, the Orioles get about 80 percent of the money fans spend on tickets. The rest is shared with other teams in the league.

Not so for today's game. For the $1.3 million paid by the fans to get into today's game, the players will get 60 percent, or $780,000. That money goes into a special "players pool" to be distributed among the athletes after the championship is settled.

The rest of the money is distributed according to percentages outlined in the players' union contract: the American League gets $45,500 a game, and the Orioles and Mariners each get $237,250, or 18.25 percent.

Those proportions change at each stage of the competition, with the teams' share of the money swelling to 48.25 percent for the final games of a divisional or league championship series.

The math becomes especially complicated for baseball's showcase event, the World Series. The commissioner's office, the two league offices and the players take nearly 94 percent of the gate for the early games. The participating teams split the rest, a paltry 6.25 percent.

The cash gets better for the teams in Games 5, 6 and 7. Each takes 21.25 percent of the gate for those games. The players get nothing for these, the most important games of the season.

After the shouting dies down, the players -- whose salaries end with the regular season -- vote by team on how to distribute among themselves the millions of dollars in their pool. Last year, $24 million was divvied up.

Players on the World Series-winning club get 36 percent of the pot. The losing team's players get 24 percent. The two league championship runners-up split 24 percent, the four Division Series losers split 12 percent, and the four non-wild-card, second-place teams split the remaining 4 percent.

Sometimes the team will vote to reward a player for his performance by giving him credit for more than the days he played. But no one can get more than a full share. Cash awards also can be made to coaches and trainers.

"It's always been done that way, for 40 years," said Donald Fehr, head of the Major League Baseball Players Association.

Last year, each eligible member of the champion New York Yankees got $216,970. As losers of the league championship series, each Oriole's share was worth $68,726.

The Maryland Stadium Authority, which owns and operates Oriole Park, figures it will probably lose money on the games. The team's rent for regular-season games is 7 percent of the gate receipts, plus a chunk of other revenues specified in the lease.

In the postseason, the rent is a straight $5,000 a game -- barely the cost of giving the place a good scrubbing. Crews have been out all week painting and polishing the downtown stadium, getting it ready for the national spotlight.

"I think the operating expenses will considerably exceed the rent," said Bruce Hoffman, stadium authority executive director.

The state probably will cover expenses with the 10 percent ticket tax and its cut of parking proceeds, however. And besides, Hoffman said, winning a championship is what it's all about for both the team and its landlord.

"It's wonderful to have this problem," he said.

For the Orioles, a big win pays dividends for years to come. The team won't know how it did this year financially until it closes its books and finds out how much it will be billed for baseball's new "luxury tax" on high payrolls -- probably about $3 million -- Foss said. Also unclear is how much, if any, of the team's postseason concession revenue will be shared with Major League Baseball.

He said a $9 million pre-tax windfall would "more than double" this year's net income from the other 162 games -- suggesting a profit of as much as $17 million.

"The greatest benefit is long-term," Foss said. "You have greater interest in your tickets, in souvenir sales, and advertising. There is nothing like winning in our business."

Pub Date: 10/04/97

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