Reds spending limits criticized

If the Reds struggle on the field this season, their payroll — lowest in the National League Central Division — will get the blame. And judging from criticism he already has received from fans on the radio, businessman Carl Lindner, second-year owner of the Reds, will get heat for the Reds' performance.

Despite drawing 2.58 million fans last year — the second-most in team history — the Reds are heading into the 2001 season with only a $44 million payroll.

The Reds' payroll was $47 million last year, and insiders say the team lost $3 million.

Andrew Zimbalist, a nationally acclaimed sports economist and author of the book, Baseball and Billions, says the Reds payroll is low.

“Their whole reasoning (reducing their payroll by $3 million two years away from opening a new park) strikes me as nuts,” says Mr. Zimbalist, who believes the Reds could have a payroll $6 million to $8 million higher.

Here are his estimates for the Reds:

• $45 million in tickets. (2.5 million estimated attendance times an average ticket price of $18.)

• $7.5 million net in concessions ($3 per head times 2.5 million).

• $5 million in sponsorships, advertising, signage.

• $6 million in local radio and TV.

• $2 million in licensing fees from Major League Baseball.

• $18 million from the national TV contract.

• $8 million in revenue-sharing.

Total: $91.5 million in revenues.

OUT

• $15 million for front office.

• $5 million in team expenses other than payroll.

• $12 million on player development.

• $4 million on stadium rental and maintenance.

TOTAL: $36 million.

Mr. Zimbalist's comment: “That leaves them $55.5 million for payroll and profit. For them to say they have to reduce their payroll (from $47 million to $44 million) this year, that doesn't make any sense to me.”

Mr. Zimbalist's estimates assume the attendance will stay about even with last year, because the demand will keep pace, despite fewer seats. Although revamped Cinergy lost 14,000 seats, there were only 13 games when attendance exceeded the present 40,000 seats. And, even then, the total number of seats filled in excess of 40,000 was 89,000 - for the entire season.

Traffic has improved over last season, and construction on the new ballpark will be shut down on game days. Opening Day tickets went fast. There is a buzz around town about revamped Cinergy with its grass field, seats closer to the action and views of the river and hills.

Reds insiders say Reds chief operating officer John Allen set the break-even payroll ceiling of about $44 million for this year.

The Reds' ownership is paying for items other than players, including a loan to finance purchase of the team, money to build the farm system, and $20 million in payments due within the next two years to build Great American Ball Park.

Mr. Lindner would not comment. But an official close to Mr. Lindner and familiar with the Reds budget calls Mr. Zimbalist's estimates “dead wrong.”

It is possible the Reds are spending more money in an area Mr. Zimbalist is not aware of — such as player development and scouting — or perhaps including some other costs that don't typically appear in a majority of clubs' books. And there are different ways of accounting for player payroll.

The Reds also may have been highly conservative in this year's attendance projections, because they had to remove 14,000 mostly outfield seats to make room for building the new ball park.

Through research for his books, Mr. Zimbalist knows basically how much clubs take in and and how much they spend, although the figures can change from year to year. He says it “doesn't make sense” to him the Reds would constrict player payroll because of the need to pay $10 million this year toward stadium construction.

“That new ballpark is going to produce a lot more than that two years down the road,” Mr. Zimbalist says.

The Enquirer asked Mr. Zimbalist if it is typical for a major-league club to include in its budget such items as new-stadium contributions and interest on a loan to finance purchase of a team.

“Yes, it's typical to include them, but as below-the-line items; typically, they would be (utilized) to minimize tax consequences,” Mr. Zimbalist says.

It is also possible the Reds may believe that spending another $5 million on payroll this year is not going to win them a World Championship. Many smaller-revenue clubs have retrenched, and are presenting their product as entertainment rather than as having a realistic chance of winning a championship — at least until the big-revenue clubs can be convinced to share more of their money with the have-nots.

Over a six-year period going into last season, teams with salaries in the bottom half won only three of 189 postseason games, according to the Associated Press. Since 1995, only clubs that are among the top seven in revenues have won any World Series games.

Mr. Lindner declined to be interviewed for the Enquirer's stories. Mr. Allen was interviewed, but would not discuss the payroll, and declined an offer to be read Mr. Zimbalist's numbers.

“I'm not going to discuss the process,” Mr. Allen says.

He did say, however, that the dramatic improvement in the Reds' farm system does not come cheaply. This source of young and relatively inexpensive talent is the lifeblood of a small- and medium-level franchise. Industry watchdog Baseball America says it will rate the Reds' minor-league talent in the top three in baseball.

All indications are that Mr. Lindner wants to make it more enjoyable for fans and players to come to the ballpark — witness the installation of a grass field even though there are only two years left at Cinergy Field. But he also appears intent not to budge from the payroll ceiling that's been set.

Enquirer reporter Cliff Peale contributed to this story.

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