MLB commissioner Bud Selig testifies before Congress. (AP photo) | ZOOM |

        WASHINGTON — Major League Baseball's financial situation is so badly flawed that even the elimination of two teams before next season will not solve the long-term economic challenges of the game, commissioner Bud Selig told Congress on Thursday.

        Several teams in small- and medium-sized markets are in jeopardy without greater revenue sharing among teams and limits on player salaries, which have doubled over the past seven years, he said.

        In what Mr. Selig described as the most detailed financial numbers ever given to Congress, the commissioner estimated that teams lost a combined $519 million this year despite record revenues of $3.5 billion and a memorable World Series.

        Only five of the 30 teams made money after revenue sharing and interest payments on league debt. Only two teams — the New York Yankees and the Cleveland Indians — were in the black when revenues over the past seven years were counted.

        “We believe certain clubs have no prospect of long-term competitiveness on the field or financial viability off the field,” Mr. Selig told the House Judiciary Committee, which called a hearing to review Baseball's exemption from federal antitrust law.

        Unlike other professional sports, Baseball does not have to follow laws that discourage monopolistic practices. Mr. Selig said the exemption, recognized by the courts since 1922, has allowed MLB to remain relatively stable by deterring teams from relocating.

        Several lawmakers were suspicious of MLB's finances and questioned why Congress should not lift or modify the exemption. Rep. John Conyers, D-Mich., who has proposed a bill that would subject team elimination or relocation to antitrust law, scoffed at what he called Mr. Selig's “tremendous accounting theories.”

        Rep. James Sensenbrenner, R-Wis., the committee's chairman, said owning a baseball franchise does not seem like “a one-way ticket to the bankruptcy court.”

        But Mr. Selig said the disparity between wealthy and struggling teams is so wide that some teams have no realistic hope of a pennant. Average team payroll has increased from $33 million in 1995 to $66 million this year, he said, with predictable results on the field.

        Teams in the top quarter of player salaries have won 82 percent of postseason games since 1995, according to the league, and no team below the top quarter in payroll has won a World Series game.

        Some teams, such as the Minnesota Twins — one of the possible elimination targets — are so heavily subsidized that more than half of the club's revenue comes from other teams and MLB. Mr. Selig said the league is still evaluating which two teams to eliminate.

        Rep. Steve Chabot, R-Ohio, said lifting the antitrust exemption would likely encourage teams from small- and medium-sized markets to consider relocating to other cities in search of profits.

        Mr. Selig said Cincinnati is a good example of a middle America team that would be more financially successful if MLB and the players' union agreed to share more revenue among teams and restrict player salaries.

        “Cincinnati is the prototype of why we need to change the system,” he said.

        This year, the Reds had $70.8 million in operating revenue, including $32.1 million in game receipts and $7.8 million in local television, radio and cable TV income. The team had $81.9 million in operating expenses, including $45.4 million in player compensation and benefits.

        The team's $11 million loss from baseball operations was offset by $13.4 million in league-wide revenue sharing that would have left a $2.3 million profit if not for the cost of interest payments, which pushed the team $285,000 in the hole.

        The Reds, according to MLB, have lost $21.1 million over the past seven years.

        Other teams fared worse. The Los Angeles Dodgers, from one of the nation's richest media markets, lost $68.8 million this year after operating expenses, revenue sharing and interest payments were considered. The Arizona Diamondbacks, the team that won the World Series, lost $44.3 million. The Montreal Expos, another team targeted for elimination, lost $12.8 million.

        Players' union head Donald Fehr said the numbers released by Mr. Selig don't tell the whole story.

        “There's a lot of information we do not have. We don't have information of what the costs are in a meaningful way,” Mr. Fehr said. “If you are going to try to figure out what the situation is, you need to understand the revenue and you have to also understand the expenses.”

        Mr. Fehr said critical analysis is needed, but that MLB isn't providing the full information to do such.

        “Simple numbers don't tell you much,” Mr. Fehr said. “To examine figures on a sophisticated basis, you can't look at lump sum numbers.”

        The players' association has filed a grievance with the league about eliminating two teams and officials in Minnesota have obtained an injunction to force the Twins to honor its stadium contract at the Metrodome next season.

        Minnesota Gov. Jesse Ventura said baseball owners have brought on the financial crisis in part by paying players too much money.

        “It's asinine,” he said of claims that the owners are in financial trouble. “These people did not get the wealth they have by being stupid.”

        The Associated Press contributed to this report.
       

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