PAUL HOLMES: Major League Baseball is playing with fire bydeceiving stakeholders about its revenues

Is Major League Baseball the least-credible institution in America?

Is Major League Baseball the least-credible institution in America?

Sure, there's some competition: those guys in the Houston office of Andersen; the tobacco execs who testified before Congress a couple years ago; Miss Cleo. But it's hard to think of an organization that has consistently deceived, misled, and disrespected key stakeholders - baseball fans, like me - quite as consistently or cavalierly as MLB and its commissioner, Bud Selig. And it's getting worse.

In November, Selig testified before Congress (although it would be stretching the definition of "testimony

to apply it to the commissioner's evasive maneuvers), during which he repeatedly refused to open up baseball's books, and urged committee members to take on faith his assertion that the majority of baseball teams lose money.

Baseball teams like to claim they lose money so they can plead poverty when the players' union seeks to negotiate a new contract, and blackmail cities into building new stadiums with public money. Their accounting practices make Enron look fastidious. For example, five teams, owned by media conglomerates, minimize their income from TV revenues, which then shows up as extra advertising profits for the parent companies.

As Baron's pointed out last year, "The bean counters know, even if Bud Selig says he does not, that baseball clubs record operating losses to shelter other income - corporate or personal - from taxation. They are so successful at generating paper losses, in fact, that the losses add value to the clubs as assets."

More recently, Forbes published a report on MLB's real revenues, suggesting that contrary to Selig's claim that only nine of 30 teams made money in 2001, in fact just 10 made a loss. (Forbes' numbers are likely conservative: When teams change hands, they typically do so for far more than the magazine's valuations.)

Meanwhile, MLB was trying to score PR runs by pledging not to lock out the players. The fans may have been taken in by the ploy, but those who understand labor negotiations were not: Owners never lock out players during the season because high-revenue post-season games could be lost.

If a strike or lockout does occur, the owners will no doubt blame excessive salaries. But while it's hard for the public to sympathize with millionaire bench players, the fact is that MLB's own disclosures show that while total revenues have risen 156% since 1995, player salaries have increased by 113% over the same period.

It's hard to imagine any other organization in America dealing with its key stakeholders like this without being called to account. Sports writers are obviously more forgiving of deception and duplicity than business writers, but if recent events have taught us anything, it's that no institution can get away with lying to the public forever.

- Paul Holmes has spent the past 15 years writing about the PR business for publications including PRWeek, Inside PR, and Reputation Management. He is currently president of The Holmes Group and editor of www.holmesreport.com.

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