Second of three articles
As the 2002 baseball season approached, Commissioner of Baseball Allan H. "Bud" Selig held a financial stake in two major league teams.
In the National Football League, National Basketball Association or the National Hockey League, even one would have been prohibited. But Major League Baseball has no conflict-of-interest rules preventing the commissioner from owning teams.
Selig had owned the Milwaukee Brewers since 1970. When he was elected commissioner in 1998, he placed his ownership stake in a blind trust, suspended his $316,926 annual salary and announced his withdrawal from the Brewers' day-to-day operations.
Even then, the perception that Selig was still involved would lead to an ugly internal power struggle with the Brewers' president and chief executive officer, who ultimately resigned over the matter last year.
Selig's relationship with the second team was in many ways thornier. His was one of 29 teams that bought the Montreal Expos for $120 million in February 2002 after legal challenges stopped baseball from shutting down the Expos and another franchise. Selig, as commissioner, had personally appointed Montreal's president, general manager and manager shortly after contraction collapsed.
Now, with the club in limbo, he had to figure out what to do with it.
To chart the Expos' odyssey -- from contraction to Puerto Rico, where baseball is renting out the team for 22 "home" games to raise cash -- is to see clearly how Major League Baseball uses its exemption from antitrust laws to control markets and how Selig's dual roles as commissioner and owner create inevitable conflicts.
Selig adopted essentially the same strategy for the Expos that he used to persuade taxpayers in Wisconsin to bail out his financially crippled team.
Baseball would offer the Expos to vacant markets such as Washington, Northern Virginia, Las Vegas and Portland, Ore., but at the same steep price he had set to keep Major League Baseball in Milwaukee: a state-of-the-art ballpark that would cost hundreds of millions of dollars.
With the public paying for the new stadium, private investors would have more money available to pay Major League Baseball for the team. In other words, taxpayers in the bidding cities would be helping the owners, including Selig, recover their Expos investment, which was approaching $175 million.
As he had in Milwaukee, Selig argued that a publicly financed ballpark was the only way to make the Expos competitive. "Is the community's life better [with a new ballpark]? Yes," Selig said. "Can a ballclub build a stadium and survive? No."
Selig's predecessor as commissioner, Fay T. Vincent, was not convinced. "It's hard for me to argue that local governments should be put in position to finance these facilities to help owners who themselves are enormously wealthy," he said. "That's a fairly tough way to run a business. I mean, c'mon."
Selig's strategy depended heavily on baseball's antitrust exemption. Without it, the Expos or another team probably would have simply moved to the District or Northern Virginia. As recently as 1999, for example, Selig had quietly impeded the Expos' then-managing partner, Claude R. Brochu, in his efforts to move to the Washington area, which, excluding Baltimore, is the nation's sixth-largest market.
The Supreme Court ruled in 1922 that baseball was not interstate commerce as defined by the Sherman Antitrust Act, a ruling the Court later called "an aberration." The 1998 Curt Flood Act granted antitrust protection to major league players but codified baseball's immunity on issues related to the "expansion, location or relocation" of franchises.
Without the exemption, Brochu or any other team owner could have moved into the capital region without Selig's permission and despite the objections of Baltimore Orioles owner Peter G. Angelos.
With it, Washington would become a strategic pawn in what former Expos president David P. Samson described as "one of the most insane transactions in sports history."
Samson's stepfather, international art dealer Jeffrey H. Loria, stood up at an owners meeting in January 2001 and threatened to resist if baseball tried to fold the franchise, which Loria had purchased in December 1999. Major League Baseball eventually accommodated Loria by paying him 10 times his original investment, then subsidizing his purchase of the Florida Marlins.
The Marlins' owner, billionaire commodities trader John W. Henry, bought the Boston Red Sox in what Massachusetts Attorney General Thomas F. Reilly called a "bag job" by Selig and Major League Baseball despite the existence of higher bids. Henry and Selig denied the charge, but, to avoid litigation, charities benefiting from the sale received an additional $30 million.
In 2003, Major League Baseball, operating a team over an extended period for the first time, decided to park the Expos in Puerto Rico for a quarter of the team's home games. The venture brought in about $350,000 per team and promoted the "internationalization" of the sport.
The Expos would play 103 road games -- 27 percent more than their competitors. The team traveled 40,951 miles last season. The on-field temperature at 18,000-seat Hiram Bithorn Stadium in San Juan sometimes reached 150 degrees. Announced attendance at a May 20 day game between the Expos and Brewers this year was 8,941; a reporter counted 2,443 fans by hand. When Milwaukee's Scott Podsednik homered in the top of the ninth, the ball clanged loudly against the metal bleachers, then rolled away.
There wasn't a soul to chase it down.
Washington 'in a Class by Itself'
On Oct. 5, 1998, Selig flew to Montreal to meet with the premier of Quebec, Lucien Bouchard.
The trip was a last-ditch effort, arranged by Brochu, to obtain financing for the new ballpark that was critical to the Expos' survival in Montreal. Brochu, a former Seagram's executive, hoped Selig could win over the premier, who a month earlier had turned him down. Selig launched into his standard pitch. In many ways, it was the same one he had delivered repeatedly to get Miller Park built in Milwaukee. The bottom line: Montreal would have to build a new stadium to keep the Expos.
"My government's answer remains the same," the premier responded. "We will not make the funds available. That's final."
The Expos were in a death spiral, but how it happened was a matter of debate. Montreal's main problems seemed to be caused by Major League Baseball itself. A strike shortened the 1981 season, interrupting what could have been five straight seasons of at least 2 million fans. The Expos recovered, but then came the strike of 1994. The club was 34 games above .500 and leading the National League East by six games when play ended on Aug. 12. By the following year Montreal faced a severe financial crisis and began to unload players.
"Montreal, basically, after the strike in '94, abandoned baseball," said Robert A. DuPuy, baseball's president and chief operating officer. "They turned their back on baseball."
Mitch Melnick, the sports director at Team 990, the Expos' flagship English-language station, disagreed. "The fan base was destroyed as the product was destroyed," said Melnick. "I guess this is Major League Baseball's way of wishing the problems would go away: Blame the customer."
Rejected by the local government, Brochu sought out alternatives. He opened secret negotiations with Virginia telecommunications executive William L. Collins III, who since the early 1990s had been trying to bring a team to Northern Virginia.
Brochu had explored several markets, including Portland, Ore., Las Vegas and Charlotte. "Washington always was to me in a class by itself," he said. "The economics, the demographics, the wealth of the area, the population, productivity, disposable income, the number of companies and firms that would be potential supporters -- it was just so far superior to any other location, by a long shot."
A source involved in the discussions said Brochu and Collins reached "an agreement in principle" to move the club to Northern Virginia. But Brochu called the talks "very, very preliminary," mostly because Selig stood in the way.
"I felt the team should have been moved and I told the commissioner that," said Brochu, at the time a member of the Executive Council, the commissioner's cabinet of owner advisers. "I always heard, 'Well, he's thinking it over, he'll review it, he'll know in two more months or six more months.' There was really no decision."
Selig said he wanted to preserve baseball's 31-year streak of not moving teams. He also wanted to address the game's economic problems before considering relocation. "Moving, in this system, what is that going to do?" he said.
Rebuffed from moving and at war with his fellow owners, Brochu stepped down. The search for his successor revealed a lot about the withered state of the franchise.
One of the team's main sponsors, a Mercedes-Benz dealer named Sam Eltes, located one. Eltes' sister-in-law from his first marriage had a son who worked as the financial adviser to Loria, a baseball-loving international art dealer in New York.
Loria had helped bid up the price at a sweaty 1993 bankruptcy auction for the Baltimore Orioles, only to lose to Baltimore attorney Angelos. He had owned the Class AAA Oklahoma City 89ers for four seasons.
Loria was not a typical major league owner. He had made millions dealing in 20th-century sculpture, painting and works on paper. He worked out of an unmarked private office on East 72nd Street in Manhattan. He had written two books: "Collecting Original Art," a primer on collecting with a foreword by his mentor, the late actor Vincent Price, and "What's It All About, Charlie Brown?" a psychological deconstruction of the "Peanuts" comic strip.
"My books! My records! My pool table! My Van Gogh! Sob!" muses Snoopy on the cover of Loria's book as his doghouse goes up in flames.
Loria's purchase coincided with preparations for civil war inside the national pastime.
The collective bargaining agreement between owners and players was about to expire. Selig was a veteran of the previous eight negotiations, each of which resulted in a work stoppage and, mostly, defeat for the owners. Selig began to lay the groundwork for battle.
In January 2000, the owners voted to give him full authority to address baseball's economic problems.
Then, in July, Major League Baseball released what it called a landmark report. A "Blue Ribbon Panel" concluded that baseball was no longer fair for teams in small broadcast markets, which could not generate enough revenue to compete.
Exhibit A was the Montreal Expos. The report showed that the team generated less revenue over its entire season than the New York Yankees took in during a six-game homestand.
Don Fehr, executive director of the players' union, called the report "the opening round" of the labor negotiations. Selig had also ramped up baseball's lobbying on Capitol Hill. He hired Baker & Hostetler LLP, the powerhouse Washington law firm. Selig knew that Washington could make or break the negotiations. In the event of a work stoppage, Congress inevitably would use the antitrust exemption as the hook to hold hearings and tear into the commissioner.
The lobbying effort was headed by William H. Schweitzer, a Baker & Hostetler partner who had worked nine years as general counsel for the American League. Schweitzer, a Republican, was joined by a Democrat, Lucy J. Calautti, former chief of staff for Sen. Byron L. Dorgan (D-N.D.) and the wife of Sen. Kent Conrad (D-N.D.).
Schweitzer and Calautti decided to launch the first Political Action Committee of any major sport. "My whole thought was that if you're going to participate in the process, like they said they wanted to, you needed a PAC," said Schweitzer.
Since 2002, the Office of the Commissioner of Major League Baseball Political Action Committee has raised $488,295 -- nearly all of it from baseball owners, officials and their relatives. It has distributed $102,500 to members of the House and Senate Judiciary Committees, which have jurisdiction over antitrust matters.
Major League Baseball has spent $5.045 million on lobbying over the past six years, more than the NFL, NBA, NHL and the Professional Golfers' Association combined, according to federal lobbying disclosure records.
Schweitzer and Calautti bound the Blue Ribbon report and distributed it to every member of Congress. How many people actually read it is unclear, for it contained a startling recommendation: "Franchise relocation should be an available tool to address the competitive issues facing the game," the report stated.
Baseball had used the antitrust exemption to control franchise movement after the Senators left Washington in 1971. Now its own economic panel was concluding that one solution to baseball's economic problems was to break up regional monopolies "occupied by one or more high-revenue club."
The reference was clearly to markets such as New York, where the Yankees and Mets controlled an area of more than 15 million people, and the Washington-Baltimore corridor, the exclusive domain of the Baltimore Orioles.
"If the recommendations outlined in this report are implemented, there should be no immediate need for contraction," the panel added.
Within months of the report's circulation on Capitol Hill, however, baseball initiated plans to shut down at least two franchises.
DuPuy said Major League Baseball chose the more drastic step of contraction because the economic conditions in baseball had worsened considerably.
Inside baseball there was speculation that contraction was a part of the owners' pre-war buildup, a negotiating ploy designed to show the players' union that baseball was prepared to cut at least 7 percent of its work force if it did not gain concessions.
But owners and union representatives said contraction was not a tactic. "Obviously, it was real," wrote Red Sox owner Henry in a lengthy e-mail interview. Henry, whose former team, the Marlins, was a candidate, added, "In any business or industry, if you have companies or divisions that are not making it, you close them."
Richard E. Jacobs, the former owner of the Cleveland Indians, warned Selig: "It's going to be a bloody process. The blood's all going to be yours. Do it anyway."
The process began in October 2000. Selig announced at a Chicago owners meeting that he had asked DuPuy and Paul Beeston, then baseball's president and chief operating officer, to study the ramifications of eliminating franchises.
As the meeting broke up, Samson, the Expos' president, bolted across the room to confront Selig.
"What do you mean: You're contracting the Expos?" Samson asked incredulously.
DuPuy quickly grabbed Samson by the arm to defuse the situation.
"David, we'll talk," he said.
In the spring of 2001, Beeston scrawled a list of candidates on a piece of yellow lined paper and handed it to an aide. The list included the Expos, Minnesota Twins, Toronto Blue Jays, Oakland Athletics, Marlins, Tampa Bay Devil Rays and Anaheim Angels.
Throughout that summer, baseball officials met in the 31st floor executive conference room at Major League Baseball's headquarters at 245 Park Avenue in Manhattan. From the beginning, according to a former baseball official who participated, there were discussions about whether baseball had the legal authority to unilaterally eliminate teams. The contraction meetings were referred to by euphemisms such as "baseball issues" or "ownership issues." Participants sometimes were told not to take notes or to hand in their notes at the end of meetings, said the official, who spoke on condition of anonymity because of an ongoing federal racketeering suit filed by the former Expos limited partners.
Calautti and Schweitzer were asked to attend to help baseball gauge the potential reaction on Capitol Hill. With the Minnesota Twins in the line of fire, Calautti brought up potential objections by North Dakota's Dorgan, her former boss and the ranking Democrat on the Senate Commerce Committee's sub-committee on competition, foreign commerce and infrastructure.
"He's not going to go for that," Calautti warned.
Calautti said she did not recall bringing up Dorgan but said she raised concerns about a number of potential pockets of resistance, including the Minnesota and Florida congressional delegations.
A scheduled meeting for Sept. 11, 2001, at Selig's Milwaukee office was postponed because of the terrorist attacks on New York and the Pentagon. Within two weeks, according to Selig, owners were again clamoring to liquidate franchises. Selig told the owners he would wait until after the World Series.
On Nov. 6, 2001, baseball's owners, meeting in Chicago, voted 28-2 to contract. Only the Expos and Twins opposed.
But lingering in the air was a fundamental question: What about Washington?
"The Washington/Northern Virginia area was obviously very aggressive in pursuing a club, and we'll be very sensitive to their issues as time goes on," Selig told reporters.
Inside Major League Baseball's offices, Washington was an issue that seemed to hover in the air without ever being addressed head on. "It was amazing what a sticky point Washington was," said the former baseball official. "Anytime it got brought up it was like Ralph Kramden and the hummana, hummanas. Almost every time the discussion would eventually come around to, 'What about Washington?' "
Most believed Loria would have jumped at the chance to move the Expos to D.C. or Northern Virginia. "I think he always had his eye on Washington," said a baseball executive who worked closely with him. But that was out of the question. Around baseball, Loria's brief ownership was already viewed with disdain. He had quickly alienated his Montreal partners, which included some of the most influential businessmen in Canada. His stepson, Samson, was widely regarded as abrasive and disrespectful.
The former MLB official said DuPuy, Selig's closest adviser, told him more than once that the chances of Loria getting Washington were nil.
According to the former official, DuPuy conveyed the message, "It'll be over Bud's dead body before he lets that [expletive] have Washington."
DuPuy denied speaking pejoratively about Loria, with whom he said he had a good relationship. But he said the "sentiment" was accurate.
Loria, who declined requests to be interviewed for this article, and Major League Baseball were on a collision course.
As the owners moved forward on contraction, Loria was systematically assuming total control over the Expos, the team in baseball's crosshairs.
Loria's plans for the Expos were unclear. When he bought the team, the deal included a critical second step in which Loria would put up an additional $38.8 million toward a new downtown ballpark.
Before the 2000 season, though, he had failed to negotiate a new local television deal and alienated sponsors. Plans for the ballpark evaporated. At the first meeting of the new partnership, Loria's chief financial officer, Joel A. Mael, stunned the limited partners by announcing a possible capital call -- a demand for cash to support operations.
Loria was an absentee owner, commuting from New York while Samson, his then-31-year-old stepson, ran the team. A former private wealth manager at Morgan Stanley with no previous baseball experience, the 5-foot-5 Samson grated on the limited partners, one of whom pushed him into a wall during a meeting. He came to be known around the Expos' offices as "Little Napoleon."
Soon, Loria and the limited partners were at war. After Loria issued a cash call on March 17, 2000, they staged what amounted to a coup. They told Loria they would give him back his $12 million if he would step down.
"They basically put a check on the table and said, 'Bugger off,' " said a source familiar with the meeting. Loria instead initiated another series of cash calls. If the limited partners failed to come up with the money their shares in the team would be diluted. Within 17 months Loria had gone from owning 24 percent of the Expos to more than 93 percent.
Asked why the partners failed to meet the cash calls, their lawyer, Jeffrey L. Kessler, said, "All they knew was that this was a destroyed team" run "by a general partner who they thought was totally out of control. . . . It was impossible for any sane investor, and Loria knew that." The move gave Loria the power to do basically whatever he wanted with the team.
But Major League Baseball had its own designs on the Expos. It wanted to buy out Loria and shut down the franchise, redistributing tens of millions of dollars in broadcast and licensing revenue, as well as millions of dollars the Expos received each year in revenue sharing.
Loria informed the owners he wasn't going anywhere. In January 2001, he stood up at an owners meeting in Phoenix and read an impassioned statement vowing to resist to stay in the game he loved. The drumbeats continued through the summer. "They were threatening us with a New York litigator virtually every conversation we had," said DuPuy.
The message: Loria would file an antitrust suit if Major League Baseball tried to muscle him out.
The "pushback" from Congress that Calautti and Schweitzer had predicted was fierce. Within a month, the House Judiciary Committee held a hearing that quickly turned ugly. Selig, slight and ashen, was seated next to Jesse Ventura, the former Navy SEAL turned professional wrestler turned governor of Minnesota.
Ventura accused baseball of seeking to extort a new ballpark from his state by threatening to shut down the Twins.
"Major League Baseball is really no different than OPEC; it controls supply and it controls price with absolutely no accountability," said Ventura.
Baseball struggled to find a way to placate Loria and shut down two teams. The process began to resemble real-life Monopoly, with baseball's powerbrokers bartering teams behind closed doors, unbeknownst to their millions of fans.
Under one scenario, Athletics owner Steve Schott would relocate his entire franchise -- including the players and front-office staff -- to Anaheim. Oakland would effectively dissolve and take over the Angels' territory in Orange County.
Under another, Loria was to move the Expos to Tampa Bay, where the Devil Rays would be folded. Under still another, Marlins owner Henry would fold his team and buy the Angels from the Walt Disney Co.
Henry emerged as the fulcrum around which baseball would bring order. The commodities trader was widely respected as a brilliant, honest broker who loved baseball and wanted to stay in the game -- just not in Miami.
As with most teams in line for contraction, the need for a new ballpark was the central issue in south Florida. Henry, who bought the club in 1998, had tried unsuccessfully for three years to get public financing. On April 25, 2001, Selig wrote a letter to the Florida legislature warning that the eight-year-old Marlins would be moved or eliminated if no stadium was secured. "Bluntly, the Marlins cannot and will not survive in south Florida without a new stadium," Selig wrote.
State Sen. Kendrick Meek, a Miami democrat, told the Miami Herald, "It sounds like Johnny Soprano writing that letter, trying to threaten and put pressure on us."
That summer Henry informed Selig he planned to sell. Selig asked him to stay in baseball. After his Angels bid fell apart, Henry contacted former Orioles president Larry Lucchino, who was now involved in a bid to purchase the Boston Red Sox.
"We're dialing for dollars," Lucchino told him. Henry asked if he could join forces.
For Major League Baseball, the timing could hardly have been more fortuitous. Henry, Lucchino and a third partner, television executive Thomas C. Werner, all were close with Selig and had impeccable reputations; in a sense, the group had been pre-approved. Henry denied the deal was a "bag job," as the Massachusetts attorney general alleged.
As baseball shuffled its deck of clubs, Loria found himself holding a flush. Spring training was weeks away. Henry's purchase of the Red Sox was predicated on selling the Marlins. After weeks of negotiation, baseball paid Loria $120 million -- a 900 percent return on his original Expos investment -- plus a $38.5 million loan tied to several conditions, including Loria's ability to get a stadium in south Florida.
On their way out of Montreal, Loria and Samson stripped the franchise. With them went computers containing scouting reports on every Expos player, dozens of signed home run balls, even life-size cutouts of the team's former superstar right fielder, Vladimir Guerrero. The Expos' limited partners, meantime, became unwitting owners of 6 percent of the Marlins. In July 2002, they filed a racketeering suit in U.S. District Court in Miami. It charged Loria, Samson, Selig, DuPuy and the Office of the Commissioner of Baseball of illegally conspiring in what the suit called an "Expos Elimination Enterprise."
The ongoing suit could complicate baseball's plans for the Expos. The limited partners have 90 days to seek an injunction if baseball tries to move the team.
Last October, Loria's Marlins miraculously found themselves in the World Series against the New York Yankees. "Can you imagine?" anguished one of the limited partners. "I'm sitting here. I'm an owner of the Florida Marlins. I'm rooting for the Yankees!"
And then, of course, the Marlins won.
This spring, nearly all the limited partners received World Series rings, even as they continued to sue Loria and Major League Baseball for racketeering in U.S. District Court.
A 'Prime' Indication
The day after the Red Sox deal was announced in Phoenix, Selig came to a news conference beaming. The previous weeks had been filled with criticism about contraction, questions about conflicts of interest and editorials calling for Selig's resignation.
But, behind closed doors at the Arizona Biltmore Resort & Spa, the owners who had elected Selig commissioner and paid his salary stood behind him. "These were the best two days I've had in a long time. Make of that what you will," he told reporters.
And then, in the middle of the news conference, Selig was asked where Washington fit in to baseball's baffling jigsaw puzzle. Would the nation's capital finally get a team?
Perhaps Selig's mood got the better of him. "I'd have to say that given the demographics of the area and all the people who want it, they are the prime candidate," he said.
Relocation, Selig said on Jan. 17, 2002, was coming "in the near future."
Staff researchers Julie Tate and Margot Williams contributed to this report.