Speech given by Mr. Jeffrey Loria
Chairman and CEO, Montreal Expos
February 3, 2000
Distingués membres de la table d'honneur,
Ladies and gentlemen,
Thank you all for being here today, present and future baseball fans, and corporate supporters of the Montréal Expos.
Before I address the main theme of my speech, the economics of baseball, I would like you to take out your personal agendas and make note of a very important date. Please turn your agendas and your minds forward to spring, the warmer sun, the longer days, to the first week of April, to be precise.
Yes, in exactly two months from today, on Monday, April 3, at 7:05 in the evening, the time-honored cry of Play Ball! will ring out as the Expos open an exciting new season against the Los Angeles Dodgers.
The Expos deserve a full house on opening day and each day of opening week. I am counting on each and every one of you to be there, to show your support for this young team, full of talent, and full of hope.
I am counting on you because you, as members of the Montréal business community, are key in helping this team remain viable in our city.
I say our city because today, as I stand before you, I feel like a true and very proud Montréaler. For about a year now, I have been commuting between New York City and Montréal. While I was still because of the requirements of Major League Baseball playing the invisible man, I travelled back and forth to Montréal. I attended a handful of games at the Big O but as you know, at that time, concern and worry had replaced enthusiasm and passion in the minds of both the players and the fans.
Nonetheless, I got to see the people behind the team, those who make this organization work, the Expos staff. My respect for them grew as time passed.
I always knew of the great baseball tradition of Montréal. I have also learned to appreciate the fabric of this peaceful, joyful city, to witness its unique character as one of the few large cities in the world at ease with two international languages, English and French.
Before going further, let me clarify the aspect of my life that has triggered the most curiosity here in Montréal. What is an international art dealer?
For 35 years now, I have dealt with paintings and sculptures of the 19th and 20th century masters. A large number of the world's major art transactions do not take in public auctions. Major art collectors want anonymity. This is where the art dealer comes in, making the connection between a seller and a buyer.
And what is the relationship between art and baseball? Well, to me, it relates to excellence. Baseball requires talent, elegance, precision, speed and strength. I like to work with the best, in both art and baseball. The specific requirements may be different, of course, but the ultimate goal is the same: excellence. In pursuit of this, many more great names will be associated with the Montréal Expos.
Let's now turn our attention to the subject at hand, the business of baseball. After the unfortunate strikes of 1981 and 1994, baseball is now living through some tremendously exciting times. The passion for baseball has been rekindled and there is enthusiasm in all of the baseball cities in North America.
For one thing, the game has never been more vibrant, featuring some of the greatest hitters and pitchers ever to take to the field. In 1998, the home run race between Mark McGwire and Sammy Sosa created unprecedented thrills. By the way, do you remember that McGwire's 70th home run ball was sold at auction for 3.2 million Canadian dollars? One could just as easily have bought a major Picasso painting for the same amount!
Overall opening day attendance in 1999 was the second highest year after 1993. Interleague play is a big success as average attendance was, in 1999, 22 percent higher than the intraleague average.
In recent years, new stadiums have opened in Texas, Cleveland, Colorado, Atlanta, Arizona and Seattle. Many of these are downtown stadiums. Three new stadiums will open this year in Detroit, San Francisco and Houston.
Our own new, state-of-the-art downtown stadium will open in 2002. As a matter of fact, next Tuesday, February 8, we will present our initial concept design project to the Montréal media.
As you are business people, let's now look at expenses and revenues first at the Major League Baseball level, and then at the Expos level.
Obviously, inflation in professional baseball salaries stands out as the greatest challenge of the last few years. In the last year alone, the average salary increased by 13%. Team payrolls ranged from 14.6 million US for the Florida Marlins to 91.9 million for the Yankees, a disparity of 77 million US dollars.
There is no assurance however that the highest payroll will produce a winner. In fact, other values, such as youth, team spirit and motivation, may in the end become more important factors.
The current commissioner, and the ninth Commissioner of baseball, Bud Selig, is doing a superb job of confronting the economic issues head-on. One year ago, Commissioner Selig named a Blue Ribbon Task Force on Baseball Economics to analyse all aspects of baseball's economic system. The very distinguished members of this panel have a lot of experience and credibility and their advice will be wise.
The concept of revenue sharing was designed to increase Major League Baseball's competitive balance. This has been one of the focuses of the Blue Ribbon Task Force. I am confident that the Commissioner will, in short order, begin the process of increasing the viability of all Major League Baseball franchises.
National broadcasting rights will continue to be an important asset for Major League Baseball. In December, ESPN and Major League Baseball reached agreement on a three-year extension that calls for a significant increase in visibility for Major League Baseball on its networks.
Fox will enter its fifth season as an important television broadcaster for baseball. Its ratings have been increasing significantly every year. They grew 15% over the 1997-98 two-year period.
What does this mean for the Expos?
Montréal is not a small market. Those who see Montréal as a small market, see it in their minds. This is a Major League market that can and will support a winning team. If we see big, my friends, we'll make it big, together.
There are five important sources of revenue for our team: two come from Major League Baseball, and three are local.
From Major League Baseball, the two are the central fund, from which Major League revenues are distributed, and revenue sharing.
Locally, the three sources are ticket sales, corporate sponsorships and broadcasting rights.
Ticket sales are a significant source of revenue. In 1999, attendance at Expos games was a Major League low at 700,000. Our objective is to sell two million tickets a year, as soon as possible. With 1.3 million additional tickets sold, at an average say of $10 apiece, we would have a revenue increase of $13 million.
As you may know, a baseball season is 162 regular season games, 81 of which are played at home. Buy baseball tickets for your employees, more than once in the season, to thank them and encourage them. Employees will appreciate your thoughtfulness. Baseball is good value, not costly entertainment.
The fourth key source of revenue for the Expos is local corporate involvement, your involvement. Various forms of sponsorships exist as well as promotions in the stadium and on-field signage.
Product endorsement of your products by Expos players is a win-win combination. The extra income players earn from their endorsements contributes to their attachment to the team, and your company will be associated with a success story.
Local broadcasting rights are the fifth and a most important source of revenue. Negotiations are currently ongoing and we hope we will soon reach an agreement. As we offer a more interesting product, broadcasters need us as much as we need them.
Of course, our main expense is the players' payroll. A team's payroll is by far its largest single operating cost, and also its most critical. Other costs, such as travel, marketing, promotion, player development and training and administration are easier to manage.
In 1999, the Expos payroll was only 15 millions US dollars. There has to be a middle ground somewhere, and we are increasing our payroll in order to develop a winner, within the boundaries of fiscal responsibility.
Now, I ask you, let's not play the chicken or the egg story. Do we wait for high attendance and increase corporate support to justify players' salaries, or do we increase salaries NOW to get a winning team and attract larger crowds? And you, as corporate supporters, do you wait and see if this team starts winning or do you get your season tickets this afternoon, as you get back to your office, so that we can start the season by reaching our goal of 9,000 season ticket holders.
You know my point of view: the future of the team starts now. We have not waited for your show of support, and we are not waiting for the building of a new stadium to improve the team. We have an exciting product and we want to share that product with you.
When the Expos are in other cities, they represent Montréal; the name Montréal is on their uniforms; they are ambassadors of the city, reflecting its youth, determination and enthusiasm.
Montréal should be no exception to the revival of the game. Let me give you a few reasons why the wind of change is also blowing here.
As you know, some of the best players of the game are part of our team. We WILL keep our stars in Montréal.
We know fans will feel closer to the players when they have more occasions to meet them off the field. We also believe the players will become more attached to Montréal as they become more present in the community. That's why we will do everything we can to increase the involvement of our players in the community.
By the way, we are pleased to welcome at our luncheon today many of our players. They are an international group who have come from North and South America, the Caribbean, Australia as well as Japan to be here with us. As long as we are talking numbers, our players represent more than half of the continents in the world. No other major league team can make that claim.
Let's have a round of applause for these gifted athletes. Gentlemen please stand up.
One of the most significant factors for the Expos' future success is the fascination Montréalers and Québecers have for winning. It's time for them to rediscover their passion for a winning team.
Montréalers also need the type of relaxation that baseball can provide. Just think that in today's rush-rush world, baseball remains one of the last bastions of no time constraints! Our lives are timed down to the last second from the moment we wake up to the time we go back to bed. That's too much stress, and baseball is the antidote.
During a baseball game time is measured in innings. Forget the usual minutes and hours, now it's all about strikeouts and home runs! That's why the inimitable Yogi Berra was quite right when he said: « It ain't over till it's over! »
Enjoy a family outing, an employee bonding experience or a business-related experience. And personally, when I go to a ball game, I put my crackerjacks in the pocket where I usually carry my cell phone.
Speaking of family, I would like to introduce you to my wife Sivia and my son David. David, as you know, is the Executive Vice-President of the Expos and my right hand man. His enthusiasm for the Expos and love for the game are second only to mine.
It does not take a psychologist to tell you that baseball is the perfect treatment for life's stresses because it is the most peaceful of games. Of course, the adrenaline flows when there's a disagreement over those precious inches around the plate, but as any fan will tell you, baseball players do a lot of posturing, but not much fighting!
It is a simple equation:
The new Expos are providing winning assets for all.
- The players get motivation and enthusiasm from the fans;
- The Montréal business community becomes associated with the Expos success story throughout North America;
- Montréal gets a long-term winning professional sport team;
and most importantly,
- The fans get to live a full season of passion and breathtaking action.
In closing, I would like to thank you again for coming today. My Montréal partners, all the players and myself, will be waiting for you at the Olympic Stadium.
The Montréal Expos will change the face of the city from this April to October. Baseball will be the talk of the town. See you on April 3, at 7:05 in the evening, against the Dodgers.
Thank you very much for your attention.