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Don Fehr

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Bob DuPuy: Page Two

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BA: How do you characterize steroid use in the game right now?

DUPUY: I have no idea. Our doctors advise us that it is an issue. We believe from the increase of players on the disabled list, the length of time they're spending on the disabled list, the nature of the injuries, that it is probably an issue. We have had on the table, for a long time, not just in reaction to the recent disclosures by former players--remember, all of this became an issue because of former players deciding to speak up--but we have had a comprehensive drug policy on the table now for well over six months, and have discussed comprehensive drug policies in prior negotiations. We think it's important for the health and well-being of the players, and for the integrity of our historical records, which are key to this, and the popularity and success of the game.

BA: How prevalent does Major League Baseball believe it is?

DUPUY: We don't have an opinion as to the prevalence of it. The commissioner thinks the Caminiti estimates were significantly exaggerated, but he does believe it's an issue.

BA: What's your assessment of the union's response to and stance on the proposals of testing, whether random or scheduled?

DUPUY: The union's response has been negative thus far.

BA: Can anything be done to address the issue, other than testing, other than random testing? Because education, which both sides attempt to do, doesn't appear to have a major impact, or enough impact.

DUPUY: We do testing at the minor league level. We do education. I think education and the minor league testing has clearly had an impact. But the fact that you've had positive benefit A and positive effect B doesn't necessarily lead to the belief that there's still not a problem. And we believe there is still a problem, and we're trying to address it. We think testing is an appropriate way to address it.

BA: Is there any other option in between the minor league testing and education, and random testing?

DUPUY: A lot of players have spoken out in favor of testing to establish that they're clean--and that their performance is untainted. And I think that to ensure that the public has confidence in the performance and in the statistics that are being put up, that testing is the right way to do that. I can't think of anything less than that that would solve that problem.

BA: Does Major League Baseball, in the office, test its employees?

The fact of the matter is that (MLB's financial) numbers are audited three different times, and the Players Association has the right to audit those numbers, but has never elected to exercise the right to audit the numbers. The numbers are flat accurate. Period. End of story.
DUPUY: We are all subject to being tested.

BA: Have you been tested, personally?

DUPUY: I have not been tested since I came to work for Major League Baseball. I'd be happy to be tested. They'd find a lot of cholesterol, and that's about it.

BA: Do you test other employees?

DUPUY: What we do is, frankly, out of respect for the privacy of our employees, what we do is not public--other than to say every employee of Major League Baseball, except for the major league players, is subject to being tested randomly.

BA: You replaced Paul Beeston in March as the owners' lead negotiator--or at least that's your role from the outside--and Paul has left baseball since. Have you spoken with him lately?

DUPUY: Sure. Paul and I sat together at a wedding two weeks ago.

BA: Do you discuss these issues on a, however informal, basis?

DUPUY: No. I think because the status of the negotiation, the progress of the negotiation, are directed by the commissioner and the clubs. The constitution put the commissioner in charge of labor negotiations, and Paul is not a current participant in those.

BA: How would you rate the last collective bargaining agreement, signed in 1996?

DUPUY: I think the deal that we struck in '96 was the result of a lengthy work stoppage and came on the heels of that, and the problems that that had created, and exacerbated the competitive-balance problem which is key to these discussions and ongoing negotiations.

BA: It sounds like you're saying it was a product of an urgent time, a time when, would it be fair to say, you guys ran out of time to get the deal you wanted?

DUPUY: I don't know I would say we ran out of time. We reached a deal we thought was appropriate at the time. In hindsight, some of the issues we tried to address did not get solved.

BA: What can be different this time? The owners have been concerned about the rise in salaries for 30, 50, 80, 100 years. Competitive balance for, say, the last 10 or 20 or even 30. What can the current folks do that's different? I believe in the momentum of history, and we're 8-for-8 with work stoppages when the CBA is being negotiated. It seems a professional sports inevitability.

DUPUY: It's too bad.

BA: What can be different this time?

DUPUY: What was the phrase you used, the momentum of history? There's also a learning from history. And those work stoppages have not necessarily advanced the ball for either side, in some instances. You can argue that the work stoppage cost both sides considerably last time. The union struck to prevent implementation. We implemented anyway. All the strike did was cost players money and hurt the fans. We got lucky in '98 with Sosa and with McGwire and with David Wells' perfect game and with the Yankees' run. Who knows whether you'll get that lucky again?

We've made a proposal that is intended to begin to right the ship. It was not intended to provoke a work stoppage. It was not intended to be inflammatory. We made a proposal that included only concepts that had been in prior deals.
And what can be different is an understanding of the continued economic erosion--and an understanding of the competitive balance erosion. In the last five years--since the last (agreement)--you've seen the numbers: 225 playoff games, and only five won by teams in the bottom half of payroll. Not a single World Series game has been won other than by teams in the top quartile of payroll. And that's a fairly significant statistical sample to draw conclusions from.

Revenues have grown from $2 billion to $3.5 billion--to $3 billion or $3.5 billion--and yet the debt of the industry has grown from $1 billion to $3 billion during that same period of time. The spread in payrolls has gone from two-to-one to now almost four-to-one. And you know, there continues to be this erosion and the widening of the gulf between the haves and have-nots. Sooner or later that needs to be addressed, and maybe that's what can be done differently.

BA: I believe the following are Major League Baseball's own numbers: Revenues up 156 percent since 1995. Salaries up 113 percent, other expenses up 134 percent. If revenues are going up at a greater percentage . . .

DUPUY: They're not. The numbers you are using are skewed because 1995 revenues were artificially deflated by the strike. Expenses were not.

BA: It's no secret that numbers that Major League Baseball provided to the House Judiciary Committee have received about as much public scrutiny, and acceptance maybe, as Worldcom's. For instance, if the Dodgers are losing $54 million or $69 million, depending on whether you count interest and all of that stuff, if they're only worth $330 million, or whatever it is, why did they take such huge contract risks? It's one thing to sign Kevin Brown, an established all-star . . .

DUPUY: They signed him three years ago.

BA: Right.

DUPUY: They signed Gary Sheffield two years ago.

BA: But they signed Darren Dreifort a year ago to a huge deal.

DUPUY: One of their own players.

BA: I understand, but a guy with a significant injury history and what-not. I'm not debating the contract per se--I liked the signing at the time, to be honest. I'm not going to lie here. But then again, I didn't know they were losing more than $50 million a year, according to your figures. Why would you take a risk like that if you're losing that much money? I'm not asking you to pick on the Dodgers. They're just an example.

DUPUY: I want to respond to two points you made. The first is your comment about the numbers provided to the House Judiciary Committee. The fact of the matter is that those numbers are audited three different times, and the Players Association has the right to audit those numbers, but has never elected to exercise the right to audit the numbers. The numbers are flat accurate. Period. End of story. All right? Whether people want to believe them or not is wholly irrelevant to the fact of whether or not these clubs are actually losing the sums they're losing.

Second, without picking on any particular team, there are all sorts of reasons, ranging from competitive instincts, to peer pressure, to rampant local newspaper criticism, as to why clubs sign players they do sign, and why they invest in players at the level that they do. That's, in fact, part of the reason why we proposed additional revenue sharing. It's part of the reason why we proposed a competitive balance tax. It's to have some sense of balance within that system so that an individual owning Team X, or a smaller company owning Team Y, can in fact compete with a larger company owning Team Z who are willing or apparently willing to lose those kinds of money.

But you've also seen, particularly given the debt structure, if you look at the bidding this year in the free-agent market, there are fewer teams that participated in the free-agent market this year. That's in part, I think, because of recognition that they were going to continue to lose money.

BA: Why can't that process continue to the point where teams just say no on their own?

DUPUY: Because it's not enough. Because not every team will say no, and then you've got an amplification of the competitive balance issue.

BA: Using September 1st as the cutoff date for roster analysis, that, of course, will depict as strong a disparity as possible among team payrolls as any other date you could have chosen. You're using the whole salary rather than the actual prorated out-of-pocket expense.

DUPUY: I think September 1st is used because of the expanded rosters. But the fact of the matter is that it doesn't matter where you did it in the year. The issues would still be the same.

BA: From the outside, it also appears that you don't make money operating a baseball team. You make money selling it. If you lose $10 million a year for 10 years and sell the thing for $180 million more than you paid for it . . .

DUPUY: Okay, let's do it that way. I'll cover every side of that. I got that question at the Senate Judiciary Committee. And I don't have the chart in front of me.

Of the last dozen sales, fewer than half recouped the investment, let alone the investment plus the losses. We had a significant number of teams that are for sale today that do not have buyers. We have one team that's been for sale for some time that has dropped the purchase price more than $100 million and still does not have a buyer.

People keep raising the Red Sox, with the Red Sox selling for $700 million. In fact, that included 80 percent of NESN (New England Sports Network), which is an extraordinarily valuable property in which at least one of the potential purchasers had a bid for . . .

BA: Whose last name was Dolan.

DUPUY: . . . 300 million dollars, right? For that piece alone, right? And it also includes the Fenway Park property. So if you look at that and look at the value of the team, no one disputes that the Red Sox are one of our flagship franchises. I mean, of all the teams people would like to buy, if you listed them, the Red Sox would make everybody's top three or four. They control all of New England, they have a wonderful broadcast relationship, they have a great relationship with their fans. They have a majestic park--which probably is inadequate--but a majestic park. If you look at these other teams, where are the people lining up to buy Kansas City? Where are the people lining up to buy Minnesota? Where are the people who wanted to go buy Cincinnati and Montreal? And Florida, where we ended up having one of our own owners agree to go in there and take another shot at that.

BA: Just say contraction doesn't happen, willingly or not. If an owner from Washington chooses to buy Montreal--or if you guys choose to relocate to Washington first because somehow there's a stadium there--but you sell it for $300 million before or after a move. Does Major League Baseball keep the $180 million profit?

DUPUY: The Washington territory is an asset of Major League Baseball. And anything that was obtained from that asset would be an asset of Major League Baseball and belong to the clubs.

BA: So it would be fair to say that Major League Baseball's investment in the Expos could prove to be a very intelligent one.

DUPUY: If that were to come to pass, you could say that it is. No one wanted to own the Montreal Expos. No one wanted to invest in the operation for Montreal. Remember, the Montreal Expos are going to lose a substantial amount of money this year in operations. There'll be an investment in excess of $50 million in the Montreal Expos, this year alone.

BA: So you'd have to make 170. But no one else could have moved them to Washington, because they were always at MLB's mercy to approve it.

DUPUY: One other thing: The commissioner has talked about his concern about converting what has been one of our premier franchises over the last 10 years, Baltimore, into two medium franchises, or struggling franchises, Washington and Baltimore. And second, put aside Baltimore, or Washington, New Jersey, Charlotte, wherever. We have a system right now that can't support the number of teams that we have. And until you correct that system and do something about that system, you're running a risk of merely shifting one .9 problem and converting it to a .7 problem. And that's not an ideal situation.

BA: Speaking of Bud, you've known him a long time. Needless to say, you guys share a lot of opinions about a lot of things.

DUPUY: I hope so.

BA: You work for him, among other things. At least a public perception can be formed where Bud's overwhelming presence on the labor front the past 20 years or more has not resulted in deals that have worked. We know this. You guys admit it. If you are so close to Bud, and adopt and share so many of his sensibilities, how can people feel that a different outcome can result from the application of the same ideas, if you're in charge?

DUPUY: Your assumptions are fundamentally wrong. First of all, I've never heard anyone say someone should go out and hire someone to work for him who has wholly different views. You hire people who you'd like to think could carry out your policies and practices and views. And I'd like to think I can do that with Bud. I came out of 25 years of client service. And having worked for Bud for 12 years, I understand the concept of a boss.

I believe that every one of the initiatives that we talked about from 1992 on, and all of this emphasis on competitive balance is the commissioner's legacy to the fans. That is to provide the fans in every major league city an opportunity to have a chance to compete and to get to the playoffs and to get to the World Series.
But look at what has been done since 1992 when Bud became the chairman of the Executive Committee. Ten years ago, we did not share a dollar of local revenue . . .

BA: What about tickets? There was sharing of gate receipts.

DUPUY: There was some modest gate sharing that amounted to less than $10 million per year. But in terms of locally generated revenues, we now share $160 million of local revenue. Interleague play. The wild card and additional round of the playoffs. We opened the season in Monterey, Mexico, Japan and Puerto Rico in three of the last four years. Ten years ago or in 1992, I believe we had two minority managers. We now have 10, and the best part about that is people get hired and fired and they don't even raise the issue any more. The attendance each of the last three years, we brought in in excess of 70 million people. Even though attendance is down a little bit this year, we'll still draw in excess of 70 million people. Television ratings are up. You've already given me the figures on the growth of monies and revenues in the industry. We are in, I think, not even including the four expansion franchises, nine new stadiums. Cincinnati, Philadelphia and San Diego are coming. The growth and change in the game over the last 10 years is remarkable. And frankly, it's due to his stewardship.

BA: But from what MLB says itself, the industry's going bankrupt!

DUPUY: Which is why the one component that has not yet been solved needs to be solved, and why he's indicated he has every intention of resolving it. He is not going to turn his back on the one issue that has not been solved.

BA: That sounds very ominous.

DUPUY: No, not at all. We've made a proposal that is intended to begin to right the ship. It was not intended to provoke a work stoppage. It was not intended to be inflammatory. We made a proposal that included only concepts that had been in prior deals. Revenue sharing, which is frankly not out of the players' pockets. These are owner-driven initiatives. How much Team A and B redistribute to Team Q and R and S is really not out of the players' pockets.

BA: OK, but it does sound somewhat foreboding. The union is not going to let anything happen that even at all acts like a de facto salary cap.

DUPUY: First, who says it is a salary cap? Second, whatever you call it, the union's going to have to let it happen. There has to be an economic adjustment. We're trying to let as many teams survive as possible. The intent here is to grow the game. All of the good that Bud has done over the last 10 years, he will nonetheless be judged by what happens in large part as a result of his negotiations. So it's important that we begin to right the ship.

BA: Can you guys survive a strike? If everything's so bad, if the debt is so bad, what kind of strike can be withstood?

DUPUY: There is no desire to have a work stoppage initiated by either side. The devastation to both sides will be significant. By the same token, if the owners don't have additional revenue-sharing and some form of restraint, it's really a matter of choosing your poison.

BA: Flowing right into the last question, Major League Baseball as a corporation is 30 owners, and in large part you guys judge the viability of the industry by the value of franchises. Major League Baseball Players Association represents the 1,200, or whatever it is, players, and judge the game in large part on the salaries of those players. Who is responsible for the game as the public sees it? There doesn't seem to be someone in between who can share the sensibilities of both.

DUPUY: I disagree that the owners' view of the game is driven by franchise values, or you would not have so many owners, as we talked about for the last hour, so many owners who were willing to lose significant sums of money. Wayne Huizenga was vilified for dismantling his team. But the fact of the matter is he was also willing to lose $40 million to produce a world champion for the Miami area.

I believe that every one of the initiatives that we talked about from 1992 on, and all of this emphasis on competitive balance is the commissioner's legacy to the fans. That is to provide the fans in every major league city an opportunity to have a chance to compete and to get to the playoffs and to get to the World Series. So while all of that dovetails very nicely with enhanced franchise values, growth of the game, greater attendance, greater TV revenues, more popularity, continued establishment as the national pastime, the fact of the matter is that all of these things are fan-driven, fan-sensitive. And I think having an owner who went through the travails of owning a team, getting to the World Series, going through a stadium war that lasted for years and years, and finally seeing the fruition of developing a new stadium, all bodes very well for the fans of America.

Bud has said to the owners and has said to Don Fehr, the idea is to have everybody prosper. If Team A prospers significantly, then Team R can prosper, or Team Z. Perhaps less so, but prosper nonetheless. And that inures to the benefit of the players as well.

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