The Owners Show Their Colors
A couple of articles in the last day or so show just how chintzy the very rich men who own baseball teams can be. First, the owners are reportedly considering doing away with the pension plan that covers non-playing team employees, in spite of record revenues in the industry. Second, the cheapest of the cheap Miami Marlins are threatening to sue a pair of 15-year season ticket holders because the fans requested to change their seats, as they are apparently allowed to do under their ticket purchase contract.
Team personnel, excluding major league players who have their own collectively bargained pension plan, are presently covered by a defined benefit pension plan, which means that participants (team employees) are promised a guaranteed benefit based on their total number of years of employment and their salaries during their employment. Each year that employees work, the plan sponsor (management) is supposed to deposit monies into the pension plan, which monies are then invested. If the investments under-perform for whatever reason, the plan sponsor is on the hook to add additional monies to the pension plan to provide employee participants with the promised benefit.
The trend in the U.S. over the last 40 years, as less and less of the work force are members of labor unions, is for employers to switch their defined benefit plans to defined contribution plans or to do away with pension plans entirely. In a defined contribution plan, the employer makes an initial contribution to the pension plan but then has no responsibility to make up any short-falls if the pension plan’s investments do poorly. The benefit that employee participants then receive is determined by the performance of the pension plan’s investments. If the employee participant retires at a time when the stock market is down, then the participant receives a much smaller benefit than when the stock market is up.
However, many of the industries that have switched to defined contribution plans or eliminated their pension plans entirely do not have the revenue growth or profitability of major league baseball. MLB is setting new records for revenue every year since the darkest days of the Great Recession in 2009 and 2010. You can also be certain that the owners themselves have all kinds of lucrative deferred compensation arrangements so that they will be drawing a pretty penny when their own retirement years arrive.
The greed of the wealthy owners is more apparent when you take into account that many team employees such as minor league coaches, trainers and scouts are not particularly well paid to begin with, often making less than $40,000 or $50,000 a year.
Meanwhile, the Miami Marlins seem determined to destroy whatever little good will they have left with the people of South Florida. The team is now threatening to sue two long-time season ticket holders (since 1998) Jan and Bill Leon in a dispute concerning the Leon’s desire to switch their seats after the Marlins installed a new billboard which partly obscured the view from their seats.
The Leons’ seats are apparently in the front row just beyond third base. Prior to the 2012 season, they signed a contract with the team under which they would purchase season tickets for two seasons (2012 and 2013) at a cost of a little over $25,000 per season. The contract reportedly also provides that if the Leons are unhappy with their seats after the first season, they could request to switch seats for the second season.
In the middle of last season, the Marlins installed a new billboard in front of the Leons’ seats which caused the padding on the wall in front of the first row to be raised by what appears to be four to six inches. Here is an article from the Miami New Times with pictures of the seats before and after.
Mrs. Leon is particularly unhappy about the change, because the new, higher padding obscures her view of the third base side of the field and makes it harder to follow hard hit foul balls that sometimes jump into the stands, creating what she believes is an increased danger of injury.
The Leons have requested to change seats for the 2013 season and have withheld their payment for their 2013 season tickets until they receive new seats they find acceptable. After initially failing to respond to media inquiries about the dispute, the Marlins now claim that they have offered the Leons alternative seats, but the Leons have refused to accept them. It has not been reported where exactly the proposed alternative seats are located.
At any rate, the Marlins’ in-house lawyer sent the Leons a demand letter on March 8th stating that unless the Leons tender their $25,000+ within 20 days, the Marlins “reserve the right to pursue any and all legal and equitable remedies available to it … including, but not limited to, pursuing you for the full amount currently outstanding …, plus all interest charges and applicable collection costs and legal fees.”
That’s some way to treat season ticket holders who have been putting large sums of money in your pocket for the last fifteen years and are now justifiably upset because the team effectively changed the seats they paid for after the contract was signed.
If the dispute were to end up as a lawsuit, the outcome would almost certainly be dictated by the fine print of the Premium Seat Agreement. Thus, without reading the contract in its entirety, it is impossible to say who would come out on top in a lawsuit. However, the demand letter and the resulting national media coverage (it was reported on Sports Illustrated’s website) make the Marlins look even more venal than they already did, if that were possible.
The Marlins drew more than 2.2 million fans last season. One has to think they may be lucky to draw even half that number in 2013.