Take a glance at the 10 highest-paid athletes in Los Angeles and it’s easy to see who the biggest spenders in town are: Rupert Murdoch’s Fox Entertainment Group Inc. and Dr. Jerry Buss.
Murdoch’s Dodgers dominate the list, along with Buss’s Lakers, while the Walt Disney Co., despite owning a pair of franchises, has only two athletes on the list. The Kings have none, evidence that the free-spending days of Bruce McNall are long gone.
Whose got the loosest purse strings isn’t the only way by which to measure the attitude of Los Angeles’ sports team owners toward their payrolls, but it’s instructive enough.
In one corner, you have a corporation controlled by an international media baron who has long shown a willingness to spend freely on marquee sports properties that fit into a larger strategic vision. In that respect, Murdoch is oddly paired with a Lakers owner who in many ways is a throwback to an era when winning championships was the only true payoff.
In the other corner, you have Disney, the Burbank-based media behemoth, with a reputation for penny pinching, and a pair of businessman Denver billionaire Philip Anschutz and L.A. real estate developer Ed Roski Jr. whose Kings hockey franchise is at least partially viewed as being just an element of downtown redevelopment plans.
And then there’s Donald Sterling who, despite being among the city’s wealthiest individuals, seems to run the Clippers as a sort of hobby, unwilling to spend the big bucks it takes to win in the National Basketball Association.
“Whether it’s for strategic reasons, like Fox, or the pure desire to win, like Buss, money is needed to be a success,” said Sab Singh, director of sports business at Growthink Inc., a Los Angeles strategic consulting firm. “The L.A. sports landscape reflects that reality.”
The gap between L.A.’s big spenders and its other owners is also reflected in their teams relative gross payrolls. At $94.2 million, the Dodgers had the third highest payroll in Major League Baseball last year, while the Angels were near the middle of the pack, 13th among the 30 teams, at $58.7 million.
The gap is even wider in the NBA, where the Lakers’ $54.1 million payroll in 1999-2000 was fourth highest in the league and the Clippers $26.3 million was near dead last.
The Ducks and Kings, meanwhile, had payrolls close to the top of the National Hockey League which has the smallest payrolls among the major sports at $35.1 million and $34.6 million, respectively.
Murdoch hasn’t blinked often about shelling out what it takes to keep the Dodgers competitive since acquiring the franchise and stadium in 1998. He shocked baseball three years ago by forking over $105 million to pitcher Kevin Brown in a seven-year contract.
Global ambitions
The moves were seen by many as part of Murdoch’s global strategy for News Corp. Ltd. to own sports teams and leagues even if it meant losing money to provide content for his wide-ranging broadcast, cable and other media operations.
“It certainly does fit into the corporate picture at News Corp.,” said David Carter, president of The Sports Business Group, a Los Angeles sports consulting firm.
So far, the bottom line seems to bear that out. The Dodgers last year reported a net loss of $30 million, but apparently even Murdoch has a limit. The team failed to bid for shortstop Alex Rodriguez, who landed a record setting $252 million contract this winter from the Texas Rangers.
“We didn’t go after Alex Rodriguez, knowing it would send our payroll through the roof,” said Derrick Hall, the Dodgers’ spokesman.
In the basketball arena, Buss has recently shown a return to the big spending that brought the “Showtime” Lakers multiple world championships in the 1980s.
He shelled out $120 million in a seven-year deal that brought Shaquille O’Neil from the Orlando Magic in 1996, the richest contract in NBA history at the time. Buss was rewarded last year with a championship, and extended O’Neal’s contract for three more years for another $88.5 million.
With new NBA owners like Microsoft co-founder Paul Allen getting into the game with even fatter wallets, the Lakers are publicly embracing the league’s attempts to cap salaries, including a luxury tax imposed on giant payrolls.
“In the early years, (Buss) was pretty well known as one of the freewheeling spending owners,” said Laker spokesman John Black. “(But) he believes in what the luxury tax is meant to do. It’s in everyone’s best interests in the league to (adhere to salary limits).”
Despite the differences when it comes to paying its athletes, Disney is also viewed as running its baseball and hockey franchises as a component of its overall media empire, though it has not had the same success as News Corp.
When Disney was awarded the Ducks hockey expansion franchise in 1992 and bought the Angels in 1995 there was hope that the teams could provide content to a series of regional ESPN cable sports networks the company would create. But Disney was beaten to the punch in 1996 when Fox Sports Net, formed an affiliation of 22 regional sports networks.
That decreased the Anaheim franchises’ overall strategic value for Disney, and perhaps what they were willing to spend on payroll, but the teams still serve other corporate purposes.
“They really consider these as part of their community involvement. They also draw people to the area,” said Robin Diedrich, an analyst with Edward Jones, a St. Louis-based brokerage house. “But at the end of the day, they want to make sure they are not overpaying (on salaries).”
Going for Mo
Disney has been willing at times to spend some big money on the Angels witness the $80 million it spent on star slugger Mo Vaughn two years ago. But it did not even consider bidding for Rodriguez. And just last week, the Ducks unloaded star right wing Teemu Selanne in a move that had sports columnists excoriating the media giant.
Tim Meade, spokesman for Anaheim Sports, the Disney unit that runs the teams, acknowledged the corporation’s spending limits, while maintaining that the Selanne trade was not payroll dumping.
“That’s a really erroneous perception of the trade,” he said. “(But) Rodriguez? Disney is not going to spend that kind of money. They are going to spend what their operations people feel is right.”
Back in L.A., the Kings have been seen as playing second fiddle to the larger goals of Anschutz and Roski, who see the Staple Center as the centerpiece of a renaissance just south of downtown’s financial core.
That perception was not lessened when the Kings traded star defenseman Rob Blake last month rather than pay him the $9.6 million salary he demanded.
“Staples Center has always been about promoting real estate in downtown. Nobody makes any bones about that,” said Carter, the sports consultant.
But King General Manager Dave Taylor said that, while the team has to live within a budget, paying the highest salaries doesn’t guarantee a winner, noting the moderate payroll of the Stanley Cup Champion New Jersey Devils.
“If you look at the history of the successful teams in the NHL, they are the teams who do a good job of scouting, drafting and holding on to their draft picks,” Taylor said.
To that end, he noted, the King’s ownership recently approved the purchase of a minor league team to beef up the Kings’ player development program. He pegged the cost at $2 million to $3 million, but would not be more specific.
