Inside baseball: arbitrators as umpires.

• Author: Bowal, Peter
• Position: Special Report: The Law and Sports

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The Business of Baseball

Baseball is the big summer sport in North America. From Little League to Beer League, amateur baseball and softball--organized and pick up--has entertained players and fans alike. It is a big part of our Canadian culture.

The economic success of the professional game has been more elusive. The elite pro game has abandoned Canada except for Toronto. The lower division semi-pro "farm teams" continue to play across Canada in various leagues, but occasionally they strike out as sustainable community-centred businesses.

Take Ottawa as a case in point. The Ottawa Lynx minor league team competed in the Triple A International League from 1993 to 2007 in their own stadium. It was the only International League franchise in Canada and it was consecutively affiliated with the Montreal Expos, Baltimore Orioles and the Philadelphia Phillies. Even after fifteen seasons, the Lynx could not attract enough fans and the team was sold to Allentown, Pennylvania where it started the 2008 season.

Then it was announced on April 28, 2008 that semi-pro ball would get another chance in Ottawa with the new Rapidz franchise in the Canadian-American (Can-Am) league. During that inaugural season, an average of just over 2,100 fans attended each game to cheer on their Rapidz, only slightly under the league average attendance of 2,300 per game. Yet, the Rapidz ownership group lost over $1 million.

The Rapidz won only a third of their games, not the worst record ever for a new team, but they still placed in the basement of the Can-Am standings at the end of that first playing season. Five months after the first pitch, on September 29, 2008, the Rapidz declared bankruptcy and ceased operations. The Can-Am league moved in and purported to take over the team but never returned for a second season.

This article is about the law of baseball that continues to develop from the business failure of the Ottawa Rapidz. The international league arbitration principles that are being developed will be transferable beyond baseball but this Rapidz story and its baseball context offers a glimpse of the business model of these local teams operating throughout North America.

Ownership

The Rapidz ownership structure was complicated and interlocking. The Lease and League Affiliation Agreements disclose that the Ottawa Professional Baseball Inc. (OPBI) was the corporate entity under which the Rapidz operated. Zip.ca (Zip) and a subsidiary, Momentous Inc., together owned a 49% share. The remaining 51%...