Red ink gives Dodgers the blues.

Winning isn't everything.

So it goes for the Dodgers, who have seen attendance and broadcast ratings rise along with their winning percentage this season, but who are making little headway in erasing the red ink that has dogged the team in the Fox-owned era.

A post-All Star break malaise dropped the Dodgers into second place behind the World Series Champion Arizona Diamondbacks last week, but the team entered the second half of the season with its best record in years. Barring a complete collapse, L.A. has a decent shot of winning its first playoff game since they beat the Oakland As in the 1988 World Series - the longest dry spell in franchise history.

And local fans are taking notice.

Through the first 47 home games--a little more than half the regular season schedule--the Dodgers drew 1,759,959 fans, an average of 37,446 per game. That's up 6.5 percent from 2001, when the team stayed close to the division leaders early but faded in the second half of the season.

On television, the Dodgers are averaging a 3.1 share on KCOP-TV (Channel 13), compared to a 2.8 share last season when games were aired on KTLA-TV (Channel 5). On Fox Sports West 2, average ratings have jumped to a 2.1 share from 1.4 last season. Radio ratings are also up substantially.

Still, all that good news is unlikely to put much of a dent in an operating deficit that, depending on whose numbers you believe, stood at between $29.6 million and $45.3 million in 2001.

Higher revenues from gate receipts and reduced salaries will help the Dodgers make up some of that difference, but not much, according to team President Bob Graziano. Like Baseball Commissioner Bud Selig, who has taken his complaint to Congress, Graziano insists that nothing short of an overhaul of baseball's underlying salary structure would solve the financial woes of the Dodgers and other teams.

"There is a correlation between winning (and revenues)," Graziano said. "But is it a significant enough increase to take care of the economic issues confronting the Dodgers? The answer is no. This is not an attendance problem. It's a problem of the cost structure within baseball."

Competitive excess

Taking issue with Selig's numbers, which showed the 30 Major League teams combining to lose $511 million in 2001, Forbes magazine found that professional baseball was generating profits in excess of $100 million a year.

Although few would question that baseball is plagued by serious economic issues, such as a massive revenue gap between small and large markets, some contend that the owners are exaggerating their losses to advance their bargaining position in negotiations with the players' union this summer.

This spring, Forbes estimated that the Dodgers had lost $29.6 million in 2001, versus the $45.3 million loss (or $54 million after amortization) reported by the league. And Forbes valued the Dodgers at $435 million, the third highest in baseball and $85 million more than Fox paid for the team in 1998.

If no deal is reached, baseball faces a potential labor stoppage later this season and the possible cancellation of the World Series for the second time in nine years.

Negotiations between the owners and the players' union center on the possible contraction of one or two teams, a potential cap on team salaries that would trigger a "luxury tax" for teams that exceed the cap, increased revenue sharing among clubs and issues related to baseball's player draft.

Irrespective of the larger issues, it's clear the Dodgers have been bleeding red rather than blue. The team had revenues of $143 million in 2001, among the highest in baseball, but only the Toronto Blue Jays lost more money, according to the league. Over the past five years, the commissioner reported the Dodgers lost $165.4 million, the most in baseball.

Player salaries, which gobbled up $116 million, or 80 percent of the team's operating budget, was the main culprit behind the losses in 2001. But the Dodgers also lagged several teams in broadcast revenue, despite being in the nation's second-biggest media market.

This year, the Dodgers have reduced player payroll to $100 million--in part by trading away high-paid malcontent Gary Sheffield and getting out from under a three-year, $15.5 million deal with pitcher Carlos Perez, who performed so badly that he was sent to the minor leagues last year.

The team has also entered new television contracts with Fox Sports West 2 and KCOP. Both stations, like the Dodgers, are under the umbrella of Rupert Murdoch's News Corp.

Fox Sports' new six-year deal with the Dodgers started this season. Terms of the deal, which calls for televising 80 games per year, were not disclosed. With KCOP, the Dodgers signed a three-year deal worth $8 million for the rights to broadcast 50 regular season games a year.

The team also negotiated a new five-year radio deal in which all Dodger games will be aired on KFWB-AM (980) beginning next season.

Media strategy

Recognizing Fox's larger media strategy is the key to understanding why the Dodgers have spent lavishly in the hope of staying competitive, said David Carter, a principal at The Sports Business Group.

When Fox bought the Dodgers, its sports programming consisted primarily of National Football League games on Sundays. In the ensuing years, the company has built a national sports network with cable tentacles reaching into all major markets. In Los Angeles, Fox operates two sports cable channels that televise the Dodgers and Lakers as well as the Anaheim Angels, Los Angeles Kings hockey team and various sports from UCLA and USC.

The Fox strategy has been to focus on obtaining the rights to broadcast local teams' games and to use those games as a draw to get viewers to watch its news and other programming. For Murdoch, ownership of the Dodgers ensured he would control the rights to broadcast those games.

"If (Fox) didn't have the Dodgers they would have had far greater difficulty in launching their regional sports network here," Carter said. "That network is worth hundreds of millions more than the Dodgers will ever lose."

The Dodgers have also boosted ratings at KXTA-AM (1150). The station's overall rating among listeners 12 and older was flat in the spring tracking period, as compared to the like year-earlier period, according to Arbitron Inc. But from 7 p.m. to midnight, a slot often devoted to Dodger broadcasts, the station's ratings went up to a 1.2 in spring, versus a 0.4 in the winter period.

"When teams win, people get excited and that translates into more listening," said Robin Bertolucci, program director at KXTA.

Dodger disconnect

On a rare Tuesday afternoon game last week the Dodgers hit their average, drawing 37,000 fans. Many of those were kids who sat in groups, coloring entire sections with matching red, yellow, orange, blue and white camp T-shirts. As usual, the weather was gorgeous and, though it's just a stone's throw from downtown Los Angeles, there was a vacation-like atmosphere.

"It's really an escape for a lot of people and a destination for tourists and other folks," Carter said. "Winning will certainly help the Dodgers at the turnstile, but they already draw 3 million a year, every year. The Dodgers are insulated from having a losing season. A lot of other teams are not so fortunate."

Standing fifteen deep in a line for the ATM, Jeffry Martini, who works for ABC Radio in Los Angeles, said he brought his adult cousin from Buffalo, N.Y. to the game.

"He's a big baseball fan and he's in heaven. He was very impressed how good the stadium looks even though it's 40 years old," Martini said.

The stadium, the weather, excellent customer relations and relatively affordable ticket prices have made the Dodgers one of the top draws in baseball for decades. And the jump in attendance comes as overall Major League attendance is lagging 3.5 percent behind last year at 29,400 fans per game.

Little of that, however, has translated to the bottom line. Even extra revenue generated by a trip to the playoffs is not likely to have a major impact on a bottom line that will almost assuredly reflect tens of millions in losses again this year.

"If there was another owner without a major media strategy I've got to think they wouldn't be losing $30 million a year, or whatever the true figure is," Carter said. "They need to fix it or it's only going to get worse."

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