Baseball Tries on a New Cap
Limits on how much players are paid may level the field for all teams
AS Ken Griffey Jr. tags a pitch for his 15th home run of the season, the crowd roars and fireworks patter under the Kingdome roof.
The star center fielder, who leads the league in homers, wields one of several sizzling bats on the Seattle Mariners. But pyrotechnics are notably absent from the club's financial scorecard: The baseball franchise says it lost about $15 million last year and expects to be $10 million in the red this season.
While many of the 28 teams in Major League Baseball are making money, other teams - estimates range from half to one-fourth - are not. Explanations range from poor management to the disparity in TV revenues between big-city teams and those in smaller cities. Owners say one factor is central: skyrocketing player salaries.
Mr. Griffey's 1994 contract of $5 million makes him the game's highest-paid center fielder. In an effort to erase red ink while making a bid for the Mariners' first division championship, Mariner vice president Woody Woodward walked a tightrope earlier this year. He retained a handful of big-name players with multimillion-dollar contracts but cut the team's payroll to $29 million, from $33 million in '93. Even so, salaries devour two-thirds of the club's revenue.
At the other end of the spectrum are a few teams like the Toronto Blue Jays, with payrolls 50 percent higher than Seattle's.
With teams bidding for top players in an effort to win pennants and fans, owners say a cap on team payrolls is needed to restore discipline and profits to the game. Basketball teams have had salary caps for about a decade, and the National Football League is operating under a new system that limits salaries to no more than 64 percent of revenues. In both sports, the lion's share of industry revenues are shared so that teams are on a fairly level playing field, economically.
This year, baseball owners are trying to renegotiate the collective-bargaining agreement that governs player contracts, hoping to introduce payroll limits. If players agree to the caps, owners will share more of their television revenue. Currently only the revenue from national telecasts is fully pooled in baseball, with local broadcast and cable coverage giving big-city teams a financial edge. The disparity is increasing this year, because national broadcast income is being cut in half under a new contract with the ABC and NBC networks.
Despite what owners argue are the game's dire straits, salary caps are hardly a foregone conclusion. Foremost among the obstacles is heavy resistance from the players union.
``It's something that no union in its right mind would want,'' says Andrew Zimbalist, a Smith College economist and author of ``Baseball and Billions'' (Basic Books, 1992).
``The owners are completely naive if they think that the [Baseball] Players Association is going to agree to a salary cap without major concessions,'' says Christopher Cameron, a labor-law expert at Southwestern University in Los Angeles. The most important move would be to open now private financial information about each club, he says.
Players may also demand ``some say in baseball's major financial decisions,'' Professor Zimbalist adds.
The reluctance of owners to open their books points to another potential obstacle: The game may not be as bad off as owners say it is.
Financial World magazine, in a recent report on professional sports franchises, estimated that baseball posted profits of $168 million on revenues of $1.7 billion last year. It also said the San Diego Padres made $17.5 million (the club says it lost money), and put the Mariners' losses at $4 million, not $15 million. Owners dispute the findings.
``The burden is on the people who are crying wolf to show us the wolf,'' Professor Cameron says.
Another question is whether teams can buy a championship. The well-heeled Toronto Blue Jays have become the team to beat in recent years, but they are barely winning half their games this year.
The Padres, with baseball's lowest payroll ($13 million) are losing two-thirds of their games, but so are the better-paid Chicago Cubs.
``If you go back to 1977 ... there simply is not a positive significant correlation between high team salaries and winning percentages,'' Zimbalist says. In the mid-1970s, players won the right to become ``free agents'' - selling their services to the highest bidder - after five years in the game. With players no longer considered the property of one team, salaries began to soar.
While the debate over revenue-sharing and salary caps drags on, the Mariners are doing what they can themselves: This week they announced their first-ever regional cable TV deal, a $4 million, 2-1/2-year contract with Prime Sports Northwest.
The club also hopes to persuade King County to build a new stadium.
A new ballpark ``can mean, in some cases, three times more revenue,'' says Mariner vice president Paul Isaki. New arenas maximize lucrative luxury seating, ad venues, and concessions.