Baseball's Big Bucks Go The Robin Hood Route
Major league baseball can afford to walk with a new spring in its step this winter. A long, at times ugly labor negotiation appears to have finally ended, bringing peace to a sport that was losing its grip on the public.
Actually, the final signatures on a new collective bargaining agreement, brokered by players' association boss Donald Fehr and owners' negotiator Randy Levine, are expected this week, when the players' executive board convenes in Puerto Rico. Barring unforeseen developments, board members will rubber-stamp the deal that the owners approved during a Nov. 26 vote.
Among its key provisions are a 2.5 percent payroll tax on player salaries, a luxury tax on teams that exceed a payroll threshold ($51 million in 1997), and approval of interleague play. Teams from the National and American leagues will play each other in-season starting next June.
The contract, which runs through Oct. 31, 2000, and could be extended another year by the players, was ratified in the backyard of Chicago White Sox owner Jerry Reinsdorf, whose signing of free agent Albert Belle for $55 million rocked baseball two weeks ago. Reinsdorf voted against the new contract, but turned right around and brazenly predicted it would work to his advantage.
"Actually," he said of the long-awaited deal, "it's good for the White Sox because it dooms the small-market teams. There will be less for us to compete against." If Reinsdorf is right, baseball could find itself locked in an unhealthy haves-vs.-have-nots situation. An objective of these negotiations, however, was to restructure baseball economics to ensure competitive balance between teams in disparate markets.
A major feature of the new contract is a revenue-sharing formula in which clubs with the highest revenues will transfer millions of dollars annually to the teams with the lowest revenues. This redistribution of wealth theoretically helps to level the playing field for a team like the Kansas City Royals. Their pennant hopes seemed especially bleak this past season, when four of the five highest paid teams - New York Yankees, Baltimore, Atlanta, and St. Louis - advanced to the league championships.
Kansas City general manager Herk Robinson once explained the problematic nature of baseball's split-level economics this way: "The gross revenue of a small-market club may only be 30, 40, or 50 percent of a large-market club, yet we have the very same expenses that a large-market club has. If the two clubs have comparable payrolls, the club with less revenue either has to reduce its [player] procurement and development costs far below what they should be and run a below-par operation, or it is going to suffer tremendous [financial] losses."
Robinson laid out this scenario in 1995. Outside his office on the Royals' Davenport, Fla., spring training complex, replacement players prepared to begin a new season. They were never used for regular-season play, however, as a district court judge returned major leaguers to work by restoring the terms of the expired labor agreement until a new one materialized.
Altogether the labor dispute festered for nearly four years, reaching its nadir when the 1994 season was cut short and the World Series eliminated by a 232-day strike that reportedly cost the owners $1 billion and the players $400 million in lost salaries. Those gloomy days torpedoed public trust and sent attendance figures and viewer ratings reeling. Now, however, acting commissioner Bud Selig says baseball "can look forward to five years of uninterrupted play" that will allow the game to "reconnect ... to all of our fans." Baseball needs the time to oil its promotional machinery.
Interleague play is expected to help revive flagging interest, with each team playing 15 or 16 games against teams from the corresponding geographic division in the opposite league. The upshot will be a number of natural rivalries - Yankees vs. Mets, Angels vs. Dodgers, etc. - that could do as much for the game as some think a strong, permanent commissioner might.
Selig gained ratification of the new contract at the 11th hour, after it was shot down by the owners, 18 votes to 12 two weeks earlier. In the eyes of some observers, the owners' change of heart and resounding 26-4 passage came in reaction to Reinsdorf's infuriating signing of Belle, which seemed a betrayal of Selig and Reinsdorf's own hard-line position against escalating salaries.
With its new contract, baseball has managed to put mechanisms into place to restrain runaway spending while avoiding the kind of salary cap the players consider unacceptable.