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Baseball fans should brace for the worst -- again

BY TOM MITSOFF

At the ripe old age of 31, Ken Griffey, Jr. of the Cincinnati Reds had earned $74.1 million for playing major league baseball for 13 years.

But he’s a pauper compared to Texas Rangers shortstop Alex Rodriguez, who had earned $34.02 million in his eight-year career prior to this year, but is in the second year of a 10-year contract which will pay him a total of $252 million before it’s done. “A-Rod” will receive every cent of that money even if he is injured tomorrow and unable to play ever again. If he decides to retire after his current contract is over, Rodriguez will have earned more than $264 million playing major league baseball.

This year, major league baseball players will receive $2.024 billion in salaries. That’s an average of $2.38 million per player. The median salary -- meaning that as many players receive more than the figure as those who receive less -- is $900,000.

Raw rookies who make any major league team and have no big league experience whatsoever start at a minimum salary of $200,000 per year. Some minimum wage, huh?

It is numbers like this that lead people to shake their heads in disgust when major league baseball players begin to talk about setting a date to go on strike. Why, oh why, oh why would a group of millionaires vote to go on strike against a group of billionaire owners? Has greed run completely amok when two sides with so much to lose can’t come to an understanding?

As outlined above, the players are doing well, and have absolutely no reason to want to rock the boat. But the owners say that the salary escalation in the last quarter-century has put many teams on the brink of extinction. In fact, Commissioner Bud Selig last week said that one and possibly two teams might have problems meeting their next payrolls.

In 1976, the average major league baseball player salary was $52,300. This year’s $2.3-million figure means that average player salaries have increased over 4,000 percent since then. It was the mid-1970s when players won the right to become free agents and sell their services to the highest bidder when their contracts expired. Prior to that, the “reserve clause” in every player’s contract basically bound that player to his team for life, unless the team traded him or cut him. Teams always knew, prior to the mid 1970s, that even if contract negotiations became bitter and nasty, the player had two choices -- sign with the team anyway or go home.

When the reserve clause was struck down, players began to move from team to team freely, and many in the game predicted it would mean doom for teams in smaller cities that couldn’t offer players some of the financial, cultural and media opportunities that exist in the New Yorks, Chicagos and Los Angeleses. To some degree that has happened. But the bigger factor in escalating salaries has been the owners’ inability to control themselves in bidding on players. (See Alex Rodriguez, above.)

In the mid 1980s, the owners decided to try to keep salaries down. Through an unwritten understanding, they agreed upon limits that they would offer to players who were free agents. The bountiful market suddenly dried up, leaving players wondering what happened. They found out by filing labor relations charges against the owners, and arbitrators ruled that the owners had indeed unfairly influenced the free market. The result was a stunning $280 million settlement that the owners had to pay to the players union. That effectively ended any effort that the owners could make to keep salaries down without getting approval from the players through collective bargaining.

The owners say that something has to be done to allow them to get control of salaries. They cite their own financial figures which indicate that 24 of the 30 major league teams lost money last year. Even with combined operating revenue of $3.5 billion last year alone, major league owners say their business enterprise lost $344.7 million, a figure that they say includes over $110 million in interest expense alone necessary to finance debt.

So, if you believe the baseball financial statement -- and there are many who don’t since the owners just continue to throw money at this allegedly failing business venture -- then the owners have a great deal of incentive to change the way they have to conduct business -- some way. The players say it’s not their problem if some of the teams are better-run as businesses than others. The New York Yankees, with a player payroll of $117 million, still made $8 million in profit last year. The Los Angeles Dodgers, with $116 million in player payroll, lost over $68 million.

The players don’t really want to strike. They know they are sitting on the golden goose. But their collective bargaining contract expired after the 2001 season, and they are playing without a contract under the previous terms which have carried over. They worry that if they don’t declare a strike and this season comes to its natural conclusion at the end of the World Series, the owners will declare an impasse in negotiations, will impose their own terms of operation and tell the players to take them or leave them.

The owners are proposing as part of a new agreement that much more of teams’ locally generated revenues be shared. Disparity of local revenue is probably the biggest reason why a competitive imbalance has developed in the game. The Yankees had local operating revenue of over $217 million last year, while the Montreal Expos had local revenue of a little over $9 million. The owners’ proposal would take half of local revenue generated by all teams, put it into a fund and distribute it equally among all of them. If it sounds unfair, it’s the formula that the National Football League has used to become the most wildly successful of the major professional sports. But baseball players are resisting the owners’ proposal to increase the percentage of shared local revenue from 20 to 50 percent, for a reason which isn’t immediately clear.

If the players don’t make some concessions, the owners should look closely at what the NBA owners did in 1998. With player salaries spiraling out of control and several teams claiming losses, the owners locked the players out, seeking some concessions. As the weeks passed and half of the regular season went unplayed, the owners waited patiently until the players agreed to terms, including a firm salary cap. Those NBA players, like their baseball brethren, were multimillionaires. But multimillionaires have bills to pay, and there comes a time when they realize that they can compromise, still make their millions, and allow the owners to make profits. Since then, the NBA has been a very healthy enterprise, much like the NFL.

The baseball owners must take the same action at some time, and it will probably come next season. If the players don’t strike first.

The best outcome would be a negotiated settlement that serves the interests of both sides. But with eight work stoppages in the past 30 years, there is no indication that baseball labor and management can work together effectively to do that. Baseball fans should brace themselves for the worst -- again.

This column was written July 13, 2002, and published in several print publications across the country.