Baseball's Strike Talk Turns SeriousAaron Bernstein
Take a cold drink in hand, lean back, and think baseball. The thwack of ball hitting bat. The roar of the fans in the bleachers. The screams of multimillionaire baseball owners crying poverty to millionaire players who threaten to lay down their gloves if their salaries are touched.
Yup, it's that time. Labor negotiations have begun in Major League Baseball, and the outlook calls for deja vu all over again. As usual, the clubs are unhappy about player salaries, which have doubled in five years. The owners' solution, presented to the players' union on June 14: a cap on salaries and benefits at 50% of revenues.
OMINOUS GROWLS. It ain't flying. The players, well content with their $1.2 million a year average paychecks, are growling ominously about a strike come August. That would put the two sides at zero for eight--a strike or lockout every time they've bargained since 1972. This time, "once they force us to go out, it will probably be a long time before we're back," warns Donald M. Fehr, chief negotiator for the Major League Baseball Players Assn.
It's easy to see why the owners want to play hardball. Player salaries have soared to 58% of revenues this year, from 43% in 1990 (chart). Meanwhile, the league's national TV revenue has skidded from $365 million a year under the four-year contract that expired in 1993 to perhaps $165 million this year, according to initial league estimates. Although two new stadiums and fat product licensing fees have offset some of the loss, the clubs' total revenues still slipped by $50 million this year, to $1.78 billion. Result: a $150 million loss this year, says Richard Ravitch, baseball's chief labor negotiator.
More important is the distribution of revenues among the league's rich and poor. National TV money is divvied up among all the owners. But clubs in large markets, such as New York and Atlanta, win big local TV and other revenue that they don't share. So they can outspend rivals and still turn a profit. The Atlanta Braves coughed up $52 million for salaries this year; impoverished San Diego will spend about $15 million.
The owners hope the salary cap will solve these problems. All clubs would spend the same amount: 50% of annual league revenues divided by 28 teams. This would limit rich teams' advantage in buying talent, although clubs would have the leeway to spend 84% to 110% of the average. The union and owners would negotiate minimum salaries through players' fourth year. After that, they could sell their skills to the highest bidder. However, clubs could match any offer a player got for two years.
Players would be guaranteed to get half of all revenues and no less than the $1 billion they'll get this year--unless league revenues drop. "Players wouldn't take a pay cut," says Ravitch. "All we're saying is that future growth will be divided equally between players and owners."
The players' response: Let the free market solve any pay problems. If the owners' losses are really so onerous, market pressures would force salaries down. Indeed, because revenues have grown, owners have $135 million more left over after salaries today than they did when players took 41% of revenues in 1989. The union also distrusts the league's revenue and loss figures. After all, says Fehr, clubs fetch more ev-
ery time they're sold. Last year, the Orioles went for a record $173 million.
LOSING PITCHER. In reality, argues Fehr, any losses that may exist are borne primarily by the smaller-market teams. His solution? Let big-city clubs share local revenue with smaller ones and balance out payrolls, as football teams do. Owners did agree to limited revenue-sharing in January, but not enough to solve the payroll disparity. "The small-market guys need money, and the larger ones won't pay," says Fehr. "So they want us to solve their problem."
Both sides have debated this issue for so long that their arguments seem scripted. And so does the conclusion: a strike this August if no agreement is reached. In a strike, "I'll lose anything from $750,000 to $1 million," depending on when it begins, says Atlanta pitcher Tom Glavine. "That's not easy to walk away from." But he'd do it: August is when pennant races swing into high gear, giving the union more bargaining leverage.
Given the likelihood of a walkout, the real question is the strength of the owners' resolve. In prior face-offs, big-city owners were unwilling to help their small-city brethren and caved in. This time, "there's no commissioner to foul things up," says one hard-line owner. Instead, Bud Selig, the Milwaukee Brewers' owner who's serving as acting commissioner, has tried to forge a united front. If he succeeds, fans may face a long, dry summer. No thwack. No roar. Only groans.