Propaganda war

Sporting News, The, Sept 5, 1994 by Steve Marantz

The game is not the only casualty of baseball's strike, now lingering into its fourth week. Truth is being massaged mercilessly by both sides.

The question of which side has a stronger grip on truth is one for which stately forests are being felled. In the end, truth may not matter; the stubbornness of owners and players may be all that matters.

But the battle to define the truth - the propaganda war - seems to be having an effect on lawmakers and the media, the result being a perceptible tilting of sympathy toward the players.

In Washington, another effort is under way to modify baseball's antitrust exemption, a special legal status without which a strike is unlikely to continue. The last such effort failed in June, but this one is different. It has the support of Sen. Orrin Hatch, the influential Utah Republican who helped sink the prior attempt. House sponsors are Oklahoma Democrat Mike Synar and Kentucky Republican Jim Bunning, the former pitcher.

Another effort to wrest control from the owners is being spearheaded by Sen. Dennis DeConcini, the lame-duck Arizona Democrat who is angry over baseball's delays in granting an expansion team to Phoenix. DeConcini wants to create a national commission appointed by the President that would control virtually all business aspects of baseball.

Additionally, the strike's second week saw a marked shift of print pundits from a middle-of-the-road stance to one blaming the owners. Columnists in several major newspapers took swipes at the owners. "Print has gone over to the players," says Jack Craig, longtime sports media critic for The Boston Globe. "It's hard to believe the players could arouse sympathy, but the owners have managed to do it.

The propaganda war ratcheted up a notch last week when both sides sat down with federal mediators for a day-and-a-half of talks in New York. The union seized the moment to release a new study by Stanford economist Roger Noll that - surprise! - supports the players' position. Among Noll's findings:

* Baseball is financially healthy. The clubs' 1994 profit-and-loss projections are off because their revenue projections are wrong. Noll says baseball is understating its projected revenues - $1.78 billion - by $50 million to $140 million. He suggests using cash-flow analysis in place of conventional income statements to get a clearer picture of each team's financial status.

* High general and administrative costs make it appear that some teams are losing money, but in effect owners are paying themselves and their executives larger salaries than other clubs.

* The national broadcasting arrangement, a partnership between baseball, NBC and ABC, is a bad deal, costing baseball million in potential revenue. The Baseball Network immediately had a representative call The Sporting news to refute this claim. "I want to keep my temper down because what he's saying is so preposterous," TBN President Ken Schanzer says of Noll.

* Total player compensation is not increasing faster than revenues.

* Revenue sharing among clubs is inadequate, especially in the National League. (N.L. visiting teams get about 5 percent of the gate; American League visiting teams get 20 percent.)

The transparency of the Noll study as a public-relations tool was equaled only by the feebleness of the owners' response. Chief negotiator Richard Ravitch and Red Sox chairman John Harrington initially dismissed it as "biased" on the grounds that Noll is a paid consultant to the union. Pressed to respond to the study's substance, however, the clubs attacked Noll on several points:

* Player compensation has increased from about 45 percent of total revenues to in estimated 58 percent in the past five years. Obviously, salaries are increasing faster than revenues.

* Compensation paid to owners is insignificant, totaling $5.6 million in 1992. Most owners take no salary. The Noll study cites a 60 percent increase in front-office expenses in 1992-93. Clubs assert that the correct figure is 2.7 percent.

To reinforce their position, the clubs dusted off another report: the 1992 Report of the Independent Members of the Economic Study Committee on Baseball. The earlier report, which arose out of the 1990 corrective-bargaining agreement, was written by a panel of four economists headed by former Federal Reserve Chairman Paul Volcker.

The 1992 report approves the clubs' income statements as adequately representing their finances and makes no mention of cashflow analysis as an alternative device. The report also cites,the loss of national TV contracts with CBS and ESPN as attributable to the economic recession, the perceived attractiveness of baseball, competing programming and "perhaps to business misjudgments."

It probably was a bad idea by the clubs to pull out the report. A quick reading reveals that: (1) it recommends that free agency be reduced from six years to three years, (2) it concludes competitive balance is not a problem, (3) it is neutral on the question of a salary cap and (4) it recommends clubs increase their shared revenues above the 25-percent level.