Will baseball strike out again? Commissioner Bud Selig's favorite words are hope and faith. But Major League Baseball's fractious labor situation translates them as distrust and disharmony

0 Comments | Insight on the News, April 29, 2002 | by Eric Fisher

Major League Baseball's (MLB's) owners and players open the 2002 season without a basic labor agreement; the previous one expired in November after the World Series. Negotiations toward a new deal remain stuck at the starting line. The players are proceeding with a grievance against the owners' plan to eliminate at least two franchises. The two sides' views on baseball economics are nearly as divergent as black and white.

Baseball Commissioner Bud Selig vowed in January not to lock out the players this year, and players-union chief Donald Fehr backed away from talk of a strike. But faith in those promises is weakening within baseball circles, and the hope of getting through the season without a work stoppage is flagging. Eight such stoppages have occurred since 1972.

"The gulf between us is big," says Rob Manfred, MLB's executive vice president for labor. "There are key differences right now on structural issues."

The owners want a system in which 50 percent of local team revenues are shared among all the clubs, up dramatically from the current 20 percent. Management's latest proposal also calls for a 50 percent luxury tax on team payrolls above $98 million and for a competitive-balance draft in which the eight worst teams over a three-year period could select unprotected players from the eight best. The proposals have three primary aims: propping up the game's fiscal laggards, stemming the game's current competitive imbalance and stopping the run of red ink MLB says reached $519 million in 2001.

The players, conversely, want to maintain the status quo, and they reject the luxury-tax proposal. Long-time opponents of any cap-like mechanism, the players have offered a counterproposal that would transfer 22.5 percent in local team revenues between clubs. The union's revenue-sharing plan abides by significant accounting differences in distributing the pot of aid money and would place far less control of the funds in Selig's hands. But-tressing the players' push for flee-market economics is a doubling in industry revenues since 1996 and a meteoric rise in franchise values.

"If nothing else, Mr. Selig's assertion that Major League Baseball cannot realize a profit, despite an annual revenue estimated at over $3.5 billion, a fixed number of teams and a static percentage of revenue going to salaries, is convincing proof that monopolies never work," Fehr states.

While negotiations continue, the rules of the now-expired labor pact remain in force. The question is, what happens next?Rumors have circulated for months

that the owners will declare an impasse and unilaterally impose their own economic system, complete with heavy payroll controls and significant revenue sharing. Such a move would certainly lead to lawsuits and could lead to a players strike this summer.

RELATED ARTICLE: Forbes says Baseball made $74 million.

Add Forbes magazine to the list of skeptical parties regarding Major League Baseball's (MLB's) finances. Three months after MLB Commissioner Bud Selig claimed the 30 clubs lost a total of $519 million in 2001, the magazine's annual survey of franchise valuations reports that 20 teams posted profits and baseball ended the year $74.2 million in the black overall.

The difference in fiscal results highlights an increasing scrutiny of MLB's accounting procedures. Since the public release of an unprecedented amount of financial data in December, Congress, various state governments, many fans and the MLB Players Association publicly have questioned the losses, pointing to fast-growing overall revenues, attendance totals and media contracts.

Forbes, which for years has painted a more positive picture of baseball finances, made similar arguments in the new survey, particularly due to still-strong broadcast revenues. "A few teams are struggling, but base-ball as an industry is in strong financial shape," says senior editor Michael Ozanian.

The mighty New York Yankees, now armed with the new YES network on cable and satellite TV, ranked as baseball's most valuable franchise for the fifth straight year with an estimated worth of $720 million, 15 percent higher than in 2001.The Montreal Expos, now a league-run franchise after a February takeover by MLB owners, ranked last with a value of $108 million, 17 percent higher than a year ago despite an 31 percent drop in attendance to a paltry 643,000.

-- EF

ERIC FISHER WRITES FOR Insight's SISTER DAILY, THE WASHINGTON TIMES.