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Text File | 1992-09-22 | 5.5 KB | 116 lines

                                                                                SPORT, Page 63

A Whole New Ball Game


Better enjoy this year's baseball season while you can, because
battle lines are being drawn that could change the game forever

By THOMAS MCCARROLL


    On the field, the pittsburgh pirates are one of the most
successful teams in major league baseball. They finished first
in the National League's Eastern Division the past two seasons
and came within one game of going to the World Series in 1991.
Yet the Pirates are perennial losers off the field. The club has
chalked up losses totaling $13 million since 1989, including $3
million in its division-winning season last year. The Pirates
blame this paradox largely on soaring players' salaries, which
cost $24 million, or 52% of the club's revenues, last year. To
make ends meet, Pittsburgh cut more than $7 million from its
payroll by trading 20-game winner John Smiley and letting
slugger Bobby Bonilla become a free agent.

    The Pirates are not the only team that is striking out
financially. After years of booming ticket sales, record profits
and lucrative television contracts, major league baseball has
fallen into a slump. Stadium attendance is flat, payrolls are
climbing, and revenues are on the decline. A growing number of
clubs are crying broke. Several others, including the Detroit
Tigers and Houston Astros, are being shopped around by
cash-drained owners. Last week's sale of the money-losing
Seattle Mariners to a group headed by Japan's Hiroshi Yamauchi,
president of the video-gamemaker Nintendo, was the latest
confirmation of the trend.

    The most distressing news for fans is that club owners and
the Players Association are once again preparing to do battle
over their collective-bargaining agreement. Although the pact
is scheduled to expire at the end of next year, financially
strapped owners want to reopen the contract after this season.
The clubs are demanding relief from escalating player salaries,
but the players seek to maintain the contract that has created
scores of millionaire athletes over the past decade. As a
result, the uneasy truce worked out after the 1990 owners'
lockout is in danger of being discarded. "The golden days of
baseball are over," says Gerald Scully, University of Texas
economist and author of The Business of Major League Baseball.
"The game is entering a new era of fiscal conservatism, and that
could spell big trouble for labor-management relations. Unless
cooler heads prevail, the 1993 baseball season could be in
jeopardy."

    After growing at an average annual rate of 4% during the
1980s, total attendance is not likely to match last season's
record-setting pace of 57 million. Television ratings have
declined steadily since 1989, when CBS and ESPN paid $1.5
billion for national broadcasting rights. The two broadcasters
have lost $500 million on that deal so far, and will likely pay
substantially less when they renew the contract this year. About
half of the 26 teams, including the Oakland Athletics and
Cleveland Indians, lost money in 1991, and more clubs are
expected to do so this year. There are even rumors of one or two
franchises going bankrupt within the next few years.

    Meanwhile, player salaries have leaped to an average of $1
million a year, in contrast to $369,000 in 1985. At least 271
players -- among them such lackluster performers as Giants
pitcher Bud Black, who has a career losing record, and Minnesota
Twins infielder Mike Pagliarulo, whose lifetime batting average
is a pathetic .236 -- have joined the millionaires' club. While
players have mainly free agency to thank, they have also been
able to score big bucks through salary arbitration. Much to the
dismay of owners, labor mediators called in to settle contract
disputes have awarded players hefty pay hikes.

    In an effort to cut costs, many teams have dumped dozens
of higher-paid veterans and replaced them with rookies earning
close to the minimum $100,000 salary. Owners are also looking to
cut overhead by revising the 1990 labor agreement. Their main
goal: the elimination of salary arbitration. If the players
balk, owners may respond with a lockout. Says Jerry Reinsdorf,
owner of the Chicago White Sox, one of the most militant club
owners: "The status quo cannot continue."

    The players dismiss the cries of poverty as a bargaining
ploy. In many cases, they charge, the red ink is a figment of
creative accounting. A study by baseball accounting expert Roger
Noll, professor of economics at Stanford University, found that
the Pirates earned a profit of $4 million in 1990 but turned it
into an $8 million loss by taking one-time write-offs, such as
the expenses to pay released players. Players also point out
that salary increases are slowing. Average pay is up 25% this
year, vs. 45% in 1991. Next year salaries are projected to inch
up only 11%.

    Donald Fehr, executive director of the players' union,
hints that his members may be willing to accept some changes in
the arbitration system in exchange for a voice in such major
decisions as TV contracts and ownership changes. But if the
owners play hardball, Fehr warns, "it will not be a short
fight." The owners have established a credit line of $350
million that could be used to cover set operating costs in the
event of a lockout or strike, while the players have amassed a
$140 million strike fund. Unless the argument is settled
quickly, the biggest loser in the 1993 season will be the fans.