Here's a trivia question for sports fans: Can you name a $1.8 billion industry with a minimum wage of $109,000, an average salary of $1.2 million and chronic labor strife? The correct answer, of course, is Major League Baseball. Last week, the players' union set an August 12 strike date after the collapse of talks with baseball's owners. If the two sides cannot agree to a new labor contract before then -- and prospects for a settlement appear bleak -- the game will be headed for its fifth strike since 1972.
For now, the gap between the owners and the players is so huge that a .200 hitter could find it. The owners argue that the national pastime is in serious trouble. The problem, they say, is that salaries have soared higher than a major-league pop-up. Between 1989 and 1993, the average player salary more than doubled. At the same time, many teams' revenue growth has stalled. For example, under a new contract with ESPN, ABC and NBC, television revenues are expected to shrink from $14 million per club to an estimated $7.5 million in 1994. As a result, the owners claim that 19 of 28 teams could lose money this year.
Just as worrisome, the gulf between baseball's haves and have-nots is widening. A rich club like the Atlanta Braves has a $52.1 million payroll, but a small-market team like the San Diego Padres makes do with $15.5 million -- and you don't have to be a baseball statistician to guess which one is a contender this season. "It's a catastrophe," moans Padres President Richard Freeman. To restore competitive balance -- and curb costs -- the owners propose a salary cap that would restrict team payrolls; in exchange, they would split all revenues 50-50 with the players.
But the players dispute the notion that the field of dreams has become a financial killing field for owners. If the business is so rotten, the players ask, why do franchise values keep rising? They point to Eli Jacobs, who sold the Baltimore Orioles for $173 million in 1993, more than twice what he paid in 1989. The players also accuse owners of the financial equivalent of the old hidden ball trick: Anheuser-Busch, owner of the St. Louis Cardinals, for example, runs stadium concessions through an affiliate, but none of the earnings show up on the Cardinals' books.
Salary cap. It is also true, as players say, that talk of baseball's imminent demise is almost as old as the sport itself. In fact, penny-pinching owners tried to impose the first salary cap -- $2,500 -- in 1889. "The owners have cried wolf 9,000 times in the past 100 years," sniffs veteran agent Thomas Reich. Maybe so, but almost everyone agrees that the present system is murder on small-market clubs like the Montreal Expos, Pittsburgh Pirates and Seattle Mariners, to name a few. And many players support the idea of revenue sharing among teams, but they don't want to be the ones who pay for it. They also argue that market forces will correct many of baseball's economic distortions.
Both sides have plenty of financial reasons to avert a strike. According to Richard Ravitch, chief negotiator for the owners, a season-ending walkout would cost owners $140 million in post-season revenue. And each missed plate appearance can cost a Barry Bonds tens of thousands of dollars. Of course, no one will suffer more than the fans. A strike would end a remarkable season in which some of the game's most hallowed records, including Roger Maris's 61 home runs, are up for grabs. But it is the fans who have the ultimate power to punish both owners and players. Not even Major League Baseball can survive empty stadiums.
Baseball's slugfest
Negotiators for the owners and players have hit an impasse in their labor dispute. Here's where each side currently stands.
THE OWNERS Richard Ravitch, the owners' negotiator, proposes a salary cap to restrict payrolls; in exchange, owners would split all revenues 50-50 with players.
THE PLAYERS Donald Fehr, the players' negotiator, is opposed to the owners' salary cap proposal and wants to maintain most of the current compensation system.
