Winning at all Costs

An explosive off-season of expensive signings triggered by baseball’s richest clubs--a siege of “irrational exuberance,” said San Diego Padre owner John Moores--has exacerbated what many consider dangerous payroll and competitive disparities.

“We’re either at a crisis or approaching a crisis,” Moores said. “Far too many clubs will not be competitive on opening day, which strikes me as un-American and not in the best interest of either fans or players.

“Oh, I suppose it’s in the short-term interest of players since they can take their money and run, but the clubs and fans are left with the bill. If the fans have no hope of their team succeeding, they’ll walk away from the game.”

Primarily a spectator as more than 50 free agents and potential free agents have signed for more than $850 million this fall, Kansas City Royal General Manager Herk Robinson said:

“There is a loss of hope among the smaller-revenue clubs. There are a number of clubs going in now that realistically realize they’re not going to win, that all they’ll be doing is providing a little entertainment.”

An exaggeration? The playoff history of recent years suggests otherwise. Only the high-revenue and high-payroll clubs survive. No longer does a Kansas City, Minnesota, Oakland or Pittsburgh have much chance for a playoff breakthrough of the type they produced during the economic transition of the late ‘70s to early ‘90s.

The revenue-sharing and luxury-tax provisions in the 1996 bargaining agreement that has produced a measure of peace after the long and costly labor dispute that wiped out the 1994 World Series have failed to deter the high-revenue clubs. Neither have they impeded a salary escalation that has seen the average vault from $589,483 in 1990 to $1,378,506 in 1998, when Baltimore set a payroll record at $74 million, a long way from Montreal’s $8.3 million at the bottom.

There is a numbing but growing sense that management, seeking tighter restraints, is gearing up for another showdown with the players’ union when the new agreement expires after the 2001 season, another Armageddon, perhaps.

There is also understandable reluctance to discuss anything that might diminish the glow and feeling of recovery from the ’98 season. But Sandy Alderson, the A’s former president and general manager who now works out of baseball’s New York office as executive vice president of baseball operations, said in a phone interview:

“We now have 25 teams being killed by the lack of a meaningful deterrent on four or five. The luxury tax has been almost totally ineffective in reducing the appetite of the top four or five payroll clubs, and revenue sharing is only a marginal remedy. We’re in a vicious circle in which revenue disparity creates payroll disparity which leads to competitive disparity.

“We had a great year, but it was not because we had great pennant races. It was largely because we had a great home run chase, and we have to change that so that more clubs have an opportunity to stay competitive longer into the season.

“The reality is that no one aside from the top half-dozen revenue teams are making any money, so that you have an extruding of the payroll list with a few at the top, more at the bottom and fewer in the middle. I mean, we lose sight of the fact that while some payrolls are going up, many are going down, and some clubs are giving up. It doesn’t make sense to maintain a $30-million to $35-million payroll if you’re going to lose $10 million to $15 million with no chance of winning, and a middle-class team doesn’t have a very good chance of winning any more unless it’s in the American League Central or National Central.”

The 1998 median payroll was $46.2 million. Only three teams that spent less than $48 million had a winning record--San Francisco, St. Louis and Toronto. Baltimore was the only team that spent more than $48 million and had a losing record. Houston, which ranked 12th at $48.3 million, had the lowest payroll among the eight playoff teams--and didn’t survive the first round.

Do times change? Ten years ago, the difference between the Yankees’ top payroll and Seattle’s lowest was $14.9 million. This year, the Orioles and Expos were separated by $65.6 million. In an industry with 1998 revenue of almost $2.5 billion, about $1.2 billion was paid to players, but a larger percentage of that by fewer clubs, a result of the widening revenue disparity. Those figures are not released, but the disparity is said to stretch from the Yankees, at $175 million, to the Expos, at $35 million.

Amid that “irrational exuberance” of this winter, five players--Mo Vaughn, Bernie Williams, Randy Johnson, Mike Piazza and Albert Belle--have already signed multiyear contracts eclipsing the record for average annual value, held by Pedro Martinez at $12.5 million. A sixth player, Kevin Brown, is certain to join that list, and a seventh, Roger Clemens, might, providing he is traded with a renegotiated contract.

The big-market New York Mets have signed four free agents for $161.6 million, and the Arizona Diamondbacks, printing money at Bank One Ballpark, have signed six for $118 million.

There have been several eye-popping contracts, as usual, for players of modest success, prompting a National League general manager to shake his head and say, “We cry poor as an industry, then give $3-million contracts to middle relievers. Where does it end?”

The four-year, $26-million contract that Jose Offerman received from the Boston Red Sox was even too much for a fellow union member.

“Jose Offerman, $26 million?” said Tony Gwynn, when asked by the San Diego Union-Tribune about the soaring salaries.

“You’ve got to be kidding me. He had a good year, but Jose Offerman, getting $6 million, $7 million a year? . . . There have been a few of those this off-season.

“You’re never going to argue with Mo Vaughn or Bernie Williams, top-of-the-line guys year in and year out, getting top-of-the-line money. But guys who have one good year and cash in at a good time . . . I don’t know how long this game is going to be able to survive with the payrolls being they way they are now.”

The payroll race has replaced those missing pennant races.

Disney’s Angels have become a player with the signing of Vaughn and interest in Brown and Clemens. The Dodgers, already over $70 million, could soar to the top at more than $85 million--almost $40 million more than their season-opening payroll in ‘98--if Fox signs Brown. A $100-million payroll and a $100-million contract are coming as “sure as the sun will rise tomorrow,” said Moores, the Padre owner. “I suspect that some of these clubs will rue the day they’ve signed these contracts.”

The widening payroll, revenue and comparative disparities, Alderson said, are the “purest manifestation of the economic problems we’ve been talking about for years.” The situation, he said, “has escalated every year since the strike and is now out of control and can’t be ignored.”

Said Commissioner Bud Selig: “On April 1 the baseball fan has two things--hope and faith. It’s my job to make sure hope and faith prevail in as many franchises as possible. I can’t prevent clubs from operating in their best interest, but I can remind them that the best interest of the game is at stake. We can’t ignore [the disparities]. There’s a lot of despair.”

The union is nervous. It hears the sound of distant drums in all this. It senses the possibility of another labor battle over a salary cap or similar market restraint. A union lawyer asked, “When hasn’t this been an issue with the owners? When hasn’t there been a season when some clubs have more hope than others?”

However, Donald Fehr, union executive director, refused to open old wounds or join a debate when reached Tuesday at executive board meetings in Las Vegas.

“We spent a long time negotiating a significant revenue-sharing plan [in the new bargaining agreement],” he said. “It distributes $100 million [from the top six revenue clubs to the bottom six] this year and $140 million when fully implemented [in 2000]. We should see how it plays out. We shouldn’t be making assumptions in midstream.”

Increased revenue sharing and a luxury levy that imposed a 35% tax on all payroll over an escalating threshold (but which was limited to the top five payrolls per year) were the two major elements in the new agreement. The tax expires after the 1999 season, but Fehr suggested he would be willing to discuss an extension. He responded to management claims that it hasn’t been a deterrent by saying that wasn’t the design.

“From the players’ standpoint, the goal was to raise money that could be put to good use [for joint projects or as a supplement to the revenue-sharing pool] without inhibiting the market,” he said.

Those who would call that revisionist history might also insist that the second element, the revenue-sharing plan, has done little to improve competitive balance. The high-revenue clubs remain skeptical. They tend to believe the money they are contributing--the Yankees, for instance, were the No. 1 donor this year at $13 million--is going into the pockets of the bottom owners rather than into the development or signing of players.

Montreal General Manager Jim Beattie, recipient of the biggest contribution at about $12 million, an amount that will increase significantly when the plan is fully implemented, acknowledged that his team has been in a survival mode, using the welfare checks simply to stay afloat.

“I can appreciate that some clubs may not like giving us money right now, but we can’t move from this position until we get some assurance that we’re not going to shoot ourselves in the foot all the time,” Beattie said. “As long as you have everyone acting only in their own self interest, the game isn’t going anywhere. As long as you have owners who don’t see a problem with the same teams getting to the World Series every year, you’re consigning fans in a lot of cities to having no hope to make the playoffs.”

The Expos are hopeful they will soon have a new ballpark that will help take them off the dole. New parks are coming in Detroit, Seattle, Milwaukee, Houston, San Francisco and San Diego. Pittsburgh is also hopeful.

The stadium boom, of course, has put several clubs back in business, but in conjunction with widening disparities in cable income and changing demographics, it has also contributed to the widening gulf between the haves and have-nots.

All 30 will be together starting Friday, when the winter meetings begin in Nashville.

It will be the first time that major league clubs will participate in the annual minor league convention since 1992, when in a five-day feeding frenzy in Louisville, 35 free agents were signed for $225 million, leaving owners reluctant to provide agents with that kind of shooting-gallery format again.

Of course, the agents hardly require the clubs to be in one place at one time, as this winter’s barrage of signings has demonstrated.

Only Brown, among the elite free agents, remains, but the prospect of a Clemens trade and others should enliven the meetings, although owners aren’t accompanying their general managers.

Selig will remain in Milwaukee, studying the disparity problem. He is confident it can be resolved, he said, but how smoothly or quickly?

Can it be done without a work stoppage or the cooperation of the union?

Are there unilateral steps the owners can take without waiting three years until the agreement expires?

There are no easy answers, said Alderson, but he believes that a remedy would also be in the best interest of the union because 1) not every player has a competitive chance anymore and ) there is a payroll imbalance in which more money is being paid to a few players and less to the majority.

He added that any solution has to include a meaningful tax or cap deterrent, increased revenue sharing, continued stadium growth, relocation when necessary and changes in the amateur draft to restore its original design as a vehicle to assist clubs that had done poorly the previous year.

“I don’t dispute it when people say that the Yankees should be strong because it’s good for baseball,” Alderson said.

“I don’t argue that there must be parity or should be parity. I do say that all teams should have a legitimate hope and a legitimate chance, and that shouldn’t be the function strictly of payroll.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

‘98 Payroll and Final Standings

You don’t have to pay to play in major league baseball, but these statistics suggest that you have to pay to be a player. With the exception of the underacheving Orioles and the overachieving Astros, money mattered last season. Figures in millons:

American League West

Texas (88-74): $62.1

Angels (85-77): 54.2

Seattle (76-85): 44.7

Oakland (74-88): 18.6

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Central

Cleveland (89-73): $56.6

Chi, White Sox (80-82): 37.8

Kansas City (72-89): 35.6

Minnesota (70-92): 22.0

Detroit (65-97): 23.3

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East

N.Y. Yankees (114-48): $73.8

Boston (92-70): 59.3

Toronto (88-74): 37.3

Baltimore (79-83): 74.0

Tampa Bay (63-99): 27.6

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National League West

San Diego (98-64): $53.0

San Francisco (89-74): 48.0

DODGERS (83-79): 60.8

Colorado (77-85): 47.9

Arizona (65-97): 32.9

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Central

Houston (102-60): $48.3

Chi. Cubs (90-73): 50.7

St. Louis (83-79): 47.6

Cincinnati (77-85): 20.7

Milwakee (74-88): 36.9

Pittsburgh (69-93): 13.7

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East

Atlanta (106-56): $61.7

N.Y. Mets (88-74): 58.7

Philadelphia (75-87): 29.9

Montreal (65-97): 8.3

Florida (54-108): 19.1

Source: Major League Baseball

In Quotes

“There is a loss of hope among the smaller-revenue clubs. There are a number of clubs going in now that realistically realize they’re not going to win, that all they’ll be doing is providing a little entertainment.” HERK ROBINSON, Royal general manager

Average Salaries

Who would have thought that a player making $1 millon a year would be considered below average? But with arbitration and free agency, that is the reality of baseball finances in the late ‘90s.

Jose Offerman’s $26-millon contract with the Red Sox stunned many baseball observers.

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“Jose Offerman, $26-millon? You’ve got to be kidding me. He had a good year, but Josse Offerman, getting $6 millon, $7 millon a year?. . .I don’t know how long this game is going to survive with the payrolls being the way they are now.” TOM GWYNN, San Diego Padres.

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Average salary, 1998: $1.4 millon

Source: MLB Player Relations Committee

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Baseball

The Market

Padre owner laments Murdoch’s role in salary boom. Page 9

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Dodger Pitch

L.A. lets free agent Kevin Brown know he’s wanted. Page 9

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Notes: Page 9