The $702 million dispute Huge strike losses push baseball owners, players toward deal

April 11, 1996|By PETER SCHMUCK | PETER SCHMUCK,SUN STAFF

Major League Baseball suffered staggering losses during the two seasons that were shortened by the players strike, perhaps enough to persuade both parties in the industry's ongoing labor dispute to reach a long-term collective bargaining agreement soon.

The 28 major-league clubs lost $702 million, according to figures obtained from the Commissioner's Office by the Associated Press, $376 million during a '94 season that was cut short by two months and $326 million during a 1995 season in which attendance was depressed by fan discontent.

Even the Orioles, one of the most profitable teams in baseball, could not avoid severe economic harm in 1994 -- club sources estimate losses at about $20 million -- but bounced back to make a profit last season.

The figures are imposing, but not surprising. Major League Baseball lost the most profitable segment of the 1994 season and took a massive revenue hit when the strike wiped out the World Series and the tremendous broadcast revenues generated by it. Revenues dropped 35 percent in 1994, ending a string of eight straight profitable seasons. Per-game attendance fell by 20 percent in 1995 and Major League Baseball's ill-fated share-the-risk television venture contributed to the game's financial decline.

"It may have been more than [$702 million]," said Orioles owner Peter Angelos, "but hopefully, that's all behind us. I think that both sides recognize the hazards of the old approach. I think we're on a new track now."

The owners and the Major League Baseball Players Association have taken their bitter labor feud underground, imposing a news blackout to avoid further damage to the image of the sport. Negotiations are proceeding on ownership's latest contract proposal -- submitted to the union in March -- and there are indications that an agreement could be reached in a matter of weeks.

The last management proposal called for a luxury tax system that would be far less dramatic than the luxury tax/salary cap plan that ownership tried to implement during the strike. The owners also have removed the direct link between revenue sharing and strict controls on player salaries, approving a revenue sharing plan independent of negotiations with the union.

The ownership negotiating committee has moved so far, in fact, that there is some question whether the luxury tax threshold -- which starts at $46 million and increases 7 percent per year to a maximum of $56.3 million -- would have a major impact on salary growth.

Still, there is room for union concern that the luxury tax and the new revenue sharing plan would transfer large amounts of money from the teams most willing to spend it on salaries to clubs more likely to use it for other purposes.

The players also have suffered tremendous losses during the dispute, giving up nearly $350 million in salary during the 232-day strike and watching the average player salary stagnate for the first time since the start of widespread free agency.

The owners took a hard-line stand because they felt that spiraling salaries were widening the competitive gap between the small and large market clubs.

Union officials disputed their claims of financial hardship, setting up the implementation showdown that eventually ended with a federal court ruling that prompted the players to call off the strike a year ago last week.

The players won in court, but the end result may have favored the owners, who used the huge expected losses as a pretext to cut payrolls and non-tender players who became eligible for salary arbitration.

Pub Date: 4/11/96

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