Fehr calls tax attack on salary structure

Under projection, 7 teams would be affected in plan proposed by team owners

August 21, 2002|By Peter Schmuck | Peter Schmuck,SUN STAFF

The Major League Baseball Players Association has long viewed any kind of luxury tax system as a salary cap in sheep's clothing, but union executive director Donald Fehr drove that point home in a pair of recent memos to players and agents.

Fehr called ownership's attempt to increase revenue sharing and institute a huge luxury tax on high payrolls "a wholesale attack on the salary structure," in a recent memorandum to players that was obtained this week by Newsday.

If that seems inflammatory, it certainly shouldn't be surprising to anyone familiar with the union's negotiating stance. Fehr has never made a secret of his opposition to artificial payroll restraints, and the union views any plan that alters the current system of player compensation as an attempt to make it pay for ownership's lack of economic discipline.

The owners have cast their proposal to share 50 percent of all local revenues and to phase in a 50 percent luxury tax on the highest payrolls as a last-ditch attempt to improve competitive balance in an industry with a huge revenue disparity between the richest and poorest clubs.

Both characterizations are essentially accurate. There is little question that a 50 percent luxury tax on excess payroll over $102 million (the current management proposal) would force big-spending owners to think twice about adding expensive players to already expensive teams. There also is no dispute that a huge increase in revenue sharing would give small-market teams a better chance to compete for quality free agents, but Fehr and the union feel too much money would be siphoned from large-market teams like the New York Yankees and Mets.

Union officials crunched the numbers and sent a memo to agents last week that projected - based on last year's revenue totals and payrolls - the Yankees would have to pay $86.9 million, the Mets $35.8 million, the Red Sox $34.2 million and the Seattle Mariners $32.3 million into the revenue-sharing pool under the two major components of the management plan.

The union has proposed a less ambitious revenue-sharing plan and a progressive luxury tax of 15 to 30 percent on payroll that exceeds thresholds ranging from $130 million to $150 million. The total payroll of each team includes the average annual salaries of all players on that team's 40-man roster plus benefits.

According to union figures based on the 2002 season, the ownership luxury tax plan would affect seven teams - the Yankees, Rangers, Dodgers, Red Sox, Mets, Diamondbacks and Braves. The union plan would affect only the Yankees ($171.2 million) and the Rangers ($131.4 million).

"Simply put, the clubs' proposed tax is designed to and would apply enormous pressure to reduce payrolls," Fehr said. "Its purpose is to lower salaries."

Negotiators were back at work in New York on the core economic issues yesterday, though no significant progress was made toward a compromise on either the revenue-sharing proposal or the luxury tax. There are nine days left to reach a settlement before the union's Aug. 30 strike deadline and no indication that either side is preparing to make major concessions.

Quite the contrary, there are rumblings that ownership will take a more hard-line approach to the negotiations if the players walk out, perhaps using the start of a strike as a pretext to withdraw their current proposal and replace it with an NFL-style salary cap.

"The hawks are circling," Colorado Rockies owner Jerry McMorris told the Associated Press.

Ownership declared an impasse during the 1994-1995 labor dispute and attempted to implement a salary cap, but a federal judge ordered Major League Baseball to revert to the previous work rules until a settlement was reached. The owners could try again, but they would have to be careful to bargain long enough to make an implementation stand up to the scrutiny of the courts and the National Labor Relations Board.

That could lead to another extended work stoppage like the disastrous strike that lasted 232 days and wiped out the 1994 World Series, but there apparently are some owners willing to weather another such public relations nightmare.

San Diego Padres owner John Moores told The New York Times on Monday that he is prepared to sit out a season to fix baseball's economic system once and for all, and he said there is a significant number of his fellow owners who agree.

"I won't like it, but I'm prepared to do it," Moores said. "I'm not going to be a part of a crazy system where we have to keep raising ticket prices."

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