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01/14/09 10:39 PM EST
Some owners call for salary cap
Commissioner: 'The owners are all entitled to their opinions'
By Barry M. Bloom / MLB.com
PARADISE VALLEY, Ariz. -- Brewers owner Mark Attanasio was in a bike shop on the Kona coast of Hawaii's Big Island, vacationing for the holidays when he received an e-mail from a reporter for Bloomberg News. The question was about the Yankees' signing of free-agent first baseman Mark Teixeira, coming on the heels of New York inking left-hander CC Sabathia, who pitched part of the 2008 season for the Brewers. The value of the two deals was $340 million. "At the rate the Yankees are going, I'm not sure anyone can compete with them," Attanasio said in an e-mail response. "Frankly, the sport might need a salary cap." The comment reverberated around the country and has still had its impact among Major League Baseball owners, who are meeting here on Wednesday and Thursday for the first time this year. Some sympathize with Attanasio. "I think there's a lot of owners that would like to have that right now," said A's managing partner Lew Wolff, whose team plays in a large market, but in an antiquated stadium. "It's important to realize that we're playing by a certain set of rules right now," said Bob Nutting, chairman of the Pirates. "We've got to find ways to succeed in the current economic environment. We're not going to use the hope of a salary cap as a crutch or as an excuse." Some think the Yankees spending is bad for business, while some believe it's good for baseball. "The owners are all entitled to their opinions," Commissioner Bud Selig said on Wednesday. "I don't think it's appropriate for me to comment on it. I can understand why some of them feel that way. We have a labor agreement that doesn't have to be negotiated for another three years. I'll comment about it then." The fact is that a salary cap has always been a non-starter in negotiations with the MLB Players Association, which agreed to a competitive balance tax and threshold in the collective bargaining that followed the last players' strike in 1994. This year, the threshold for player payroll is $162 million. Last year, when it was slightly lower, the Yankees and Tigers exceeded the threshold. Because the Yankees repeatedly spend over the threshold, they pay at the highest rate of 40 percent on the difference between the threshold and their actual payroll. That means if they spend $200 million this year, they will be taxed 40 percent of $38 million or about $15 million, the fair market price of another substantive player. "[The tax] doesn't seem to stop them," Attanasio said on Wednesday. "But I don't blame the Yankees, I blame the system. The Yankees are playing within the rules of the system. This isn't sour grapes. You can't blame the team so you have to change the system. They have a lot of very intelligent business people there. I'm sure they're working within their economics." The current Basic Agreement doesn't expire until Dec. 31, 2011. Selig's current contract as Commissioner expires a year later when he's 78 years old. The fact that the union has always resisted a hard salary cap doesn't seem to faze Attanasio, who offered $100 million to Sabathia and just signed reliever Trevor Hoffman to a one-year deal that could pay him as much as $7.5 million. He projects the Brewers' payroll at $80 million. "I'm going to keep working on it," said Attanasio, who purchased the Brewers in 2004 in the midst of what Selig is fond of touting as 16 years of labor peace. Selig has been Commissioner since 1992 after purchasing the moribund Seattle Pilots and moving them to Milwaukee just in time for the 1970 season. Sitting in those two offices, Selig experienced every strike and lockout as baseball went through 25 years of labor strife. With peace the sport has grown to record numbers with $6.5 billion in gross revenues last season and an average $3 million player salary. But he's been concerned since the end of the season about how the shrinking global economy might affect baseball this coming season and at the owners' meetings in New York this past November, invited former Fed chairman Paul Volcker to speak to the owners. Owners responded by spending almost $1 billion on free agents this offseason. On Monday, with the signing of pitcher Derek Lowe by the Braves, the rest of MLB finally surpassed the Yankees in total dollars spent. That's $491 million for 58 players as opposed to what the Yankees have spent on four: $442 million. "We've always played by the rules and we're still playing by the rules," said Lonn Trost, the Yankees chief operating officer. "Which part of this do these other clubs not like? Is it the revenue-sharing funds we've paid year after year? Is it all the luxury tax? "These other clubs have taken that money. We're doing everything we can to invest in our team, our community and MLB. It's what the Steinbrenners have always done and will continue to do. No one has told us that anything we're doing is at all improper or incorrect." Between revenue sharing and the competitive balance tax, the Yankees send about $100 million a year into baseball's coffers. On the other hand, the ballclub in the Bronx might generate in excess of $500 million a year from the new Yankee Stadium, which opens this year. "They are baseball," Wolff said. "They've not done anything differently than they've done for years. They benefit us more than they hurt us." And so what's good for the Yankees is good for baseball. "I have no problem with what they've done," said Crane Kenney, the chairman of the Cubs. "They've done it within the confines of our agreement. Look at the reality there: they've got a $1.3 billion stadium coming online. They were probably relying on Wall Street to fill a lot of those seats. They didn't make the playoffs for the first time in 13 years. Their reaction is probably similar to what I would do, which is you've got to put a compelling product out there when you open the doors of that new ballpark and that's what they did."
Barry M. Bloom is a national reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.