Mark's View: Baseball's Economic Report

Mark's View: Baseball's Economic Baby Steps

The blue-ridden commission looking at the future of baseball issued its report this week [click here for news story]. In anticipation of labor turbulance in 2002, the committee sought to propose solutions to the economic disparity afflicting the sport. In doing so, the panel advocated an increased revenue sharing scheme, where clubs would share between 40 and 50 percent of all local revenues, and a minimum payroll of $40 million and a luxury tax of 50 percent of revenues above $84 million. for all teams, while simultaneously levying a competitive-balance tax of 50 percent on all club payrolls in excess of $84 million.

It is good to see that the baseball is beginning to think about a more equitable sharing of revenues than has been the case in the past. Despite some claims that these are "sweeping" proposals, they still do not go far enough -- and certainly not as far as, say, the standard in the NFL. And more problematic is the reception of the "big team" owners to this idea. My hunch is that it is not going to be a rousing ovation.

Maybe it is my experience of looking at baseball over the last quarter-century, but the chances for the baseball owners to agree to meaningful changes in the way they do business is about as likely as a comprehensive Middle East peace agreement. And these proposals, while laudatory, do not go far enough as to constitute meaningful change.

Sharing of Television

First, the sharing of the television fees do not eliminate the disparity. If the New YOrk Yankees earn $60 million in broadcasting revenues, sharing 50 percent of that would still give them $30 million in their pockets -- more than the revenues of most other teams. The luxury tax -- on payrolls over $84 million -- means that the 50 percent figure only applies to money above that threshold. So, iif a team has a the payroll over $100 million (like the New York Yankees), they would pay 40 percent tax on $20 million. A nice piece of change, but not as sweeping as it sounds.

Then there is the union -- a major player in all of this. I wonder whether it was simple arrogance or a tactical reason why the union had no representative on the commission. If it is the former, then it follows the grand tradition of the owners thumbing their noses on the union and not taking them seriously. If it is the latter, then one can interpret the report and the opening salvo in the 2002 labor wars. [click here]