Baseball’s Salaries Keep Rising, but Have We Reached the Ceiling?

In 1976, when free agency began, the average major league player made $50,000. Folks thought he had it soft.

Every year since then, salaries have skyrocketed and every year owners have wept that they would soon go broke.

When salaries hit $100,000, owners said it was the end of civilization as we knew it. Around $200,000, they asked for the smelling salts.

At $250,000, the owners circled their wagons, took out strike insurance with Lloyd’s of London, precipitated a two-month strike and, basically, lost.

In the strike aftermath, owners reached into their moth-eaten pockets and, somehow, found about another $120,000 per player to give out. Gee, guys, we just stumbled on about $80 million a year for salaries that we didn’t think we had.

“See,” said the union. “We told you. Never believe a baseball owner.”

Baseball’s union has been proven right so many times in its economic analyses in the last 15 years, and baseball’s owners have been exposed so consistently as greedy deceivers, that it has become a habit to assume management is always crying wolf.

Now, the salary norm is $363,000.

And going up as fast as ever.

Has the sport been ruined?

Every attendance mark has been smashed. The network TV deal is worth a billion bucks. Cable TV, already enriching the Braves, Cubs, Rangers and Mets, is a boom market on the launch pad.

On May 17 in Anaheim, the Angels met the Yankees--two third-place teams last season. Attendance: 61,066.

Not only has no team folded, but every one that’s gone on the market has found buyers. Not always in the same town. But somebody somewhere has, so far, always been anxious to let the poor owner exit with a fist full of millions.

Even as owners claim to lose money, their clubs rise in value so fast that they always have the option of getting out with far more money than if they’d put their cash in standard investments.

To illustrate, if you buy a house for $100,000, “lose” $20,000 on improvements, then sell after five years for $300,000, did you lose money?

Edward Bennett Williams bought the Baltimore Orioles in 1979 for something on the order of $10 million. If he could get $30 million, $40 million or $50 million for them today, by what measuring stick could anyone say Williams has not become vastly richer by owning a baseball team?

According to one American League team president, New York Yankees owner George Steinbrenner has, this year, been offered more than $100 million cash for his team, despite the fact that the Yankees payroll has more than $80 million in future indebtedness.

Somebody thinks owning a ball club isn’t such a bad deal.

In light of this, what are we to make of the owners’ claim that they have opened their books to the union and discovered the sport lost up to $42 million last year and, by ‘88, will lose $155 million a year?

Union boss Don Fehr says the claims are “voodoo economics and essentially meaningless.” He says he’s got a Stanford economics professor who agrees.

Once again, the union has pointed arguments to prick the balloon of management claims. The clubs haven’t fully accounted for the multi-million dollar tax depreciations new owners get to claim in their first five years. The clubs neglect to notice the way teams put some of their baseball money in other corporate pockets so they can show red ink.

The owners don’t even like to admit that the economics of buying a ballclub have changed. Media conglomerates now buy teams as a source of cheap cable TV entertainment. Beer companies and burger chains see a club as bonus advertising, even if the team loses some money.

Can baseball prosper if salaries rise indefinitely at their unbelieveable rate of the last 10 years?

Almost certainly not. There must be a ceiling, mustn’t there?

Have we reached that ceiling? And how would we know it when we have?

It’s true that plenty of teams are losing money on paper; it’s also true that most of them couldn’t care less and, in their corporate heart of hearts, think that owning a baseball team is, on the whole, a swell deal.

There are also, probably, a very few teams, like the Pittsburgh Pirates, that are losing propositions no matter how you cut it.

Of course, there always have been such teams. And there should be. Capitalism doesn’t ensure profits.

Even teams like the Pirates--in last place, riddled with a drug scandal and bereft of fans--might look like a gold mine to another man in another town. Hypothetically, Jack Kent Cooke would buy ‘em in a split second, move them to Washington, start claiming his tax depreciation and think he’d stolen the crown jewels.

The irony of this situation is that baseball didn’t have to do anything to beat its “economic problem.” If, when that $1 billion TV contract bonanza arrived, the clubs had accepted the fact that one-third of it would go to the union--as precedent dictated--then they’d have been solid for years.

Instead, too many owners decided they’d spend their whole chunk of the billion to sign players, then plead poverty in the next negotiation. That’s happening now.

Baseball’s owners have spent money that wasn’t theirs. Now, they want the union to bail them out by accepting rollbacks, either in percentage of network TV revenue or in changing the process of salary arbitration.

The owners might argue they spent all that money on the players.

No union can buy that logic. You can’t give away one-third of the TV revenue--a precedent that might affect generations of players--just because a few owners paid players too much money back in the 1980s.

Baseball’s current “system” works just fine. Free agency, arbitration and open marketplace competition for players have been a model of free enterprise working well. It ain’t broke.

The union is asking for nothing in its current negotiations. Just a continuation of a system that was fairly fought for and has coincided with an era of booming popularity.

Baseball’s owners, who are feeling a little sickly for the first time in the game’s history, might need some castor oil--in the form of a little red ink.

Maybe that’s the only way to teach multi-millionaires that you can’t overeat and expect somebody else to have the bellyache.