Owners Drop Salary Cap Demand : Baseball: But negotiator for players says key issue is reducing eligibility for arbitration from three to two years.

Baseball’s owners have made a second concession in the collective bargaining negotiations, removing their proposed 75% cap on arbitrated salary increases.

Bowing to the firm refusal of the Major League Players Assn. to accept the concept of a cap, Charles O’Connor, general counsel of the owners’ Player Relations Committee, said Monday that the major debate involves arbitration eligibility.

Last week, the owners removed revenue sharing as the major issue.

A source familiar with the talks, which resumed with two sessions Monday, predicted that a bargaining agreement would be reached by Thursday, allowing the spring training camps to open by the mandatory reporting date of Feb. 28.

The owners’ lockout has reached Day 6. The first exhibition games are scheduled for March 1, and Don Fehr, the union’s executive director, said Monday that the lockout was “very close” to a point where the first games would be threatened by the absence of preparatory time.

Fehr also said that unless an agreement was reached soon, the lockout could linger because he would have to recess negotiations while he traveled to Arizona and Florida to update players.

Fehr downplayed the removal of the 75% arbitration cap.

“I can’t tell you there’s been any progress on the remaining issues,” he said. “We have consistently told them that we won’t accept any agreement that contains a cap. The key issue is what it has always been, the status of players with less than three years of service.”

The union is attempting to lower the eligibility requirement for arbitration from three years of major league service to two, which is what it was before the labor negotiations of 1985. That was when the union agreed to add a year as concession to owners’ claims of financial distress.

Now, citing the game’s prosperity, the union wants the year back, but many familiar with the negotiations believe the final compromise will find the union agreeing to retain the three-year rule in exchange for an increase in minimum salary from $68,000 to $100,000, return of the 25-man roster (rather than 24), and immediate free agency for players outrighted to the minors.

O’Connor said that arbitration eligibility remains the problem and that many owners strongly oppose rolling it back to two years.

“We’re looking for a middle ground,” he said, adding there is a basis for overall optimism in that the two sides are discussing traditional issues that have been resolved before. “The solutions are there. We should be able to find them,” he said.