Baseball Owners Pull Plug on Talks : Labor: Their executive council implements payroll limits and gets rid of arbitration. Players will appeal to NLRB.

The reprieve, and the posturing, ended Thursday night when baseball’s owners and players failed to reach a bargaining settlement before the midnight deadline established by the owners last Friday.

The governing executive council, conferring by phone and exercising the authority the owners had approved in that Chicago meeting, responded to the breakdown in negotiations by declaring an impasse in the four-month-old dispute and unilaterally implementing an economic system that will place a cap on payrolls and eliminate salary arbitration.

A system that the union contends will transfer millions of dollars to owners and destroy free agency becomes effective today.

It is certain to ignite a bitter legal battle and jeopardize the 1995 season, when the owners will attempt to use replacement players and the union will resume a strike that began Aug. 12.

“The owners will come to regret this--sooner than they realize,” union leader Donald Fehr said by phone from Washington.

He said he would ask agents and players to hold off the signing of new contracts until the implemented system can be fully reviewed and predicted that the union will pursue all options.

First and foremost: The union will seek injunctive relief through the National Labor Relations Board, charging the owners with an illegal impasse and having failed to bargain in good faith, a charge the NLRB has already accused the owners of in relation to the $7.8-million pension payment that was withheld from the union in August.

“If it takes the courts or Congress to help achieve a settlement the players can live with, that’s fine,” Fehr said. “If the players have to win it by outlasting the owners, they’ll do that too.”

Fehr also said he was “profoundly disappointed” the negotiations failed but was not surprised or dismayed. He said implementation was “preordained” and that the union was working against a “moving target” with every proposal and concept measured against the salary cap.

“Up until tonight I thought we were negotiating a tax plan, but tonight they told us that the tax plan we proposed didn’t measure up to the cap. This has always been about the cap,” Fehr said.

In what had seemed to become strictly a showcase attempt by both sides to establish a legal case for good-faith bargaining, the implementation delay by the owners produced little of substance until Thursday, when the players, for the first time, made a two-tiered, escalating tax proposal designed, they contended, to apply the drag on salaries and overall cost control the owners had been seeking through the cap or their own high-rate tax proposals.

The owners’ negotiating committee studied it for six hours before rejecting it, describing it in a statement as an “empty bag.”

Said acting Commissioner Bud Selig, reached by phone in Milwaukee: “I can’t tell you how disappointed we all are in their alleged counterproposal. It was so unresponsive that it is like we were back in June or July.”

Selig said it was never the goal to implement because implementation is “not a panacea or long-term solution to the industry’s problems, but we couldn’t stay with the status quo. We had been doing that for too many years, ignoring our problems. We had twice delayed implementation. We couldn’t do it again. We had to move on and prepare for next season.”

Special mediator William J. Usery concurred to an extent, saying it was clear “tonight that there was no use going any further for the time being.”

The new system will have an immediate impact in that:

--Contracts for 1995 must be tendered today.

--There will be a scale of minimum salaries: $115,000 for a rookie, $175,000 for a player with one year of service, $275,000 for two years, and $500,000 or $750,000 for three years depending on statistics.

--Sixty-three players with four or five years of service will become restricted free agents. Included in this group are Ramon Martinez, Jack McDowell, Jim Abbott and Steve Avery. A parent club wishing to retain rights to a four- or five-year free agent must tender a minimum 10% raise. If the player receives an offer from another club, the parent club has 10 days to match it.

Amid a flooded market (six-year players remain unrestricted free agents), the union contends there will be few offers and very little movement.

“Clubs aren’t going to commit to multiyear guarantees under the cap,” union lawyer Lauren Rich said.

Under terms of the cap, clubs will have four years to take incremental steps of 25% per year and ultimately bring their payrolls within 84% to 110% of the 1994 average of about $34.8 million, a figure exceeded by 16 of the 28 teams.

The revenue sharing link, which also escalates in incremental steps, provides for 11 smaller-revenue clubs to receive about $23 million in 1995 and $58 million in 1998. The Angels, whose small-revenue status under the plan has been a subject of frequent and angry debate in owner meetings, will receive $1.3 million in ’95 and $3.3 million in ’98. The Dodgers will contribute $1.8 million to the pool in ’95 and $4.2 million in ’98.

Dodger owner Peter O’Malley said he doesn’t completely support the system because of the absence of a provision insuring good management among the clubs on the receiving end.

“I still don’t like the idea of sharing money with clubs like San Diego and Milwaukee, where there has been no evidence of good management,” O’Malley said, adding Selig’s Brewers to a list he had publicly reserved for the Padres of Tom Werner, whose sale of the club became official Tuesday.

Aside from those high-profile provisions of the owners’ new system, there are many other turn-back-the-clock items. Among them:

--Elimination of the maximum 20% pay cut, meaning salaries in non-guaranteed contracts can be reduced any amount from year to year.

--Players called up in September when rosters are expanded will not be credited with service time accruing to eligibility for free agency, pensions, etc., and players on the disabled list will be credited with only 50% service time.

--Clubs can terminate and release a player at any time without reason.

In the meantime, mediator Usery said he will report to Labor Secretary Robert Reich today and may have more to say about his plans after that. On Thursday, former President Jimmy Carter released a statement through the Carter Center in Atlanta saying he would be willing to mediate the baseball dispute if there was no settlement before the deadline.

There was no official response from the players or owners, but Usery said, “The one thing I didn’t think we needed at the moment was another mediator.”

Where this ends isn’t clear, but the owners face a high risk. Congress could remove their antitrust exemption and the NLRB could ultimately levy a multimillion-dollar judgment, maybe more.

Said Eugene Orza, union associate general counsel: “No other industry in the country could implement a salary cap or a similar restriction on trade because they are all governed by antitrust laws. Baseball could do it because of the exemption. The owners had a vested interest in creating an artificial impasse.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Strike Facts WHAT HAPPENED

--Owners declared an impasse in contract negotiations with the players’ union and voted to impose a salary cap.

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THE NEW SYSTEM

--Sets 1995 salary cap of about $34 million, to be phased in over a four-year period, requiring 21 of 28 teams to reduce payrolls.

--Limits players to receiving 50% of industry revenues in compensation (down from 58%, according to owner estimates).

--Eliminates arbitration.

--In lieu of arbitration, players become restricted free agents after four seasons of major league service time. Teams would have 10 days to match any offer. Players become unrestricted free agents after six years.

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WHAT’S NEXT

--Teams are expected to offer contracts under the new system to all unsigned players.

--The union is expected to file unfair labor practice charges with the National Labor Relations Board, touching off long and costly hearings. If the NLRB files a complaint against owners, the agency would seek a federal injunction.

--Congress may elect to re-examine baseball’s antitrust exemption.

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THE 1995 SEASON

--The owners have said they plan to open spring training camps on schedule.

--The players will be: any major leaguers who choose to ignore the strike and are willing to accept the new management system; and replacement players.

--Ontario provincial law prohibits the use of replacement players, meaning the Toronto Blue Jays would have to play all their games on the road unless all their players report.