MAJOR ISSUES

The national cry of anguish went up Friday from baseball fans outraged that players dared to set an Aug. 30 strike date. Fans are disillusioned by the possibility of the second strike in eight years and enraged that neither owners nor players appear to place a higher priority on playing games than fighting over money. From peanut vendors to President Bush, fans told both sides to shut up and settle their dispute now, to act in the best interests of the sport. Those sentiments evoke a chuckle from Barry Axelrod, a longtime player agent from Encinitas. He can sympathize, to be sure. But he looks at baseball’s perfect record--in the last 30 years, no labor agreement has been reached without a players’ strike or owners’ lockout--and suggests fans might be wasting their breath. “I have never seen either of these sides care one iota about the court of public opinion,” he said. “That’s indicated by what we’ve done the past 30 years.” For fans numb to the sights or sounds of Commissioner Bud Selig and union leader Donald Fehr, and for fans lost in a sea of tax thresholds, local revenues and split-pool vs. straight-pool revenue sharing, The Times spoke with two Southern California baseball figures not involved in the current negotiations and asked them to discuss the issue fundamental to each side.

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Richard Brown served as president of the Angels from 1990-96. He returned to practicing law after Disney bought the team. In April, Los Angeles Mayor James Hahn appointed him to the city’s planning commission. Brown is an advisor to Alabama businessman Donald Watkins, who is interested in buying the Angels.

From a management point of view, Brown said, the issue is simple.

“The most critical thing is to get salaries in line,” he said. “They need to get a reasonable compensation structure.”

Commissioner Selig testified before Congress in December that owners lost a combined $350 million last season and that only nine of 30 teams turned a profit.

According to the figures Selig presented, 10 teams spent at least two-thirds of total revenues on player salaries and benefits, not counting revenue sharing. Five of those 10 teams--the Dodgers, Atlanta, Arizona, Boston and Texas--then paid out additional money in revenue sharing.

“The reason teams are unprofitable is because salaries amount to 70% of gross revenue in some cases,” Brown said. “There is no business I’m aware of in this country where salaries take up such a great percentage of gross revenue.”

The most logical solution to that dilemma is a salary cap tied to revenues--that is, player salaries account for a fixed percentage of revenues each season, with players making more money as teams take in more money.

While NFL players and owners agreed to such a system, the major league players’ union adamantly opposes any salary cap. The union believes that teams and players ought to be able to negotiate deals for whatever salary they agree on, without restrictions, in the same way that a company can hire a salesman for whatever salary the parties agree on.

The union argument in favor of a free market is flawed with respect to salary arbitration, where a third party--the arbitrator--can determine a player’s salary. The threat of a hearing compels teams to offer more money than they might like, lest the arbitrator award the player an even higher salary. Players are not eligible for arbitration until after they have played three years in the major leagues, and until then teams can pay whatever they like above the major league minimum wage. After six years, players are eligible for free agency and can negotiate with any team.

Owners have failed in every previous attempt to implement a salary cap and have acknowledged that the union never would accept one. In its place, they have proposed increased revenue sharing and a luxury tax, with the objective of providing more money to lower-revenue teams and with the more important objective to restrain spending among higher-revenue teams.

“They desperately need a luxury tax,” Brown said.

The luxury tax would not have prevented the New York Yankees from spending $17 million per year on first baseman Jason Giambi last winter, but it could have slapped them with a tax as high as $8.5 million per year, forcing teams to think twice before spending so freely.

Players reluctantly accepted the concept but initially proposed that the tax not kick in until a team’s payroll was so high that only the Yankees would be affected, or so owners believed.

The owners prefer to call the luxury tax a “competitive balance tax,” citing studies that show the teams that pay the most tend to win the most and concluding that the lesser the disparity in payrolls, the greater the chance for more teams to win.

The union, skeptical of management claims of huge financial losses, suggests that its free-market approach allows owners to pay what they like. Players often say that no one forces an owner to pay huge salaries.

But, Brown said, “If you lower salaries so you can become more financially viable, the team is not as competitive. If you’re not competitive, the fans don’t show up, the media burns you, and the broadcast rights contracts are worth substantially less.”

Players typically respond that owners, often blessed with fortunes from successful business ventures, would not spend money if they could not afford to do so.

“All the people who say, ‘They wouldn’t pay that money if they didn’t have it’ have never heard of a credit card?” Brown said. “Owners have done the same thing with lines of credit, and now they have maxed out.”