November 27, 1996
Major League baseball has had a tough last few years, a players' strike, a canceled World Series that brought on drops in attendance, revenue, and public love. Yesterday, club owners accepted a new labor contract that is being heralded as a big step toward a comeback.
JIM LEHRER: Finally tonight, the big baseball agreement. Sports author and commentator John Feinstein is here to help us understand that. John, it's a five-year deal. Now, does that mean, labor, peace, and baseball guaranteed for five years?
JOHN FEINSTEIN, Author: Well, actually, it's guaranteed for four years, because the deal is five years retroactive to the start of this season, so we've already completed--
JIM LEHRER: The first year.
JOHN FEINSTEIN: One year to five years. There is an option at the end of it on the players' side to go a sixth year, but we do have guaranteed labor peace and baseball through the year 2000 because of this contract.
JIM LEHRER: All right. Some of the details. On salaries, what does this new contract do? What are your salaries?
JOHN FEINSTEIN: Well, it raises the minimum salary from a hundred nine to a hundred fifty thousand dollars, but most significantly, it creates a luxury tax and a payroll tax. Now, the luxury tax will start when any team next year has a total salary for all its players of $51 million. If you go over that, then you will pay a 35 percent tax on anything over. In other words, the New York Yankees had a $60 million payroll this year. They would pay 35 percent of $9 million. So they would pay a payroll tax of whatever 35 percent of $9 million is. If you go--the next year, it goes up to $55 million as the cap and then $59 million. There's also a payroll tax for the players of 2.5 percent for every player, except those making the minimum.
JIM LEHRER: And that is designed to do what, to hold down the costs, or to kind of even the playing field?
JOHN FEINSTEIN: It'll do both, because the owners have always wanted a salary cap. In other words, you can't go over $51 million. This way, you can go over $51 million, but you will pay if you do so. So that's a way of policing the owners, having the owners police themselves. The payroll tax, same thing, because the players will give a little bit of money into the revenue-sharing program, which is also significant and we'll get to in a second. But the other thing it does is because the owners don't want to go over the $51 million, it brings them closer to the teams with the lower payrolls in terms of how much they're paying the players.
JIM LEHRER: And that's the revenue sharing. That leads us to the revenue sharing, which is a real breakthrough, is it not?
JOHN FEINSTEIN: Revenue sharing is very significant because baseball has gotten to the point where the haves are dominating, the teams in the largest markets with the most money. This year, the final four teams who were still playing were four of the top five paying teams in terms of total payroll. You've got a situation in Pittsburgh where without this agreement, there would not be baseball in Pittsburgh anymore.
JIM LEHRER: Why not?
JOHN FEINSTEIN: Because they simply cannot afford in a small market where they don't get the TV moneys and radio moneys and the revenue that New York gets, that the Atlanta Braves get, that Chicago gets to pay players. So what they've done in Pittsburgh, they're trading all their high salary players because they want to get their payroll down. Last year, their payroll was $14.5 million compared to the Yankees' $60 million.
JIM LEHRER: Wow!
JOHN FEINSTEIN: Now, you can't compete that way, and fans aren't coming, and so the team is headed downhill. All the small market teams needed help, and now they will get help.
JIM LEHRER: And because the--where will this money come from?
JOHN FEINSTEIN: Well, it will come from several things. It will come from the luxury tax money that have to be paid, and the top 13 teams in net revenue will have to pay money into a fund. There's already $70 million in the fund, and they will begin adding to it now next season.
JIM LEHRER: All right. Inter-league play. That's a small item to everybody except real baseball fans.
JOHN FEINSTEIN: Right.
JIM LEHRER: This is not--teams in the American League will play teams in the National League, and they will count.
JOHN FEINSTEIN: Exactly. In a regular season--
JIM LEHRER: What's the deal? Why did they think that was a good thing?
JOHN FEINSTEIN: Well, I think in every other sport, every team plays every other team. There's no division during the regular season. The Washington Redskins can play the Oakland Raiders. The New York Giants can play the Houston Oilers. Every team can meet during the regular season. The same is true in hockey and in basketball. Only baseball has there been this schism where half the teams don't play the other half of the teams. And one of the things that does is if you live in Atlanta, you never get to see Ken Griffey, Jr., or Frank Thomas play. If you live in--
JIM LEHRER: Because they're in the American League.
JOHN FEINSTEIN: Because they're in the other league, and they never come to your town. Now they'll be coming to your town on a limited basis. It will be fifteen or sixteen games a year per team of inter-league play next year, and it's only guaranteed for one year. The other thing they must do is they've got to figure out one set of rules, because when you're playing in American League parks, there will be a designated hitter. When they're in National League parks, no designated hitter.
JIM LEHRER: Meaning in the National League, the pitcher bats; in the American League, he doesn't.
JOHN FEINSTEIN: He doesn't bat.
JIM LEHRER: The hitter hits.
JOHN FEINSTEIN: Exactly. It'd be like in football if you said, well, when you're playing in the American Conference, you can kick field goals, but when you're playing in the National Conference, you can't.
JIM LEHRER: All right. Now, there are also--under this new deal, they're going to add two new teams, or they can add two new teams.
JOHN FEINSTEIN: They have the option--
JIM LEHRER: Brand new teams.
JOHN FEINSTEIN: --to add two teams as early as 1999 to begin play in 2002. The reason that's significant to the owners is because that's just found money. They'll charge the expansion teams 250 million dollars a pop. That's $500 million. You divide it by 30 teams. That's sixteen, seventeen million per team just for allowing them to play.
JIM LEHRER: John, the goal of all this is to bring baseball back from these bad last four years. Does this at least have the prospect of doing that?
JOHN FEINSTEIN: This is a very, very big step, Jim. You know, baseball reached a nadir in 1994, when there was no World Series, and it reached yet, it maybe even went lower than that during replacement ball, when they were willing to bring in scab players to replace the striking players early in ‘95. It began to come back when Mickey Mantle died and people remembered what baseball meant to them in the past, and then when Cal Ripken broke Lou Gehrig's record, they saw what baseball still could be. We had a great emotional post season in 1996, but we needed closure on the collective bargaining situation for baseball to go forward. Now we have it. We've got four years of guaranteed peace and guaranteed baseball. They had to have it because attendance was still down 13 percent this past season.
JIM LEHRER: In spite of having a great post season.
JOHN FEINSTEIN: Great regular season and a great post season. It was still down 13 percent from the pre-strike levels. Now not all the fans will come back, because some of them have gone away forever, but more fans will be willing to come back to the parks.
JIM LEHRER: John, thanks a lot.
JOHN FEINSTEIN: Thank you, Jim.