A year from the brink

Finally getting a handle on its financial woes, baseball is back

It's been a year now, or just about, since baseball walked the plank and stared into the deep, dark waters of sure death. Or, at the very least, certain chaos and an utter public relations fiasco.

That's 11-plus months that have included the end of one bumpy season, a surprising postseason, an offseason like no other in recent years and most of another regular season. That's a near year since players and owners pulled back from the edge and agreed, almost miraculously, to live to play another day.

And so here we stand. The rhetoric has quieted. The games are being played. Both the pennant races and the wild-card chase are in full throat.

The New York Yankees are still winning. The Pittsburgh Pirates still aren't. The Atlanta Braves are about to capture their 12th consecutive division title. The Boston Red Sox and Chicago Cubs still are looking up. The Montreal Expos and Tampa Bay Devil Rays still barely draw flies.

Has anything really changed? Has the collective bargaining agreement that owners and players forged in an historic deadline-day deal last year accomplished anything to revive a sport that seemed dead-set on destroying itself?

In a word: Yes.

"We are early in the game," cautions Rob Manfred, a Major League Baseball executive vice president and one of the key players in hammering out the collective bargaining agreement last Aug. 30. "But, from our prospective, the most important issue in the negotiations was competitive balance. We believe we have seen a significant improvement just this year."

As baseball heads into September under the new agreement, there are close pennant races in every division in the American League, as well as in the National League Central. And in the NL, seven teams are within two games or so of a wild-card berth entering the final month.

Included in the races are such small-revenue franchises as the Kansas City Royals, the Minnesota Twins, the Oakland A's, the Florida Marlins and the well-traveled Expos.

Whether it's the new agreement that has turned that trick is the question.

"I don't believe that that's correct at all," says Smith College economist Andrew Zimbalist, the author of the landmark book Baseball and Billions: A Probing Look Inside the Big Business of Our National Pastime. "What we've seen every single year since 1995 ... there's a high correlation between salaries and a team's winning percentage.

"Nobody ever said that the only thing that determines success is salary, is payroll. Certainly, the A's have demonstrated that. [But] as long as you have a wild-card system, it's possible for a number of teams to be in it."

The talk around baseball this summer has been about the pennant races and the wild card, about the long-suffering Red Sox and Cubs, about Albert Pujols and Barry Bonds and Ichiro Suzuki and Eric Gagne. It's another world from last summer, with all the yammering about revenue sharing, luxury taxes, player strikes and lockouts.

The fact that a new agreement is in place through the 2006 season -- no matter how good or bad it may turn out to be -- is reason enough that baseball is better this summer.

Still, there are signs that this agreement already is doing much of what owners had hoped it would do. The first signs came last winter, when the prices for free agents dropped dramatically.

There were still a few multi-million dollar signings, for sure. Slugger Jim Thome got a six-year deal in Philadelphia for $85 million. Lefty Tom Glavine got $35 million in a three-year deal with the New York Mets.

But two years ago, seven free agents signed contracts worth more than $40 million. Thome's was the only one worth that much last offseason.

At the same time, many lesser free agents were forced to take huge pay cuts. Reliever Roberto Hernandez earned $6 million last year in Kansas City. He signed for $600,000 this year with Atlanta. The Baltimore Orioles paid shortstop Mike Bordick $5 million last season. He's making $1 million this year in Toronto.

The market was so unfriendly that many players and players union representatives not so quietly wondered if owners weren't illegally conspiring to hold salaries down. That sort of thing was rampant back in the late 1980s, and in 1990 owners agreed to pay $280 million to settle charges of collusion.

Nobody has publicly accused owners of that this time around. Instead, many credit the new agreement for slowing down the spiraling salaries of players.

The problem in proving that, of course, is that there are so many other factors involved. A slack economy, for instance, probably has a good deal to do with it. After losing money for so many years and being on the brink of shutting down the game, there may be a renewed effort to be fiscally restrained on the owners' part. There could be several other explanations.

Yet few on either side would discount that the new agreement has had some effect on the market for talent.

"It's hard to argue that it's slowed down the salaries a little bit," says Glavine, a key face in the players union during the past several labor scuffles.

"I think that there clearly has been some impact. It's a little early to assess the full impact," Zimbalist says. "One thing is the drag on salary growth. The new signings went down considerably. That's clearly one effect.

"But in terms of the competitive balance, that's very problematic. It's not likely it's going to have any significant effect at all. We still have a highly significant correlation between payroll and performance. That's really all we're talking about."

Baseball officials, though, disagree. Or they at least hope that Zimbalist is mistaken.

Yes, it's difficult to quantify. But Manfred says his figures show that the disparity in payrolls between the top-revenue clubs and the lower revenue ones has shrunk under the new agreement.

That, he says, is due to a couple of features in the pact. No. 1 is the payroll tax. Only one team, the Yankees, has barreled past the $117 million barrier that triggers the tax. That leaves more of the richer teams closer to the pack.

Baseball officials clearly expected more than one team to be taxed. They are quietly overjoyed that only the Yankees have blown past the threshold.

No. 2 is the increase in revenue sharing, first made possible in the previous agreement. More than $215 million has changed hands from the richest teams to the poorest this year, and that will increase (as will the payroll tax threshold) over the life of the agreement.

Those two devices have combined so that more teams have payrolls that are closer to each other. "Payroll compression," Manfred calls it.

And that means more teams will be able to compete.

At least that's what baseball sees happening.

Last year, only four of the 14 teams that received revenue sharing checks finished with a winning percentage of .495 or better. This year, according to Manfred, eight of the 14 teams are playing .495 or better. And those eight clubs actually are showing a total increase in attendance, even as attendance across the game is down.

"If you compress payroll, lessen payroll disparity, have a little restraint at the top, give more at the bottom," Manfred says, "you have better competitive balance and bring in more fans.

"In all candor, I think the agreement has probably been showing positive trends sooner than we might have expected. It looks like it's working."

The overall effect will become clearer in coming years. This offseason, for instance, stars like Montreal's Vladimir Guerrero, Atlanta's Gary Sheffield, Oakland's Miguel Tejada, Chicago White Sox pitcher Bartolo Colon, Atlanta's Greg Maddux and Philadelphia pitcher Kevin Millwood all will be free agents. And there are many others who will command nearly as much as them.

But what the market will bear is the big unknown.

"I think you're going to see another winter where free agency is not as ... chaotic as it has been in years past," says Glavine. "It'll be more like last winter."

Baseball still has its problems, and everyone knows it. Attendance is down in a lot of cities. The situation with the vagabond Expos must be resolved. The Detroit Tigers are threatening to become the worst team ever, trying to outdo the longtime standard of futility, the 1962 New York Mets.

The poorest teams, generally speaking, are still at a severe disadvantage to the richer ones. Too many teams seem bent on cashing out when the going gets tough, as the Cincinnati Reds and Pittsburgh Pirates have shown this summer.

The game needs to do better in attracting younger fans and appeasing the older ones.

Baseball has troubles it has yet to face, too. If player salaries continue to drag and baseball's economy picks up, there will be some hard negotiating to be done when this agreement expires.

Yet, compared to 1994, when the World Series was lost to a work stoppage, Major League Baseball is in a relative renaissance. Compared to a couple of years ago, baseball is beaming.

"Business aside, you still have to be, first and foremost, a fan," says Brian Goldberg, a baseball fan and the agent for Cincinnati's Ken Griffey Jr. "And when you get down to a month before the end of the season, and there's this many teams in it, it's got to be a good thing."

A year later, baseball is better. Better than it has been in years. There's really no question about it.

And it's certainly much better than it would have been had owners and players taken that one final step last August.

John Donovan is a senior writer for SI.com.