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Blame the Bosses
Jack McCallum
October 10, 1994
The owners' unjustified demands for a salary cap have shut down two sports and threaten a third
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October 10, 1994

Blame The Bosses

The owners' unjustified demands for a salary cap have shut down two sports and threaten a third

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How did it come to this? The final seven weeks of the baseball season were erased by a players' strike, then the playoffs, which were to begin earlier this week, and the World Series were scrapped. Last Friday the NHL season, scheduled to open the next day, was put on hold for at least two weeks by an owners' lockout, and it's possible the puck won't drop at all. NBA camps are scheduled to open on Friday, but there's the threat of a lock-out either when the season is supposed to begin, on Nov. 4 or shortly afterward.

There is college and NFL football on the weekends but little meat in the Monday-through-Friday sports diet. In fact the current period of inactivity represents the longest break in the seamless continuity of the three sports (postseason baseball into hockey into pro basketball into baseball into postseason hockey, etc.) since the NBA's birth in 1946. And even more than the hard-core sports fans, hundreds of team and stadium employees (following story) are hurting too.

So how did this happen? According to the studiously neutral, pox-on-both-their-houses rhetoric that has dominated public debate on the leagues' labor woes, it happened simply because of squabbles in each sport between greedy owners and greedy players about whether a cap should be imposed on players' salaries: The owners want a cap, the players don't. But in analyzing sports' labor woes, it's a mistake to reduce the dispute to a single issue. It's also a mistake to remain neutral.

At the heart of the disputes in baseball, the NHL and the NBA are fundamental differences about the economic and competitive health of the respective games. Team owners are habitual poor-mouthers, forever crying about their supposedly dire circumstances. To hear them tell it, a frightening number of franchises are ailing financially and, in some cases, in danger of going under. The disparity in income between big-market and small-market clubs, they say, threatens to cripple competitive balance. Payrolls are so out of control, they contend, that relief from the overpaid players is necessary—a cry that emanates even from the NHL, which remains virtually devoid of free agency.

But much of this is nonsense. A pox on one of their houses—the owners'. If player salaries are high, the owners are to blame; nobody forced the New York Yankees to lavish a five-year, $25.5 million contract on free agent Danny Tartabull (he hit .257 the first three years of the deal), or the Ottawa Senators to bestow a five-year, $12.25 million contract on 18-year-old Alexander Daigle, or the Charlotte Hornets to toss aside Larry Johnson's six-year, $20 million contract after two years and upgrade him to a 12-year, $84 million deal (page 56). Why should the players be called upon to save owners from their own profligate impulses? And are so many teams really hurting? It's well known that clubs hide parking and concession fees, among other sources of income, in other owner-controlled entities. In the NHL and NBA, constant battles over disclosure of the clubs' balance sheets have helped to create an atmosphere of distrust between players and owners.

Some teams are unquestionably losing money—for example, the San Diego Padres and Seattle Mariners in baseball, the Edmonton Oilers and Quebec Nordiques in the NHL—but easing their pain by imposing a salary cap is a stopgap solution that exacerbates tension and distrust. To be sure, a decade ago implementation of a salary cap helped save the NBA, which in 1981 had 16 of 23 teams losing money and was playing to 58% of capacity. The cap gave its co-inventor, David Stern, now the league's commissioner, a reputation for genius, bailed out several franchises and was celebrated in the media and in business textbooks. Often overlooked, though, is that a major impetus for implementation of the NBA's cap was the fiscal foolhardiness of owners, such as the late Ted Stepien of the Cleveland Cavaliers, whose free-spending ways helped push salaries to unrealistic levels throughout the league. In any event the NBA is now financially sound, which is why the players' union, over Stern's strenuous objections, wants to do away with the cap.

In simplest terms, the cap has outlived its usefulness, and that applies even in the NFL, which only last June achieved labor peace—after seven years without a collective bargaining agreement—by striking a deal with its players' union whereby unfettered free agency was granted in return for a lid on salaries. But efforts primarily by large-market owners to stretch the intentions and the rules of the cap have pitted player against team and club against club. Look what happened when the San Francisco 49ers wanted the services of free-agent Deion Sanders but were snug up against the NFL's cap. They juggled the contract terms of a few other players and—voilà!—came up with $1,134 million for Sanders, along with the tacit promise that he will be an unrestricted free agent again in 1995. Why have a cap when the rich teams will create a way around it, as they also usually have done in the NBA?

And the fact is, salaries are not as out of line in pro sports as owners make them out to be. For example, the "average salary" figure tossed around by the baseball owners is $1.2 million. But that number is virtually meaningless, thrown out of whack as it is by the price tags on players like the Detroit Tigers' Cecil Fielder ($36 million over five years) and the New York Mets' Bobby Bonilla (the highest-paid player in 1994, at $5.7 million). More relevant is the median salary, which was about $500,000 last Opening Day, a figure, incidentally, that had dropped in the two previous years.

Anyway, teams that can summon the discipline to impose their own de facto salary caps are free to do so. Last year the Mariners set out to reduce their payroll from $33 million to $29 million and, after making a few clever deals, did exactly that. The loudest sound coming from baseball front offices last spring was the moaning of general managers complaining about having to live within a salary budget set by their respective owners. Here's news, fellas: Everybody else lives within a budget.

Strangely missing from the owners' clamoring for a cap is any suggestion that the value of franchises, like salaries, ought to be capped too. Nine years after Norman Braman bought the Philadelphia Eagles for $65 million, he sold the franchise this year for $185 million. Did we miss something here? As the University of Chicago's Allen Sanderson, an expert on the economics of sports observes: "Braman let the forces of the free market increase the value of the team, but he and other owners would not let free-market forces set the salaries of the players."

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