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IS THERE A CEILING?
Jim Kaplan
January 05, 1981
It must have been the Dallas locale. As Bowie Kuhn addressed the annual winter meeting in December, baseball's reserved and formal commissioner was suddenly transformed into a country-music singer belting out a familiar tale of woe. His dirge sounded something like this:
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January 05, 1981

Is There A Ceiling?

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Ray Grebey, baseball's chief owner-negotiatior, concedes that Miller's figures are in the ball park. But he adds, "You have to tie in other salaries as well. Out of every dollar we spend, 65¢ goes to employee wages and benefits, but only about 30¢ of that goes to the 25-man roster. What about minor leaguers, umpires, ball park employees and their salaries, insurance and pensions? Hospitals spend as much as we do on wages and benefits, and they're going out of business. And what about the costs of spring training, airline tickets, hotel rooms and other non-salary expenses? When we speak of the state of the union, Mr. Miller sees it as an attack on his union. The basic problem is the increase in costs—all of them."

Yet owners do most of their complaining about major league player salaries. It's easy to see why. The owners haven't much room for cutting back when it comes to other salaries and expenses, but they could exercise some restraint over big league contracts.

At least in theory. "Inflation drives salaries up," says Harry Dalton, general manager of the Milwaukee Brewers. "We now have salary arbitration, and a club must set its prices higher than it wants in order to avoid paying what the players want. Agents have taken over negotiations and their percentages drive salaries up. And salaries are commonly known these days, so players can find out what others are making."

Dalton's last point deserves elaboration. Before salary figures were published, a player had to take an owner's word that his income measured up well with that of his teammates. In the mid-'60s Dodger player representative Ron Fairly was a satisfied customer. The Dodgers had assured him that among his teammates only Sandy Koufax and Don Drysdale made more than he. But when the Players Association asked Fairly to poll the players, he discovered he was in 12th place. Fairly had been had.

Today all figures are known, and players can spot lesser performers who are making more. It's an irresistible argument for an increase. No wonder almost all major-leaguers are well paid. "The owners are seeing what Hollywood saw a long time ago," says player agent Reuven Katz. "Stars are worth a lot of money. They attract people. Hollywood paid these big salaries 20 years ago. Of course, Hollywood would pay the spear carriers scale. Baseball is paying the spear carriers as stars."

For their part, owners and general managers are willing to take responsibility for high salaries. When polled by SPORTS ILLUSTRATED, they refused to blame the players for seeking top dollar, admitted the teams wouldn't be spending lavishly if they couldn't afford to and didn't think they were investing wisely, and conceded that they, the bosses, are only too quick to reach for their checkbooks. "New owners want to make an instant hit," says Haywood Sullivan, himself a relatively new owner of the Red Sox, "so they go after big-name free agents." Adds Pittsburgh General Manager Harding Peterson, "The thirst to win is so great that owners will go to any extent to become a winner." How true. Atlanta owner Ted Turner saw himself just one lefthanded outfielder short of contention, so he signed the Mets' inconsistent Claudell Washington to a five-year, $3.5 million contract. The Astros figured they could repeat as National League West champions with a little more pitching and depth, so they signed 35-year-old Dodger Righthander Don Sutton (three years, $2.85 million) and Texas utilityman Dave Roberts (five years, $1.1 million). Of course, when it comes to free agents, all restraints are down. "You haven't had to trade anybody," says Expo owner Charles Bronfman. "You don't have to give up a frontline player." So the owner fantasizes: "If I can just spend enough I can get this guy." And he spends, frequently more than enough.

Most owners blame a few of their high-bidding peers—George Steinbrenner of the Yankees and Turner in particular—for driving up prices. Kuhn gave credence to this view at the winter meetings by stating, "Foolish player contracts signed by a few have aggravated the situation." But an examination of the record discloses that foolishness is widespread. Shortly after the second reentry draft had taken place in November of 1977, Texas owner Brad Corbett offered Minnesota Outfielder Larry Hisle a $3 million contract. Hisle hadn't said a word, but Corbett did his bidding for him. Hisle signed with Milwaukee for Corbett's figure. In 1978 Turner upped the ante for Pete Rose by offering him more than $1 million a year. Rose actually signed with his first-choice team, Philadelphia, for $800,000, but Turner had forced the Phillies to hike their original offer. In 1979, California Pitcher Nolan Ryan and his agent, Dick Moss, proposed a four-year contract, with Ryan receiving $1 million the final season. It was their opening bid, one they undoubtedly would have scaled down in negotiations. But when Angels General Manager Buzzie Bavasi began squawking that Ryan wanted $1 million a year immediately, everyone assumed that was his bottom line. Lo and behold, the Astros made Ryan baseball's first $1 million-a-year player. And remember, in 1980 it was the Mets—not the Yankees—who made Winfield his first firm offer of $1.5 million a year. Steinbrenner had to match it, and that—at least in base salary—is all he did.

Today almost everyone is shelling out big money, though you won't hear it from the owner. "[A few] big spenders are ruining the game," says Cardinal Manager-G.M. Whitey Herzog who has four $700,000-a-year players. "The Winfield deal was outrageous," says San Francisco owner Bob Lurie, whose signing of Second Baseman Rennie Stennett to a five-year, $3 million contract was probably the most outrageous deal in the short history of free agentry. Preaching sanity in salaries, Dodger G.M. Peter O'Malley says, "We're a voice in the wilderness." This is the same O'Malley who signed an average pitcher, Minnesota's Dave Goltz, to a six-year, $3 million contract. Recently the Angels signed another routine Twins hurler, Geoff Zahn, for about $1.1 million over three years. "Fools are born every day," says Minnesota owner Calvin Griffith.

The Twins are one of a handful of teams, including Toronto, Oakland, Seattle and Detroit, that have generally shied away from high-priced contracts. But has their restraint been justified? Big-money signings have made money for clubs as often as they've lost it.

It's well established that free agentry and multiyear contracts have promoted competitive parity. In the last two years the maximum of eight different teams have won divisional titles. What isn't so well appreciated is the connection between parity and profits. After signing Carew in 1979, the Angels won their first divisional title and set team records for season-ticket sales and home attendance. There was even a carryover into 1980, when they had their second-largest attendance in their worst season. "We've spent more than $14 million for free agents but gotten our money's worth," says owner Gene Autry. Even the few clubs that have done well without much spending are coming around. Kansas City has given George Brett a new five-year contract at $1 million a year. And just last week Baltimore signed Eddie Murray to a five-year, $3.8 million contract.

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