I believe I last discussed baseball labor issues prior to the start of the season while the contraction conflict was still front and center. Obviously, quite a bit has happened since Opening Day, so I want to review the events of the past months today.

Contraction is currently in limbo due to the procrastination of arbiter Shyam Das, who allowed the latest deadline for his verdict on the players' grievance to expire without even attempting to provide the teams with an estimate on when he might be able to make a decision. Players and owners delayed setting the schedule for next season for over a month in hopes of hearing from Das, but rumors now indicate that there is a schedule in place with all thirty teams still in existence and in their current markets. While Commissioner Selig proclaims contraction is still desired by the owners, it does not seem likely to happen next season, and with a longer delay the probability that contraction will ever be enacted decreases.

When it looked as though the players might set a strike date on the Monday before the All-Star game, Commissioner Selig lifted his ban on discussion of labor-related issues in the media, allowing owners to voice their support for his agenda for a short time. Reportedly he was even so generous as to provide owners with bullet points highlighting managements' positions. Cleveland owner Larry Dolan was among the owners that took advantage of the lifted ban to speak to the media, going so far as to criticize the actions of fellow owner George Steinbrenner. After a number of owners had received a chance to talk to the press, Selig once again put a lid on discussions, ostensibly to avoid having anyone say anything that would be potentially incendiary towards the union and therefore perhaps disrupt the labor negotiations.

However, his decision to re-institute the ban came just days after Selig, Bob DuPuy (MLB President and Chief Operating Officer, formerly MLB's chief legal officer and Executive VP for Administration), Jeffery Loria (current owner of the Marlins and former Expos owner), David Samson (Loria's stepson and the President of the Marlins, a position he formerly held with the Expos), Baseball Expos, L.P. (the company which currently owns and operates the Expos, which is in turn owned by MLB) and others were sued under the Racketeer Influenced and Corrupt Organizations Act (RICO). The minority partners bringing the suit charged that the defendants conspired to depreciate the value of the minority shareholders' stock in the Expos with the intent of proving Montreal to be unviable market and thereby allowing MLB and Loria to move the Expos to the United States. RICO is most commonly used in mob cases. Doug Pappas, SABR Business of Baseball Committee, has provided a link to the complaint here. As has been their policy in the past, the players chose not to disrupt the All-Star ceremonies by setting a strike date, though those same festivities would later be disrupted through other means. Instead, Players Association Executive Director Don Fehr spent a month visiting every team prior to yesterday's Executive Board meeting to discuss the progress of the negotiations. The meeting was held yesterday because all but 10 teams had the day off, allowing many members of the union to attend the Chicago gathering in person.

While the media was almost certain the players would set a strike date, the union once again held off due to recent progress in negotiations. The Board will meet again on Friday via teleconference to review the progress of the week. While the union likely has a date in mind should they choose to throw down that gauntlet for the owners, at this point they don't feel the negotiations need that particular stimulus.

The following is a look at the two mechanisms ownership is proposing in order to increase competitive balance and control costs.

The Luxury Tax
In an interview with Baseball America in their August 4th issue, Bob DuPuy used the term Competitive Balance Tax rather than Luxury Tax to describe management's desire to require teams with payrolls over $100M pay an amount equal to 50% of their payroll over $100M into a pool to be distributed to lower-revenue clubs. Normally, a semantic change wouldn't affect my opinion of a policy. However, I've tended to agree with the union's position that "players aren't luxuries" and therefore payrolls shouldn't be subject to a luxury tax. With the change in the wording, my objections suddenly become much less strenuous as there's really little reason for teams to have payrolls near $100M; they can already obtain good players for much lower totals. If teams want to shortcut their front office work by simply signing high-priced talent to fill every position, then they can pay a fee to do so.

The players haven't indicated that they share my feelings regarding the change in wording and still oppose the tax. However, there was a limited tax in the last agreement, and the $100M base payroll, on which the teams do not pay a tax, does indicate a $2M increase from the owners previous $98M base payroll proposal.

Using those funds to assist lower-revenue teams seems a good way to insure that the money has a possibility of still making it into the pockets of the players. Many people still can't understand why the players won't accept salary restrictions given that they're already being paid large sums to play a game. However, what fans need to understand is that the players generate the revenue. Without the players, there would be no product. Restricting players' salaries will not cause prices at ballparks to fall, rather the money will simply go to the owners instead of the players, when the players are the people doing the work.

Revenue Sharing
While I've softened my stance against the Competitive Balance Tax, the more I look at revenue sharing, the less I like it. Putting aside the possibility that big market clubs will have less revenue to allocate to player salaries and the hideous concept of a payroll floor to insure that the money is spent on payrolls and not pocketed by owners, there is an even bigger problem. In addition to the interview with DuPuy, Baseball America also printed an interview with Don Fehr. Fehr made a very poignant point that by taking local revenue away from the individual clubs, you diminish their interest in locally marketing their club. Why should the Yankees spend money marketing their team if they don't keep the money they generate? Baseball's already suffering from decades of poor marketing, so the concept of further decreasing teams' interest in promoting the game is a very scary proposition.

While the amount of additional money going to low-revenue teams would increase by a far lesser amount with only a Competitive Balance Tax, intelligent front office personnel should be able to run a successful franchise within the boundaries of their funding and winning teams will generate more revenue.

Tomorrow, I will address several of the other issues the two sides need to negotiate before a labor contract can be completed.