Baseball asks players for luxury tax

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Posted 7:52AM on Thursday, January 10, 2002

NEW YORK - Baseball commissioner Bud Selig asked players to accept a luxury tax that would slow the increase of salaries and proposed that teams vastly increase the amount of local revenue they share. Selig spoke for nearly four hours during Thursday's bargaining session at major league baseball's headquarters and explained management's central economic proposals for a labor contract to replace the agreement that expired Nov. 7. Addressing eight players and lawyers from union and management, Selig asked for a 50 percent luxury tax on the amounts of payrolls above $98 million, according to three people familiar with the meeting who spoke on the condition they not be identified. Selig also proposed that teams put 50 percent of their locally generated revenue, after deductions for ballpark expenses, in a pool that is redistributed equally to all teams, up from 20 percent this year. The New York Yankees, who generated the most revenue among the 30 major league teams last year at $242 million, would pay an additional $36 million to the other teams next year under the plan Selig outlined. Last season, when the Yankees generated $154.75 million from tickets and local broadcasting, they paid $26.5 million in revenue sharing, money that was redistributed to low-revenue teams. The Yankees' total would increase to about $40 million this year under Selig's proposal. New York is projected to spend $143 million this year in salaries and benefits for players on its 40-man roster, according to average-annual-value method of valuation used by the commissioner's office. The Yankees would have to pay a $22.5 million luxury tax under Selig's plan. One management projection estimated the tax would effect four or five teams next season. In addition, Selig told players that owners would like a worldwide draft, which would eliminate the ability of Cuban defectors to become free agents and gain the leverage that has gotten many multimillion contracts. Both sides were guarded in their comments. ``Bud outlined his basic position, as did we,'' union head Donald Fehr said. ``There have been a lot of preliminary discussions. Neither party was surprised. It was a workmanlike initial meeting. I really don't want to characterize the substance of the discussions.'' Rob Manfred, management's top labor lawyer, called it ``a full constructive day.'' Spring training starts Feb. 15 but neither side has threatened a work stoppage, which would be baseball's ninth since 1972. During negotiations in 1990 and 1994, owners attempted to gain a salary cap, a concept the union rejected. Players are happy with the current system of free agency and salary arbitration, which has existed with little change since 1976, boosting the average salary from $51,500 to $2.14 million in a quarter century, a period in which baseball's revenue increased from $182 million to $3.55 billion. They are fearful increased revenue sharing would cause high-revenue teams to spent less on players. Under the labor agreement that covered 1996 to 2001, the union agreed to a luxury tax for the 1997, `98 and `99 seasons, but owners regarded it as largely ineffectual. Only the teams with the five highest payrolls paid a tax, the threshold for the tax was the midpoint between the payrolls of the fifth- and sixth-highest teams, and the tax rate was 35 percent in the first two seasons and 34 percent in the third. At total of $30.6 million in tax was paid in those three years, $10.6 million by Baltimore and $9.9 million by the Yankees. Players who attended the session were Tony Clark, Damion Easley, Jason Grimsley, Rick Helling, Al Leiter, Mark Loretta, Mike Myers and Mike Stanton. Manfred and Paul Beeston, baseball's chief operating officer, had a series of two dozen informal sessions with the union from March to June last year before Selig ended those talks. Bargaining has been slowed by Selig's proposal to eliminate to teams before the start of this season, most likely Montreal and Minnesota. An injunction issued by a Minnesota judge forces the Twins to play at the Metrodome this season, and the team and Selig have asked the Minnesota Court of Appeals to lift it. In addition, the union filed a grievance claiming contraction violated the expired labor contract, which remains in force. That hearing, before arbitrator Shyam Das, is scheduled to resume Thursday.