Thursday, April 25, 2002
Owners pitch luxury tax
They want rich teams to share more with poor
By John Erardi jerardi@enquirer.com
The Cincinnati Enquirer
The key to the owners' proposal of giving more teams a legitimate chance to reach and win the World Series a concept they call restoring competitive balance is money.
More of it for the have-nots, less of it for the haves.
Major League Baseball proposes a 50-percent luxury tax on those teams with annual payrolls above $98 million, and increasing the percentage of locally shared revenue from 20 percent to 50 percent.
MLB said it has the votes three-quarters of the 30 club owners to enact these measures, but needs the approval of the players' union to do so. Why? Because it's a collective-bargaining issue.
Who is benefiting from the system of having a competitive advantage and being able to sustain that over a period of time, of making money or at least not losing their shirt? Sandy Alderson, MLB's executive vice president of baseball operations, told The Enquirer Wednesday.
Maybe you can identify two or three at the most. What it takes to adopt reve nue sharing is a three-quarters vote. This small-market/big-market mentality has shifted to the point where we only have two or three teams who are interested in preserving the existing system, as opposed to what existed six or seven years ago, where you had big-market caucuses (numbering) 10 or 12.
But there are those in the union who wonder whether, in fact, three-quarters of the 30 owners would agree to giving so much of their money to the have-nots even if the have-nots agree to a minimum payroll rather than simply using that money to become profitable.
The clubs are prepared to do this because of what they see out there, said Robert Manfred, MLB's executive vice president for labor and human resources.
He said the competitive-balance tax formerly known as the luxury tax would mean the New York Yankees would have to pay 50 percent of the difference between $98 million and $160 million, the payroll figure Major League Baseball considers them to be paying for taxing purposes.
What you're doing is slowing down the front end and hoping that you can get that lagging group to start moving forward, Mr. Alderson said.
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