LAKE BUENA VISTA, Fla. – Less than six weeks after baseball's owners and players' union agreed to a new five-year labor contract, signs of dissent are coming from top executives concerned with rocketing salaries.
"I'm already lamenting it," Chicago White Sox owner Jerry Reinsdorf told Yahoo! Sports on Tuesday at baseball's winter meetings.
Reinsdorf's fears center not only on his own team's ability to compete, but that of low-revenue teams to sign free agents, a problem echoed by executives in similar situations.
The agreement, unanimously approved by the owners, guarantees labor peace until 2011, assuring baseball 16 years of uninterrupted play, the most since 1972. In announcing the contract, commissioner Bud Selig and union head Donald Fehr painted a rosy picture, claiming baseball made $5.2 billion in revenue last season and that the game's booming economics led to negotiations with minimal contention.
Since then, the Chicago Cubs have given Alfonso Soriano a $136 million deal, the sixth-largest in major-league history, the Texas Rangers have signed Vicente Padilla, widely thought of as a No. 3 starter, to a three-year deal averaging $11.25 million per season and the Baltimore Orioles have lavished three middle relievers with three-year contracts totaling $41 million. Compound those deals with outfielder Gary Matthews Jr., a career journeyman, receiving $50 million for five years from the Los Angeles Angels, and Juan Pierre getting $44 million for five years from the Los Angeles Dodgers, and it begs the question:
Have teams with lesser local revenues, such as the Minnesota Twins, Tampa Bay Devil Rays and Pittsburgh Pirates, been priced out of not only the top free agents, as they were in the past, but the mid-level ones, too?
"They still have problems," said Reinsdorf, a close friend and ally of Selig's. "Revenue sharing has helped somewhat, but not enough. We need a system of salary restraint. Until there's a system of salary restraint, the players are going to get all incremental revenue."
The new collective-bargaining agreement tweaked the revenue-sharing system to correct a loophole in which low-revenue teams lacked incentive to spend money because they would simply receive more from top-end teams. Although both sides said there are provisions in the new agreement that encourage teams to drive local revenue, the contract does not fully address the inequities that have kept low-revenue teams at a distinct disadvantage for years.
Rather than concern themselves with those issues, Cleveland Indians president Paul Dolan said, the owners of low-revenue teams agreed to the new deal in hopes that the game's labor peace would encourage financial growth. Knowing how the market has played out, Dolan said he did not know whether the deal would again pass unanimously if a vote was taken today.
"It is unfair how it is structured. And it's something we do have to live with," Dolan said. "The new CBA is a significant accomplishment in that it's created labor peace. At the same time, it did not take on some of the ongoing structural issues. In my view, the cost of making meaningful changes would've been extraordinarily high – in the form of a work stoppage.
"I know I'm happy because we kept peace."
Said Reinsdorf: "There was a general feeling on both sides that this was not the time for a work stoppage."
Instead, teams have gone after a poor free-agent class rather recklessly, willing to take more risks because of the sport's stability. Because larger-revenue teams can wiggle out of big-contract busts with minimal damage, it allows them far greater flexibility than the small-revenue teams, who, as Cincinnati Reds general manager Wayne Krivsky put it, "just can't get things wrong."
The perfect metaphor for this offseason necessitates a trip to the hotel suite of the Milwaukee Brewers, whose $57.6 million payroll ranked 24th of 30 teams last season and whose $131 million in revenue was 25th, according to Forbes. Brewers general manager Doug Melvin ordered three large pots of coffee to keep his inner circle awake during trade talks. The total bill: $120.
Melvin had already conceded the Brewers were priced out of the free-agent market, a possibility that less than two months ago never occurred to him.
"I sit down at the end of the year when we go through the free-agent list," Melvin said. "We do our predictions on what a guy is worth. We're not close."
His prediction for Carlos Lee, the slugger Milwaukee traded midseason for fear it couldn't re-sign him: $65 million.
The actual contract: six years, $100 million with the Houston Astros.
"I have an argument about what is market value," Melvin said. "Just because somebody gives somebody something – it's a bad argument for me that that's market value. 'Well, that's what Adam Eaton got in the open market.' (Three years, $24.5 million.) That's what the Phillies wanted to pay him. It doesn't mean the other 29 teams wanted to pay him that."
In an ideal world, sure.
Today, though, value is transitive. If Padilla is worth $11 million per season, it is reasonable to believe a team will pay left-hander Ted Lilly as much. And even with the increased revenue about which baseball is proud to boast, no team trying to keep its salaries below $70 million would be willing to spend anywhere between 15 and 20 percent of its payroll on a No. 3 starter.
The debate, then, returns to the one that spurred revenue sharing in the first place: large revenues vs. small revenues, and, most important, if the low-revenue teams are willing to pay to win.
In this market, such a strategy makes little sense. And even if some executives aren't comfortable with that, they've got five years to figure out how to deal.
"I'm OK with it," Devil Rays manager Joe Maddon said. "I really am. I find it interesting. I find it a great challenge."
And, without skipping a beat, he said: "I know I'm crazy."
- Jerry Reinsdorf