Players' counterproposal turns negotiations sour

WASHINGTON — WASHINGTON -- President Clinton showed up at the Mayflower Hotel last night, but rumors that he would make a personal appearance at the baseball labor talks turned out to be unfounded.

Clinton was there for an unrelated function, and perhaps the Secret Service advised him that it would not be safe to step between the players and owners at this critical and contentious stage in their bitter labor dispute.


The negotiations, which had been surprisingly cordial since they resumed here on Wednesday, turned sour again last night when the Major League Baseball Players Association submitted a counterproposal that did not meet with much approval from the owners.

The players' proposal gives the owners a range of options to eliminate salary arbitration and attempts to conform to the clubs' Fort Lauderdale revenue-sharing program, but it does little to bridge the wide philosophical and economic gap that has kept negotiations at a near standstill for months.


The union taxation plan targets the same high-revenue clubs that will produce the small-market subsidies in the Fort Lauderdale plan, but it goes no further than the estimated $58 million that would be transferred annually under the ownership revenue-sharing program. It simply redistributes the amount that would be generated by payroll and revenue taxes.

"We've taken a preliminary look and we don't see any meaningful movement," said ownership negotiating chief John Harrington. "I don't want to just cast it aside. We'll continue to look at it. But I was a little bit disappointed."

So was special mediator William J. Usery, who has been under pressure from the Clinton administration to move the negotiations along. According to two sources, Usery was visibly upset that the players' proposal did not represent any significant progress toward a compromise.

The union earlier had expressed similar disappointment in the ownership proposal, which calls for severe taxes that could be worth up to $1 billion (in payroll taxes or the resultant drop in salaries they might cause) over the seven-year term of the management proposal.

"The owners' proposal, while technically not a salary cap, contains extremely high marginal tax rates," said union director Donald Fehr. "If their plan had been in effect last year, the overwhelming number of clubs would have been penalized for having payrolls at excess levels -- 19 clubs over the $35 million [threshold] and 13 over $42 million.

"At current salary levels, if salary levels don't go up one penny over the next seven years, more than $1 billion in taxes would be generated. I don't think anyone seriously believes clubs would do anything but respond to the heavy disincentives and salaries would crash."

The players' proposal would raise a share of the Fort Lauderdale revenues through a payroll tax on the 15 top revenue-producing clubs with a graduating tax on the portion of payrolls that range from 50 percent to upward of 160 percent of the average payroll. The designated teams would pay a 5 percent tax on that part of their payroll from 50 percent to 130 percent of the average, 15 percent on any portion that is above 130 percent and 25 percent of any increment above 160 percent.

Union officials say that the plan would raise revenues for the small-market teams while producing a disincentive on free-spending clubs. The owners obviously want that disincentive to be much larger, but the union says that management demands for a prohibitive tax on excess payroll largely will benefit the richest clubs.


"The players are more than willing to do anything that's reasonable to assist the small-market clubs," Fehr said, "but the players do not believe that the big-market clubs would be rewarded with artificially low salaries."

The union gave the owners three options on salary arbitration, which would be traded for two years of restricted free agency in the ownership proposal. The players would drop arbitration entirely if all players who would have been eligible under the old system can choose free agency.

"If the clubs prefer a longer reserve," Fehr said, "they can retain free agency for the super-two [a small group of two-year players who are eligible for arbitration] and three-year players and make the four- and five-year players eligible to elect free agency."

The third option would simply eliminate the salary arbitration provision for players who can choose free agency and replace it with a requirement that the club make a qualifying offer to retain negotiating rights.

In the union proposal, the players also addressed expansion, calling for the owners to expand by two teams by 1997 and agree on a schedule for further expansion during the four- or five-year term of the new collective bargaining agreement. Any further revenue-sharing funds would come out of expansion fees.

Where does all this leave the negotiations? Apparently, not much further along. The owners still seem intent on getting a significant economic give-back in this labor dispute, and they apparently were very upset with the very modest movement in the union proposal.


"We basically have the same objections we had the first time we saw this proposal back in December when the talks broke off," said Atlanta Braves president Stan Kasten.

The owners were expected to study the proposal overnight and decide whether to make another counteroffer, but there are some members of the ownership committee who feel they would be bargaining against themselves.

One management source said that the ownership negotiating committee is so frustrated that it is ready to leave the dispute in the hands of Usery and the Clinton administration. Their reasoning: that they may be able to do much better with an imposed settlement than what they hope to get out of further negotiations with the players.

If that's the case, it will become apparent soon enough. The negotiations resume today with a $1 billion canyon to cross. No one seriously expects that it will be bridged by tomorrow, so President Clinton might have to step in. But it is not clear whether he'll be able to persuade Congress to pass special legislation to end the dispute.