WHAT PRICE SUCCESS?

Baseball went on its wildest spending spree yet at the winter meetings
December 17, 1990

Al Rosen looks at his new roster and smiles. Since the end of the 1990 season, the general manager of the San Francisco Giants has signed centerfielder Willie McGee, the reigning National League batting champion; Dave Righetti, one of the game's best lefthanded relievers; and lefty Bud Black, who will bolster the starting rotation. The 1991 Giants are much improved.

Al Rosen looks at his balance sheet and cringes. The three free agents each signed a four-year contract at a total cost to Giants owner Bob Lurie of $33 million—$13 million for McGee, $10 million each for Black and Righetti. The 1991 Giants are much more expensive.

"If we don't draw people next year, [these signings] could be very harmful," says Rosen. "In our market, fans turn off rapidly if we're not in the hunt. If we tell the fans that we don't want to win [by not spending], they stop coming and we lose revenue. It's a Catch-22."

The Giants, of course, are not alone in their dilemma, which explains the six-day feeding frenzy at baseball's winter meetings last week in Rosemont, Ill., where 20 free agents were signed at a cost of around $122 million. How preposterous did it get? Pitcher Matt Young, whose .395 career winning percentage is the third lowest among all active pitchers with 50 or more decisions, signed a three-year, $6.35 million deal with the Boston Red Sox. Outfielder-first baseman Franklin Stubbs, a lifetime .236 hitter, was heavily pursued. The Milwaukee Brewers "won" Stubbs, signing him for three years and $6 million. Said one agent, "These owners can't spend their money fast enough."

The Giants were the biggest spenders, but Rosen, playing the free-agency game to the hilt while hating every minute of it, said afterward, "For 100 years, we've been trying to find a way to destroy this game, and we finally found the key."

The sweepstakes began on Oct. 31 when the Philadelphia Phillies preempted catcher Darren Daulton's free agency by signing him to a three-year contract worth $6.7 million. Daulton's career batting average is .227. On Nov. 8 the Los Angeles Dodgers signed Darryl Strawberry to a five-year, $20.3 million deal, which, in light of recent signings, appears positively prudent. On Nov. 9 (dubbed Black Friday by some G.M.'s) Rosen signed Black (83-82 lifetime), whose $10 million deal "shocked me, shocked everyone," according to one American League general manager. On Dec. 5 Pittsburgh Pirate owner Carl Barger said glumly, "I thought the early signings were an aberration, but...."

They weren't. They served instead to jump-start a spending spree that's far from over. As of Sunday, several top free agents were still available, including Cy Young Award winner Bob Welch. On Dec. 7, as part of the collusion settlement over an arbitrator's finding that the owners had improperly curtailed the players' rights to free agency, 15 "new-look" free agents were set free: Jack Clark, Chili Davis, Brett Butler, Gary Gaetti and Dave Smith, among others, were given until Jan. 29 to entertain bids. And next year's potential free-agent crop is loaded; by then, what will Roger Clemens, Dwight Gooden and Frank Viola be asking for?

At the winter meetings, just as at last year's gathering, the agents were the real stars and money was all anyone talked about most of the time. By the fourth day, it had become so depressing to San Diego Padres general manager Joe McIlvaine that he and Toronto G.M. Pat Gillick got together and—in 24 hours—engineered one of the biggest trades in baseball history. The Padres sent second baseman Roberto Alomar and outfielder Joe Carter to Toronto for shortstop Tony Fernandez and first baseman Fred McGriff. Said McIlvaine later, "I was tired of reading about who the next 10-millionaire would be. So we thought we'd give everybody a good old baseball trade."

But money was still the name of the game, and the meetings provided the best opportunity yet for owners and G.M.'s to start spending the bucks from baseball's four-year, $1.48 billion television contract, signed before the 1990 season. Yet even as the teams were dishing out the loot to the players, CBS, which is committed to pay $1.08 billion, was already asking for a rebate from Major League Baseball to help the network ease the pain of losing an estimated $100 million dollars on its baseball broadcasts this year. ESPN, which will pay the remaining $400 million, wasn't thrilled with its ratings either—or with its reported $53 million in losses.

How quickly things change. Two weeks ago the Associated Press reported that in 1989 the 26 major league teams had record combined pretax operating profits of $214.509 million, an increase of 23% over 1988. And that was before the new TV contract kicked in. Bonanza time. But already, many baseball executives are looking ahead with concern. Where, they wonder, will they be in the winter of '93, when the current TV contract runs out, especially if the next contract were to shrink? Player salaries in 1990 averaged $597,000, an increase of $100,000 over '89. If salaries were to continue to rise at the post-collusion rate, the average could approach $1 million by the 1994 season. (And this would come on top of the serious hit—$10.8 million per team—that owners will take as a result of the most recent collusion settlement.) Is baseball looking at serious financial trouble by '94?

"It won't take that long," says Oakland A's general manager Sandy Alderson. "There's concern now. It doesn't take much to realize there's trouble when you pick up your newspaper, look at page one and CBS is asking for a rebate, and ESPN is saying it isn't happy with its deal. On page two, there's a story about breweries being subject to advertising limitations. On page three, there should be a story about what's going on here. It [serious financial distress] is going to happen quickly, not in four or five years. At some point, everyone is going to have to say no because there will be no money left. Some clubs are in that position now. We could end up with a competitive disparity like we had in the early '80s."

Alderson's $21.7 million payroll was among the highest in baseball in 1990 and is likely to increase. But, he says, "our revenue stream isn't going to go up in the next few years unless we raise ticket prices." Rosen has the same fears with the Giants and even greater fears for less successful teams in smaller markets. "For some teams, there will be only one way to go, pal," Rosen says. "Bankruptcy."

A few teams already are operating shorthanded in the free-agent market. The Pirates, who won the National League East yet supposedly will barely show a profit for 1990, lost Sid Bream to the Braves and had to stretch ($10.6 million over four years) to re-sign free-agent pitcher Zane Smith. The Texas Rangers, who aren't backed by much capital, pursued no free agents. The Seattle Mariners were out of the market after Black's contract with the Giants set the standard. The Baltimore Orioles were shut out until they agreed to sign free-agent outfielder Dwight Evans to a one-year, $1 million contract on Dec. 6.

The doomsayers argue that baseball's $200 million-plus '89 profit is deceiving because the big-market teams—the Chicago Cubs, the Dodgers, etc.—accounted for a disproportionate share of it, primarily because of their local TV revenues. The Mariners, for instance, have a local radio/TV package estimated to be worth about $1.5 million per year. By contrast, the New York Yankees' package is worth $50 million. Which once again has raised the notion that teams in larger markets should share the wealth with those in smaller markets. And there is fresh talk of profit-sharing with players, an idea that was discussed and dropped during negotiations over baseball's Basic Agreement last spring. Even Tom Reich, an agent who represents several big-money players, said recently, "Revenue sharing is a necessary part of the future of baseball and the other major team sports, as basketball has demonstrated."

Reich hastens to add, however, that "it's the teams' fault for letting players go to free agency. If they would sign them before they get that far, I guarantee it would cost them less. If you have an important piece of property, are you going to wait until the lease runs out before you talk to the landlord? No way. There's a limit to the size of payrolls. But it's tough to have sympathy for the owners after five years of collusion."

The Major League Players Association, the strongest union in sports, is certainly shedding no tears. Says executive director Donald Fehr: "With all the collusion, the owners will get no sympathy from the players by complaining about hypothetical poverty." Fehr discounts any conjecture that TV ratings and revenues will continue to suffer. "A repeat [of this year] for the next three years [of the TV contract] is unlikely," he says. "Why would anyone even assume that?"

But Rosen says, "All I know is that unless something is done that enables the players' association and management to get together and put a stop to this lunacy, fewer and fewer teams will be operating in the black. But if 26 owners said to 26 general managers in a soundproof room, 'O.K., you can't spend any more than this budget,' I guarantee there would be a collusion charge."

One thing is certain: Fans will be asked to pay more. In New York last week, both the Mets and Yankees announced a substantial increase in ticket prices for next season, making a night at the ballpark a little tougher proposition for some families, especially with a recession looming. Still, the alarms have sounded before, and baseball has proved resilient many times. Atlanta G.M. John Schuerholz says he's concerned about the games's future, but adds, "I've been saying that for 10 years. Baseball will always be popular. It's America's game. It's going to prosper despite what we do to it."

With both the Basic Agreement and the TV contract in place for three more years, there's plenty of time to test that theory. Consider the fact that 14 months ago there were no baseball players making $3 million a year. As of Sunday, there were 25. Is there a breaking point?

After signing Righetti last week, Rosen was asked if he was finished signing free agents for the winter.

"Maybe forever," he said.

Don't count on it.

PHOTODAVID LIAM KYLEBLACK'S 83-82 CAREER RECORD WAS WORTH $10 MILLION TO THE GIANTS PHOTOJOHN CORDES/FOCUS ON SPORTSSTUBBS (.236 LIFETIME) IS LAUGHING ALL THE WAY TO THE BANK PHOTOFOCUS ON SPORTSYOUNG'S STAT LINE: 51 WINS, 78 LOSSES AND $2 MILLION-PLUS A YEAR PHOTOJERRY WACHTERSAN FRANCISCO'S GIANT TAB INCLUDED $10 MILLION FOR RIGHETTI... PHOTODON SMITH...AND $13 MILLION FOR BATTING CHAMP MCGEE

HOLE YARDS PAR R1 R2 R3 R4
OUT
HOLE YARDS PAR R1 R2 R3 R4
IN
Eagle (-2)
Birdie (-1)
Bogey (+1)
Double Bogey (+2)