Selig asks players to accept luxury tax
Thursday, January 10, 2002
NEW YORK -- Baseball commissioner Bud Selig asked players Wednesday 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 a 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."
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.
Under the labor agreement that covered 1996 to 2001, the union agreed to a luxury tax for the 1997, 1998 and 1999 season, but owners regarded it as largely ineffectual.