A Whole New Ball Game

By THOMAS McCARROLL

On the field, the pittsburgh pirates are one of the most successful teams in major league baseball. They finished first in the National League's Eastern Division the past two seasons and came within one game of going to the World Series in 1991. Yet the Pirates are perennial losers off the field. The club has chalked up losses totaling $13 million since 1989, including $3 million in its division-winning season last year. The Pirates blame this paradox largely on soaring players' salaries, which cost $24 million, or 52% of the club's revenues, last year. To make ends meet, Pittsburgh cut more than $7 million from its payroll by trading 20-game winner John Smiley and letting slugger Bobby Bonilla become a free agent.

The Pirates are not the only team that is striking out financially. After years of booming ticket sales, record profits and lucrative television contracts, major league baseball has fallen into a slump. Stadium attendance is flat, payrolls are climbing, and revenues are on the decline. A growing number of clubs are crying broke. Several others, including the Detroit Tigers and Houston Astros, are being shopped around by cash-drained owners. Last week's sale of the money-losing Seattle Mariners to a group headed by Japan's Hiroshi Yamauchi, president of the video-gamemaker Nintendo, was the latest confirmation of the trend.

The most distressing news for fans is that club owners and the Players Association are once again preparing to do battle over their collective- bargaining agreement. Although the pact is scheduled to expire at the end of next year, financially strapped owners want to reopen the contract after this season. The clubs are demanding relief from escalating player salaries, but the players seek to maintain the contract that has created scores of millionaire athletes over the past decade. As a result, the uneasy truce worked out after the 1990 owners' lockout is in danger of being discarded. "The golden days of baseball are over," says Gerald Scully, University of Texas economist and author of The Business of Major League Baseball. "The game is entering a new era of fiscal conservatism, and that could spell big trouble for labor-management relations. Unless cooler heads prevail, the 1993 baseball season could be in jeopardy."

After growing at an average annual rate of 4% during the 1980s, total attendance is not likely to match last season's record-setting pace of 57 million. Television ratings have declined steadily since 1989, when CBS and ESPN paid $1.5 billion for national broadcasting rights. The two broadcasters have lost $500 million on that deal so far, and will likely pay substantially less when they renew the contract this year. About half of the 26 teams, including the Oakland Athletics and Cleveland Indians, lost money in 1991, and more clubs are expected to do so this year. There are even rumors of one or two franchises going bankrupt within the next few years.

Meanwhile, player salaries have leaped to an average of $1 million a year, in contrast to $369,000 in 1985. At least 271 players -- among them such lackluster performers as Giants pitcher Bud Black, who has a career losing record, and Minnesota Twins infielder Mike Pagliarulo, whose lifetime batting average is a pathetic .236 -- have joined the millionaires' club. While players have mainly free agency to thank, they have also been able to score big bucks through salary arbitration. Much to the dismay of owners, labor mediators called in to settle contract disputes have awarded players hefty pay hikes.

In an effort to cut costs, many teams have dumped dozens of higher-paid veterans and replaced them with rookies earning close to the minimum $100,000 salary. Owners are also looking to cut overhead by revising the 1990 labor agreement. Their main goal: the elimination of salary arbitration. If the players balk, owners may respond with a lockout. Says Jerry Reinsdorf, owner of the Chicago White Sox, one of the most militant club owners: "The status quo cannot continue."

The players dismiss the cries of poverty as a bargaining ploy. In many cases, they charge, the red ink is a figment of creative accounting. A study by baseball accounting expert Roger Noll, professor of economics at Stanford University, found that the Pirates earned a profit of $4 million in 1990 but turned it into an $8 million loss by taking one-time write-offs, such as the expenses to pay released players. Players also point out that salary increases are slowing. Average pay is up 25% this year, vs. 45% in 1991. Next year salaries are projected to inch up only 11%.

Donald Fehr, executive director of the players' union, hints that his members may be willing to accept some changes in the arbitration system in exchange for a voice in such major decisions as TV contracts and ownership changes. But if the owners play hardball, Fehr warns, "it will not be a short fight." The owners have established a credit line of $350 million that could be used to cover set operating costs in the event of a lockout or strike, while the players have amassed a $140 million strike fund. Unless the argument is settled quickly, the biggest loser in the 1993 season will be the fans.