Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, October 5, 1994 TAG: 9410050081
SECTION: SPORTS PAGE: B1 EDITION: METRO
SOURCE: JOSEPH A. REAVES CHICAGO TRIBUNE
DATELINE: LENGTH: Long
Until the World Series died, it was easy to ignore salary caps.
Then, the National Hockey League season got put on hold. The National Basketball Association started talking about calling off games at Thanksgiving. And National Football League players still in the prime of their careers started losing jobs.
Suddenly, salary caps are as much a part of professional sports as fouls and penalties, as bad calls and errors. Even more important.
Owners say salary caps are the salvation of sports. Players say damnation comes dressed in a salary cap.
Salary caps are nothing new. They have been part of professional sports for more than a century.
Baseball had one in 1889. And, while that quickly died, semblances of salary caps come and go all the time.
``A salary cap is simply a device put in place for somebody's benefit to get an advantage over market forces,'' said Allen Sanderson, an economist at the University of Chicago.
``It is the equivalent of rent control or minimum wage. Most economists look at rent control and minimum wage as un-American. Rent control is nice if you can take advantage of it. It's a way for my buddies and me to get an apartment cheaper than we could otherwise. But it's simply a way to get around market values.''
In sports, salary caps enable owners to get around the market values of their players. Simply put: Caps control payroll costs for owners and limit the amount players can earn and where they can earn it.
The very essence of the American Dream is unlimited promise - not proscribed limits. Yet players in two professional sports - basketball and football - freely agreed to the imposition of salary caps.
The NBA was first, with the blessing of its players' union, in 1983. The NFL followed a decade later.
On the other hand, players in Major League Baseball and the NHL have steadfastly refused to accept any form of salary constraint. Baseball players walked off their jobs Aug. 12 to fight a cap. Hockey players were prevented from starting their season, in part, for the same reason.
The lack of accord among the four sports is understandable. Not only is each sport a vastly different economic entity, but the mere term ``salary cap'' means something entirely different to each one.
Basketball, for instance, has a so-called ``soft cap.'' Technically, every team is required to hold its payroll to 53 percent of an agreed-upon set of revenues. But there are many legal ways to stretch the limit.
Escape clauses work because the NBA's ``soft cap'' allows teams to re-sign their own players for any amount. Teams sign a free agent, pay him a nominal salary under the cap, then tear up that contract and sign him at any price using the incumbent exemption.
That loophole is being challenged in court. But, so, too, is the NBA salary cap in general.
Football's definition
Football's cap is slightly more rigid and even more complex.
The NFL cap went into effect this year, when player costs reached 67 percent of the league's designated gross revenue.
In return for accepting the salary cap, NFL players got the long-sought right to become unrestricted free agents after four years. Nearly one-fourth of all players in the league immediately became free agents.
The NFL salary cap is tougher to circumvent than the NBA's. As a result, it has proven more costly to mid-level players.
Given the opportunity to sign a big-name free agent, say Deion Sanders, teams have shown a willingness to jettison several mid-level players with average or above-average salaries to make room for the new star under the cap.
``Where it hurts the NFL is in the quality of players after your first string,'' says place-kicker Kevin Butler, who became a free agent and re-signed with the Bears for $650,000. ``You're not getting the second- and third-string players who can go in there and keep your performance up.
``The salary cap is good and it's bad. Something had to be done. If you don't do something, the league is headed down the same road as everything else.''
That, of course, is the gospel according to owners. And it was the gospel that persuaded NBA players to first taste the forbidden fruit of a salary cap.
In 1983, only five of the 23 NBA teams were making money. Four to seven were on the verge of collapse. The players bought into a salary cap and restrictions on free agency to help the league get back on its feet.
It worked. A dozen years later, the NBA is on the verge of yet another expansion - its second since the dark days of '83. Television ratings are higher than ever. Franchises are worth more than ever. And player salaries are the highest among all four professional sports.
In spite of all that - better yet, because of all that - NBA players say the time has come to get rid of salary caps.
``These are different times,'' says Charles Grantham, executive director of the NBA Players' Association. ``Revenue streams that are created and changed present a different set of problems. Because something happened 10 years ago doesn't mean it has to be that way now.
``Things have changed dramatically. So let's not be fooled. All these owners are looking to increase profit margins, and they're on the verge of another major expansion by going international. The reality is, you cannot make the case any more for needing a cap.''
Baseball's hard line
That is precisely the stand major-league baseball players have taken. They say a salary cap is out of the question. It won't even be discussed.
The hard-line stand already has led to cancellation of the World Series for the first time in 90 years. It threatens the 1995 season. It has spawned an emotional congressional hearing on the possibility of lifting baseball's exemption from antitrust laws.
Owners, led by acting commissioner Bud Selig, say baseball is in dire financial straits. The only way to save the game, particularly in cities with smaller local-television revenues, is to come up with some kind of system that allows teams to control costs - to know, within reason, several years in advance, roughly what expenditures will be.
Salary caps would be an ideal way to achieve that goal - from the owners' point of view. But there are basic problems with the owners' logic.
First, and most important, owners have yet to show that the industry is in financial trouble. There is no doubt that players' salaries have skyrocketed beyond imagination. The average salary in baseball this year was $1.2 million - nearly 23 times what it was in 1976, when the average player made $52,300.
Owners have tried repeatedly since 1981 to justify salary caps by claiming baseball is on the verge of bankruptcy. Yet, never have they been able to back that claim.
Salary caps are meant to rectify the wage structure in baseball. They are meant to prevent it from getting out of control in football. They are seen as a proven savior by NBA owners and the wave of the future by hockey's lords.
``You see caps on all kinds of things,'' says Sanderson. ``The whole health care debate - a lot of it turns on issues of caps: from the administration on pharmaceutical houses or insurance companies, Medicare and Medicaid payments. You can go back and say Prohibition was a cap, just as our current drug policies are a cap with respect to curtailing consumption or production.
``[But] I don't think salary caps are the wave of the future. I see it more as a blip on the screen or a wave that rises and falls. I don't think 10 years from now you're going to see salary caps.''
Not if the players have anything to say about it.
by CNB