Winning Over Profit

Baseball's critics blame the wrong millionaire.



Wednesday, April 21, 2004 12:01 a.m. EDT


The Red Sox have just won the first battle in the 2004 war by taking three

of four games from the Yankees at Fenway Park. But no matter what happens

the rest of the season, Boston has already won the public-relations battle.

To most fans and sportswriters around the country, and even to some in New

York, the Yankees have become what Sox president Larry Lucchino dubbed

them, the Evil Empire. Mr. Lucchino didn't go so far as to call George

Steinbrenner the Evil Emperor, but he didn't have to. To most of Mr.

Steinbrenner's fellow owners, that's what he's been for the 31 years he has

been the Yankees' principal partner.


The Yankees have a 2004 payroll of nearly $184 million--in comparison, the

worst team in their division last year, the Tampa Bay Devil Rays, will

spend about $27.3 million. Nothing less than the Yankees winning the World

Series will justify the huge cost. And if the Yankees do win, they cement

their reputation as the monster that's ruining baseball. Mr. Steinbrenner,

of course, couldn't care less about his team's or his own reputation, so

long as the Yankees win.


Bill Veeck, the late, legendary Chicago White Sox owner, was not one of the

Steinbrenner haters. He said: "I like George. He breaks all the unwritten

rules." (Mr. Veeck was known to break a few himself.) By "unwritten rules,"

he meant gentleman's agreements among baseball owners. This year, Mr.

Steinbrenner is breaking the most important unwritten rule of all, and he's

doing it by playing by the written rules.


In baseball, the only one of the top three major sports without a cap on

players' salaries, there is no rule prohibiting an owner from spending as

much as he chooses on his team. Commissioner Bud Selig thought he had

forced a de facto salary cap on the players in the 2002 collective

bargaining agreement by instituting a "luxury" tax, to be assessed when

a team's payroll exceeds a threshold. (This season, the threshold is $120.5

million, and the tax for a second-time offender, such as this year's Yanks,

is 30% of the amount it exceeds the threshold.) What Mr. Selig didn't count

on was that Mr. Steinbrenner would place winning above profit and keep

right on spending.


The stated reason for the luxury tax was to address what Mr. Selig

constantly called a "competitive imbalance." But the issue was a sham.

Doug Pappas, editor of the Society for American Baseball Research newsletter,

summed up the luxury tax bluntly: "It doesn't have a thing to do with

promoting 'competitive balance,' which was never a problem in the first

place. It was designed to keep George Steinbrenner from raising salaries."


The reason it hasn't is that Mr. Steinbrenner is no gentleman and has no

intention of sticking to any gentleman's agreement. He wants to win.


No single team can match the Yankees' revenue streams, but if every team in

baseball, regardless of market size, competed for some players, it wouldn't

be possible for the Yankees to stockpile talent. If the Yankees have an

unfair edge in the competition for talent, it's not because they spend too

much, but because so many others aren't spending enough. After the Yankees

signed Alex Rodriguez, Red Sox owner John Henry howled about baseball's

need for a salary cap; what he meant was a cap that would keep the Yankees

from spending more than the Red Sox.


It's not that the Red Sox couldn't afford A-Rod. Like several other

major-league owners, including several in the so-called small markets, the

Red Sox bosses have personal wealth far greater than Mr. Steinbrenner's.

Unlike Mr. Steinbrenner, they seem loath to risk their own money on their



Why should they when they get welfare from the Yankees? The Yankees could

be paying out as much as $75 million in revenue sharing and luxury tax this

year. Between that, the payroll and other team costs, the Yankees began

this season not knowing whether they would show a profit. All Mr.

Steinbrenner wants to do is win.


One of the absurdities of the current system is that it rewards some of the

wealthiest men in the country for not investing in their own baseball

business. For instance, the payroll of the Minnesota Twins, owned by

billionaire Carl Polhad, ranks 23rd out of 30 teams. Mr. Polhad isn't

required to spend any of the money given to him by the Major League

Baseball central fund on players' salaries. He is required to spend it on

team improvements; the catch is that those team improvements are defined by

the commissioner, himself a former owner.


Baseball's critics are right: There is a ridiculous imbalance in baseball

spending. But it hasn't been caused by Mr. Steinbrenner. It's been caused

by a system created by men who, in the words of the former players' union

head Marvin Miller, "pay lip service to competition and free enterprise,

and shudder when they see it in action."


All George Steinbrenner wants to do is win,