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Tuesday, August 27
Strike can be traced to Yanks' bloated payroll

By David Schoenfield

Blame George Steinbrenner and the New York Yankees when the players go on strike later this week.

The negotiating differences between the owners and players remain wide, in large degree because the Yankees' revenue and payroll are so astronomically out of whack with the rest of baseball -- a disparity the union has no intention of ending.

And the Yankees? They have no intention of ending the disparity, either. Recently, George Steinbrenner told The New York Times that he is concerned about revenue sharing, "(B)ecause I see it hurting the union and the players, and I see it hurting us and other big-market clubs."

Furthermore, the Yankees have high-profile attorney David Boies -- who represented the U.S. Justice Department against Microsoft, Al Gore in his election case and currently represents the Yankees in their lawsuit against Cablevision -- investigating a possible lawsuit against baseball if the eventual labor agreement isn't satisfactory to The Boss' team.

Because the union is interested in protecting the interests of the Yankees, its payroll thresholds and luxury tax proposals are designed to inflict little damage to baseball's most powerful franchise. If a labor agreement creates a drag on the Yankees' payroll, it could create a drag on all player salaries ... which, of course, is what the other 29 owners want.

Why is Steinbrenner raising such a stink about sharing his wealth? Consider, for example, the Yankees' 2006 payroll. They already have approximately $93 million ($76.6 in average annual salary) committed to just six players (if they pick up Bernie Williams' option):

Derek Jeter: $21 million
Jason Giambi: $20 million
Mike Mussina: $19 million
Bernie Williams: $15 million
Jorge Posada: $12 million
Drew Henson: $6 million

Now consider the payroll thresholds and luxury tax each side has proposed for 2006. The owners want a payroll threshold (which is calculated using the average annual salary of the 40-man roster plus benefits) of $111 million and a tax rate of 35 to 50 percent on portions above that amount. That would leave Steinbrenner with two options: (1) have the rest of his roster filled with Alfonso Soriano, who will likely earn $15 to $20 million by then, and minimum-salaried rookies and struggle to avoid losing 100 games; or (2) try to compete with the highest payroll in the game but pay a heavy tax in the process.

This season, the Yankees have a projected "luxury tax payroll" of about $170 million. If the Yankees maintain that current payroll, they would be taxed $29.5 million on the $59 million difference between $170 and $111 million. A $200 million payroll would mean a potential tax of $44.5 million to be distributed to low-revenue teams.

Meanwhile, the players have proposed ... no threshold and no tax in 2006. The Yankees could afford to pay Soriano, with money left over to sign Vladimir Guerrero, Lance Berkman and Matt Morris. Even under the players' 2005 proposal -- a threshold of $145 million and a tax rate of 20 to 40 percent, the Yankees would pay a maximum tax of $10 million on a $170 million payroll.

The Yankees like to claim that they don't raise the payroll bar -- that it was Tom Hicks, not Steinbrenner, who signed Alex Rodriguez to the richest contract in the game. This is true; the Yankees didn't make Derek Jeter or Jason Giambi the highest-paid player. But their signings do influence the salaries of other players. Due to baseball's economic structure and arbitration system, when the Yankees sign Jeter, it affects how much a comparable player like Miguel Tejada will eventually make; when they sign Mike Mussina, it will affect the value of Barry Zito and Mark Mulder; when they sign Mariano Rivera to the richest contract for a closer, it increases salaries for all closers.

Why would the union want to potentially hamstring the richest team of all? They don't. They want Steinbrenner to keep spending his millions.

It is also often said the Yankees are successful not just because of their revenue streams, but because they are smart with their money and develop home-grown talent, such as Jeter, Williams and Rivera. This is also true. But this is also giving the Yankees more credit than they deserve.

For example, the Yankees were so smart they left Rivera unprotected in the 1993 expansion draft. The Yankees were so smart they traded Soriano and Ted Lilly to the Astros in 2000 for Moises Alou, only to see Alou block the deal with a no-trade clause. The Yankees were so smart they signed Rondell White in the offseason, only to have to trade for another outfielder, Raul Mondesi, in July. The Yankees were so smart, they signed Sterling Hitchcock for two years and $12 million.

The Yankees can afford to sign all their homegrown talent and mix in a few expensive free agents as well. You think the A's will be able to afford Zito and Mulder when they both become free agents after the 2006 season? Not likely, not when Steinbrenner can pay whatever is necessary to bring one of them to New York.

Look, the Yankees play a different game than everyone else. In 2001, the Yankees collected $56.75 million in local broadcast revenue, nearly 10 percent of all local broadcast revenue and at least four times the amount of 12 other teams. That figure will only rise in the future with YES network income.

The Yankees had a 2002 Opening Day 25-man roster payroll of $126 million, now projected to $140 million. More than half of all teams -- 17 -- began the season with a payroll less than half that. That difference may only increase under the union's proposal, which won't limit the Yankee payroll.

And that is why the players may strike on Friday.

Blame the Yankees.

David Schoenfield is the baseball editor at

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