$Unique_ID{BAS00175} $Pretitle{} $Title{The Business of Baseball} $Subtitle{} $Author{ Mann, Steve Pietrusza, David} $Subject{business entertainment money clubs franchises franchise Free-Agency salaries salary contract long-term contracts Lockout} $Log{} Total Baseball: The Game Off the Field The Business of Baseball Steve Mann and David Pietrusza Major league baseball, like every other professional sport, is an entertainment business. And the financial success of any top-level entertainment business rests on its ability to attract consistently large audiences. In order to meet that requirement, the business must do two things. It must assemble and maintain a group of the very best performers in their field, and it must provide pleasant accommodations for the spectators. Every other facet of the business is tied to these fundamental necessities. In professional sports, the top performers are essentially world-class athletes. And, by definition, there is always a relatively scarce supply of such athletes. This scarcity demands constant vigilance on the part of club management in identifying and developing new talent. The task of maintaining an ample supply of highly skilled performers is difficult in any sport for the simple reason that the players have relatively short careers. But it is especially challenging in baseball because the amateur players, no matter how gifted and experienced they are, almost invariably need intensive long-term training to be able to compete at the major league level. To continue producing that level of talent, season after season, the clubs are obliged to invest heavily and continuously in scouting and player development. Although the association between major league clubs and their towns runs deep, and one therefore tends to think that the clubs belong to their towns, major league baseball is actually a form of private enterprise. It is an industry made up of twenty-eight separate, semi-independent franchises, all of which are owned by private individuals, groups, or companies. Each franchise is contractually linked to a half dozen or more minor league clubs through which it develops its big league talent. The network of those two hundred or so clubs is organized under the Office of the Commissioner. Like any other private industry, baseball has had to depend upon income and profits for its existence. In the game's earliest days, nearly all of its revenue came from sales of tickets to spectators. As the sport grew in popularity, and as bigger and more comfortable stadiums were built to accommodate the increasing number of fans, the sale of refreshments, scorecards, pennants and other team paraphernalia became significant new sources of club revenue. The advent of radio broadcasts in the 1920s brought yet another form of income to the game: advertising revenue. Sponsors paid radio stations handsomely for promoting their products during games. And the stations, in turn, paid the clubs for the rights to carry the games. As the listening audiences grew, the charges for broadcast rights increased. When television was introduced, a generation later, a flood of new advertising money washed over the major leagues. By the mid-1980s, total industry income from radio and television rights, in-stadium advertising and promotions, and club shares of ballpark concessions exceeded gate receipts. Then, in 1987, baseball commissioner Peter Ueberroth raised several million more dollars for the industry from an entirely new source, the national sponsor. Through this scheme, huge corporations pay large sums for the privilege of becoming the official "mega-sponsors" of baseball. Now, for example, International Business Machines and Chevrolet are the official computer and automobile manufacturers, respectively, of the major leagues. While all of this new money was being raked in, baseball's resurgent popularity continued to soar. Attendance records were being broken year after year. In 1986, every club exceeded the 1 million mark in home attendance, a major league first. And in 1987, thanks largely to unprecedented competitive parity on the field (fifteen of the twenty-six clubs were still legitimate contenders on September 1), even more fans poured through the turnstiles. Teams such as the Dodgers, Mets, Twins, and Cardinals would exceed the 3 million mark. The Blue Jays crashed through the 4 million barrier, and would be followed in 1993 by the Colorado Rockies. The baseball business also generates revenue for publishers, sporting goods companies, T-shirt manufacturers, transportation companies, service stations, restaurants, bars, legal and illegal gambling operations, and a variety of other business interests. Consequently a major league franchise is not only a source of pride for its hometown fans but also an economic boon to the city that houses it. Where all this money comes from, of course, is the fans. It is the fans who pay for the tickets, the fans who purchase the scorecards and yearbooks, the pennants and caps, the hotdogs and sodas that supplement the gate receipts. Furthermore it is the fans who ultimately pay for newspaper, radio, television, and in-stadium advertising, for it is they who absorb the built-in costs of advertising when they buy the sponsors' goods. And for the moment, at least, the fans seem quite willing to pay the increasing costs of their spectatorship. Given the huge and still growing influx of income to the baseball owners' coffers, one would expect that the clubs are by now embarrassingly profitable. In truth, however, the baseball business is in trouble. The problem is that throughout the revenue bonanza, the rate of increase in the costs of running the clubs has far exceeded the rate of increase in income. The startling rise in costs can be attributed almost entirely to a single category of club expenses--player salaries. On the surface, the issue is simply money. Ownership claims that it still doesn't have enough of it, and the players seem to behave as though they can't get enough of it either. Until recently the sports news media tended to pay only sporadic attention to the dilemma, in part because cries of distress are hard to accept from either party, and in part because there is no base of popular support for either party. The fans are generally unsympathetic toward either camp. In fact, public sentiment on the subject is by and large measured in terms of resentment for one or both sides, with the players lately holding a distinct edge in unpopularity. The financial situation is quite bleak--major league baseball actually is teetering on the brink of bankruptcy. The primary cause of baseball's paradoxical dilemma is the adversary relationship that has existed between the players and owners since 1879. It was then that the baseball owners first established a limited version of the infamous "reserve clause." This was a provision in certain players' contracts that made them captives, virtual slaves, of their owners. Within six years of its inception, the provision was extended to include all major and minor league players. The ballplayers did not obtain freedom from the reserve clause, and thus did not begin to receive a reasonable share of baseball's income, until the 1977 season. For today's players, a century-old legacy of financial slavery and the personal animosity and political entrenchment that naturally flow from that condition are neither quickly nor easily erased. In light of the dubious practices of the clubs since the 1985 season, which include collusion in dealing with free agents, the players appear justified in maintaining their basic distrust of management. For the owners, the sixteen years since the players gained their freedom have been a horror show of fiscal ineptitude and mismanagement. They have watched their own club executives drive salaries to unthinkably high levels. In several instances they have themselves added significantly to the escalation. But while many of the baseball moguls privately blame their fellow owners and themselves for allowing the game's financial crisis to develop in the first place, their public anger is directed squarely at the players, their agents, and their union. So contrary to popular opinion, the current standoff is not merely a case of two greedy opponents using hardball negotiating tactics to force concessions out of each other, all at the fans' expense. Rather it is a clash over rights and principles. And if greed is at all involved in baseball's internal conflict, then it is more as a manifestation of that conflict than a cause of it. In fact, the history of the business of baseball is the history of the tension between individual rights on the one hand and the priorities and practices of businessmen on the other. Like the game itself, the story is uniquely American. In many respects it runs parallel to the history of labor-management relations in America. The story begins in 1846, with the first match game of the Knickerbocker Base Ball Club, and winds its way through the institution of the reserve clause and the many challenges to it over the years, the breaking of the color bar, transcontinental franchise shifts, rich television contracts, and league expansion. But as these events are detailed elsewhere in this volume (see the contributions by Voigt, Hailey, Tygiel, Dellinger, Cohen, and Hoie), the present essay will focus on the turbulent years since 1968, when the Players Association and the owners signed the game's first bilateral agreement. The Storm Before the Calm: 1968-1975 When Ford Frick retired as commissioner in 1965, the owners hired an unheralded Air Force general by the name of William D. Eckert. "Spike," as he was known, was openly pleased to be a ceremonial chief. But he assumed the job just at the time the Players Association was beginning to make bold moves. To deal with the growing strength of the opposition, owners created a Player Relations Committee in 1967. The PRC, as it is commonly called, was headed by John J. Gaherin, former president of the New York City Newspaper Publishers Association. It included the two major league presidents and three owners from each league and was supported by a legal staff. As its name implied, the Player Relations Committee's sole function was to act as a link between the Players Association and the owners, delivering information to and from both bodies and assisting in the formulation of management policy. The first big item on the PRC's agenda was a collective-bargaining agreement, something that the association had been angling to get for some time. The purpose of the agreement was to make some inroads into the standard contract. It was not yet time to launch a frontal attack on the reserve clause. The document which emerged from the negotiations was officially entitled the Basic Agreement. Signed in February 1968, it was the first in a still unbroken series of such accords. It established a formal grievance procedure for the players and provided for subsequent study of the reserve clause by both parties. Probably the most important feature of the first Basic Agreement was that it would take official precedence over the old major league rules wherever they were found to be in conflict. This meant that players were involved in major league policymaking for the first time. By now the players had racked up a series of important victories, and it was clear that William Eckert's administration was overmatched. During the short period in which Eckert held office, the players hired Marvin Miller, built their Park Avenue office, and successfully negotiated the first Basic Agreement. The war was on, but General Eckert was in the wrong army. The owners fired him in December 1968. Within three months of Eckert's removal, and with the commissioner's job still vacant, the owners were confronted with a crisis. Management had offered the players a contract package that was a distinct improvement over the previous deal. The Players Association had rejected the offer because they felt they deserved additional increases in health care, life insurance, and pension benefits. Both sides were angry, and neither side would yield an inch of ground. So the players refused to sign contracts and threatened to strike. Spring training was scheduled to begin in a couple of weeks, and it appeared that the players were prepared to delay its start. The PRC called on one of the National League lawyers, a big pleasant chap named Bowie Kent Kuhn, to see if he could untie the knot. Kuhn, in a style which would become his trademark, devoted most of his time to calming and soothing his irritated management colleagues. Having accomplished that not-so-easy feat, he gave the players everything they had asked for. Six months later, he was rewarded for his efforts with an eight-year term as the commissioner of baseball. Within seven months after he assumed office, Kuhn was confronted with the Curt Flood case. Flood had been a very fine outfielder with the Cardinals for twelve years when he was informed by a low-level club official after the 1969 season that he would be playing ball with the Phillies in 1970. The Phillies had finished 24 games behind the Cardinals, and Flood apparently didn't much like the town of Philadelphia anyway. So he wrote a letter to the commissioner requesting that he be permitted to "consider offers from other clubs before making any decisions." Kuhn could not grant the request without simultaneously and singlehandedly overturning the reserve clause. He denied Flood's request. With the Players Association behind him, Curt Flood decided to take the issue to court. The case reached the United States Supreme Court, but, as usual, yet another player went down in defeat. Why did it always turn out that the lawmakers and judges, many of whom were openly sympathetic to the players' cause, were unwilling to rule in the players' favor? Essentially it was because no less than the relationship between government and private industry was at stake. If Congress or the United States Supreme Court had chosen to modify or overturn the reserve clause, it would have immediately established a fundamentally different and presumably more equal balance of power between the players and the owners, but with unknown results. The uncertainty was the hangup. Whatever the effects of altering the reserve clause might be, the publicity such an action would receive would be enormous. Sports fans and politics watchers, a sizable audience to say the least, would be riveted to the issue. And if major league competition and franchise stability were indeed sacrificed through the removal or modification of the reserve clause, as the owners had been warning would happen since 1885, then the government officials responsible for the decision, either the Supreme Court justices or the members of Congress, would be held accountable. If baseball could not right itself in a reasonable amount of time or, worse, if it were to collapse, this would be especially embarrassing and possibly damaging to nothing less than a branch of the United States government. Except in the most extreme circumstances, neither Congress nor the Supreme Court is inclined to take a potentially profound step where the outcome of its decisions is so thoroughly unpredictable. Both bodies would much prefer that basic struggles of this sort be brought to a higher level of resolution before they will bring their heavy conclusive weight to bear upon them. Not a single meaningful aspect of the reserve system had been altered yet. The real effects of altering or removing the controversial clause were still basically untested. So it is reasonable to conclude that in the eyes of Washington politicos baseball's eternal adversaries had a long way to go before the federal government would get seriously involved. Despite the risks involved, the Supreme Court's decision to retain baseball's antitrust exemption in the case of Flood v. Kuhn was a upheld by a narrow 5-3 margin. Subsequent revelations concerning the justices who ruled on the case suggest that the issue troubled a few of them deeply and that the vote was even closer than the final tally indicated. It could have gone either way. Furthermore public opinion at the time was overwhelmingly on the side of Curt Flood. These were definite signs that the owners were in a lonelier position than they had ever been in before. Indeed, they were cornered. And Commissioner Kuhn's previous behavior as well as the personal risks his job entailed should have been clear hints to the owners that he would be more inclined to commiserate with them than fight for them when the going got tough. The Players Association, which had responsibly cautioned Flood against pursuing his case, was nonetheless delighted that he had chosen to disregard their advice. Flood's case would keep the reserve system in full public view. This was just the first loud shot in what would become an unceasing legal siege on baseball management. Starting with the Flood case, the two sides have engaged in major confrontations roughly once a year ever since. Just during the time that the Flood case was being heard, the association fought a battle over the second Basic Agreement in 1970, which it followed up with a players' strike in 1972, which was in turn followed by a third Basic Agreement in 1973 that gave the players the right to outside, impartial salary arbitration. Between these big surges, the union maintained a barrage of smaller assaults. And in what was effectively a flanking operation, they directed a flurry of attacks on the renewal clause of the uniform baseball contract. What the renewal provision said, in brief, was that a player who did not sign a new contract for the coming season at a salary set by the club would still be the property of his current club for one year--the renewal year. What it did not say was what would happen after the renewal year. Would a player be free to sell his services to any club at the conclusion of the renewal year? Thus a pivotal legal question remained unanswered, a question that shared its legal border with the reserve clause. In 1969, pitcher Al Downing of the Yankees made a serious inquiry into the matter. He wanted to play the 1970 season without signing so that he could become a free agent the following year. After being cautioned by Marvin Miller against testing the renewal clause, Downing was told by Yankees management that if he refused to sign his 1970 contract, he might as well not bother to show up at spring training. Downing signed. He was then traded to Oakland before the 1970 season began. In 1972 St. Louis catcher Ted Simmons came even closer to testing the renewal clause. He played unsigned for half a season before finally agreeing to a two-year contract with the Cardinals. From 1973 to 1975, seventeen more players started seasons without contracts, all of whom threatened to play out their options for a stab at becoming free agents. Two of them, pitchers Dave McNally and Andy Messersmith, carried out the threat--they never did sign. Meanwhile, association gains were piling up. The 1970 Basic Agreement had given the players the right to arbitrate grievances. The Flood case had led to the inclusion of the "five-and-ten" rule in the 1973 Basic Agreement, by which players with ten or more years of major league service who have played for at least the last five years with one club have the right to approve a trade to another club. Though the rule affected only a very small segment of the major league population, it marked the first time that any group of players had any control over where they would ply their trade. A breach of contract by Oakland A's owner Charles O. Finley had made pitcher Catfish Hunter a free agent in 1974. That decision had been of little direct value to other players, except to grant them protection against illegally drawn contracts. But it had demonstrated the determination and the growing strength of the union. Next on the agenda was a full test of the renewal clause by Messersmith and McNally in the fall of 1975. Both pitchers had played the entire 1975 season without contracts. The bounds of the Basic Agreement had thus been exceeded, leaving the two pitchers in a legal no-man's-land. Would the parent clubs still own the contracts of the players after the renewal year, or would the players become free agents, thereby allowing them to sell their services to other teams? That was the multimillion-dollar question. The case was to be heard by a three-man arbitration panel. The panel chairman was Peter Seitz, a man with twenty years of experience as an arbitrator. Marvin Miller and John Gaherin were the other panel members, so naturally their partisan votes on the case would cancel out. This meant that Seitz would, in effect, be making the most important decision in the history of baseball's labor-management relations all by himself. Although the issue was ostensibly the renewal clause, it was really the reserve clause that was on trial. For if Seitz ruled that the two pitchers were free, then every other player in the major leagues could take the same circuitous route to freedom. It would be a cavernous loophole, but a perfectly legal one. Seitz tried vigorously to get the two sides to work out the problem through bargaining. Like Congress and the Supreme Court, he felt that the matter was far too important to be adjudicated in any other way. He even went so far as to write a letter to management, explaining that the weight of the case was definitely on the side of the players and warning that he would not shrink from his duty to act, and act quickly, on the case. But the owners stonewalled it. They rejected Seitz's recommendation. Two days before Christmas 1975, Mr. Seitz placed a nicely wrapped gift under the owners' tree--a sixty-one-page decision in favor of Andy Messersmith and Dave McNally. The owners' first response was to fire Seitz. Then they sent their attorneys around to all of the courts that would listen, trying desperately to appeal the decision. The courts listened, but did not heed the call. Every appeal was rejected, the last one coming in March 1976. Spring training had not begun. The owners had locked the players out. Another delay in the start of a big league season was looming on the not-too-distant horizon. Then, suddenly and very uncharacteristically, Bowie Kuhn defied the owners and opened the training camps. Recognizing the unpopularity of their position and having exhausted all of their legal options, the owners entered into negotiations with the Players Association for a new Basic Agreement. By this action, the owners had officially surrendered. The specter of the Messersmith decision cast a pall over the management negotiators. They knew that they were going to have to yield expensive turf. The only question was how much. This was it, the big face-to-face showdown between baseball management and labor, and the culmination of an ancient quest by ballplayers for a proper share of major league revenue. On the face of it, the Basic Agreement that emerged from the negotiations in July 1976 did not seem revolutionary. Indeed, to the astonishment of many, it retained nearly all of the elements of the original reserve clause. But there was one historic exception: a provision that any player with six or more years of major league service would now have the right to declare himself a free agent. Was this what all of the commotion had been about--the freedom to sell one's services after six full major league seasons? The answer was a resounding "Yes!" The new provision gave the players all the freedom they would ever need. In fact, 1976 was a year of unsurpassable celebration for the union members. It marked the two-hundredth birthday of the United States of America, the one-hundredth birthday of major league baseball, and the erection of a fountain of wealth for the men who play the game. Thus ended the first long chapter in the history of labor-management relations in major league baseball. Nearly a century of internal struggle had been devoted essentially to the revision of a single sentence in the standard player's contract, a single clause that meant the difference between economic slavery and economic freedom. Although the new 1976 version of the reserve clause still restricted that freedom, and although no one could predict what effects limited free agency would ultimately have, the players had finally built a tunnel to the outside from their financial prison. And golden rays of sunshine immediately began to pour into the cells of some of the veteran inmates. The peculiarities of the baseball industry had produced a strange, even unique form of economic struggle. The last attempt to establish a third baseball league had been crushed sixty years before arbitrator Seitz's ruling. So the baseball players received none of the large and lasting financial boosts that the American Football League, the American Basketball Association, and the World Hockey League had generated for professional football, basketball, and hockey players. And with little more than expressions of positive sentiment on the part of the fans and the politicians, they had had to fight their salary battles in virtual isolation. The transiency of the major league labor force had made it extremely difficult for them to mount a sustained offensive. Furthermore, by paying many of the star players rather handsomely, ownership had bought most of them out of opposition. Given the ease with which the owners could remove ordinary players, who would not be terribly missed by the paying customers anyway, it was next to impossible for the players to get a grassroots movement started. Troublemakers and malcontents generally found themselves tied up in court, or quickly dispatched to the minor leagues, or dispensed with altogether. Besides, it truly was a whole lot better to be turning double plays for a living than turning sod in a field or flapjacks on a grill. Baseball players had always been a young, hungry, competitive lot, generally unschooled in and intimidated by corporate matters. So most of them were quite content to play ball for a living, regardless of the level of pay. And they tended to look back on their major league experience, their days in the sun, not with rancor, but with understandable pride and satisfaction. What resentment the players did harbor for the barons who owned them generally lasted no longer than their careers. Under these circumstances, and given the socioeconomic climate of America during baseball's first seventy years, all that the baseball owners had had to do to protect their dictatorial monopoly was play hard-fisted defense. They and their cadre of lawyers and bureaucrats practiced the traditional corporate techniques of stonewalling, name-calling, delaying, and postponing. Furthermore they were an integral part of the business establishment. This had given them unfettered access to and clout with the sports media. Add to those advantages the reluctance of the Congress and the courts to intervene meaningfully on the players' behalf, plus the relative indifference of the fans to the whole matter, and management had been practically invulnerable. Being as ambitious, competitive, and self-interested as they were, management had never even attempted to accommodate the players, in any area, not even when Commissioners Kenesaw M. Landis and A.B. Chandler had advised them to do so. The owners were The Club. And they had ruled with the club, primitively and uncompromisingly, for one hundred years. The only club the player had had was made of hickory or ash and called a bat. It was the only club he had had, that is, until the star players took up the cause. The stars were the ones who had attracted the crowds in New York in the 1850s and 1860s and put baseball on the map. It was they who had received the game's first big paychecks and eventually prompted the restrictive methods adopted by the owners, including the oppressive reserve clause. It was the stars upon whom the hapless rival leagues had pinned their takeover attempts. And it was they to whom the established clubs had paid even higher salaries to keep them in the fold. To the fans the stars were kings, to be envied. To the owners they were pawns, to be played against the other players and the rival leagues in the interest of minimizing salaries and maximizing profits. To the players the stars were the winners in an environment in which it was every man for himself. Baseball's stars had let their teammates down for seventy-odd years. Ty Cobb's steely disregard for his fellow ballplayers at the Celler Committee hearings in 1952--when he spoke of the necessity for maintaining the reserve clause--was perhaps the most galling example. But in the early 1950s, the stars turned and the rest of the players gradually joined the effort. Perhaps the courage of Jackie Robinson in his fight for integration had inspired them to act. Perhaps Branch Rickey's treatment of Ralph Kiner--paying him far less than his performance warranted, simply because he played for an inferior team ("We could have finished last without you" were Rickey's immortal words)--was the pivotal event in their crusade. Perhaps it was the continuing emergence of the Roosevelt-inspired middle class, or the conclusion of the war. Probably it was all of those things, and more. But whatever their personal reasons, the commitment of stars such as Kiner, Bob Feller, Allie Reynolds, and Robin Roberts to their fellow players, a commitment that led to the very formation of the Players Association in 1954 and would require their continued attention and devotion to the cause after their own careers were over, was the key to the success of the players' revolt. Others played very significant roles. Marvin Miller, Curt Flood, Andy Messersmith, and Dave McNally are among the most obvious. Dozens of lesser-known participants made important contributions, too. But when the stars finally took action, that is when the scenery really started to change. And by 1976 the stage was set for a new period in major league history--the free-agency era. The baseball industry had undergone another dramatic change from the late 1950s to the mid-1970s. During that time the mantle of club ownership was being gradually handed over to a new genre of proprietor, the corporate magnate. Prior to the 1950s, one did not need excessive wealth to become a club owner. Thanks to the reserve clause, operating costs had always been relatively low. And the monopoly status of the sport had served as protection against outside competition, especially after the Federal League incursion had been quashed in 1916. Clubs were generally owned by individuals or small groups of investors. Most franchises were family-run businesses that depended for their survival and success more upon baseball savvy and blood-and-guts determination than upon managerial sophistication or huge cash reserves. The ballclub, in most cases, was the livelihood of the owner. And his fortune normally rose and fell with the standing of his team or the general economic health of the major leagues. Through the 1950s the motivation to own a ballclub came from the prestige that one automatically acquired, the profits that one stood a very good chance of making, and, perhaps above all, a deep devotion to the game. For without an abiding attachment to baseball, one would have succumbed to the unrelenting, undifferentiated demands of the job. The fact that the game was a cash business practically mandated that management personnel be family members or highly trusted friends. Someone, after all, always had to keep an eye on the till. In those days, most owners assumed major responsibility for the day-to-day running of their clubs. In nearly all cases, it was they who dictated and negotiated player contracts. This gave the sport a head-to-head, man-to-man character. All were in it together--the owner, his cadre of management personnel, and the players. But the relative intimacy of ballclubs did not promote fair and equitable treatment for club employees. Most of the front-office people and their assistants fared no better than the players. The fellowship that existed resembled the sort that is found in military organizations. There was a strict top-down chain of command, in which orders were obeyed, rights and privileges were decreed, and nonsense was not tolerated. But along with that stern order came a unity of purpose among all involved and a high level of camaraderie among the troops. Those qualities helped to keep the teams and the sport intact throughout its embattled development. The quasi-military nature of the sport helped to foster a public perception of team loyalty and stability. That perception grew after the Black Sox scandal and flourished during the Landis regime. In the meantime, the big league clubs had become embedded in their cities. For exactly fifty years, starting in 1903, not one of the sixteen American and National League franchises left its hometown. The music had stopped and the chairs were in place. The sport and each of its teams had become seemingly permanent features of the American cultural landscape. Then, in 1953, all of that began to change. After having won the National League pennant in 1948 with a record of 91-62, the Boston Braves began to slide. By 1952, they had fallen to seventh place with a 64-89 record. The next year, the franchise moved to Milwaukee. This was the first in a rapid shakeout of two-team cities. Towns like Milwaukee had been aching to obtain major league clubs for years. Since there were as yet no firm plans to expand the major leagues, the obvious takeover targets for the disfranchised towns were the weaker clubs in two-team cities. The next two teams to move out were both from the American League. The St. Louis Browns became the Baltimore Orioles in 1954, and the Philadelphia A's moved to Kansas City in 1955. Both clubs had been last-place finishers the year before they pulled up stakes. And both had been distinctly weaker, competitively and economically, than their National League counterparts for a long stretch of time. As a result, these first club relocations in a half-century were rather easily accepted by the hometown fans. And the general perception of franchise stability remained unshaken. During this brief period, the Players Association was being formed, and television had begun to expand the reach and the income of the baseball business. A decade had passed since the end of World War Two, and the jet age was just beginning. It was a new world with new frontiers. And the big leagues could not buck the momentum of change. After the 1957 season, the baseball industry was thoroughly introduced to the magnitude of that momentum, for it was then that the New York Giants and the Brooklyn Dodgers were moved to San Francisco and Los Angeles, respectively. Both franchises had maintained huge and loyal followings. Thus the decisions by Giants' owner Horace Stoneham and Dodgers' owner Walter O'Malley to go west sent shock waves through the baseball community. It was one thing to sell a wilting franchise to an enthusiastic new owner and a hungry new town. But it was quite a different matter for an owner simply to rip a solid club away from its faithful fans. The Brooklyn fans were particularly enraged. Their team had been one of the very best in baseball for the preceding decade. In their eyes, and in the eyes of many others, mainly from the East, baseball had broken a social contract by allowing the moves to take place. From the perspective of Stoneham and O'Malley, the uprooting was strictly a sound business decision. Both viewed California as an untapped source of practically boundless opportunity. And despite the strong base of support in New York and Brooklyn, the industrial East was stagnating. Attendance at Giant and Dodger home games, though respectable, did not match the quality of the teams, especially in the case of the Dodgers. Walter O'Malley recognized that baseball was in the midst of a transition to a more demanding, higher profile, and more lucrative entertainment industry. The Dodgers' first year in Los Angeles was a bust on the field. The club wound up the season in seventh place, 21 games behind the pennant-winning Braves. But the club set its all-time attendance record, reaching nearly 1,850,000. Only twice before had the Dodgers drawn in the 1.8 million range, in the immediate postwar years of 1946 and 1947. And this was only the beginning. After he built his own stadium in 1962 and assumed control of all ballpark concessions, O'Malley's new vision was complete. By putting a solid baseball organization in the booming Los Angeles area and securing ownership of all related property, O'Malley constructed the most successful baseball operation in the history of the sport. For its first sixteen years, club attendance averaged slightly better than 2 million. For the last twenty years, it has averaged close to 3 million. Until the Blue Jays moved into the SkyDome and the advent of the expansion Rockies no other clubs remotely approached that degree of success at the turnstiles. Meanwhile, up the coast, the Giants were trying to win at the same game. The first several years, the years of Willie Mays, Juan Marichal, and Willie McCovey, were magical. Great talent continued to flow into the organization, enabling the club to be a serious contender for most of its first fourteen years in San Francisco, through the 1971 season. But attendance in the city by the bay never reached the dizzying heights attained by the Dodgers. From 1958 through 1967, average attendance held at around 1.5 million, which was well above the league average of roughly 1 million for the period. Then, however, the A's moved from Kansas City to Oakland. The Giants' attendance plummeted overnight. By the time the club had lost its edge on the field, in 1972, annual attendance had settled in the 700,000 range, making it one of the weakest draws in the National League. Attendance languished at that level for five more years, during which time the A's were busy winning three World Series and attracting 900,000 fans per year. It was immediately evident that the San Francisco Bay area would have difficulty supporting and sustaining two major league clubs. And Candlestick Park, with its sixtyish temperatures and its erratic, blustery winds, was becoming progressively less acceptable, both to the fans and to the new principal owner of the club, Robert Lurie. Giant attendance bounced back, reaching an all-time high of 2,059,829 in 1989. A franchise shift to St. Petersburg was narrowly averted when Bob Lurie sold the club to Peter Magowan in 1992. By the mid-1960s, the financial stakes had become higher for the major league baseball business, and the new California teams highlighted some of the opportunities and risks involved. The most important transformation in the character of big league club ownership started in the 1960s, when corporate interests began to replace family ownership groups. Overall baseball attendance had ebbed by then, due in part to a severe drop in run production caused by a legislated increase in the size of the strike zone, and due in larger part to the ascendancy of the National Football League. The nation was in a countercultural frenzy at that time, with drugs, sex, rock-and-roll, and the Vietnam War sharing center stage. Under the circumstances, football was hot, baseball was not. There was a growing sense among the members of the major league establishment that the national pastime would have to kick into a higher gear to keep up with the faster pace and more indulgent interests of the society. The first big corporation to get into the act was the Columbia Broadcasting System. CBS purchased the New York Yankees in 1964. One way to meet the demands of the time was to replace old, typically small, and in some cases dilapidated, baseball parks with large new all-purpose stadiums. Twenty-three of the twenty-eight stadiums in use in 1993 were built since 1960. New parks will open in 1994 in Arlington and Cleveland. Until the opening of Camden Yards in 1992, the new stadiums reflected the comparatively cold, artificial, plastic, hyped qualities of the new era they were ushering in. They were equipped with massive electronic scoreboards and message boards. Giant sound systems piped advertising jingles through the vast concrete terraces of plastic seats. Spectators were led in cheers, taunts, and songs by computer-graphic instructions flashed on the huge, usually garish message machines. In the Houston Astrodome, touted for its first several years of existence as the eighth manmade wonder of the world, fans were even prompted to applaud by the center field message board, where jerky animated figures of hands would suddenly appear, clapping to the synthesized beat of a high-technology organ. By way of these innovations, several ballparks became enormous television studios, filled with all of the technical gadgetry and special accommodations needed to put on dazzling spectacles, both for the in-stadium and at-home spectators. Even the playing fields did not escape the reconstruction trend. Artificial grass was developed for the sun-starved floor of the Astrodome in 1966, and it soon spread through the big leagues, as though it was the real thing. In 1993 ten stadiums were paved with plastic turf. So by the mid-1970s the surface features of baseball had been altered markedly. For the clubs that joined in the reconstruction movement, the immediate and long-term financial costs were high. The new gimmickry, by itself, was very expensive. The cost of building a stadium had become so great by the mid-1960s that practically every one of the newer stadiums was funded by a local bond issue. And even with the local populaces paying for the ballparks, the annual rent charges to the clubs had become quite costly. Club organizations needed to become more diversified to keep up with the increasing complexities of the business. More importantly, to some of the old-style owners the game was turning into a promotion-ridden circus. The days of pure unadulterated baseball entertainment were numbered. As a result, the business was being invaded by public-relations-minded corporate magnates. And the Messersmith-McNally decision was hanging over the industry, threatening to restructure its century-old financial foundations. The Free-Agency Era: 1976-1989 The Messersmith-McNally arbitration decision put major league salary matters on hold for a full year while labor and management worked out the details for implementing free agency. Neither side could predict what effects the new arrangement would have, so both sides were inclined to proceed slowly and cautiously in laying it out. As a result, free-agent bidding did not begin until the fall of 1976. The two sides also agreed to suspend the salary arbitration process through the 1977 season. What emerged from the 1976 bargaining talks was a salary system made up of four basic elements: a guaranteed minimum salary of $19,000, maximum salary cuts of 20 percent in one year and 30 percent over a two-year period, the right for players with at least two years but less than six years of major league service to have their salaries determined through arbitration, and the right for players with six or more years of service to declare free agency and sell their services to any club. The first two components, the minimum salary and the maximum permissible cuts, were the players' defensive weapons. Both had been in place for many years. Arbitration, which was first adopted after the 1973 season, was designed to allow any player dissatisfied with a club salary offer to have his dispute heard and ruled upon by an impartial arbitrator. It was intended to give the player an opportunity to raise his income to a level commensurate with other players of similar ability and experience and thereby protect him against salary gouging. Free agency was strictly an offensive instrument. It enabled the player to determine his dollar value through free-market bidding by clubs. In theory, an ordered salary structure would emerge from the new four-part system. There would now be three mutually exclusive "classes" of players. At the bottom of the salary pyramid would be those players with less than two years of major league service, who would have no explicit rights beyond the major league minimum. Their salaries would be unilaterally determined by management. If such players felt they were underpaid, their only recourse would be to hold out, refusing to play unless and until they received higher pay. Holding out had been the players' only real source of negotiating leverage for one hundred years. Now, just those players with less than two years of service would be forced to rely on such an extreme negotiating measure, and only on rare occasions. In the middle would be the arbitration eligibles. If they did not want to accept a club's offer, they would be free to take the matter to an arbitrator. The salary arbitration procedure is essentially simple and straightforward. If, in the course of negotiations, a player has reason to believe that his club will not offer him as much money as he feels he is worth, then he officially files for arbitration by a specified date in early January. If he and the club are still unable to reach an accord as of a second deadline, at the end of January, then both sides are required to submit a salary figure. Within twenty-four hours of the submissions, the player, the club, the Players Association, and the Player Relations Committee are notified of the salary amounts that the two parties have submitted. An arbitration hearing is then scheduled for a specific morning or afternoon between February 1 and February 20, the official arbitration period. If the two parties remain unable to reach a settlement before the appointed hearing, then the case is heard in a four- to six-hour session. The arbitrator then has twenty-four hours to select one of the two submissions. It is an either-or proposition; there is no middle ground. Thus if the player is seeking, say, $350,000 and the club is offering $250,000, the arbitrator must choose one or the other figure. He may not, for example, split the difference and award the player a $300,000 contract. In its first two years of implementation, in 1974 and 1975, arbitration did not amount to much. Indeed, it could not amount to much because nearly all salaries were relatively low. The average salary was between $40,000 and $45,000; the median was between $30,000 and $35,000. In those years, arbitration battles were generally fought over differences in the $10,000 to $20,000 range. The top salary class in the new structure would consist of the players eligible to be free agents. They would either receive enough income from their original clubs to stay with those clubs or they would declare themselves free and seek higher pay elsewhere. In either event, there would be pressure on the clubs to pay all players with six or more years of service well enough to secure their services, assuming, of course, that the clubs would uphold the letter and the spirit of the free agency rules by earnestly bidding for players. The scheme, as a whole, follows the logic of military employment. Like the armed services, the owners would be giving the players training and instruction in the minor leagues in exchange for six years of active duty, at which point the soldiers of summer would be free to remain with their original employers or strike out on their own. Under the circumstances, this seems to have been a surprisingly fair and reasonable resolution of the players' ancient problem. Management had cornered itself, legally, in its dealings with the Players Association and with arbitrator Seitz. So they might well have been backed into a deeper hole by the players. But this final salary arrangement appeared to give the clubs plenty of financial breathing room. When free agency was set into place in November 1976, it had immediate impact on veteran players. Their salaries took off. In that first year, the average major league salary increased by nearly 50 percent, jumping from $51,501 to $76,066. The median increased by a similar percentage, going from around $40,000 to around $58,000. But the extra $25,000 per player was not distributed evenly. The 1976 minimum salary of $19,000 was retained in 1977, which meant that the younger players had received no boost at the bottom end. So most of the significant raises were going to players with six or more years of major league service behind them. Those veterans represented approximately 40 percent of the player population. Thus what had happened was that the six-year veterans had realized an average increase of about $50,000, while the players with less than six years of service had, as a group, made only marginal gains. This dichotomy was to have been expected. For not only did the younger players not possess the valuable right of free agency, but they also had no access to arbitration. And even if they had been able to take salary disputes to arbitration, the awards would have been limited by the fact that players of similar skill and experience were not making big salaries either. Over the next three years, the same principles held. The result was a lopsided three-tiered salary structure, with the youngest players hovering around the minimum, the arbitration eligibles a full notch higher, and the veterans far, far ahead. And the costs of retaining the older players continued to climb steadily and dramatically, widening the gap even further. The average salary for all players shot up to $113,500 by the end of the 1979 season. Management took on a siege mentality, with owners and executives privately and publicly predicting doom for the baseball business. But the new system created a good deal of interest in baseball's backstage politics. If anything, it contributed to a resurgence in the game's popularity--and in the owners' revenue. The American League's expansion in 1977, from twelve teams to fourteen, and increasing competitive balance on the field in both leagues provided additional boosts to club income. The dollar value of clubs began to skyrocket. More corporate owners bought into the business, and few family-owned and -operated clubs remained. With the stakes now so high, the small owner was simply unable to compete for the better players. For the players, the last years of the 1970s were an exciting beginning. At long last some of them had started to share in the profits of the entertainment industry that they were the center of. But the huge gap between the arbitration eligibles and the free-agency eligibles kept growing. Even the star players with less than six years of major league service were unable to bridge that gap. What had happened was that the two groups had become segregated. Veterans were being compared with veterans, and younger players were being compared with younger players, due strictly to the difference in service. Consequently middling players with many years of service were generally earning quite a bit more than stars with less than six years of service. This development kept the rate of salary inflation from getting completely out of control. It was the silver lining in the cloud that had formed over the owners. To the players and their union leaders, it was illogical and unfair that a number of over-the-hill veterans were making hundreds of thousands of dollars more per year than many outstanding young players, such as Eddie Murray, Keith Hernandez, Pete Vuckovich, and Dennis Eckersley. In their view, too much credit was being given for sheer longevity and not enough for quality of play. But under the new salary system, the only way the younger players could move toward the veteran salary range would be through arbitration. The owners certainly weren't going to elevate their salaries out of generosity. Meanwhile, the arbitration arena was becoming an interesting sideshow feature of the big league circus. Once the combination of free agency and arbitration was permitted to function, after the 1977 season, arbitration began to take on the character of a high stakes pokerfest. The spreads between player demands and club offers were occasionally reaching six figures. Then, after the close of the 1979 season, a major showdown started to take shape. Relief pitcher Bruce Sutter of the Chicago Cubs had completed his fourth year of unsurpassed excellence on the mound. Every big league club would have loved to have Sutter in its bullpen. At the winter meetings in Toronto, in December 1979, several club executives expressed the view that Sutter was among the three or four most valuable players in the game. Some felt that he was the topmost banana in the whole bunch. December trades and purchases of players had dried up considerably as a direct result of the new salary system. As a result, much of the attention of the press and the clubs was given to arbitration, especially to the Sutter matter. The rumors floating around the headquarters hotel suggested that Sutter would be seeking more than a half million dollars for the 1980 season, while the Cubs would not be willing to spend much more than a quarter of a million for his services. In January the arbitration filing figures came out. The Cubs were offering their relief ace $350,000, a very high amount at that time for a player with barely four years of service, but not much higher than the income he had received the previous year. Sutter's demand was $700,000, a staggering figure that, if granted, would place him near the top of the salary pyramid despite his nonveteran status. In February the case was heard. And to the astonishment of management, Sutter was declared the winner. This was the first big crack in the wall that separated the free agents from the younger players. The decision implied that a star is a star, regardless of his prior service time, and that he should be paid accordingly. That is to say, he should earn a salary consistent with, though perhaps not quite as high as, that of a veteran with a similar qualitative performance record. Inside the baseball establishment there was a swirl of controversy surrounding the Cubs' handling of the case. Suggestions were made that Cubs' management committed one or two key tactical blunders. Whether those claims are valid or not, the Sutter case suggested that a few weak links among the clubs with respect to the negotiation and arbitration of salaries could have impact on all other cases and clubs. The case also helped to establish a new high-paid class of player, the relief ace. The clubs were badly shaken by the Sutter decision. A few of the owners, particularly George Steinbrenner of the Yankees, Ray Kroc of the San Diego Padres, and Brad Corbett of the Texas Rangers, had already sent the salaries of free agents into the stratosphere. Now the clubs felt that they would have to give equal attention to the growing threat of salary arbitration. For even though the Sutter decision was the act of only a single arbitrator, the full precedential impact of which would not be determined for at least a few years, it was a strong signal of danger. How the clubs responded to their deteriorating position is mystifying. It is also of bottom-line importance to the history of the baseball business, because that response more than anything else is what led the clubs into the deep and dire financial straits in which they are currently mired. Management's convoluted strategy proceeded more or less along the following lines. It was obvious to all of the clubs that free agency was costing them dearly. It was equally clear that the big bidders had not reached a plateau, so there was no telling when, where, or if the veterans' spiraling salaries would stop. By 1980 the $1 million mark had been surpassed by several players. In the meantime, the overarching priority for nearly all of the clubs was still to put the best possible team on the field. That was their business. A handful of less well-off owners refused to enter the fray and simply turned their backs on free agents. But they were too few to buck the inflationary trend. They were on their way out of the industry anyway. For the rest, the problem was not only to decide if and to what extent they would get involved in bidding for free agents. They also had to figure out how they could keep their better young players on their teams once those players reached the sixth year of service and became free agents. Front-office people throughout both leagues dreaded the prospect of having to lose players whom they had selected, trained, and groomed for eight or more years just because some other club would be willing to pay more for them in free-agent bidding. The anxiety was particularly acute among the clubs in the smaller and less profitable media markets. So a defensive contract strategy was needed. A few clubs responded to the dilemma by entering into long-term contracts with their most prized young players. Such contracts had been virtually nonexistent prior to free agency. The reserve clause had made the player the permanent property of his club, so there had been no good reason for the clubs to guarantee anyone more than the coming year's salary. Now, however, there was a special incentive to sign players for several years at a time. The reasoning went as follows. If a club had an All-Star quality player with four years of service, then by signing that player for, say, five years the club would retain ownership of his contract through the player's ninth year of service. In other words, the club would in effect buy out three years' worth of the player's free agency rights. In practical terms, this meant that the clubs would be willing to risk wheelbarrows full of current dollars on players purely for the purpose of being able to hang on to them for an additional one, two, three years, or more. The multiyear contract would typically be of great benefit to the player, for no matter what might happen during the term of the contract, most or all of the money would be fully guaranteed. Thus if the player's performance were to fall off, or if he were to become incapacitated through wear and tear or injury, his financial future would be secure. There were only two risks to the player in agreeing to a multiyear deal. With salaries escalating at a wild rate, no one could know what the future dollar value of a player might be. Consequently a salary of $750,000 in year four of the contract might appear irresistible to the player upon signing, but he could actually be worth much more than that in the major league market by the time that fourth year rolled around. The other risk of entering into a long-term contract was that the player's performance might improve dramatically, again raising his relative dollar value. If both possibilities came to be, then the player might lose hundreds of thousands of dollars, or millions, by taking the multiyear offer. Though there weren't very many of them, future Hall of Famers Johnny Bench and Tom Seaver were among the principal victims of the multiyear contract. Each of them missed out on an income bonanza by agreeing to a long-term deal early in the free agency era, before salaries went through the roof. Having bitten the multiyear bullet, the question now facing the clubs was how exactly to design these long-term contracts. Since each player belonged to his club through year six, it seemed unnecessary to pay any player more than a fair wage for years three, four, or five. One would have expected, therefore, that the clubs would have granted modest raises prior to a player's sixth year of service, and that they would have built much larger raises into the contract for all subsequent years, raises that would make the player's pay consistent with free agents of similar ability. In fact, what the clubs started to do was to offer free-agent level salaries for each and every year of a multiyear contract. A hypothetical example will help to illustrate this critical issue. Let's say a club had a better-than-average third baseman who had earned $100,000 in his third year of major league service in 1979. The club wanted to ensure that it would keep the player on the team for as long as reasonably possible. So it decided to offer the player a six-year deal covering the years 1980 through 1985. Comparable third basemen with less than six years of service were making between $150,000 and $250,000. Comparable free agent third basemen, however, were earning between $600,000 and $700,000 per year. With both the player and the club anticipating continued, rampant salary inflation, they might agree that the player would be worth more than $1 million by the beginning of the sixth year of the proposed contract. A fair contract, under these circumstances, might have been constructed as follows: Calendar Yr. Yrs. of Service Contract Yr. Salary ------------------------------------------------------------------ 1979 3 -- $100,000 1980 4 1 200,000 1981 5 2 300,000 1982 6 3 700,000 1983 7 4 850,000 1984 8 5 1,000,000 1985 9 6 1,150,000 ------------------------------------------------------------------ Tot. Cum. Salary 4,300,000 In the first two contract years, before the player would have reached free agent status, he would have been paid at a rate slightly higher than, but generally consistent with, the pay of other third basemen who had not accrued six years of service. Then his salary would have leaped up to the free-agent level in contract years three through six. What the clubs in fact did in many such instances was draw up contracts that looked more like the following: Calendar Yr. Yrs. of Service Contract Yr. Salary -------------------------------------------------------------------- 1979 3 -- $100,000 1980 4 1 500,000 1981 5 2 650,000 1982 6 3 800,000 1983 7 4 925,000 1984 8 5 1,050,000 1985 9 6 1,175,000 -------------------------------------------------------------------- Tot. Cum. Salary 5,200,000 The first two years of this deal, while not quite at the free-agent level, are roughly double what a comparable player would have been worth in normal negotiations or arbitration. And the total value of the second contract is $900,000 greater than the first, more than a 20 percent boost. Of course, by adopting this approach major league executives cost their clubs both immediate and long-term cash. But, far more important than that, they set into motion a wave of big salary increases via the arbitration process. Why? Because the third baseman from the above example would be used as a basis of comparison by players of similar quality who had also not yet obtained free agency rights. In negotiations, a comparable young player would point to that contract and any others like it, claiming that if the other third baseman were worth $500,000 after just four years in the big leagues, then so, too, was he. And if the club didn't accept the claim, then the player would take the case to an arbitrator. More and more players did indeed take such cases to arbitration. By the end of the 1983 season, this almost breathtaking act of fiscal self-destruction on the part of club management had become standard policy. Nearly every major league club had a few players with less than six years of service who were reaping very hefty incomes. As a result, the salaries of the arbitration eligibles, as a group, had increased by several hundred percent. Although they were still a clear notch or two behind the veterans in income, they had pulled away from the players with less than two years of service, who had no arbitration rights. Had the clubs not overplayed their new defensive strategy, which they clearly did not have to do, the arbitration eligibles might still have salaries within hailing distance of the major league minimum. It was by this time, of course, too late for the clubs to correct their grave strategic error. And the wall separating the younger players from the veterans had been reduced to an embattled trench. To make matters worse for management, the Sutter precedent continued to exert its own upward pressure on the salaries of arbitration eligibles. That is, the players were still trying to establish the principle that a star is a star, regardless of his prior experience, and that he should be paid the full wages of a veteran star. The nub of their reasoning was that a young star has at least as much present value as an older star, and certainly greater future value to his club. The clubs continued to insist that service time is the bedrock of the salary structure, just as seniority is in other industries. The first three years of the free agency era can be regarded as an experimental phase. No one on either side of the table knew precisely what was unfolding or how it would play itself out. As of 1980 it was evident to the clubs that free agency was producing an unchecked inflationary spiral and that arbitration would demand very serious attention. Help for the clubs in the arbitration arena was already on the way. Talbot M. "Tal" Smith had been the president and general manager of the Houston Astros from 1975 through 1980. He was renowned in management circles as a tough but fair-minded chief executive with extraordinary skills in fiscal management. Smith had also brought the Astros from the depths of mediocrity to a division championship in his relatively brief tenure at Houston. But he and the new Astros owner, John McMullen, did not see eye to eye on a number of internal club matters, particularly the assignment of contracts. So despite his club's 1980 success on the field, Smith was fired almost immediately after the Astros lost the League Championship Series to the Eastern Division champion Phillies, three games to two. Smith had gotten his feet wet in arbitration prior to his last season at the helm. Although he had lost both cases, his interest in the arbitration process had been piqued by the experience. He genuinely enjoyed the challenge of the specialized competition that arbitration is. So he decided to offer his personal services to a few of his front-office colleagues. The Oakland A's took him up on the offer. The club was headed toward contract battles with two of its best players, outfielder Tony Armas and pitcher Mike Norris. With Tal Smith representing them, the A's prevailed over both players in arbitration. The victories prompted Smith to set up a business, Tal Smith Enterprises, to extend his salary services to other clubs. At the end of the 1981 season, six major league clubs retained Smith for support in salary negotiations and arbitration. Smith quickly assembled a small group of legal and statistical experts to round out his salary team. He had commented, privately, in his last months as the president of the Astros that backup catchers were now earning more than general managers. He felt strongly that the financial survival of major league baseball was in jeopardy and regarded his new role as a mission, a financial crusade, to save the game. His lament over fiscal conditions was sincere, and it was music to the ears of a lot of club executives. Prior to the formation of Tal Smith Enterprises, the Player Relations Committee had been solely responsible for providing advice, counsel, and data support to the clubs. The PRC's executive director, Raymond Grebey, was a gruff and rather arrogant veteran of labor-management wars. He had headed the PRC since 1978, but had not scored many victories for the clubs. Instead of allying himself with Smith, Grebey seemed to view Smith as a competitor for Grebey's rightful role as management's protector. He even attempted in various ways to thwart Tal Smith's efforts. This bureaucratic pettiness exemplified management's internal divisions over policies and methods for combatting the gains being racked up by the Players Association and its constituents. Grebey notwithstanding, Smith and his band of Young Turks put on a dazzling display in the 1982 arbitration campaign. Of the eight cases that went to hearings, the Smith team won seven. It was a previously unheard-of margin of victory, and it helped to quell Grebey's opposition. More importantly, it sent a strong message to the players and their agents. They would have a better organized and much more formidable arbitration adversary than they had ever before encountered. A line had been drawn in the arbitration sand, giving the clubs a small but significant beachhead. As the 1982 salary returns came in, it was plainly evident that the clubs were routinely granting enormous percentage increases to arbitration eligibles and free agents. There was a rising tide of salaries that was lifting nearly all boats. Furthermore, the clubs, inexplicably, were tendering virtually no salary cuts, even though they were empowered to do so. Equally difficult to explain was the fact that franchise sales were proceeding apace, with prices going up, way up. With the exception of the O'Malley family, the last of the family owners was gone, and corporate interests were evidently still anxious to gain membership in the baseball owners' club. Tal Smith Enterprises' accomplishments the year before led six more clubs to sign up after the 1982 season. Smith had to expand his workforce and computerize his operation to keep up with the demand for his services. The client load increased to thirteen clubs the following year and remained at that level through 1986. Smith was, thus, representing half of the clubs in baseball. Smith's presence no doubt tempered the submissions of a sizable percentage of players in arbitration, and it helped to slow the pace of inflation in normal negotiations carried out by his client clubs. But the Smith team compiled only a .500 record after its first splashy campaign. Inherent in the arbitration process is a tendency for the arbitrators to split their decisions, for if they come down too heavily on one side they are likely to be permanently removed from the pool of arbitrators by the opposing side. This worked against Smith, perhaps even unduly after his highly publicized rookie campaign. Moreover, even Smith's clients saw their payrolls rise at a bankrupting rate. The past practices of ill-prepared clubs had gone on too long and they were precedential. Those practices had helped to establish the micro-rules of the arbitration game, and there was little that Tal Smith or anyone else could do about it. Besides, of the more than 700 contracts that are signed each year, only 25 or so end up in hearings. And of that total, only about 60 percent, or roughly 15 cases, are handled by Smith. In other words, Smith brought too little, too late. The structural damage had already been done even before he had officially hung up his shingle. To make matters worse, by the end of the 1985 arbitration season many of the club executives and the player agents were complaining that arbitration had become a random process. Decisions were almost totally unpredictable. The term being bandied about was "crapshoot"--arbitration, many were saying, had turned into a crapshoot. Throughout the first decade of the free agency era, labor-management relations worsened. The clubs' hiring of Smith had put an additional buffer between the players and the clubs, just as the cadre of player agents had done several years earlier. By adding such layers of representation, the ballplayers and their owners became a step more detached and alienated from each other. The more intimate love-hate relationship that had existed between the old family owners and their players, which was more akin to the relationship between troops and their generals, or between sons and their fathers, steadily gave way to an entrenched business relationship after World War Two. Meanwhile, salaries continued to rise. The labor-management war drums were beating, perhaps more loudly than ever before. But now the owners were the Indians. More bad news greeted the besieged front offices after the 1985 season. Two years earlier, baseball had signed a six-year television contract with ABC and NBC that was worth approximately $8 million per year to each club. The $1.3 billion deal was triple the value of the prior network-TV contract. But now there was open talk that TV revenues had passed their peak. The networks were initiating an industry-wide reduction in personnel and a streamlining of their corporate structures. Accordingly, they were letting it be known that baseball could fully expect a decline in income--a fear that proved unfounded--when the next contract came up for negotiation in 1989. The clubs also began to see their cable television income level off. And prices for tickets, parking, and concessions had all risen steadily as the players' salaries increased. Those prices were now barely, if at all, increasable. And radio and in-stadium advertising and promotions were rapidly reaching a saturation point. To demonstrate the gravity of the situation, the owners made the unprecedented and startling decision to open the clubs' financial books in the fall of 1985. The central purposes of this action were to prove management's claims of insolvency and to obtain changes in the Basic Agreement that would reverse, or at least stem, the flow of red ink. By their accounting, the industry was losing roughly $58 million per year, or a bit more than $2 million per club. The Players Association had its own financial analysts review the data. They concluded that the clubs had actually netted $9 million in profits in 1985. According to one highly placed club executive, the financial data were so poorly organized, so incomplete, and so out of date that no one could draw reliable conclusions with respect to club costs or revenues. Wherever the truth lay, it was clear that no more than two or three clubs were regularly showing profits. The Los Angeles Dodgers were, and still are, in their own special category at the top of the heap. The rest were fighting a losing battle. Nonetheless, between 1982 and 1985 the Detroit, Minnesota, and Cincinnati franchises were purchased--at then astronomical prices. And there was talk, encouraged by the game's new commissioner, Peter V. Ueberroth, that the expansion of the major leagues to twenty-eight or thirty teams would take place in the relatively near future. Given the extremely discouraging financial conditions of the baseball industry in the 1980s, one wonders why anyone, including the high rollers who had replaced their generally less wealthy predecessors, would want to get into the business. By 1985, every big league club was backed by at least one big corporate entity. In name, almost every club was owned by an individual or a group of individuals, but in reality the clubs belonged to large parent companies. The list included a variety of large media corporations, an international brewery, a blue-chip jeans manufacturer, a nationwide pizza franchise, a big-time law firm, a regional car dealership, and two major shipbuilding companies. What distinguished the new breed of owners from the earlier model was that the new baseball moguls were uninvolved in day-to-day club operations. Several owners meddled in important personnel and salary decisions, but club management was now essentially in the hands of front-office executives. This absentee style of ownership was a clear indication of the relative unimportance to the owners of the financial condition of their baseball franchises. It also suggested what the main motivation to own a ballclub had finally become--promotion. For whether or not a club made money, the individuals and the corporate interests that undergirded them would constantly be in the national limelight. Thus the clubs had turned into the promotional, public-relations playthings of their corporate overlords. How else can one explain the appreciation in club values in the midst of the game's financial plunge? Is the alternative view, that so many ultrawealthy parties are just slipshod businesspeople, really credible? After all, if the new owners are so terribly lacking in business acumen, how have they gotten to where they are? Whatever their individual reasons for buying into the baseball business, the new hands-off owners relied on front-office personnel to oversee their organizations. Within the front offices there had always been a barrier between business and baseball. The baseball people--general managers, player personnel directors, farm system directors, assistants in those areas, scouts, and all the rest--had jealously protected their professional turf and the inside information upon which their jobs rested. They were also a relatively uneducated group, the bulk of whose professional experience was limited to the playing field. The finance people, stadium operations people, ticket office personnel, and so forth minded their own business. This kind of compartmentalization of responsibility and authority was another of the quasi- military aspects of the sport. The new owners in most cases empowered their one or two top baseball executives to hire and supervise the business personnel, thereby keeping the old order intact. As a result, salary matters generally fell to people ill-equipped to deal with salary techniques and strategies. Salary determination is inherently a blend of performance evaluation and comparative salary analysis, and a rather exacting intellectual exercise. But with the owners basically uninvolved and with the traditional organizational barrier still standing, there were very few club personnel qualified to do a creditable job in the salary arena. The rapid and broad success of Tal Smith stood as proof that the clubs could not adequately manage their own salary matters. And if there was a single area on which the current and future financial health of each franchise depended, it was undeniably the area of salaries. It is for these reasons that free agency and arbitration led to rampant inflation. To put it another way, the Messersmith-McNally decision had freed only the veterans; it was the unsupervised and fiscally deficient baseball executives who had made the rest of the major league players wealthy. In effect, they had given away the store while the owners were fishing. The first loud signal of ownership's recognition of its managerial shortcomings came when the owners' council selected the business entrepreneur Peter Ueberroth to replace the attorney Bowie Kuhn as baseball's commissioner. Ueberroth had demonstrated his take-charge, no-nonsense, profit-oriented approach to sports when he organized the 1984 Olympic Games held in Los Angeles. The owners' appointment of Ueberroth was nothing less than a reversion to the strong-commissioner strategy that had brought Judge Landis into baseball and saved the game in the aftermath of the Black Sox scandal. It showed that they were deeply concerned about the existing state of affairs. It was also a virtual admission that when the going gets tough, the ever-divided house of owners must seek outside help. When Ueberroth took office as the commissioner at the beginning of 1985, baseball was awash in red ink and the tide was still rising. The clubs could not unilaterally rewrite the Basic Agreement. Nor could they control the behavior of arbitrators. They had opened their books, but the players remained unconvinced that they were in trouble. How, the players asked, could the clubs possibly be insolvent and at the same time have a string of anxious buyers waiting in line to pay exorbitant and still escalating prices for those clubs? Management was becoming desperate. The new commissioner was not the type of administrator who would simply sit back and allow a bad situation to deteriorate further. In late September of 1985, Ueberroth addressed the club owners and their representatives at a regularly scheduled quarterly meeting. After the season ended, he attended two more of management's private meetings. His broad message to the clubs at those gatherings was that they would have to exercise fiscal responsibility in order to keep their industry viable. His more specific advice to them came in the form of a negative statement that he made at the general managers' meeting at Tarpon Springs, Florida, in early November: "It is not smart to sign long-term contracts." Shortly after that meeting, sixty-two players filed for free agency. Though the list was long, it was perhaps the least impressive group, talentwise, since free agency was instituted. It was loaded with marginal and soon-to-retire players. One of the few exceptions, however, was All-Star outfielder Kirk Gibson. The twenty-eight-year-old Gibson had been with the Detroit Tigers for his entire professional career, and he was coming off his best season as a major leaguer. Many clubs would normally have had serious interest in obtaining a player of Gibson's caliber. But the deadline for bidding on free agents came and went, and not a single club made an offer to Gibson. In fact, practically all of the free agents had been completely ignored by the clubs. Of the group of sixty-two, only five changed clubs. And all five were players in whom their previous employers had officially indicated no interest by waiving their right to negotiate with them. To the Players Association, it was obvious that the clubs had entered into a tacit agreement not to pursue any free agents that their most recent employers wished to retain. In their view, that amounted to a conspiracy to violate the terms of the Basic Agreement. The legal term for such behavior is collusion. So the association lodged a grievance against all twenty-six clubs, claiming that they had violated Article XVIII of the agreement, which states that "the Clubs shall not act in concert with the other Clubs" in signing free agents. Veteran arbitrator Thomas Tuttle Roberts began hearing the case in the summer of 1986. In September the owners attempted to dismiss Roberts from the case. He had just ruled, in a separate case, that the clubs could not insert drug-testing provisions in players' contracts without the consent of the Players Association, and that had angered the owners, or so they claimed. The association felt that this was merely an excuse and that management was engaging, as it had done for more than a century, in delaying tactics. For the longer it would take to resolve the collusion case, the more opportunity the clubs would have to defy free agency and maybe even wreck it. To the delight of management, the case dragged on through the winter of 1986-1987. This time, however, the free agent pool was one of the best on record. It included perennial All-Stars Tim Raines, Andre Dawson, Jack Morris, and Lance Parrish. But, true to form, the clubs continued the practice of the previous year. They made no bids for free agents whom their previous clubs wanted to keep. And, not surprisingly, the Players Association filed another grievance. Then the final 1985 salary tallies came in. What those results showed was that management's initial attack on free agency had had little if any effect on salaries. The major league payroll had continued to grow at a bankrupting pace. Management was sweating bullets, and they were looking more and more ready to fight back in other ways. Some of the provisions of the Basic Agreement had been changed through prior negotiations between the players and the clubs. The changes went into effect after the 1986 season. The most important of them dealt with arbitration rights. Players now would have to complete three full years of major league service instead of just two to become eligible for arbitration. Using the new provision to full advantage, the clubs grossly underpaid some of the game's brightest young stars, including 1986 Cy Young Award winner Roger Clemens of the Boston Red Sox. It was, as it always had been, within the clubs' rights to unilaterally assign contracts to such players. But by recent standards, the salaries tendered to Clemens and a half dozen other outstanding young players were, in each instance, hundreds of thousands of dollars below the established scale. Several of the players threatened to hold out for the 1987 season. Clemens did hold out until shortly after the season began. In addition, the clubs took a firmer stand in arbitration than ever before. They submitted several offers that represented no raise over the previous year's salaries, and they even went so far as to try to cut a few salaries by way of arbitration. Given the almost total absence of holds and cuts in prior arbitration proceedings, these were highly risky actions. The 1986-1987 arbitration results revealed the chaotic state into which the process had lapsed. At the bottom end of the salary scale, the clubs had cleaned up. Twenty-six players had taken their cases to arbitration and seven of them had returned without salary increases. Four of those had received cuts in pay. But at the high end, Yankee first baseman Don Mattingly received an award of $1,975,000, which was at the time the largest arbitration award to date. Overall, the clubs won sixteen of the twenty-six cases. And the players realized the lowest percentage gain in income in the history of arbitration. The most interesting case was that of Detroit pitcher Jack Morris. Morris had gone to arbitration four years earlier and had lost. After the 1986 season, he declared himself a free agent. But because the Tigers wanted to keep him, none of the other clubs would bid for his services. His agent, Richard Moss, decided to throw the Tigers a curveball. He advised his client to pursue a new option available to free agents, namely to withdraw his declaration of free agency and subject himself, once again, to arbitration. Detroit management was over a barrel. Morris was one of the best pitchers in the game, and he had plenty of statistical evidence to back up that assessment. So the club knew that if it were to accept the offer, it would stand a pretty good chance of getting clobbered in arbitration. On the other hand, if the club were to turn down the offer to arbitrate, it would not be permitted to negotiate with Morris until May 1, a full month into the 1987 season. The club consented to arbitrate. Jack Morris won this one, and it cost the club a whopping $1,850,000 to retain his services for the 1987 season. When the final figures for 1987 came in at the end of November, it appeared that the array of extreme measures taken by management had at last reversed the salary inflation trend. In fact, the average major league salary had declined by a few thousand dollars. And Tal Smith Enterprises was still proudly leading the cost-reduction crusade on behalf of the ballclubs. But it was not yet time for the owners to celebrate, because two months earlier arbitrator Tom Roberts ruled that the major league clubs had indeed operated "in concert" when they shunned the free agents after the 1985 season. In September 1989 that translated into awards of $10,528,086.71 to the 139 players he held had been victims of that first round of collusion. Seven players--including Kirk Gibson and Carlton Fisk--were given "new look" free agency. In August 1988 arbitrator George Nicolau, after reviewing 8,346 pages of testimony, found owners guilty once more of collusion, this time against seventy-nine free agents following the 1986 season. In October--he had delayed his action to avoid disrupting the pennant races--he granted "new look" free agency to twelve more players, including Bob Boone, Jim Clancy, and Willie Randolph, all of whom signed with new teams. A "Collusion III" case was filed by the union in January 1989 regarding those who had become free agents after the 1987 campaign. In July 1990 Nicolau again found for labor. Seventy-six players, including such stars as Jack Clark, Gary Gaetti, Jack Morris, Dave Righetti, Mike Witt, and Paul Molitor, were involved in the case, which revolved around management's creation of an "information bank" in the winter of 1986-87. This data bank reported all salary offers made to free agents. Nicolau wrote he found it a "quiet" form of cooperation between supposedly rival clubs endeavoring to keep tabs on what each competitor was offering on the supposedly free market. By the time damages would finally be determined, they would exceed the $100 million mark. New Sources of Revenue Reports of the demise of television's profitability proved premature. Toward the end of Ueberroth's tenure, a series of blockbuster broadcasting deals were negotiated. The biggest was a four-year deal with CBS in December 1988 for $1.06 billion. The network received rights to the All-Star Game, League Championship Series, World Series, and twelve regular-season weekend games. Criticism surrounded the cutback in regular-season broadcasts, but Ueberroth answered with an unprecedented deal with the cable industry. ESPN outbid such rivals as TNT and USA in January 1989 for a four-year, $400-million pact, featuring 175 regular-season games, including groundbreaking Sunday-night cablecasts. No one knew how successful the package would be, but even ESPN officials admitted they would lose money for at least the first two years. At the same time a $50-million, four-year agreement with CBS Radio for the Game of the Week, All-Star Game, and postseason contests was made final. Not only was Organized Baseball as a whole cashing in; so were the individual clubs. George Steinbrenner obtained a $500-million, twelve-year agreement with Madison Square Garden cable. His colleagues incorrectly worried that he would again attempt to corner the free-agent market. Big Apple fans, at least what Yankee fans remained, worried over the cost of their cable bills (as did fans nationwide following the ESPN negotiations), but the deal was done. At the conclusion of Ueberroth's breathtaking round of broadcasting conquests, the Commissioner noted baseball's newfound prosperity and respectfully requested owners to hold the line on ticket prices. He was ignored. Another segment of the business of baseball--and an increasingly lucrative and ugly one--was memorabilia, autographs, and baseball cards. In 1989 it was estimated that these "extras" accounted for $1 billion in business. Its culmination came during a particularly dark day in baseball history. Hours after a disgraced Pete Rose was expelled from the game by Commissioner Giamatti, he appeared on a cable network and peddled $1.2 million in bats, plaques, and balls, taking home $100,000 in pocket money. While that may have shocked many, it was not the only seaminess marring the trade. Ballplayers peddling autographs at card shows soured stomachs from Fenway to Anaheim. Forgeries and fakes surfaced with regularity. Jose Canseco was sued for his failure to appear at one card show. Two dealers were charged with ripping off an infirm "Cool Papa" Bell of his mementos. A seventy-five-year-old man was killed over memorabilia in the Midwest. By 1990 reports from the New York City area held that the boom was losing steam, that crowds were thinning out at shows, and that overpriced gimcracks were starting to gather dust. Tying in to this facet of the game was the licensing of logos and related products. Initiated nearly three decades ago by the National Football League, licensed sports marketing now produces over a billion dollars in annual sales in baseball. The Franchise Game In 1988 Peter Ueberroth admitted that four years earlier twenty-one out of twenty-six big league clubs suffered financial losses. By 1987 the situation had seen a dramatic turnaround, and twenty-two out of twenty-six clubs either broke even or were profitable. There had always been an interest in ballclubs as rich men's toys, but when it appeared that once again money could be made at the national pastime, bidding went through the roof (dome?) for franchises. Even the most moribund teams were selling for big bucks. Somewhat understandably the New York Mets changed hands for $100 million, and Baltimore sold for $70 million, but when the woeful Seattle Mariners were peddled for $77 million (George Argyros had paid $13.1 million for these latter-day St. Louis Browns in 1981), it was clear that the economic balance had been tilted. Back in the early 1980s Commissioner Ueberroth had announced that the majors would feature two new AL and four new NL clubs by 2000, but calling progress snail-like would have exaggerated its speed. By the late 1980s the game faced increased pressure from a number of sources for expansion. The Players Association wished to open up more jobs for its members. The U.S. Senate formed a fourteen-member panel on the subject. A new league, organized by agent Dick Moss and at one time backed by Donald Trump's ephemeral billions, was another threat in the summer of 1989. Baseball now announced a willingness to add two more NL franchises. Nothing really happened until the summer of 1990. Slowing up matters, some said, were the recent TV contracts. Established owners were loath to share their newfound riches with any newcomers, and hence expansion would not occur until the current broadcasting contracts expired. Each of the twenty-six teams received $16 million yearly from the national package, but with more dollars going to such stars as Viola, Clark, and Canseco, the owners still felt they needed every last penny. As a result, a 1993 target for expanding came into view. The National League announced its two newest members in September 1991. The expansion franchises would draft entry-level minor-league players in late 1991 and actually operate farm systems in 1992. During that season, they would draft college and high school players. Major league expansion drafts occurred after the 1992 World Series. An interesting--and definitely different--aspect of this draft was that the newest senior-circuit clubs drafted personnel (thirty-six for each club) from both major leagues, the logic being that if the two newcomers cut into the TV and radio revenues of all clubs, they should draft from all clubs. A corollary of this, of course, is that both the AL and the NL would divvy up the $95 million franchise fee each rookie owner would fork over. While Organized Baseball did not exactly pooh-poohing those hefty initiation fees, they were not the only factors involved in the initiation process. Such considerations as "substantial financial resources" (obviously) and "long-term commitment" to their local communities were cited. Multipurpose stadiums were deemed passe. Local politicos were told to be cognizant of "the necessity of the club receiving parking, concession, signage, pay TV, and luxury box revenue." Frontrunners for the new franchises included Denver (where voters in 1990 approved a new 40,000-seat stadium), St. Petersburg (which nearly hijacked the White Sox in 1988 and the Giants in 1992), Miami (assisted by recently retired Mike Schmidt), Buffalo (where the Rich family runs a big-league operation at the AAA level), and Washington (a two-time loser, but a loser with political connections). The huge franchise fees plus a projected $65 million in startup costs (a figure that ultimately reached $95 million) began to cause several prospective backers to think twice. Nonetheless, despite a downturn in the national economy, there was no shortage of takers. Major league expansion also triggered minor league expansion, as the new clubs would require farm teams. With such franchises as Oklahoma City going for $4.5 million, the price tag at the AAA level would not be cheap. Most observers estimate it would be $5 million per club (consider that the Mets had cost $1.8 million in 1962 and the Kansas City Royals had cost just $5.55 million in 1969). Even applying for a minor league club required a $5,000 nonrefundable deposit (an unprecedented situation for the bushes), but in September 1990 eighteen groups sent in their checks. As minor league franchises were being bought and sold for record prices, the major league clubs took notice. Claiming they no longer saw the wisdom of subsidizing such "profitable" ventures (in all too many cases the only profit comes from selling to the next party willing to take operating losses), the big leaguers started to place heavy-handed pressure on their farm clubs in 1990. On a single day in August 1990, sixty-three working agreements were dropped. That was followed by a threat to bring fifty-nine bush-league teams to Florida and Arizona in 1991 for summer versions of complex baseball. Hardball was the name of the game on all negotiating fronts. The Lockout of 1990 Baseball's Basic Agreement expired on December 31, 1989, and despite the prosperity that both sides now enjoyed, open warfare was imminent. The Players Association was hardly blind to the marvelously round figures Ueberroth had pried out of the networks. Beyond that they were particularly irritated by the year of arbitration they had given away in the last settlement. Club owners, on the other hand, were tired of forking over millions through the arbitration process. The problem for management was not simply the cost of losing specific arbitration cases. Winning could also be costly. In the winter of 1989-90 the ten losers in the process received average raises of $477,050. Average salaries doubled for only the second time in the fifteen-year history of the process. First-year arbitration players saw paychecks skyrocket by 166 percent. While the vast majority of disputes were settled before they got to arbitration, they still involved huge increases, such as Teddy Higuera's $2,125,000 stipend and Tom Browning's pact for the same figure. Fred McGriff saw his income rise from $325,000 to $1,450,000 in a prearbitration settlement. A showdown had to occur. Negotiations dragged on during the winter of 1989-90, and it was widely believed that the players would collect their checks for a few months and then strike at midseason, when the owners were gearing up for large crowds and were most vulnerable. To thwart this plan, management struck first, engaging in yet another lockout of spring training camps. The owners' strategy was to hold firm on the third-year threshold for arbitration. The PRC tendered a number of alternatives to the Players Association, including one granting 48 percent of club profits to players and another offering a cumbersome $4 million bonus-pool scheme to be shared by two-year players. After thirty-two bitter days, Donald Fehr, the union's combative new representative, and Charles O'Connor, the new PRC negotiator, hammered out a compromise. Seventeen percent of the second-year players would now become eligible for arbitration. The minimum salary would rise from $68,000 to $100,000, the largest percentage increase ever. Management would contribute $55 million to the players' pension fund, up from $39 million. To the casual observer this seemed a victory for labor, but the players had wanted $80 million and the settlement was a giant step back from the traditional one-third of national TV revenues that players had contended was their right. Additionally, it was written into the agreement that baseball would announce its long-stalled expansion plans within ninety days. It was not a settlement that established any great principles, and most fans were no doubt just as puzzled as ever as to what all the shouting had been about, but it appeared that the process had cooled some tempers. Even the Players Association's Don Fehr, never one to look away from controversy, discerned a "measurably lower degree of hostility" at the lockout's conclusion. Baseball Enters the Nineties In the 1991 season salaries, arbitration settlements, and attendance continued to climb in dizzying fashion. The average player salary soared an astonishing 42.5 percent to $851,383. The highest stipend was accorded to Los Angeles' Darryl Strawberry--$3,800,000--while the average Oakland paycheck was a handsome $1,394,119. In January 1991, 159 players filed for arbitration. They secured average raises of $540,000--a 102 percent boost. Big winners were Wally Joyner ($2.1 million) and Doug Drabek ($3.35 million). Overall, major league attendance hit an all-time high of 56,813,760, paced by Toronto's exceeding the 4 million mark, the first time a club had smashed that barrier. Long-stalled National League expansion finally occurred in June 1991 with $95 million franchises being granted for the 1993 season to the Colorado Rockies, headed by wholesale beverage dealer John Antonucci, and the Florida Marlins, led by Blockbuster Video tycoon Wayne Huizenga. Huizenga's appointment of Pirates executive Carl Barger to be the Marlins' first president caused some controversy as Barger had played a key role in the expansion process. Also on board as Marlins GM was Dave Dombrowski, who had previously done much to fortify the Expos farm system. Commissioner Fay Vincent ruled that American League teams would receive $42 million of the franchise fees. Issues such as disparities in local television revenue continued to fester. Local television, cable, and radio rights generated $200 million for Major League Baseball, but just four teams--the Yanks, Mets, Phils, and Dodgers--garnered more than 35 percent of the total. The Yankees' $41.5 million per year deal towered over the funding available to such small market franchises as Pittsburgh ($5.8 million), Kansas City ($5 million), and Seattle ($4 million). In September 1991 the American League voted to channel 20 percent of local broadcasting "net revenues" into a pool which would be shared equally (the NL formula, on the other hand, now calls for sharing 25 percent). Controversy was expected over what revenue is to be considered "net." As the 1991 season ended, another round of free agent signings ensued with the New York Mets snagging Pittsburgh's Bobby Bonilla with a five-year, $29 million pact. This largesse was soon eclipsed by the Cubs' signing of thirty-two-year old Ryne Sandberg to a four-year $28.4 million agreement. At the lower end of the spectrum, the big league minimum wage inched up to $109,000--an almost meaningless figure with the average major league salary now at $1,043,156. Big losers in the free agent-big salary game were the 1992 Mets, Dodgers, and Red Sox. These teams spent $130.5 million in finishing a collective 82 games out of first as their attendance plummeted by a total of 1.5 million paying customers. Despite another 4-million-plus season in Toronto and the million-fan boost given by the opening of Baltimore's Camden Yards, major league attendance dropped by 1.6 percent in 1992. Major league profits plummeted from $143 million in 1990 to just $8.7 million in 1991 to virtually nothing in 1992. Nervousness increased over the coming end of the lucrative CBS television contract after the 1993 campaign. Given these alarming indicators of doom, it was mistakenly anticipated that the unprecedently large number of free agents testing the market after the 1992 World Series--including such stars as Barry Bonds, David Cone, Kirby Puckett, and Greg Maddux--would find few takers. As the World Series ended, a bombshell struck baseball's already shaky financial structure. ESPN announced it would not exercise its option for television coverage in 1994-1995. Claiming that so far it had lost more than half of its investment in the deal, the decision makers at ESPN chose a $13 million buyout rather than further payments of $250 million for the two seasons available to them. The cable network left the door open for negotiations, but obviously at a much lower starting point. Among other factors, baseball was losing its popularity was American youth: Neilsen ratings revealed a disconcerting 24 percent drop in viewership of regular season games by 12-to-17-year-olds from 1989 to 1992. In that time NFL ratings in that age group were up 16 percent; the NBA rose a startling 31 percent. Meanwhile in the minors, 1992 provided the highest attendance total since 1950, with 27,180,170 fans passing through the turnstiles. Major league expansion had appeared to create a trickle-down growth for the minors. Yet the capital demands on minor league owners, a product of the hardball Professional Baseball Agreement that Major League Baseball had pushed on the National Association, were coming due in a recessionary atmosphere, and fewer municipalities were willing or able to foot the bill for new ballparks or for upgrades of existing facilities. The saga of Bob Lurie and the San Francisco Giants went on and on. In June 1990 he received permission to shift the club thirty-five miles south to Santa Clara County, California. But that November voters in fifteen Santa Clara County cities turned thumbs down on a 1 percent utility tax to pay for a new stadium--the third year in a row such a referendum had failed. In January 1992 Lurie announced plans to move to San Jose if a new $155 million, 48,000-seat stadium could be constructed. The plan foundered on the shoals of a projected 2 percent increase in the city's utility tax. On August 7, 1992, Lurie (who had paid $8 million for the franchise in 1976) announced the sale of his Giants for $115 million to a group headed by Vincent J. Naimoli bent on relocating the club to St. Petersburg, Florida. That triggered a $100 million counteroffer from local investors headed by Safeway magnate Peter Magowan and stockbroker Charles Schwab, who were intent on keeping the team in the Bay area. The National League, by a 9-4 vote on November 10, 1992, rejected the St. Petersburg offer, leaving the status of the Magowan offer up in the air, although it was ultimately settled in Magowan's favor. The maneuvering sparked new Congressional interest (particularly that of the Senate Judiciary Committee) in baseball's anti-trust status. Several other franchises changed hands in 1991-1992. On November 2, 1991, John Labatt Ltd. paid $67.5 million (Canadian) to acquire majority control (going from 45 percent to 90 percent ownership) of the Blue Jays. In a controversial move that sparked xenophobic and racial responses, Jeff Smulyan turned the woeful Seattle Mariners over to Japanese interests connected to the Nintendo corporation for $106 million. John McMullen unloaded the Astros to Texas business executive Drayton McLane, Jr. $115 million. Finally, after draining an estimated $23 million from the Detroit Tigers' coffers, Domino's Pizza baron Tom Monaghan peddled the club to fellow pizza magnate Mike Ilitch (a former Tiger farmhand) for a relatively paltry $85 million. The Orioles were rumored to be on the block for $200 million. The biggest casualty of the 1992 season was Commissioner Fay Vincent, who was ousted on September 7, 1992. (For more about his "resignation," see the articles by Stephen S. Hall and Adie Suehsdorf.) Brewers owner Bud Selig stepped in as Commissioner Pro Tem. The first tangible result of Vincent's departure was recision of his controversial National League realignment plan, which would have placed the Cardinals and the Cubs in the NL West and the Reds and Braves in the NL East. Some observers felt that Vincent's downfall was foreshadowed in December 1991 when owners hired Richard Ravitch, a one-time candidate for mayor of New York City, to the post of President of the Major League Player Relations Committee at a salary $100,000 greater than Vincent's. The owners did not want Vincent interfering in labor relations as he had when he intervened in the 1990 spring training lockout. Vincent's dismissal only fueled the false rumors, already rampant, of an owner-generated lockout for 1993. Sales of Major League Baseball licensed products continued to soar--from $200 million in 1987 to $1.5 billion in 1990 to $2 billion in 1992. Despite the fact that items with Mets and Yankees logos account for 20 percent of all sales, revenues were split equally among the twenty-eight franchises. To compete with the rival NBA and NFL in an increasingly global struggle for fan dollars, MLB started to promote overseas sales and by 1991 was doing $20 million a year in foreign sales. In 1992 even the minors got into the act with a similar centralized licensing approach (under the control of Major League Baseball Properties, which can keep up to 30 percent of the royalties). National Association licensed sales in 1992 were an estimated $12 to $15 million. Hopeful plans are being drawn up to go "international" with bush league caps and gimcracks. 1993: A Season of Fear--and Profits Early in 1993 it was oh-so-fashionable to write baseball off as a sport which for all intents and purposes was finished. Newspapers, magazines, and even entire books purported that baseball's long-awaited crash had finally occurred. Demographic reports and television ratings were trotted out to prove conclusively that the National Pastime was on the ropes. Attendance figures proved otherwise. Major League Baseball set an all-time record of 70,257,938--a figure 23.7 percent above the record set in 1991. Even factoring out the two expansion teams, the Rockies and the Marlins, and factoring out the National League's new method of counting attendance (the same method employed by the American League, based on tickets sold, not on actual bodies in the park), attendance was estimated to be 5.2 percent above the 1991 record and 7 percent over 1992. The Giants, on the ropes in 1992, drew 2.6 million in 1993. Montreal, another moribund franchise, also showed signs of life. "The amazing thing is not simply that our crowds have been good," said Expos owner Claude Brochu, "What's really significant are the demographics. We're getting a very young, vibrant audience." The Reds, lackluster on the field and tarnished by the Marge Schott fiasco and the Tony Perez firing, were estimating a $12 million profit for the season. The Rockies, who had projected a debut season attendance of 2.5 million, attracted nearly 4.5 million customers and suddenly were looking at ways to increase the size of their new Coors Field. And a new record was set for the value of a franchise. The Orioles sold for a record $173 million at bankruptcy court auction. The club's new owners were led by Baltimore attorney Peter Angelos and Cincinnati businessman William DeWitt. Minority partners included movie director Barry Levinson, author Tom Clancy, broadcaster Jim McKay, and tennis star Pam Shriver. The minors topped 30 million fans for the first time since 1950, when there were 446 clubs. Average 1993 per-game attendance in the National Association was 3,316--the highest in history. Eight leagues (the International, Eastern, Southern, California, Carolina, South Atlantic, Northwest and Appalachian) posted attendance records. The International League set an all-time minor league attendance record, drawing 4.6 million customers. In the Courts and in the halls of Congress, rumblings continued regarding removal of baseball's special legal status. On August 4, 1993, U.S. District Court Judge John Padova of Philadelphia, in a move many interpreted as a distinct restriction of baseball's antitrust exemption, denied Organized Baseball's request to dismiss a suit brought by disgruntled St. Petersburg interests. Padova ruled that the 1922 Supreme Court decision exempted O.B. from antitrust legislation only in those things that were unique to baseball, such as players' contracts. Thus, the buying and selling of clubs was not covered. "We're very disappointed with the ruling," said a spokesman for Major League Baseball, "We disagree with the judge's interpretation...." Hearings were scheduled for September 30, 1993 (but delayed until 1994) in the Senate Judiciary Committee on a measure sponsored by Howard Metzenbaum (D-Ohio) revoking baseball's anti-trust exemption. Threatened Judiciary Chairman Joseph Biden (D-Del.): "Unless baseball gets its act together in a way that is monumentally different from where they are now, this committee will be back with the votes that will change the status of baseball." What was billed in advance as the most important meeting in the history of baseball took place in Kohler, Wisconsin on August 11-13, 1993, under the leadership of Richard Ravitch. The session was not all it was cracked up to be. But it did provide some new developments. A widely anticipated agreement on revenue-sharing failed to come about, but owners did pledge to refrain from a threatened lockout of players in spring training 1994. However, Ravitch refused to rule out a lockout later in the 1994 season. At this writing, about one-third of major league revenues are shared; in the national Football League the figure is roughly 75 percent. How Major league Baseball will divide its spoils between "big market" teams and "small market" franchises is anybody's guess, but it is theorized that a new revenue-sharing formula will go hand-in-hand with some sort of salary cap. Complicating the situation have been threats by small market clubs to veto televising of games from their parks by visiting clubs. The small market clubs would have the power to do this except for games covered by the various national TV contracts. Salaries continued to escalate in 1993, and the grossly underachieving Mets started the year with an average salary of $1,534,007. But some teams featured relatively low average salaries: the expansion Rockies at $327,000 and Marlins at $649,876, for example, and the more established Expos at $513,149 and Indians at $541,989. The Padres angered many fans by ruthlessly trimming salaries and talent in the 1993 season. Star performers such as Fred McGriff, Tony Fernandez, Darrin Jackson, Gary Sheffield, and Bruce Hurst were all sent packing. General Manager Joe McIlvain abandoned ship as owner Tom Werner successfully pursued a course of lowering the payroll from the $30 million level in 1992 to a goal of $18 million in 1993. "They have been losing money ever since the purchase," explained Richard Ravitch. "They lost $12 million the last two years.... And they're going to do what Milwaukee is doing, what Houston did under its prior ownership, what Pittsburgh is doing in order to be able to operate within their resources." The most significant event of the year was the change from a two-division to a three-division league setup, a concept favored by the Players Association. Formal approval occurred on September 9, 1993, by a 27-1 vote, with only Texas' George W. Bush dissenting. Playoffs would involve the three division winners, plus a so-called wild card team, i.e. the non-division winner with the best won-lost record. The first round will be a best-of-five format; the second, a best of seven. Potential ramifications regarding the move include a cutback of the 162-game schedule and an accelerated expansion schedule, perhaps as early as 1996. Some saw the "wild card" provision diminishing interest in tight pennant races, but they noted that it could have been worse. Elements in the owners' camp had originally pushed for two wild-card teams, playing the two division winners. It was the Players Association that championed the plan eventually adopted. Also causing controversy were fears that a team with a regular-season losing record could conceivably win a World Series. However, that possibility had already existed under the two-division system, as witnessed by the barely over-.500 Mets lasting until the seventh game of the 1973 World Series. A new (less lucrative) television contract was signed in May 1993 with ABC and NBC covering the 1994-1999 seasons. It did little to silence critics of Organized Baseball. Aside from postseason play, Major League Baseball will continue to have little presence on network airwaves. There will be no games telecast before the All-Star Game, and only twelve after that point (with coverage split between ABC and NBC). This represents a continued downturn in recent history's already scant level of network coverage (i.e., from sixteen games in 1993 and from forty-three as recently as 1987). Most controversial is the concept that league playoff games will not be broadcast nationally, but rather regionally. Broadcaster Tim McCarver was among many predicting "a serious public backlash on this." While the issues of regionalization and regular season broadcasting drew the most attention, just as significant (if not more so) were the financial terms of the deal. Unlike the $1 billion CBS TV contract (on which the network claimed it lost $500 million), no money changed hands. Instead a joint venture was set up between Major League Baseball and the two networks involved to sell advertising for the telecasts. It was estimated that this arrangement would prove only half as lucrative to baseball as the CBS deal. Signs of fiscal retrenchment involved scouting and the minors. A cutback in the Major League Scouting Bureau was announced in the late summer of 1993. All twenty-one part-time scouts employed by Bureau were laid off September 1, 1993, with as many as thirty of the fifty full-time scouts also being let go. Only those scouts with a year to go on their contract were retained. Facing opposition from minor league clubs and financially strapped local communities, the Major Leagues relented on the ballpark improvement provisions of the Professional Baseball Agreement, delaying the deadline for its provisions to April 1, 1995. The minors on their part agreed to put off reopening the entire PBA until September 1994. The minors in 1993 also featured the creation of three independent circuits. Two of them, the Texas-Louisiana and the Frontier Leagues, were unmitigated flops, but Miles Wolff's Northern League showed that, under the right circumstances, such entities could succeed. The Spoils of War For the better part of a century, major league baseball players fought for a reasonable portion of the proceeds of their entertainment industry. However, with no viable competition from outside the baseball monopoly, the players were forced to accept whatever salaries and conditions their owners saw fit to give them. They eventually made progress, but only after they pulled together as a bargaining unit and slowly and painfully loosened the grip of the reserve clause. In the end, what they obtained was not a specified level of income but rather a system of salary determination. The system contained no financial guarantees beyond the major league minimum salary. How much money the players would ultimately receive through free agency and salary arbitration would rest entirely on the behavior of the clubs. What the system did was create a form of free-market competition within the monopoly. In a sense, it turned a single business into twenty-odd separate businesses and unleashed a self-destructive frenzy of interclub competition. To the players' amazement and joy, they saw their salaries reach heights that they could not have imagined were possible. To most of the fans and the press, the dizzying escalation in their incomes made the players appear baldly greedy. And when filthy-rich players began to complain that they were being underpaid compared to other individuals or groups of players, the public's growing distaste for them was understandable. But greed really was not the issue. What was at stake for the carping millionaire pitcher or outfielder was not the money but rather his standing as a ballplayer. Money had become the measure of his talent, and every player wanted and still wants his money to match his skills. So when he sees that a player whom he considers himself superior to is earning more than he is, he feels underrated, cheated. That is his value system. Unfortunately, as long as the salary system remains a chaotic hodgepodge without fixed standards of evaluation, in which the negotiating skills of agents and club executives are often more of a factor in determining the players' worth than their actual on-the-field contributions to their teams are, a good number of players will always feel cheated. And the clubs will continue to be and to feel besieged. The players will continue to earn astounding sums of money and the club owners will continue to bask in the national limelight, thereby getting plenty of public-relations bang for their otherwise poorly managed bucks. And the fans will continue to be the ones who ultimately pay for the follies of both sides. Thus one of the key questions facing the major leagues is how long the fans will go on subsidizing the war of principle between the players and the clubs. Whether or not the fee-per-game plan is implemented, the recent and steady shift from free over-the-air telecasts to paid-for cable-TV telecasts is continuing. This development is taking viewing opportunities away from those people who either do not have cable access or cannot afford to pay the monthly fee. The problem is already rather acute for New York Yankee fans, because there is no cable television in the Bronx at this time and the majority of Yankee games are broadcast exclusively on MSG, a cable-TV operation. In the long run, the shift to cable may diminish the size of the baseball viewing audience, which would erode the major league fan population and thereby reduce the future income of the sport. The shift also raises a fundamental question concerning baseball's exemption from antitrust laws. The matter has been addressed by Charles E. Schumer, a member of the House of Representatives from New York's Tenth Congressional district. In an article for the New York Times written in the summer of 1987, he posed the following challenge: If baseball is simply a "business," then why should it have a special antitrust exemption? On the other hand, if baseball enjoys protection from the nation's laws because it is a national treasure, then Americans have a right to demand reasonable access to it. Congressman Schumer has introduced legislation which would require that the Yankees and major league baseball choose between two alternatives. They must, in his words, "either act like a business and receive no governmental protection, or behave like a great national pastime by making sure that New Yorkers can see the game on cable or free TV." There is an eerie quality to the maelstrom in which baseball now finds itself. For none of the central issues that have haunted the game since its inception has really been resolved. The business is still a monopoly. Many individual players are still dissatisfied because they do not feel that their contracts reflect their relative value as on-the-field performers. Members of Congress are beginning to consider legislation aimed, as before, at removing baseball's antitrust exemption. And baseball's un-merry-go-round, the seamier side of the industry, keeps spinning on its own goofy axis. In the words of Yogi Berra, "It seems like deja vu all over again." Nevertheless, the game is bringing in more spectators and more money than ever before. And the irrepressible club owners, though they are now more a clique of promotion-minded high rollers than a league of dyed-in-the-wool baseball men, seem undaunted by the growing financial threats to their industry.