Owners Surrender Their Way to Labor Peace

Three years ago, the Lords of Baseball vowed that these labor negotiations would be different. No more Commissioners counseling moderation, no more peace for its own sake. They wanted to win so badly that they were willing to destroy the 1994 season and damage the 1995 season to get their way. How ironic that the hardest-line owner of all drove his colleagues to surrender.

After the owners voted, 18-12, on November 6 to reject a tentative labor agreement, White Sox owner Jerry Reinsdorf explained, “I hope the fans understand that what we are doing is meant to be to their benefit. We're attempting to control the spiraling of salaries.” But on November 26 the Lords raised the white flag, overwhelmingly approving the very deal they had just denounced. Done in by their own arrogance and greed, they had no choice.

The owners start all sports labor disputes with a public relations advantage. Most fans think professional athletes are overpaid, and, encouraged by comments like Reinsdorf’s, they blame high ticket prices on the “greedy players.” In fact, as economists have noted, player salaries are the result, not the cause, of higher revenues -- even if the players worked for free, a profit-maximizing owner would raise ticket prices whenever the market allowed.

By repudiating their own negotiator, the owners lost that advantage. Even sympathetic fans and reporters turned on them. The “dishonorable owners” became the villains: they had hired Randy Levine to reach a labor agreement, then reneged after Levine did his job. Acting Commissioner Bud Selig, who had assured the Players Association that Levine spoke for him, now abandoned him. Hiding behind anonymity, others went further. One unidentified NL owner suggested: "What we should do is put Randy against the wall, blindfold him and shoot him for treason.”

The meeting highlighted the disarray among baseball’s ruling class. Even after discussions made clear that the proposed agreement would be rejected, 12 owners voted for the deal despite Selig’s plea for a unified public front. Several owners protested Selig’s refusal to distribute a written summary of the proposed deal while it was being debated. With nothing in writing to review, some owners may have based their vote on incorrect information -- for example, some small-market teams incorrectly thought they could get revenue-sharing money without a labor agreement.

The Players Association refused to reopen negotiations MLB’s new Director of Marketing warned that any hint of labor trouble would doom up to $1 billion in sponsorship contracts from major national advertisers, but no one seemed to listen. The owners and players prepared for a third off-season under the expired agreement.

But then came Reinsdorf. One week into the free-agent signing period, the self-styled protector of the fans against higher salaries signed Albert Belle to a record-breaking contract. Reinsdorf’s White Sox will pay the 30-year-old Belle $10 million per year from 1997 through 2001. In 2002 the Sox must either pay Belle another $10 million or buy out his option for $5 million, so he’ll earn either $60 million for six years or $55 million for five. Either way Belle’s contract dwarfs that of Ken Griffey Jr., baseball’s second highest-paid player. Griffey, who’s three years younger and much more likely to retain his value, will earn an average of $8.5 million from 1997-2000.

The Belle signing sent shock waves through baseball’s front offices, especially those with their own marquee talent. If Belle is worth $10 million per year, what about Mike Piazza? Or Bernie Williams? Or, most ominously for Red Sox fans, what about Mo Vaughn? Vaughn earned only $250,000 less than Belle in 1996: is he, too, due for a $4 million raise?

But the greatest effect of the Belle signing won’t be felt for several more years. Belle’s performance will declines as he ages, allowing every quality free agent and arbitration-eligible player to point to Belle’s $10 million salary as a benchmark for his own contract. By 2000, the Belle contract and its descendants will cost small-market teams most or all of the revenue-sharing money they’ll receive under the new agreement.

Celebrating the Belle signing, Reinsdorf further alienated his colleagues by boasting, “It is perfectly fiscally responsible for us to give him this money because we can afford to give him this money.” Cynics noted how closely Reinsdorf’s opposition to the labor agreement dovetailed with his self-interest: the proposed agreement would cost the White Sox millions in luxury tax and make a free agent of Sox ace Alex Fernandez. Even as Reinsdorf insisted, “I want the people in Pittsburgh, Kansas City, Milwaukee, all these small towns, to have a chance for their team to compete,” owners in those cities took little comfort from his words.

In particular, the owner in Milwaukee focused on Reinsdorf’s actions -- and Acting Commissioner Selig didn’t like what he saw. He wanted the luxury tax in place before Reinsdorf could strike again: Roger Clemens, perhaps? At a hastily-called owners’ meeting, Selig implored his colleagues to ratify the labor agreement. Now fans everywhere can thank Jerry Reinsdorf for inducing his fellow Lords of Baseball to surrender rather than play by Reinsdorf’s rules.

Copyright © 1996 Doug Pappas. All rights reserved.
Originally published in the Winter 1996 issue of Boston Baseball.

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