New York Yankee owner George Steinbrenner had not noticed that the joke was on him, so one of his colleagues at a meeting of baseball owners decided to clue him in. The fellow owner fingered the lapel of the sport jacket worn by Steinbrenner, who almost never ventures out in public without his dark blue blazer. Alerted, Steinbrenner looked up and saw that even one of his fellow American League owners was wearing a blue blazer. Steinbrenner and the rest of the room burst out in laughter.
Funny, isn't it, how the tables have turned within the power structure of the owners' cartel. The traditional influence of some of the highest-revenue franchises—Steinbrenner's Yankees, the Baltimore Orioles, the Boston Red Sox, the Los Angeles Dodgers, the New York Mets, the Toronto Blue Jays and a newcomer, the Colorado Rockies—has been muted by a consortium of small-market and neophyte owners. The meek have inherited the mirth.
The concern that was driving small-market clubs the last couple of years was that player salaries were gobbling up an increasing percentage of their revenues. Their need for economic reform gained urgency when baseball's $1.1 billion gusher of a television deal with CBS ran dry after the 1993 season. The current TV package, a joint venture with ABC and NBC, was expected to yield about $7 million per club, half what the teams had been receiving. Consequently the small-market owners insisted that it was essential for all 28 major league teams to share their income, not only to maintain competitive balance but also to guarantee the economic survival of a handful of franchises.
"I sat next to George for almost every one of the revenue-sharing meetings," says Jerry McMorris, chairman of the Rockies. "Did we chuckle? It was more like a grimace. We could see the small-market teams coming into control, and there wasn't anything we could do about it. I'm sure the pendulum has swung."
September 25, 1994
Last January the mighty mites succeeded in ramming through a revenue-sharing plan by threatening to rewrite the rules so that the big-market teams would have to share their local over-the-air television income with the small-market clubs. Under the plan, revenue sharing would be implemented only if the players agreed to a salary cap, which would drive down payroll costs for all clubs.
This new world order of baseball owners has wrought a players' strike and, given the timing, an unprecedented shutdown of the game. The moment of greatest infamy occurred on Sept. 14, when one of the small-market guys, de facto commissioner Bud Selig, announced the cancellation of the remainder of the regular season as well as the postseason, including the heretofore sacrosanct World Series, which had been contested for 89 consecutive years. Selig, who moonlights as owner of the Milwaukee Brewers and head of a car-leasing business, delivered the historic pronouncement amid the Bavarian kitsch of the employees' dining room at Milwaukee County Stadium. That setting only served to underscore how Selig has risen on the owners' depth chart from wurst to first.
No less stunning, this reengineering of the power structure has resulted in the longest sustained solidarity among owners in baseball's miserable history of labor relations. "With each passing day of the strike," says McMorris, "the resolve among the owners was like concrete setting: getting harder and harder. That is in stark contrast to the previous seven encounters with the players" union, when the owners exhibited all the rigidity of Jell-O.
The owners, however flush with the Pyrrhic victory of their solidarity, are hardly without their troubles. For one, they have little use anymore for their designated negotiator, Richard Ravitch. "Who?" one of them asks mockingly. For another, the high-revenue clubs are a simmering kettle of unhappiness that Selig & Co. must continue to keep covered. "I'm not a happy camper." Steinbrenner says, "but I'm loyal to Bud Selig's leadership."
Two owners, Marge Schott of the Cincinnati Reds and Peter Angelos of the Orioles, refused to sign Selig's World Series death certificate. Schott wanted to resume the 1994 season with minor leaguers. The independent and unpopular Angelos, who made his fortune as a labor lawyer, objected to the inflammatory wording of the document, such as a charge that the players have been "unwilling to respond in any meaningful way" to the owners' demand for a salary cap, which both sides have long known is a provision the players find abhorrent. Another owner agreed with Angelos but chose not to join him and Schott in abstention because, he says, "I always figured you are judged by the company you keep."
Still another big-market owner complains, "I truly believe small-market clubs need some help. But I have no sympathy for people who don't know how to operate a team properly. And there are some cities that have done everything they could, like Montreal, but if the fans don't appreciate that, then I'm for relocation."
Despite such cracks in the owners" seemingly solid front, their biggest problem is an uncertain future. They still have no agreement with a players' union that has resolve at least equal to the owners'. They also have no apparent detailed strategy on where to go from here, a perilous position given that the strike could extend into next season.
McMorris confirms that the owners intend to impose new work rules on Nov. 1 in the likely event that no agreement with the players can be reached by then. But exactly what rules will they implement other than the salary cap? From the large issues—such as eliminating salary arbitration and restricting free agency—stem numerous tricky details that have to be resolved. For instance, would the owners credit striking players with service time? "A good question," says one owner. "I hadn't thought of that." If not, a player such as Jack McDowell of the Chicago White Sox would fall just shy of the six years of service needed to become an unrestricted free agent.
It seems that the owners have not so much masterminded an elaborate scheme to ultimately break the union, as the players like to believe, as they have concentrated on building and maintaining consensus. The players decided to strike on Aug. 12 rather than later in the season in part because that date allowed the owners time to fold up like lawn chairs and preserve the postseason. McMorris calls that thinking "a huge miscalculation on their part." Steinbrenner even charges that union executive director Donald Fehr "has a credibility problem with his people. He told them the owners always capitulate. Now it's not happening."
Fehr says the owners" resolve doesn't surprise him; that's why the union stockpiled a strike fund of $200 million in licensing money the past four years.
Still, even as late as Sept. 10, each side seemed to underestimate the other. At a negotiating session that day, Dodger pitcher Orel Hershiser stood up and, according to Atlanta Brave president Stan Kasten, said, "It doesn't matter what we do. You're going to get rid of Selig and Ravitch, get a new negotiating team, and you're going to cave in." Kasten buried his face in his hands.
"That was my saddest moment in this whole thing," Kasten says. "What a grave misunderstanding. But that's what the union has them believing. That's why the union feels up to now they don't have to negotiate. I've had more than one player say that to me."
The union also likes to say the owners began mobilizing for a confrontation when they forced out Fay Vincent as commissioner in 1992 after Vincent refused to surrender all his authority in labor matters. True, that left no one to gum up the owners' works. Just as important, though, is the fact that the owners handed the commissioner's authority to Selig, whose similarity to Zelig, Woody Allen's celluloid character, goes beyond the name: Both have an uncanny ability to assimilate. Friend to all, Selig has the owners playing Buddy Ball.
"I didn't think it could be accomplished, what he did," says Bill Giles, president of the Philadelphia Phillies. "He has a way of building consensus, of getting opposite views to get to a middle ground. He works the phone."
Selig also benefited from a large turnover in ownership. One out of every four owners today has never operated a ball club under the auspices of a true commissioner. Being steered by a fellow owner seems perfectly right to them. "I don't know it any other way," McMorris says.
Further, many of these new owners ignored the unwritten rules of this exclusive club about kowtowing to senior owners. They also brought to baseball keen business acumen and, in some cases, records for taking a hard line against organized labor. Kansas City Royal chairman David Glass is chief executive of Wal-Mart Stores, which has fought unionization of its truckers and clerks, and he is prepared to field a team of scabs next season. "Kansas City is going to have professional baseball next year if I have anything to do with it," he says.
"What happened," one owner says, "is the middle-market teams cast the swing vote. When we talked about revenue sharing, it basically broke down into three groups of just about equal size—small, middle and large—with local television revenue being the most determining factor. The middle-market teams were in a position of really not being affected much one way or the other by revenue sharing. They sensed a need for a change, though, and aligned themselves with the small-market group."
The small-revenue group, with Selig of Milwaukee as its flag bearer, consists also of Kansas City, Montreal, San Francisco, Seattle and five teams that are looking for new owners: California, Minnesota, Oakland, Pittsburgh and San Diego. Ten middle-market clubs wholeheartedly joined their smaller brethren: Atlanta, both Chicago teams, Cleveland, Detroit, Florida, Houston, Philadelphia, St. Louis and Texas. Seven clubs—Baltimore. Boston, Colorado, Los Angeles, the two New York teams and Toronto—might be described as conscientious objectors, and though they had the most to lose by sharing their income, they were convinced of the need to present a unified front. The Reds, because of the impetuous Schott, are off in their own universe.
It was in Cincinnati in June that the owners galvanized their cause. After months of discussion they agreed to a proposal made by Selig that, in the event of a work stoppage, three quarters of the ownership, or 21 clubs, would have to approve a settlement rather than the simple majority required previously. "One of the reasons I was for it was, it would tell us if everyone was serious," one owner says. "If we didn't have 21 votes, based on past history, how long would we have lasted? Fifteen votes could have come quickly."
"That was a turning point," says McMorris. Not only did it seal the owners' unity for the coming strike, but it also ensured that the small-market point of view would dictate their battle plan.
As the talks unfolded, the owners found reasons to entrench themselves further. Many were upset when, in one session. Yankee pitcher Steve Howe, a seven-time drug offender, lectured them about ethics. Then, on Aug. 24, the union released a report by their economist, Roger Noll of Stanford University, that called the owners' claims of financial distress "pure fiction." Says McMorris, "I know some owners were offended by it."
Of course, the union claims the owners positioned themselves for an impasse all along. The owners' last proposal is also their first. What's more, Ravitch admitted he withheld from the union complete details of the owners' revenue-sharing plan. Selig calls it "an obvious lack of communication" that is typical in a process in which "we can't agree on basic facts." The union, when it files its inevitable claims of unfair labor practices on the part of the owners, will call Ravitch's action part of an overall failure to bargain in good faith.
The two sides remain on parallel tracks that seem to be hurtling them toward a courtroom. Says Marvin Miller, the former players' union executive director, "I can't think of any terms that would produce a settlement that would be ratified by the majority of the players and 21 of the 28 owners. I mean that seriously."
Though the Braves' Kasten says, "We're not out for a win; all we want is a tie," one of his colleagues may be more accurately describing management's and the union's true positions when he says that it looks now as if it has to be "a lose-lose situation. Each side has to feel like it's screwing the other side."