kcmets.com would rather not have to devote site space to Baseball's labor woes. We would much rather focus on the game than the bickering between the owners and players. But, collective bargaining is a part of the business of baseball, and in our attempt to cover every angle of the game, over the coming weeks and months (or until there is a settlement), this space will be devoted to observations and analysis about the state of the negotiations between the Owners and the MLB Players' Association.

So, who is right, and who wrong in Baseball’s labor war? The owners. The Players. Both. Neither. Why can’t they figure out how to carve up a $5 billion pie? Will they really kill the golden goose by having another work stoppage? How stupid do they think we are? Or, do they even care about us?

In my regular life, I’m a labor lawyer. I represent management, so I have an inherent bias toward management’s point of view on labor matters. That said, I fully understand the Players’ Association positions here, and I’m not sure they are wrong, not that being “right” will make it any less catastrophic if the World Series is cancelled again. For fans who are having a hard time understanding what the hell is going on – and not getting much help from sportswriters who are trying to be labor experts – allow me to be your guide through the labor morass.

In this installment, I’ll attempt to set out the historical context of the current labor dispute, which is important to an understanding of what is really happening. Next week, I’ll try to explain the legal issues involved, and why the parties are acting the way they are. I'll also offer some opinions and some possible solutions – not that anyone is going to listen to me!

The Good (or Bad, depending on your perspective) Old Days

Many fans and commentators (as well as all owners) like to harken back to the “good old days” before there were labor problems in baseball. That is to say, before there was a Players’ Union. Those were the days when the owners could concentrate on building their teams, and winning games, and entertaining their fans, instead of worrying about strikes, and skyrocketing payrolls. Back then, players were content to play a game and get paid for it, and they weren’t prima donna jerks like they are today – only looking out for themselves and their Agents. They signed autographs, and the fans felt close to them. Players stayed with one team for years – often their entire careers – which bred fan loyalty and a sense of team purpose. Yes, those were the good old days.

Of course, those were also the days when players had to work odd jobs during the off season, because the average player’s salary was not enough to support a family. Players were indentured servants to their teams – bound by the “reserve” clause in their contract to be employed by their team, and only by their team for the duration of their career – unless traded. Each player had a one-year contract, and they either took what the owner was willing to pay, or they didn’t play. As Branch Rickey was once quoted when future Hall of Fame slugger Ralph Kiner asked for a $2000 raise following a season in which he led the league in home runs, “forget it. I can finish last without you.”

In those days, the owners kept virtually all the money. There was no marketing deal for apparel and souveniers – the players got squat except for their salary. The owners often charged the players for room and board at team-owned boarding houses, and also charged them for laundering their uniforms. Players had absolutely no leverage – there was no where else to go.

A few times over the years upstart owners would try to form a new league – luring away established stars with more money and multi-year guaranteed contracts. It worked, for a while. With an alternative employer available, players could sell themselves to the highest bidder – at least among 2. The alternate leagues, however, either folded, or were absorbed into the established Major League (the National League, and then the joint National/American leagues). Players could see the advantages of competition for their services, but in each case, they were eventually coralled back into the prison of the reserve clause.

Even after the establishment of the Players’ Association, the players didn’t immediately get any leverage. The owners still held all the cards, and going on strike was not much of an option with no strike fund available, and players still barely squeeking by an honest living on their baseball salaries.

And it’s not like those good old days – where players didn’t move from team to team as much – were a utopia of competition. Just the opposite. With no need to pour money into player salaries, the richest teams like the Yankees and Cardinals sunk loads of money into building their farm systems, and scouting programs. Those teams were able to find and sign the best talent – which was then tied to the team for life. Pennants were distributed to only the elite teams even more so than today. And for fans in cities that didn’t have teams, the league had little incentive to expand.

Potential star players were stuck on the bench behind established stars, with no free agency option to move to a team where they would be allowed to actually play. And Negro League players had no opportunity at all.

This was baseball for a hundred years. Not exactly great days if you were a player.

“But the fans loved it!” you might say. Well, partly true. The cost of attending games was low, and the players were heroes who didn’t give the fans the movie-star brush off, because they didn’t think of themselves as anything other than average guys who happened to have a job playing ball rather than driving a truck. The average Major Leaguer’s salary was only marginally higher than the average laborer.

There was no television, and in the beginning little radio coverage of games – as owners tried to control media availability – forcing fans to come to the park in order to root for their home town teams. Eventually, radio and television made inroads, pouring more money into the hands of the owners – although the true explosion of television revenue was still to come.

The Reserve Clause

The key to the hold that the owners had over the players was the “reserve clause.” Each player’s standard contract contained such a clause. The standard player’s contract was for one year. There were no multi-year contracts. The reserve clause stated that if a player and his team did not come to terms, then the club had the right to renew the contract for a period of one year on the same terms. The owners interpreted the clause as meaning that if the player did not sign a new one-year contract, the team could simply renew the contract year after year on the same terms, and that the player could not play for any team in the league. The reserve clause bound the player to the team, and cut off any chance the player had to move to a different team without the original team’s consent (such as if there were a trade).

With the reserve clause in place, teams had total control over players, and players had no leverage at all when it came time to “negotiate” a new contract. The player accepted what the team offered, or they didn’t play. Period.

The reserve clause had a pervasive effect. Owners had no incentive to treat the players well, or even fairly. Owners could tell players that if they had a good year this year, then next year they would get a better deal. When next year came around, the owner could “forget” that such a deal existed. Players could be given incentive clauses that would pay a bonus if they played in 150 games –and then the owner would direct the manager to sit the player out the last week of the season so that he didn’t trigger the bonus. Players had no forum to complain (there was no arbitration system in place), and no option to move to a different team. It wasn’t exactly working in the coal mines, but conditions for players were far from ideal.

The Baseball Labor Wars

“We’ve got the only legal monopoly in America – and we’re f---ing it up.” -- Ted Turner, 1974

The history of labor disputes in Baseball goes back to the mid-60s. At that time, the Players’ Association was in its infancy. Marvin Miller, the head of the MLBPA, was trying to convince the players that they should behave as if they were part of a union, and trying to convince the owners that the players were part of a union. The players still thought of themselves as professionals – independent agents – rather than “workers.” But, the owners certainly thought of the players as workers – as commodities, to be exploited whenever possible. Miller demanded that the owners bargain collectively, and the owners hated him for it. Each time Miller sought some concession that would increase the players’ bargaining power with the owners when it came to contract time, the owners refused. The very first collective bargaining agreement achieved little more than setting a minimum annual salary of $10,000 for all players and establishing some limited increases in the owners’ contribution to the players’ pension plan.

Eventually, Miller convinced the players that the only way to get the owners to take them seriously as a union – and the only way to get the owners to budge on economic issues, was to engage in a traditional tactic that labor unions had employed for years – a strike. By withholding their services to the owners, they could cause the owners to lose money, which would pressure the owners into making concessions at the bargaining table. The owners didn’t believe that the players would do it. Many of the players also didn’t think that a strike was a good idea. But, Miller prevailed on the players, and the first strike occurred prior to the 1969 season. Miller convinced all but a handful of players to refuse to sign their one-year contracts, and to “hold out” and threaten not to play the season. The big issue then was getting the owners to contribute more money to the players’ pension plan based on the new $40 million television contract the league had just signed.. The owners were taken by surprise, and settled less than a week before the start of the season – basically giving the players what they wanted,a nd lowering the eligibility requirement for participation in the pension program to 4 years of major league service.

At the end of the ’69 season, Curt Flood was traded by the Cardinals to the Phillies. Flood didn’t want to go. He appealed to Bowie Kuhn, the Commissioner of baseball, but to no avail. So Flood sued, taking his case eventually all the way to the Supreme Court, challenging the legitimacy of the Reserve Clause, arguing that it violated anti-trust laws. Although he would lose the case (because Baseball was exempt from the reach of federal anti-trust laws based on decades old legislation), the controversy stirred the players even more to action.

In 1972, the players struck at the start of the season. The strike lasted for thirteen days, resulting in the cancellation of 86 games, which would not be made up. The owners gave players with 10 years of service and 5 years with the same team the right to veto any trade (responding to the Curt Flood situation), and also capitulated to the players’ demands on pension and salary issues.

Miller was shrewd. He didn’t try to get too much too fast. He started by getting the owners to agree to increased minimum salaries for all players, and to guarantee that certain expenses such as travel, lodging on the road, and uniform cleaning were paid for by the team. Modest improvements, to be sure, but a step in the right direction.

Miller eventually obtained some key changes to the standard contract, including mandatory arbitration of disputes. Then, an agreement that salary disputes would be subject to the arbitration clause of the contract – even though there were few circumstances that would trigger such an arbitration.

The First Free Agent

In 1973, Charles Finley, owner of the Oakland A’s had a bitter dispute with his star pitcher, Jim “Catfish” Hunter. Finley refused to pay Hunter a bonus called for by his contract. The Players’ Association filed a grievance, and demanded arbitration, claiming that the A’s had breached Hunter’s contract. Miller argued that since the team had violated the contract, the reserve clause in the contract was rendered void. The arbitrator agreed, declaring that since the A’s had breached the agreement, Hunter was a “Free Agent” and could sign with any team.

The owners agreed that it would be a bad idea to start fighting over Hunter’s services and drive up the price of his next contract. But, Hunter was a star pitcher, and the teams fell over each other to sign him. He even was able to demand a multi-year guaranteed contract – something unheard of before. Eventually, the Yankees were the high bidder and gave Hunter the largest contract in the history of baseball.

This event not only was good for Hunter, but it let all the other players know what it would mean for them to be free agents. To have teams bidding against each other for a player’s services would mean everything to the players. The appetite of the players had been whetted, and now the stage was set. After a hundred years of the owners having all the cards, the players wanted to get into the game.

At the same time, revenue for the teams was exploding as television revenue came pouring in. With more money to spend, the players saw their opportunity to force the owners to share the wealth. But, that would require a significant change. And Miller decided that the players were ready.

The Advent of Free Agency and Salary Arbitration

Miller and the players’ association took on the reserve clause in an arbitration involving Andy Messersmith and Dave McNally. Miller had long thought that the reserve clause really meant only that a team owned the rights to a player only for one year after the expiration of the contract – not forever. Messersmith and McNally agreed to challenge the clause, and played for one year without a contract, declaring after the end of that season that they were free agents. The players’ association took the case to an arbitrator – and won. The arbitrator ruled that any player could become a free agent by not signing a new contract for one year.

The owners were in a panic. They feared the unrestricted movement of players based on the arbitrator’s ruling. But, under the labor laws, the owners could not change the reserve clause, or any other term of the standard player’s contract, without the agreement of the union.

Miller was now ready to make a deal. Now that he had some leverage, he didn’t even need to strike to get what he wanted. Miller understood that total free agency was not in the players’ best interests. If too many players were free agents all at the same time, there would be a glut in the market, and the price for any individual would be depressed. Players would be fighting each other for spots on teams. He also realized that the integrity of the game would be compromised if players jumped from team to team to much.

And so, Miller offered the owners a compromise. Each team would be entitled to retain the rights to all new players for six years before the players would be eligible to become free agents. That way, the teams would be able to realize a return on their investment in developing players in their minor leagues. The players agreed to maintain the draft of high school and college players, and to allow the drafting teams to retain those rights until the player had accumulated six years of major league service.

But, Miller also required the owners to agree to further increases in the minimum salaries for players in their first three years, and also agree to arbitration of salary disputes for players with between three and six years of service. The owners thought that Miller’s compromise was a much better idea than unrestricted free agency, and quickly agreed.

Little did the owners realize that they had sown the seeds of their great despair. The market for free agents soared, pumped up by the owners’ new television money. The stars started to receive contracts in the millions, and tens of millions, including multi-year deals, and no-trade clauses. Meanwhile, the players who were eligible for salary arbitration were able to argue that their salaries should be based on their relative ability as compared to older players who were eligible for free agency. The owners had agreed to a unique form of arbitration (now known as “baseball style” arbitration) where each side submitted a salary number, and the arbitrator was compelled to choose one side’s number or the others for a one-year deal. The players did well in early salary arbitrations, and found that the free agent market had so driven up the price of players, that those who were eligible for arbitration did almost as well as free agents.

In 1981, with no new contract in place, the owners were pushing the players to agree that whenever a free agent changed teams, his old team would receive “compensation” from the signing team in the form of draft picks. This was intended to give owners a disincentive to sign free agents. The players were incensed, and when the owners wouldn’t budge at the table, the players walked out – this time for 7 weeks in the middle of the season, canceling more than 700 games. The players prevailed again, but the season was split, resulting in a bizarre half-season pennant winner and a playoff to determine which teams would play for the championship of each league. The World Series was played, but the season was tainted, and the fans were not happy.

The Collusion Years

And so, the owners had made their beds, but didn’t like the lumpy pillows. The players were able to play one team and owner against another and receive handsome salaries. Arbitrators were awarding 3^rd and 4^th year players salaries in line with those being garnered by more experienced free agents with similar stat lines. The players were making money, and the owners had lost control. The owners were not able to achieve meaningful change at the bargaining table because the players had shown the willingness to strike, and the owners had not shown the resolve necessary to survive a strike.

The solution, for a while, was that the owners got together and agreed that they would not bid against each other for free agents. For a few years, no matter how big a star the free agents were, nobody wanted them. Jack Morris, who was the MVP of the World Series for the Twins found that no other team would make him an offer as a free agent. Carlton Fisk got an offer only from his former team, the White Sox. Other players were similarly stymied in their efforts to use free agency to enhance their salaries. Each player had no option but to re-sign with his former team – for much less money than should have been able to make on the open market.

The players’ association again went before an arbitrator, arguing that the owners had breached the collective bargaining agreement by colluding together to depress the market for free agents. Again, the players won, and the arbitrator ordered the teams to pay damages to the players who were free agents between 1985 and 1987.

The owners were beaten down. They could not avoid the ultimate explosion of salaries. Soon, average players were making what had been super-star money only a few years earlier, and the average salary of all major league players topped the million dollar mark.

The players were happy. The owners were not. The worm had turned.

Next week – where we are today, and where we are headed.