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1
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- Transition from Reserve Clause to Present
- Collective Bargaining
- Measurement of Competitive Balance
- Impact of Labor Market Restrictions on Balance
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2
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- Senator Kefauver: Let me ask you,
first, do you think there should be some limit on the length of time of
a reserve contract?
- Jackie Robinson: Yes; I do sir.
- Senator Kefauver: What do you
think about the draft system? Do
you recommend an unrestricted draft?
- Jackie Robinson: ....If a
ballplayer so desires, I think a ballplayer should have a say as to
whether or not he should be subject to draft or not. In other words, I feel that a
ballplayer should have some say personally in his baseball future.
- Hearings before the Subcommittee on Antitrust & Monopoly, Senate
Judiciary Committee, July 1958
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3
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- Essay by Charles P. Korr in Diamond Mines
- Judge Robert Cannon
- Exec. Director of MLBPA in 1960s
- Appointed and paid for by owners (a violation of labor law)
- Testimony to Congress on Prof. Sports Bill, 1964:
- “....we have it so good we don't know what to ask for next. I think this sums up the thinking of
the average major league ballplayer today."
- This, in the reserve clause era when players earned 15% of their MRP
and pumped gas in the off-season!
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4
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- Miller elected head of MLBPA in 1966
- Former head of Steelworkers Union & accustomed to confrontation
- Better, he was both shrewd and smart
- Brookings Conference: “the most intense person in the room, and
unquestionably the brightest too”
- Key move: 1968 agreement on arbitration
- neutral member selected by players & owners
- replaced appeals to commissioner
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5
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- Several versions (since 1889) w/ common features:
- “If, prior to March 1, … the player and club have not agreed upon the
terms of such contract [for the next playing season], then on or before
ten days after said March 1, the club shall have the right to renew
this contract for the period of one year on the same terms except that
the amount payable to the player shall be such as the club shall fix in
said notice”
- Interpreted by owners to imply that renewal on this basis also renewed
the reserve clause; i.e. maintained exclusive rights of the team to
negotiate with the player as long as the team wished
- J. M. Ward: “the reserve rule
gave the managers unlimited power, and they have not hesitated to use
this in the most arbitrary and mercenary way”
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6
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- A’s renege on Jim “Catfish” Hunter’s contract
- Top pitcher in baseball in early 70s
- In 1974 signed 2-year contract (rare) @ $100k
- Called for A’s to send 1/2 of contract to tax-deferred annuity
- Owner writes check for $100k instead
- gave owner tax write-off instead of Hunter
- Hunter claims contract invalidated
- Issue goes to 3-member arbitration panel in Fall '74
- 2 votes predictable (Miller & owners rep)
- The arbitrator, Peter Seitz, is only vote that matters
- Seitz declares Hunter free agent
- Hunter signs 5 year deal w/ Yanks for $3.5 million!
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7
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- McNally & Messersmith refuse to sign contracts
- Messersmith plays for Dodgers at renewed terms
- McNally injured but willing to stand for principle
- Prior cases: owners dragged out
negotiations
- example: in 1972 Ted Simmons
held out for MLB average
- Cards renewed him at $18,000
- Gave raise to $24,000 when he made the all-star team in 1972
- here, McNally was offered $100k to sign in late summer even though it
was known he was unable to pitch!
- Why?
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8
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- Signing would re-instate the reserve clause
- Not signing -> neutral arbitrator is forced to determine how far the
reserve clause extends
- 1 year, or (through renewals) indefinitely?
- Peter Seitz' decision: 1 year
renewal
- players that don't re-sign now "play out their option"
- can re-sign
- Pandora's box is opened
- majority of players are on 1 year contracts
- -> majority of players can be free agents in one year!!!
- 300 announce they will play out their option in 1976*
- Hunter's experience implies payrolls will explode!
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9
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- Aftermath of Messersmith-McNally:
- Owners fire arbitrator Seitz
- Owners appeal arbitration result in Court
- Result came from collective bargaining - can't undo
- Owners lock out players in Spring 1976
- Contracts change over next decade
- Majority of contracts become multi-year
- Average salary increases over 700%
- Players’ share of revenues increased from 21% to 56%, 1975-2001*
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10
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- Implications of mass free agency brought negotiated end to reserve
clause era
- New CBA reached in 1977
- Eligible for free agency after 6 years of ML service
- Remain eligible for salary arbitration after 3 years of service
(originally agreed in 1972)
- -> journeymen earn MRP
- -> young superstars remain subject to reserve clause impact on
wages (e.g. Andrew Jones)
- Extent of exploitation limited by salary arbitration
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11
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- CBA of 1977 established a pattern
- Owners want restrictions on labor market codified in agreement
- Federal law exempts CBA restrictions from Antitrust
- Players accept some guaranteed goodies in exchange for agreeing to
limitations on competitive labor market
- In absence of CBA, de facto free agency
- All of MLB’s labor trouble since then stems from owners’ desire to take
back the gains players realized in 1976*
- 1981 strike: free agent compensation scheme for owners
- 1990 lockout: salary cap +
reduction in pension contributions
- 1994 strike: salary cap + more
revenue sharing
- 2002 lockout: revenue sharing
& “luxury tax” on high payrolls
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12
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- Why would MLBPA put draft issues under CBA?
- Owners want protection from NLR Act
- Draft doesn’t violate Antitrust if it is agreed to in CBA........ maybe (see Haywood & Clarett
cases)
- Suits & ploys
- handful of anti-trust suits in NFL, MLB, NBA; all lose (why?)
- JD Drew
- drafted by Phillies but signed w/ independent league team
- bided time, then signed as free agent w/ Cardinals
- GED ploy:
- Another Boras client “graduated” w/ GED in Dec. to avoid draft in
June
- no team drafted (boycott?); played for Univ. S. Carolina instead
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Notes