Wall Street History

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Wall Street History

02/18/2000

Talkin' Baseball

Baseball? Wall Street History? Well, with pitchers and catchers
reporting to spring training, it only seemed natural to take a little
break from what you normally find on this link. And when you
hear about contracts, potential or real, of $140 million (in the
case of the Tigers'' Juan Gonzalez.not as yet wrapped up) or the
$116 million recently signed by the newest Cincinnati Red, Ken
Griffey Jr., I think it''s safe to say that the business of baseball is
worth discussing.

But how did we get from the days when a $30,000 contract was
the norm for many starters to the levels of today? Former St.
Louis Cardinals star Curt Flood springs to mind, as do pitchers
Andy Messersmith and Dave McNally.

I covered the Curt Flood story at length in my August 9, 1999
edition of "Bar Chat" so I won''t repeat everything here. Suffice
it to say that each and every ballplayer today owes a debt of
gratitude to Mr. Flood. And it would be distressing to know how
many of today''s players have no idea who he is.

[To further digress, as I''m writing this on 2/17, the Wall Street
Journal has a front page article on Professor Henry Louis Gates
Jr. As I mentioned in a recent "Bar Chat," Gates co-authored a
huge work, "Africana," which is the most complete encyclopedia
of the African and African American experience that you will
find. So I was just glancing through this incredibly
comprehensive work. Nothing on Curt Flood! One of the
bravest African American individuals of the 20th century and not
a word. But there is a piece on Roberta Flack. Amazing.]

Back in 1970, Curt Flood challenged Major League Baseball''s
exemption from the federal antitrust laws, first established by a
Supreme Court decision in 1922, and later affirmed in 1953.
Flood, a longtime player with the St. Louis Cardinals, had a
contract dispute with the Cardinals after the 1968 World Series.
He wanted a raise from $70,000 to $100,000 but settled for
$90,000. After the 1969 season he was traded to Philadelphia
after 12 years in St. Louis. Flood said at the time, "There''s no
way I''m going to pack up and move twelve years of my life
away from here. No way at all." On Christmas Eve he sent a
letter to Commissioner Bowie Kuhn. "After twelve years in the
major leagues, I do not feel that I am a piece of property to be
bought and sold irrespective of my wishes."

Flood was fighting a clause in the standard baseball players
contract, the "reserve clause," which tied a player to their team.
The team had the right to renew the contract for the next season
and as far as the teams were concerned that meant they could
keep a player forever.

Flood filed and lost a lawsuit against Major League Baseball and
then proceeded to appeal his case to the Supreme Court.

On June 19, 1972, the Supreme Court ruled 5-3 against Flood.
Justice Harry Blackmun acknowledged baseball''s special status
was an "aberration" and an "anomaly," but he re-affirmed the
position taken in prior cases, that it was up to Congress to
remedy the situation with legislation. A 1922 ruling had stated
that baseball was not the sort of business that the antitrust laws
were intended to cover. In 1953 the Court ruled that the
exemption should be continued, even though legal philosophy
had changed, because the industry had been allowed to develop
for 30 years on the assumption of its immunity.

Blackmun added, "We continued to loathe to overturn these
cases judicially when Congress, by its positive inaction, has
allowed those decisions to stand for so long."

Justice William O. Douglas dissented. "While I joined the Court''s
opinion in (1953), I have lived to regret it, and I would now
correct what I believe to be its fundamental error."

Douglas further commented on the inaction of Congress. "If
Congressional inaction is our guide, we should rely upon the fact
that Congress has refused to enact bills broadly exempting
professional sports from antitrust regulation.There can be no
doubt that were we considering the question of baseball for the
first time upon a clean slate, we would hold it to be subject to
Federal antitrust regulation. The unbroken silence of Congress
should not prevent us from correcting our own mistakes."

But in concurring with the majority, Chief Justice Warren Burger
wrote, "Like Mr. Justice Douglas, I have grave reservations as to
the correctness of Toolson (the 1953 case); as he notes in his
dissent, he joined in that holding but has ''lived to regret.''" The
error, if such it be, is one on which the affairs of a great many
people have rested for a long time. Courts are not the forum in
which this tangled web ought to be unsnarled. "I agree with Mr.
Justice Douglas that Congressional inaction is not a solid base,
but the least undesirable course now is to let the matter rest with
Congress; it is time the Congress acted to solve the problem."

Justice Thurgood Marshall dissented. "(Antitrust laws) are as
important to baseball players as they are to football players,
lawyers, doctors, or members of any other class of workers."

Now we fast forward to 1975. Pitchers Andy Messersmith and
Dave McNally both refused to sign contracts for the 1975 season,
pitched without contracts, and then demanded their freedom in
the open market. [McNally, a longtime Baltimore Oriole, had
been traded to the Montreal Expos where he proceeded to go just
3-6. Messersmith had a great season for the Los Angeles
Dodgers, 19-14.]

An arbitration panel, led by professional arbitrator Peter Seitz,
ruled that after the 1975 season both Messersmith and McNally
were free agents. A historic ruling. Both were no longer bound
by their baseball contracts and could sell their services to the
highest bidder. Of course this was cheered by the Players''
Association (headed by Marvin Miller) as a major erosion of the
reserve clause.

Commissioner Bowie Kuhn responded. "If this interpretation
prevails, baseball''s reserve system will be eliminated by the
stroke of the pen." [Incidentally, Seitz was handed a notice after
the ruling by the baseball owners that he was out of a job.]

A year earlier, Seitz had declared Catfish Hunter free of his
contract with the Oakland A''s, whereby Hunter auctioned
himself to the highest bidder (and the New York Yankees won
his services for about $3.75 million). But Hunter''s dispute was
more the result of a "breach of contract" by Oakland as opposed
to a challenge of baseball in general.

In his new ruling, Seitz said, "It was represented to me that any
decision sustaining Messersmith and McNally would have dire
results, wreak great harm to the reserve system and do serious
damage to the sport of baseball [and] would encourage many
other players to elect to become free agents."

"The panel''s sole duty is to interpret and apply the agreements
and understandings of the parties. If any of the expressed
apprehensions and fears are soundly based, I am confident that
the dislocations and damage to the reserve system can be avoided
or minimized through the good-faith collective bargaining
between the parties."

Later Seitz said, "I am not an Abraham Lincoln signing the
Emancipation Proclamation. Involuntary servitude has nothing
to do with this case. I decided it as a lawyer and an arbitrator.
This decision does not destroy baseball. But if the club owners
think it will ruin baseball, they have it in their power to prevent
the damage."

Kuhn replied, "It is just inconceivable that after nearly 100 years
of developing this system for the overall good of the game, it
should be obliterated in this way."

So, at the start of the 1976 season the players found themselves
locked out of spring training by the owners. It''s safe to say the
game has never been the same as labor strife has dominated (with
events coming to a head in 1994 when the season ended on
August 11 and no World Series was played).

The 1976 season eventually got underway without interruption
and during the course of it the owners and the players reached an
agreement whereby the players received the right to become free
agents after 6 seasons, thus ending the court battles which began
with the Seitz decision. Andy Messersmith went 11-11 with
Atlanta. Dave McNally retired.

In 1977, 23 players tested the free agent market. Yankees owner
George Steinbrenner signed Reggie Jackson and pitching star
Don Gullett. The Yankees won the World Series in the fall, 4-2
over the Los Angeles Dodgers. But signing free agents didn''t
always guarantee success. The California Angels signed Joe
Rudi, Bobby Grich and Don Baylor and proceeded to go 74-88.

But yes, the game''s current mega-millionaires owe a huge debt
of gratitude to Curt Flood. In explaining his decision to fight he
quoted Frederick Douglass. "If there is not struggle, there is not
progress. Those who profess to favor freedom, and yet
depreciate agitation, are men who want crops without plowing up
the ground.Power concedes nothing without a demand. It
never did and never will."

Career Statistics:

Andy Messersmith, 130-99, 2.86 ERA
Dave McNally, 184-119, 3.24 ERA
Curt Flood, 85 HR, 636 RBI, .293 BA
Brian Trumbore, 0 HR, 3 RBI, .213 BA [6th through 8th grade
league.]

Sources: Joseph Durso and Leonard Koppett, articles written in
The New York Times.
"The New York Times Century of Business," Floyd
Norris and Christine Bockelmann.
"Crossing the Line," Larry Moffi and Jonathan
Kronstadt.

Brian Trumbore

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