1947 Dodgers: Ownership issues in Brooklyn

By Andy McCue

This article originally appeared in SABR's "The Team That Forever Changed Baseball and America: The 1947 Brooklyn Dodgers" (University of Nebraska Press, 2012), edited by Lyle Spatz.

Red Barber called 1947 the year “When All Hell Broke Loose in Baseball.” The team Barber broadcast for, the Brooklyn Dodgers, was at the center of that year’s headlines. Jackie Robinson broke the color barrier. Leo Durocher was banned from the game.

Behind the headlines, in the quiet of the boardroom at the team’s 215 Montague Street headquarters, issues that would profoundly affect the Dodgers, and indeed all of baseball, were being shaped by three men. Two of the triumvirate would leave large marks on the history of baseball, and the third would choose which of those two would finally control the team.

The issues on the table often seemed routine. Should they add additional seats in center field? Should they agree to pay their accountants more? Who should sponsor radio broadcasts? But each of these issues wound themselves around larger ones. How much should it spend on its scouting and farm systems? What should be done about Ebbets Field?

To understand the arguments playing out in the minutes of these board meetings, it is necessary to understand how the ownership of the Dodgers was structured. And how that structure set the pattern for how the partnership would come apart.

The story begins in 1912, as Charles Ebbets struggled to finish the stadium that would bear his name. He ran short of cash and sold half his franchise to Stephen and Edward McKeever, brothers who brought both money and construction experience to the project. Things ran smoothly through pennants in 1916 and 1920. By 1925 the New York Times would describe the Dodgers as "one of the soundest organizations financially in professional baseball."

That began to change with the death of Charles Ebbets in April of that year, followed by that of Ed McKeever eleven days later. Both men had multiple heirs with multiple interests. The board soon settled into a thirteen-year stalemate, with the feuding McKeever and Ebbets interests each holding exactly 50 percent. The team descended into serious debt, a situation exacerbated by the Great Depression. Even when the National League stepped in to name a president to act as arbitrator, matters did not improve. By the end of the 1937 season, phone service had been cut off to the team’s offices because the bills had not been paid.

Effectively, the team was controlled by the Brooklyn Trust Company and its chairman, George V. McLaughlin. The team owed the bank over $700,000, and it had also loaned money to both the Ebbets and Ed McKeever heirs with their shares in the team as collateral. McLaughlin and the league pressured the two factions to find an executive they both could accept, and who could bring the team out of its financial troubles. James Mulvey, husband of Stephen McKeever’s daughter Dearie, went to St. Louis to lure Branch Rickey. Rickey demurred, but recommended the team hire Larry MacPhail, who most recently had run the Cincinnati Reds.

MacPhail arrived for the 1938 season and turned the franchise around. By the end of 1942 the Dodgers had won a pennant and barely missed another. Despite borrowing another $200,000, MacPhail had reduced the franchise’s debt to Brooklyn Trust to $350,000 and had $150,000 in the bank. Then, with World War II raging, Larry MacPhail went off to the Army.

Again the board went to Branch Rickey and this time he accepted. Rickey soon perceived the economic opportunity presented by the recovering franchise. His perception was reinforced by the purchase offers that began to come in from outsiders.

McLaughlin was the arbiter of any sale, for he had multiple responsibilities. As chairman of Brooklyn Trust, he had to make sure that his bank was repaid. As the trustee for the Ebbets and McKeever heirs, he had to ensure that they got a fair price for their holdings. As a leading citizen of Brooklyn, conscious of the public-relations nightmare Dodger problems could bring his bank, he had to make sure one of the borough’s gems was well-managed and stable.

Part of the equation was bringing in the right people. Rickey offered decades of baseball experience and he had hired a McLaughlin protégé named Walter O’Malley to act as the team’s lawyer and keep an eye on the business side. But Rickey had no capital to invest and O’Malley didn’t have enough. From the ranks of the bank’s clients, McLaughlin recruited two wealthy men, Andrew Schmitz, an insurance broker, and John Smith, a top executive with the chemical manufacturer Pfizer Inc. In November 1944 McLaughlin sold the group the Edward McKeever heirs’ 25 percent. In August 1945 the group added the Ebbets heirs’ 50 percent, with Schmitz dropping out.

The other part of the equation was the ownership structure. McLaughlin vividly recalled the paralysis occasioned by the 50-50 votes between the Ebbets and McKeever factions and he pushed the new owners to create a structure that could avoid such deadlocks. Rickey, O’Malley, and Smith each owned 25 percent.

The three partners agreed that they would vote their shares as a bloc. Within the bloc, whatever side of an argument two could agree on would become the position of the controlling 75 percent of the stock. Given personalities as strong as Rickey’s and O’Malley’s, it was inevitable that John Smith would be the swing vote.

The routine issues were just that – routine. Hire Charles Vacchris and Co. to add the center-field seats. Pay the accountants more. Let cigarette maker P. Lorillard sponsor the radio broadcasts.

The political issues were tougher and began to reveal a fundamental split between Rickey and O’Malley. At first, it looked as if the unhappiness of Dearie (McKeever) and Jim Mulvey would push the partners closer together. The Mulveys were upset that they hadn’t been offered a chance to buy more of the team when McLaughlin put together the triumvirate.

In June 1946 Mulvey had been pushed off the board of directors. He said it was because he was raising objections to Rickey’s policies. “They did not like hearing those exceptions,” he told The Sporting News. Rickey’s response, while not public, was more detailed. He told Commissioner Happy Chandler that Mulvey voted negatively on even the most routine matters, that he constantly asserted in board meetings that his family hadn’t gotten the team because McLaughlin wanted the stock for himself, that O’Malley was just a front for McLaughlin, and that Mulvey argued constantly for more dividends to shareholders rather than investing money in the team. He also made vague allegations to the press that hurt the Dodgers image, Rickey said.

Walter O'MalleyIn 1947 Mulvey was still refusing to play ball. He asserted his rights to attend the September stockholders’ meeting and paid a stenographer to create a verbatim transcript, which he refused to share with his co-owners, who were worried about legal action. He asked to audit the company’s books, and was refused. The triumvirs remained united, despite pressure from Chandler to reach an accommodation and, preferably, put Mulvey back on the board. They did agree to Mulvey’s claim of back pay for service as a corporate officer, but wouldn’t go any further.

But the exchanges with Mulvey were revealing cracks among the triumvirate. The importance of some would not be clear until later. Mulvey was constantly calling for dividends. Rickey, O’Malley, and Smith were against that, but Rickey and O’Malley had different reasons. Rickey wanted to pour money into developing the farm system. O’Malley wanted to put money aside for a new ballpark to replace aging Ebbets Field. This wasn’t a crack that would split Rickey and O’Malley then, but revealed a major O’Malley concern that would flower after he gained full control of the team.

The Mulvey campaign that would contribute greatly to Rickey’s departure was Mulvey’s quest to create dividends by cutting expenses. He questioned everything, from large expenses to purchase minor-league clubs or players, to the number of free passes that were being issued. He wanted lots of detail, and the club wasn’t willing to give it to him.

These questions, however, resonated with John Smith, whose close control of spending was a hallmark of his management at Pfizer Inc. Because of the triangular structure of the partnership agreement, Smith’s vote would be the one to decide between Rickey and O’Malley.

The issues were diverse, and Smith did not always side with O’Malley. Rickey wanted to set up a massive spring-training camp at a former Navy pilot-training facility outside Vero Beach, Florida. The land was free, but O’Malley expressed concern at the cost of converting the base to baseball and that Vero Beach’s relative isolation would limit the ability to draw the exhibition game crowds that helped finance spring training. Rickey persuaded Smith.

O’Malley wanted to take the money offered for television rights to Dodgers home games. Rickey worried that it would cut down attendance. O’Malley persuaded Smith.

Rickey wanted a corporate plane to take him around to minor-league cities and Dodgers tryout camps. He wanted more scouts. He wanted to buy the St. Paul franchise of the American Association for $175,000, a move Smith agreed to only with the promise of economies elsewhere.

Rickey moved into football, taking a franchise in the All American Football Conference. From that conference, the San Francisco 49ers and Cleveland Browns would enter the National Football League. The Brooklyn (football) Dodgers would be merged with the New York (football) Yankees and leave a puddle of red ink, $300,000 in 1947 alone. That loss was covered by the sale of prospects. Irv Noren, Sam Jethroe, and Chico Carrasquel all went on to decent major-league careers, but the revenue from their sales was eaten by the football venture rather than falling to the bottom line.

The pattern was becoming clear. John Smith was happy operating in the background, but when he did give his first major interview, he expressed some surprise that sportswriters criticized Branch Rickey for parsimony. “I have read that Rickey is cheap. As treasurer of the Brooklyn club, I think that he is extravagant,” Smith told Michael Gaven of the New York Journal-American early in 1948. By the middle of that year, John Drebinger of the New York Times was reporting that “the majority of stockholders, represented by Walter O’Malley and John L. Smith, were not seeing eye-to-eye with Brother Rickey on a number of things.”

With that word “extravagant” hanging in the air, Rickey turned once again to his main concern, his own future as a team executive. In late 1942, when Rickey joined the Dodgers, he had received a five-year contract. In 1946, that contract was extended to October 1950. But from 1947 to 1950, Rickey fought a losing battle to persuade O’Malley and Smith to extend it further. The problem was the amount of Rickey’s compensation. He received a $50,000 annual salary, plus 10 percent of the team’s pretax profits. To put this in perspective, the major-league minimum salary was $5,000 and the salaries of the Dodgers players of the late 1940s topped out at $23,500. The bonus provision also was troublesome, for as chief executive, Rickey could make decisions that affected how big those profits were. He could sell players, for example, if he needed cash. In fact, the pretax profits were substantial. From 1947 through 1949, the team’s net income before taxes fell just short of $2.7 million, or not quite $90,000 a year for Rickey over three years.

By 1950 it was obvious to Rickey that his contract would not be renewed. The issue became even more obvious when John Smith died in July of that year. His widow, Mary Louise Smith, was clearly taking her cues from O’Malley. If Rickey was to take employment elsewhere in baseball, he’d have to sell his Dodgers stock. The inexorable provisions of the partnership agreement came into play.

Rickey decided to force the issue, using another clause in the agreement between the three partners. He offered to sell his stock to the others. Smith, who was terminally ill, wasn't interested. O'Malley, outsmarting himself, offered Rickey the amount Rickey had paid for the stock five and six years before. That had been when World War II and its uncertainties still hung over the team, and when people hadn't begun to perceive its financial potential. Infuriated, Rickey turned to a friend, John Galbreath, owner of the Pittsburgh Pirates, who wanted Rickey to be his general manager. Galbreath led Rickey to William Zeckendorf, a New York real-estate man who was willing to pay one million dollars for Rickey's 25 percent. The partnership agreement allowed O'Malley to match that price. So he swallowed hard and paid.

The triumvirate had become one man.

ANDY McCUE is a retired newspaper reporter, editor, and columnist. He is an active member of SABR, where he has served as President. He is the author of "Mover & Shaker: Walter O'Malley, the Dodgers, and Baseball's Westward Expansion," which won the prestigious Seymour Medal in 2015.

 

Sources

Branch Rickey Papers, Library of Congress.