The Empire Strikes Out: Collusion in Baseball in the 1980s

After a 1985 season in which he hit 29 home runs and drove in 97 runs, Detroit Tigers outfielder Kirk Gibson was the top position player of that winter’s free-agent class. So when he accepted an invitation to go bird hunting with people from the Kansas City Royals, he believed the outing would be a fun start to a process that would yield contract offers better than Detroit’s of $1.2 million per year for three years.1

While Gibson was tromping through the woods, his agent checked in with Royals general manager John Schuerholz. What the agent heard stunned him. “Yes, Kirk Gibson is a fine ballplayer, but I really don’t think we have any interest,” Schuerholz said. The agent got a similar response from every team he contacted.2

Gibson’s teammate, catcher Lance Parrish, was encountering a variation on the same theme. His agent, Tom Reich, felt he was making progress in ongoing talks with Bill Lajoie, the Tigers GM, about a long-term deal. But in late October, Lajoie’s stance changed. “I don’t know quite how to tell you this,” he said, “but we have reviewed this and decided that the best we can offer is a two-year contract and not at the kind of money we have been talking about.”

“Where did that bull come from?” Reich asked.

“We had some meetings and decided that these are the economics,” said Lajoie. “This is the best we can do.”

Soon after this exchange Reich called Parrish. “Something’s up,” he said.3

What was up was the start of baseball’s collusion era, which began in that winter of 1985-86 and continued in earnest through the next two off-seasons. It was an attempt by baseball owners to slow a dramatic rise in player salaries and to ratchet down their teams’ liabilities for long-term contracts that were not panning out. Collusion affected hundreds of players and at least three pennant races. Marvin Miller, longtime leader of the players union, believes it is the greatest scandal in baseball history because of its wider impact than the 1919 Black Sox affair.4

Collusion proved costly to the owners. They lost in three consecutive rulings after the players union filed grievances and arbitrators reviewed extensive evidence and testimony. The owners eventually paid the players $280 million that the arbitrators said players had lost. Miller has pointed out that this large amount didn’t include a penny in penalties.5 Collusion in baseball took place at a time when management in many different American business sectors was trying to reduce the power of organized labor in the name of competitiveness and economic rationality. In 1981, newly elected President Reagan had set the tone for this stance when he fired the striking members of the Air Traffic Controllers Union, who were federal employees and barred by law from striking.

Baseball didn’t need a cue from the White House; the roots of the 1980s collusion among the owners ran deep. An enduring form had been the “gentlemen’s agreement” that kept African Americans out of the game until 1947. In the spring of 1966, standout Dodger pitchers Don Drysdale and Sandy Koufax had announced that they would negotiate in tandem for their new contracts. They sought three-year deals that would pay them each $166,000 per season. Drysdale and Koufax eventually signed for a lot less, but the sight of premier players working together—with an agent, no less—terrified the owners.6

The Drysdale-Koufax negotiations led the owners in 1977 to propose a ban on collusion among players as part of the basic labor-management agreement. The players readily agreed, as long as the idea would work both ways, which the owners had no problem with, either. Years later, Miller said, “I was only going to give in if it was a two-way street. They yielded instantly. It wasn’t a big deal.”7

What was more problematic was the issue of compensation for free agents. This question had dominated negotiations on the 1980 basic agreement. As part of that agreement, the owners and players established a joint study committee charged with finding a workable solution to compensation. The agreement stipulated that if such a solution wasn’t found within a year, the owners would be able to impose their compensation plan—and the players would be able to strike. Following some wrangling in the courts in the wake of a predictable failure to achieve a solution on compensation for free agents, the players walked out on June 12, 1981. The strike lasted 50 days and canceled 713 games.8

After the strike, player salaries continued to climb, growing by 47 percent in the two years that followed. Between 1980 and 1984, the average salary in the major leagues more than doubled to $326,000. Between 1981 and 1984, owners agreed to more than 200 multi-year contracts to players with less than six years of big-league experience.9

It was against this backdrop that Commissioner Peter Ueberroth met with the owners in St. Louis on October 22, 1985. On the agenda was a report from Lee McPhail, who headed up labor relations for the owners. McPhail’s report showed that teams owed between $40 and $50 million under guaranteed contracts to players who were no longer in the league. His data also showed a positive correlation between players with long-term deals and time spent on the disabled list or performance below expectations.10

McPhail’s research seemed to support Ueberroth’s practice of berating the owners for what he believed was irrational spending. He had previously called them “dumb” and “stupid” and said that agents and the union were not causing their problems. “Look in the mirror and go out and spend big if you want, but don’t go out there whining that someone made you do it,” he said. Ueberroth’s derision, coming from a man widely hailed as an economic wizard who had made the 1984 Olympics in Los Angeles a financial success, evoked the kinds of responses more typically seen at a religious revival. “Some [owners] stood up to confess their past stupidity; some took the pledge to abstain from free agents.”11

The conversation between Tom Reich and Bill Lajoie on Lance Parrish’s contract took place the day after this meeting, and baseball’s collusion era had begun. The off-season of 1985-86 was the first of three in which a similar pattern unfolded. The free-agent market was slow; the players union filed a grievance (February 1986, February 1987, and January 1988); and after poring through massive testimony and supporting documentation, arbitrators Thomas Roberts and George Nicolau found for the players each time. They delivered their decisions in September 1987, August 1988, and July 1990 in cases that became known as Collusion I, II, and III respectively. All told, the three cases generated 71 days of hearings, 618 exhibits, and 14,028 transcript pages.

What the arbitrators uncovered in this mountain of evidence was a larger pattern that began to emerge with the lack of interest in signing Kirk Gibson and Lance Parrish. In the 1985-1986 off-season 29 of 33 free agents stayed with their original teams; in the previous year, 20 out of 46 free agents had stayed. A brief filed on March 22, 1988, by the players union cited numerous incidents that they believed violated the no-collusion clause. At a meeting on February 26, 1987, Commissioner Ueberroth asked for and received updates from teams on their player negotiations. Minnesota Twins general manager Andy McPhail had testified that he called his counterpart with the Orioles, Hank Peters, to discuss how much Peters thought pitcher Ron Guidry was worth. The White Sox co-owner, Jerry Reinsdorf, sent to Ueberroth and to the Tigers copies of his correspondence with pitcher Jack Morris’s agent. The Red Sox sent a note to all other teams on January 9, 1987, in which they said that they intended to try to resign catcher Rich Gedman when the rules permitted them to renew negotiations with him on the following May 1.12

But it would have been hard to believe that the owners would even consider concerted action based on their public statements after the players filed their first grievance in February 1986. In an interview in The Sporting News on June 30, 1986, Yankees owner George Steinbrenner said, “I’ve been in business. I know what collusion is. … I have seen no collusion whatsoever.” Commissioner Ueberroth seemed annoyed by even the mention of it. Speaking with The Sporting News for an article published January 5, 1987, Ueberroth said, “I still think each owner will do what he damned well pleases (in regard to contracts and free agents) and, when people finally see that, the collusion talk will stop.”

It didn’t stop, and on September 21, 1987, arbitrator Thomas Roberts delivered his decision on Collusion I. In finding for the players, Roberts noted that not a single team had pursued free agents in 1985 unless their 1985 teams had relinquished their interest in those players. He decided that this “in itself constitutes a strong indication of concerted action.” Asked for his reaction to Roberts’ decision, pitcher Jack Morris, a member of the 1986 free-agent class, told the Detroit News,

Hey, it’s foolish for a guy making $1.85 million to look for sympathy, and I’m not doing that. My salary is not the issue here. The issue is that the owners were found guilty of collusion. … I know that George Steinbrenner wanted to hire me. … He finally had to say, ‘Sorry, buddy, I can’t do it.’ Steinbrenner said no one told him what to do. In fact, he swore on his mother’s name about it.13

Decisions by arbitrator George Nicolau in Collusion II and III followed a similar pattern. On August 31, 1988, Nicolau’s ruling on Collusion II stated:

The evidence as a whole convincingly establishes that everyone knew there was to be no bidding before January 8 for free agents coveted by their former clubs. … The abrupt cessation of activity in 1985 and the repetition of that pattern, with only minor post-January 8 deviations in 1986, cannot be attributed to the free play of market forces. …”14

After further decisions on the damages to be paid, the players and owners reached a settlement. On October 26, 1990, the owners agreed to pay $280 million dollars, or $10.77 million per team, to cover damages that had been awarded as well as damages to be determined and interest.15 The final distribution to players was not completed until 2005.16

Baseball’s collusion era is fraught with ironies. During the same years that the owners were working to keep salaries and free-agent movement down, attendance, revenue, and profits in the game soared. Total revenue increased from about $700 million in 1985 to $1 billion in 1988. In addition, collusion did little to address the game’s structural issues, such as the disparity in revenue across the major leagues. Finally, it helped seed the ground for the dispute that led to the spring training lockout in 1990.17

But collusion may not have breathed its last nearly 20 years ago. As part of the basic agreement reached in the fall of 2006, the owners made a lump-sum payment of $12 million dollars, to be taken from the nearly $70 million dollars in luxury-tax funds then held in reserve by baseball, to settle planned claims of collusive activity following the 2002 and 2003 seasons.18 The settlement addressed approximately 40 claims and pending grievances.19 Déjà vu all over again?

 

Notes

1. David A. Kaplan, “Baseball Braces for Free-Agency Ruling,” National Law Journal, June 1, 1987; John Helyar, “Playing Ball — How Peter Ueberroth Led the Major Leagues in the ‘Collusion Era,’” Wall Street Journal, May 20, 1991.

2. Helyar, Wall Street Journal, May 20, 1991.

3. Ibid.

4. Marvin Miller. A Whole Different Ball Game: The Inside Story of the Baseball Revolution, Chicago: Ivan R. Dee, 1991. 346.

5. Miller, A Whole Different Ball Game, 399.

6. Maury Brown, “1985-1988—Collusions I, II … and III (A Hard Lesson Learned).” The Big Book of Baseball Blunders, Rob Neyer, New York: Simon and Schuster, 2006.

7. Brown, “1985-1988—Collusion I, II … and III.”

8. G. Richard McKelvey. For It’s One, Two, Three, Four Strikes You’re Out at the Owners’ Ball Game: Players Versus Management in Baseball, Jefferson, NC: McFarland, 2001, 111-128.

9. “The 1980s,” history of labor relations in baseball at http://www.cbaforfans.com/1980s.html.

10. Helyar.

11. Ibid.

12. Newsday, July 5, 1988, Associated Press story.

13. “Tigers’ Gibson: ‘My Pocket’s Open,’” The Sporting News, Oct. 5, 1987, 16

14. McKelvey,152.

15. MurrayChass,“Collusion Accord: 16 Freed, Payment of $280 Million,” Nov. 1990. New York Times.

16. Ronald Blum, “Baseball and union settle potential collusion claims,” Nov. 6, 2006, Associated Press.

17. Helyar.

18. Bill Madden, “Big league conspiracy,” New York Daily News, Oct. 26, 2006.

19. Blum.