“Moneyball” (2003)

Part 23 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.


51AEIBfJvuL._SX331_BO1,204,203,200_In the spring of 2003 author Michael Lewis created a sensation in the baseball community with the release of Moneyball, a book that related the story of how Oakland A’s general manager Billy Beane kept his undercapitalized team competitive. A one-time financial trader turned writer who had unprecedented access to Beane’s activities, Lewis identified two related causes for the A’s success: Beane understood the concept of market inefficiencies and the analogous benefit of finding undervalued players; and Beane believed that these players could be better identified using statistical and analytical techniques than by traditional scouting methods.

The second issue caused a fair bit of controversy. Lewis is a terrific writer and much of the charm of his book came from the dichotomy he drew between the old-school scouts and the new-fangled statistical analysts. As Lewis put it, “Billy had his own idea about where to find future major league baseball players: inside [assistant general manager] Paul DePodesta’s computer. He flirted with the idea of firing all the scouts and just drafting kids straight from Paul’s laptop.” The two most prominent statistical insights of the A’s, as highlighted by Lewis, were that most organizations undervalued hitters with a high on-base-percentage who didn’t otherwise stand out, and that teams undervalued college players when compared to high school players in the amateur draft.

Baseball statistical analysis had been evolving and developing for roughly 50 years and had begun to find an audience with the writings of Bill James starting in the late 1970s, but this audience mainly consisted of independent researchers and a particular type of fan. Sabermetrics, a word coined by James, did not prescribe a set of formulas and answers as its critics might have thought. It is a process, a philosophy that teams should make decisions based on evidence and data. This was not a new idea – scouts had been using radar guns and stopwatches for decades rather than merely trusting their eyes – but sabermetrics suggested that baseball’s vast statistical record could tell a team which players were actually helping the team score or prevent runs, which strategies would increase the team’s chances of winning, which minor leaguers were likely to be good major leaguers, and more. Much more, in fact.

By the late 1990s sabermetrics had begun to creep into some of the more progressive baseball front offices. For example, Rockies general manager Dan O’Dowd and major league administrator (and current Twins GM) Thad Levine were making sophisticated mathematical evaluations of the effects of their high-altitude Coors Field in 1999. But most teams, before the publication of Moneyball, kept their analytical efforts out of the public eye. Not surprisingly, Lewis’s portrayal of a general manager who seemed to be rejecting 100 years of supposedly hide-bound traditionalist scouting in favor of novel statistical methods created a rift between the proponents of traditional scouting and statistical analysis.

Beyond player evaluation, statistical analysis was and is being used to evaluate in-game situations. The mountains of data that have recently become available allowed comprehensive analysis of on-field events like batter-pitcher matchups, strategic decisions such as bunting, and defensive positioning. As the front offices in some of the more statistically oriented organizations began to better understand these relationships, a natural tendency developed to impose some of this knowledge on the manager. Not surprisingly, this reset the line that had been observed between the front office and the field staff for nearly a century.

“You’re the manager and you’re going to get no interference or second-guessing from me,” Yankees general manager Ed Barrow told manager Miller Huggins in the 1920s. “Your job is to win, and my job is to see that you have the players to win with.”

Analytics has changed this relationship; the front office now had information that might contradict what a manager ordinarily would want to do. As one writer recently observed, overstating a little, “Teams don’t want a seasoned, master tactician anymore so much as they want a manager with a small ego and an open mind. At the root of this change is the proliferation of statistical analysis, which can make decisions for managers if they’re willing to embrace it.” Lewis described Beane’s preferred approach in Moneyball: “Beane ran the whole show. He wasn’t just making the trades and supervising scouts and getting his name in the papers and whatever else a GM did. He was deciding whether to bunt or steal; who played and who sat; who hit in which spot in the lineup; how the bullpen was used; even the manager’s subtle psychological tactics.”

billy-beaneThe debate in the immediate aftermath of the book was between those who supported the traditional scouting model and those who thought, as Beane did in Lewis’s book, that sabermetrics could dramatically reduce the need for scouts. In fact, much of the acrimony was due to Lewis’s overstated caricaturization of scouts’ limitations. His unflattering portrayal of traditional scouts poisoned even his more compelling statistical arguments and encouraged an unnecessary choosing of sides. The smartest and most successful teams, as it turned out, grew their analytics staff to provide information that could enhance and augment what their scouts were telling them, and that, in the ideal environment, the scouts and analytics staffs could work together and learn from each other. On the field, even in the most analytically focused organizations, managers have remained critical to success given all the complexities in leading 25 men.

Back in 2003 Lewis thought that Beane’s advantage would eventually dissipate because other teams were going to start mimicking his strategies. “He [Beane] may feel pretty happy with himself now, because his team reflects inefficiencies exploited in the past, and looks pretty damned good. He might even get through this whole year without having to use the trade deadline, one of his favorite things. But two, three years down the road, he has problems.”

Beane thinks we have finally reached that point, though it took longer than two or three years. “Eventually, it was going to happen,” Beane recently acknowledged. “The big teams are run very wisely now. There are really smart guys who have capital. There’s no soft spots. They’re smart guys, and they’re surrounded by smart guys. It’s a very intelligent industry right now. In fact, one of the most intelligent [of any industry] … The big teams look like they’re going to be good for a long time.”



Albert Belle

Part 22 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.


Since the Messersmith Decision in 1975, the negotiations for nearly every CBA have involved the owners trying to reverse the rights the players had gained. The most divisive negotiations, and all of the labor stoppages, have come when the owners are the most determined.

In 1976, the owners wanted to restrict free agency to players with nine years of service, before settling for six. In 1980-81 the owners demanded player compensation for any signed free agent, eventually settling for the ill-fated compensation draft. In 1985 owners initially demanded that teams above a certain payroll level be unable to sign free agents – effectively a salary cap. They did get a major concession from the players: an increase in the service time required for salary arbitration from two years to three years.

In 1990 the owners, already embroiled in legal difficulty because of their illegal collusion, nonetheless claimed massive industry losses and demanded a salary cap (plus a salary floor) for each team, the end to arbitration, and a pay-for-performance scheme for pre-free agency players. This went so poorly that Commissioner Fay Vincent basically took the players side. Despite a spring training lockout, the owners got none of what they wanted. Instead, they fired Vincent.

budselig_081214In 1994 the owners had no commissioner and the small market teams (led by “acting” commissioner Selig) had gained power and were ready to shut the game down to revamp their relationship with the players. The owners demanded a salary cap, revenue sharing, and an elimination of salary arbitration. They announced that they would impose this system after the 1994 season, which caused the players to strike on August 12. This ended the season.

The owners ultimately did impose their plan, and, with the union still on strike, opened spring training with replacement players. In March an NRLB decision enjoined the owners from implementing their plan, essentially restoring the old system. The players went back to work.

In what is now largely forgotten, even after the players returned to work the two sides butted heads for almost two more years before finally signing a new CBA. The owners and the players were so disgusted with each other that they all took several months off, not really bargaining again until after the 1995 season.

The union, led by their leader Don Fehr, and the owners’ chief negotiator, Randy Levine, finally reached an agreement in October 1996, essentially creating the model we have today, with a luxury tax and revenue sharing. The hardline owners still were unsatisfied without a true salary cap, and they had enough power to kill the agreement – needing 23 “yes” votes from the 30 owners, it could only garner 12. The players had no interest in renegotiating the pact, and talks again deadlocked.

At this point, November 1996, there was real risk that there could be another labor stoppage. What’s more, even with a signed agreement there was genuine doubt as to how “free” the free market might be. The owners were angry with the players union, and angry with each other. Salaries had been stagnant during the turmoil of the past few years. What was going to happen now – with frustration and anger at its height, and no CBA for two full years – was anyone’s guess.

What happened was a thunderbolt.

On November 19, the Chicago White Sox signed free agent (formerly Indians) outfielder Albert Belle to a record five-year, $52.5 million contract. Belle was an outstanding hitter (though a lesser player than Ken Griffey Jr., Barry Bonds and a few others) and a bit of a headache off the field.

The shock of the deal was not only the size of the contract – baseball had had many “record breaking” contracts over the past 20 years – but the team that signed him. White Sox owner Jerry Reinsdorf had been one of the hardline owners throughout the strike and against the recently negotiated deal, Selig’s chief ally, and the one of the most vocal of the diehards. If Jerry Reinsdorf was willing to give Albert Belle $52 million, taking him away from the small market Indians, their chief rival in the AL Central, what was the point of the labor impasse?

Belle”We’re not being fiscally irresponsible because we can afford it,” said Reinsdorf, responding to criticism from the Indians. Reinsdorf was still not willing to give up his crusade to change the system, feebly adding: ”But it does bother me that there are only a few teams that can afford to do this. That means the game is not healthy. I want the people in Pittsburgh, Kansas City and Milwaukee and all the other small towns to have a chance to compete. I want competitive balance.”

Feeling their leader had moved on without them, the hardliners caved. A week or so later the owners ratified the Fehr-Levine pact by a vote of 26 to 4. The core of the old system — salary arbitration, free agency after six years – remained unchanged. The luxury tax and revenue sharing were new, but have stuck around, with occasional tweaks, through four subsequent CBAs.

With the new agreement finally in place, the owners were again willing to aggressively use free agency to reshape their teams. The Florida Marlins, led by their own hardline owner, Wayne Huizenga, gave out huge deals to Moises Alou, Bobby Bonilla, and Alex Fernandez, capping what turned into a huge off-season for players. The Blue Jays hoped to return to their pre-strike glory by signing Roger Clemens to a three-year $24.75 million contract, while the Yankees solidified their pitching staff by landing David Wells for a three-year $13.5 million contract. The salary malaise of the past few years had come to and end and salaries returned to their unrelenting upward trajectory. Free agency still offered the best opportunity to land mid-career stars, transforming or shoring up a team on the fly.


Collusion and Tim Raines

Part 21 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.


RainesTimTim Raines may not have been the best player in NL in 1986, but he was certainly among the top five. He led the NL in batting and OBP, stole 70 bases, and had his fourth consecutive top 12 finish in the MVP balloting. After the season he became a free agent, and at only 27 years old, he should have been near the top of every team’s list. Instead, he and agent Tom Reich heard practically nothing.

The previous offseason the free agent market had been suspiciously slow. After receiving no free agent offers, Kirk Gibson, Carlton Fisk, Donnie Moore and others had accepted much less money than they had hoped for and reluctantly returned to their old teams. There was some hope among the players and their agents that the slow offseason was simply an aberration and that the stronger 1986 class, including Raines, Jack Morris, Andre Dawson, Lance Parrish, and Bob Horner, would loosen the owners’ purse strings. It did not.

The Expos offered a three-year $4.8 million contract, a raise of about $100,000 per year. Reich initially pushed for a three-year contract at $2 million per year; once he realized the market was stagnant he lowered his asking price to $1.8 mil per year. And then he was forced to continue lowering it. Houston, Seattle, and Atlanta showed some nominal interest, but none made a meaningful offer. Only San Diego displayed any real interest, but at less than the Expos were offering.

On January 8, Raines had a big decision to make. If he didn’t re-sign with the Expos by this date, he couldn’t sign with them until May 1. He would have to trust that the system wasn’t completely rigged, and that he would be able to come to terms with another team. Raines and seven other free agents—Andre Dawson, Rich Gedman, Ron Guidry, Bob Horner, Lance Parrish, Doyle Alexander, and Bob Boone—elected not to take this chance, to take a chance with the other 25 clubs.

Once again only San Diego showed any real interest in Raines, but they would go no higher than a two-year contract at $1.1 million per year, well below the Expos. According to Raines, the Padres declined his desperation proposal of one year at $1.3 million plus incentives. On May 1, having lost his gamble, he went back to the Expos for roughly what they offered originally: $5 million total for three years.

Lance Parrish

In the end, of the eight free agents that went past the deadline, only two switched major league teams (Horner went to Japan); the others returned to their original teams at well below market prices. Dawson offered the Cubs a blank contract and told them to fill in whatever they wanted. They filled it in for $500,000 plus $200,000 in incentives, well below what a veteran of Dawson’s ability and stature would typically be paid. Parrish left the Tigers for the Phillies at roughly the same pay he had earned in 1986. Even with no raise, the Phillies were reportedly subjected to calls from Detroit’s GM Jim Campbell, AL President Bobby Brown and owners Bud Selig and Jerry Reinsdorf to consider what they were doing.

In fact, the owners were acting in violation of their collective bargaining agreement with the players, which stated: “Players shall not act in concert with other Players and Clubs shall not act in concert with other Clubs.” Baseball commissioner Peter Ueberroth, the mastermind behind this illegal conspiracy, had struck a chord with the owners in late 1985 when, as John Helyar wrote, he told them: “You, singular, are responsible for your own downfall, and you are so dumb that you are paying all kinds of money to players that aren’t playing so you’re losing money and don’t have money to play players that are playing, please don’t throw stones at anybody. It’s your fault, Mr. So and So, don’t rant and rave. Nobody is forcing you to do anything. It is your own stupidity.” He followed this up a week later at the general managers meeting, advising the attendees that if they want to sign a free agent, he wanted them to justify the deal economically.

Under this new banner of “fiscal responsibility”, the owners began working collectively to make sure salaries stayed in line. As Raines’s ordeal highlighted, in this they were successful. One study leaked to the Associated Press looked at players with six or more years of service who signed new contracts. Salaries increased 74% before the 1981 season, 50% for 1982, and 43% for 1983, 9% for 1984, and 7% for 1985. Once collusion kicked in, however, salaries for this subset began to plummet. In 1986 salaries dropped 18% and the next year 22%.

From a team building perspective, the biggest problem was strong deference given to a player’s current team. If a team made it known that they wanted to re-sign a player, this was code to the other teams to lay off. Even if the new salary was not a material increase from his previous salary—as in  the cases of Parrish and Raines—teams generally shied away from free agents still wanted by their current club. If it had just been about the money, Cubs GM Dallas Green would not have been so defensive about signing Dawson in one of the greatest bargains in baseball history.

The players, their agents, and the union quickly recognized what the owners were secretly up to, and the union filed a grievance for the 1985 free agent class, later followed by grievances on behalf of the 1986, and 1987 classes. After hours of testimony, 31 interviews, and thousands of pages of transcripts, in September 1987 the arbitrator ruled in favor of the players in the 1985 free agent class. Roughly a year later, an arbitrator similarly decided in favor of the players for the 1986 class. Finally, in October 1990, while waiting for the verdict on the 1987 class the owners and players agreed to a $280 million damages settlement for all three cases. Additionally, several players who had gone through the process in these years were given a fresh opportunity at free agency.

With the advent of free agency to the game in 1976, the reserve clause no long applied to players with six years experience.  But for these three years—1985 through 1987—the owners essentially acted to restore the reserve clause for these players. GMs were restrained from working to improve their clubs and, as a result, pennant races were artificially constrained and influenced. The lack of player movement during this three-year window underlined how much team building had changed with the coming of free agency.


Free Agent Compensation Draft (1982)

Part 20 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.


After the signing of the 1976 CBA that formalized the rules for free agency, that fall saw the first free market for players in baseball history. The first class included Reggie Jackson, Bobby Grich, Don Gullett, Rollie Fingers, Sal Bando, and many more. All these players signed for massive raises over their previous salaries. Twins pitcher Bill Campbell was the first to sign, inking a four-year $1 million deal with the Red Sox, ten times his previous salary. Reggie Jackson got five years, $3 million from the Yankees, breaking the record Catfish Hunter had set two years earlier.

The next year was more of the same, with owners backing up the truck for Rich Gossage, Mike Torrez, Larry Hisle, Lyman Bostock, Richie Zisk, and dozens more. Teams also gave out huge contracts to players like Jim Rice and Mike Schmidt to keep them from testing free agency. Predictably, the owners immediately began claiming that they needed to change the rules to make it illegal to do what they were voluntarily doing.

s-l1600 (8)In early 1979 Commissioner Bowie Kuhn first broached the idea that the owners would demand veteran free agent compensation as part of the next CBA, due to expire at the end of that year. Such a scheme had been in place in the NBA and NFL for several years effectively stifling meaningful free agency. NFL commissioner Pete Rozelle awarded the San Francisco 49ers two first round draft picks from the New Orleans Saints after they signed receiver Dave Parks for 1968. When the New York Knicks signed free agent forward Marvin Webster from Seattle in 1978, the NBA commissioner awarded Seattle Lonnie Shelton as compensation – Shelton was likely a better player, and the Supersonics went on to win the NBA title the next spring. The Knicks and their fans were livid, but that was the system. No team wanted the risk a big signing only to lose one or more of their best players

Marvin Miller and the players would have none of it. The CBA expired in December 1979, but it took the two sides until August 1981 to finally hammer out a deal. The players nearly went out on strike in May 1980 before agreeing to set aside the free agent compensation issue (the only sticking point) for one year. They struck in June 1981 and were out for seven weeks, gutting the middle third of the 1981 season.

When the two sides finally agreed, they settled on a bizarre compensation system whereby teams who lose a Type A free agent (defined using a complex statistical formula) would draft a player from a pool made available by all teams, not necessarily the team that signed the player—similar to an expansion draft. A limited number of teams could opt out – they were prohibited from signing Type A free agents but were not required to make players available to the compensation draft pool. This proposal was offered by the players before the strike but rejected.  After weeks of impasse, the owners eventually gave in to a plan whose main idea was to compensate the former team without penalizing the new team.

On February 2, 1982, the first ever Free Agent Compensation Draft was held. The only Type A free agent to change teams that off-season was White Sox pitcher Ed Farmer, who signed with the Phillies. In compensation, the White Sox drafted catcher Joel Skinner from the Pirates. For this, the game had been shut down for 50 days.

The next year there were two picks in the draft. The White Sox (who had lost Steve Kemp to the Yankees) drafted Steve Mura from the Cardinals. And the Mariners (who lost pitcher Floyd Bannister to the White Sox) drafted infielder Danny Tartabull from the Reds. None of this was earth-shattering news.

112558-004-EDD44BD4The 1984 draft proved more memorable. After the White Sox lost pitcher Dennis Lamp to the Reds, they selected pitcher Tom Seaver from the Mets. Seaver was not the star he had once been, but he was still a big hero in New York and his unceremonious loss – in a newfangled draft no one wanted or needed – shocked New Yorkers. The Mets protested that they left Seaver exposed because they figured no one would want his contract, a gamble they lost. Seaver put up two excellent seasons with the White Sox, and might have missed another chance at the post-season with the strong Mets clubs of the mid-1980s.

That same year the Athletics pulled off a coup by selecting pitcher Tim Belcher from the Yankees. New York had just signed Belcher a few days earlier after taking him first overall in the January amateur draft. He was considered one of the best prospects in the country, but the Yankees had mistakenly exposed him in their confusion over the rules. Again, local fans were livid that this bizarre compensation system had cost them a well-regarded player.

After one more go around in 1985, with Donnie Moore (by the Angels) and Tom Henke (by the Blue Jays) the key draftees, the owners lost interest in the pool concept. In the 1985 CBA negotiations, both sides agreed to return to draft pick compensation. The details of the draft picks has changed with each CBA, but veteran compensation, which cost baseball the middle of the 1981 season, has not made a return.






Pat Gillick and the Rule 5 Draft (1977)

Part 19 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.


Building an expansion team is difficult. The talent available from other teams in the expansion draft rarely consists of players one can build around or will still be valuable once the team eventually contends for the playoffs. When Pat Gillick took over as GM of the Blue Jays after their inaugural season in the fall of 1977 he began to implement his “many rivers” approach to finding ballplayers: Look everywhere.

Most famously he teamed up with his old friend, scout Epy Guerrero, and began building a presence in the Dominican Republic, well ahead of other organizations, excepting perhaps the Dodgers.

UpshawGillick also began to exploit another little-used “river” in December 1977 when he selected first baseman Willie Upshaw, whom he and Guerrero knew from the Yankees organization, in the Rule 5 draft. A holdover from the early days of organized baseball (under slightly changing guidelines and sections in the rulebook), the Rule 5 draft was designed to prevent players from being buried in the minors. Teams could control any player in their organization who was younger than 19 on June 4 of their signing year for four years and those who were 19 or older for three years. Practically, this translated to high school and college signees respectively.   After this control period, players had to be placed onto the team’s 40-man roster or be exposed to the Rule 5 draft. Held in December, this draft allows teams to claim veteran minor leaguers unprotected on their club’s 40-man roster. (As of the 2007 the control period was increased by one year to five years for prep players and four years for the college players.) The cost of each draftee was $25,000 (the price jumped to $50,000 in 1985 and is $100,000 today).

The catch is that the selecting team has to keep the player on its major league 25-man roster for the entire upcoming season or return the player to his previous club for half the original drafting price. As most of the available players were not ready to jump to the major leagues, a club would often have to waste a roster spot for a full season if it wished to keep the player. Accordingly, only about ten to fifteen players a year were usually selected in the Rule 5 draft. But if a team could find a player of value, the price was cheap compared with trying to develop a major league ballplayer.

download (16)Gillick recognized that the young Blue Jays were still in the talent accumulation stage and while an unprotected player may not fit into their team’s plans, they might still be good enough to play for the Blue Jays. He and his scouts focused their energies on this draft much more than the other clubs. Over the next several years Gillick mastered the Rule 5 draft to an uncanny degree. In addition to Upshaw he uncovered a number of additional valuable contributors, including OF George Bell (1987 MVP), SS/2B Manny Lee, P Jim Gott, and 3B Kelly Gruber.

Bobby Cox, who managed the 1985 team to its first division title, deserves special credit for this championship because he was effectively limited to just 23 roster spots. Gillick saddled Cox with two Rule 5 players, Manny Lee and Lou Thornton, and neither were yet ready for the majors. During the years that Toronto was still uncompetitive the burden of carrying these players seemed a fair tradeoff. One of the many things Gillick appreciated about Cox was that his manager bought into the overall program, even when it made his job a little harder.

Gillick’s success in the mostly overlooked Rule 5 draft of veteran minor leaguers was legendary; no one else came close to his success, and he forced teams to be much smarter about protecting their assets from this draft. Moreover, in no small part due to the success of Gillick in using this approach to uncover talent, baseball changed its rules. In 1985 the cost of a drafted player was increased, as noted above, to $50,000. Moreover, the majors and minors agreed to increase the control period from three to four years. Gillick understood better than just about anyone the need to look for talent anywhere and everywhere.

Andy Messersmith (1975)

Part 18 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.


In the years following his 1966 hiring as the MLBPA’s executive director, Marvin Miller began educating the players about the “reserve clause”, the paragraph in the standard baseball contract that bound a player to a team for life. Miller believed the clause was unethical and illegal, but he also questioned whether the clause actually said what baseball people (clubs and owners) had long believed it said.

The “reserve clause” was Paragraph 10-A of the standard contract and read, in part: “On or before December 20 (or if a Sunday, then the next preceding business day) in the year of the last playing season covered by the contract, the Club may tender to the Player a contract for the term of that year by mailing the same to the Player at his address following his signature hereto, or if none be given, then at his last address of record with the Club.” If a player and club could not agree on contract terms for the following year, the club could renew the previous contract at a rate not less than 80% of the prior year’s terms.

FloodSince the 19th century, this meant that every off-season each team would “reserve” all of the players it wanted to keep for next year. A player would be reserved year after year until he was deemed no longer useful, and then the club would release him or he would retire.

In early 1970, outfielder Curt Flood—having just been traded from the Cardinals to the Phillies—sued major league baseball in federal court, asking the court to invalidate the clause and give him the right to sign with any team he wished. Flood ultimately lost his case in the US Supreme Court, but his struggle, and the obvious panic it induced in the owners, helped to strengthen the players’ resolve and persuade many in the media of the merits of his case.

The first significant modification to the reserve clause actually came in the 1973 CBA, when all players with ten years experience and five with their current club, had to approve any trade to another. This rule, known as the 10/5 rule, would have applied to Flood, who likely would have vetoed the trade and stayed with the Cardinals. The first player to veto a trade was Ron Santo in late 1973, when he called off the Cubs attempt to trade him to the Angels.

In the mean time the union was eyeing another tactic.

Marvin Miller’s interpretation of the reserve clause was that if a player did not sign his contract, and played out the year under the renewed terms, the reserve clause would not apply the following off-season, making the player a free agent. The club’s interpretation was that the entire contract, including 10-A, was renewed. Miller wondered what a neutral arbitrator would decide, if the clause were ever tested?

The first player to play a large part of the season under a renewed contract was Cardinals catcher Ted Simmons in 1972. Simmons signed for a hefty pay increase around the All-Star break, an increase he likely would not have gotten without the threat his situation imposed. In 1973 seven players played into the season without signed contracts, but all either signed or were released.

In 1974, Yankee pitcher Sparky Lyle and Padres outfielder Bobby Tolan went all the way to the goal line, until Lyle signed a two-year deal on the final day of the regular season. On October 17, the still-unsigned Tolan filed a grievance. Just prior to the hearing he signed a two-year deal for the terms he had been requesting. Marvin Miller was careful never to advise players to sign or not sign contracts—he just made certain they understood the law, and their rights. He was happy for Tolan, but still hoped for a test case.

andy_messersmith_1971Finally, in 1975, Dodger pitcher Andy Messersmith and Expos pitcher Dave McNally (who retired during the season but agreed to join the case) made it into the end zone. On December 23, 1975, arbitrator Peter Seitz ruled for Messersmith and McNally, dramatically altering the balance of power between baseball players and their clubs and how a general manager could build his team. Seitz ruled that the infamous “reserve clause” in the standard player contract did not in fact bind a player to his club endlessly but merely for one additional season, and that the two players were now free agents.

Since the Messersmith ruling, most labor negotiations have hinged on the owners attempts to reduce the freedoms that Seitz gave the players in 1975 – by limiting free agency to six-year veterans, by requiring some sort of compensation going to the team that lost the player (the details of which have changed many times), or by taxing team payrolls.

At the time of the Messersmith decision, many observers predicted that salaries would skyrocket and that baseball would suffer terrible harm. “Without a reserve system,” Commissioner Bowie Kuhn testified, “our vast array of minor leagues would hardly survive. It is not hard to imagine that we could even lose a major league.” But many also believed that the owners were little concerned with principal. “It is the price of human flesh that has scandalized the baseball establishment,” Red Smith wrote, “not the barter of human flesh.”

In the end, of course, the game did not crumble.   Baseball revenues (bolstered by enormous television revenue, stadium enhancement, merchandising, and advanced media income) have skyrocketed beyond what could have been imagined in 1975. Moreover, the associated massive escalation in franchise values has more than offset the jump in salaries.

It is important to recall that Seitz’s decision essentially allowed any player to play out their contract and become a free agent. The owners, suitably panicked, briefly locked the players out of spring training in 1976, before the two sides eventually signed a new CBA in mid-summer. The new deal created the model that we have today, giving free agency to players with six years of major league service time.

But for the past 40 years, salary and service time are of paramount importance when building and maintaining a roster. The days of trading for veteran stars had practically come to an end.


Catfish Hunter (1974)

Part 17 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.


During Marvin Miller’s early days running the player’s union, he made slow progress in his efforts to convince the players that they were underpaid. By 1973 the players’ minimum salary had more than doubled – from $7,000 to $15,000 – and salary arbitration had begun to provide several large salary increases that would not have occurred before the union’s recent progress. But what would be in store with a free market was still mostly a matter of conjecture.

9102-247FrThe players actually had one data point. In August 1967, Kansas City Athletics owner Charlie Finley released outfielder Ken Harrelson in a fit of anger. Finley had fired manager Alvin Dark, and Harrelson responded by calling Finley “a menace to baseball.” When Harrelson refused to apologize, Finley released him unconditionally. Usually when a player is released it is because the team believes that he has no trade value, but in Harrelson’s case the “release” was actually beneficial to the player.

Harrelson was initially shocked, fearing that he would be blacklisted from the game, but his shock abated once he started getting phone calls from general managers offering him contracts at significantly more money than he had been making. A good player but by no means a star, when Harrelson signed with the Red Sox for a reported $75,000 (Harrelson later claimed $150,000, which likely included a sizeable bonus) he became one of the highest compensated players in the game. The ramifications of Harrelson’s free agency so disturbed major league owners that they amended the rules such that in the future a released player had to pass through waivers before becoming a free agent.

With that loophole closed, there were no more free agents in baseball for seven years, when Charlie Finley once again handed the players a glimpse of a possible future. On the eve of the 1974 World Series, which the A’s won for the third straight year, a story broke that star pitcher Jim “Catfish” Hunter would file a “breach of contract” grievance against the A’s because Finley had failed to pay a $50,000 annuity as stipulated by Hunter’s contract (which totaled $100,000 for the season). If Hunter’s position was upheld, he would become a free agent.

Marvin Miller had said that the impartial grievance arbitration was the union’s greatest victory, and here was its first significant use. The judge would not be Commissioner Bowie Kuhn, whose public statements made it crystal clear that he would have ruled for the A’s, but arbitrator Peter Seitz.

Oakland A's v Baltimore OriolesFinley had agreed to the annuity clause in Hunter’s contract, but once he realized that there were significant tax liabilities associated with this method of payment, he refused to pay it. After the story broke, he made a public show of trying to give Hunter a $50,000 check in the A’s clubhouse during the World Series. Hunter refused the check.

Soon after the A’s beat the Dodgers in the final game, Hunter followed through with his grievance. Nearly four weeks after a lengthy November 26 hearing, arbitrator Seitz found for Hunter, voiding his contract and freeing him to sign with any club. The baseball world went crazy. Ken Harrelson was a good major league player who had gotten rich, but Hunter was a star.

A three-week bidding war ensued involving nearly every team in baseball. The Yankees landed him with a five-year deal totaling $3.75 million, about three times the going rate for the game’s top stars. Players union chief Marvin Miller had been telling the players for years what the free market might mean, and now they knew. “This had shown everybody,” said Lee MacPhail, now the AL president, “exactly what free agency could amount to.”

San Diego Padres president Buzzie Bavasi, who reportedly bid higher than the Yankees for Hunter, likely spoke for many owners in expressing his fear of what had transpired. “What we saw happen here,” he said, “fully demonstrates the importance of the reserve rule. The richest clubs would offer the top players the biggest salaries and the biggest bonuses.”

Marvin Miller disagreed. “Buzzie Bavasi is a smart man,” he said, “educated and all of that, but he obviously didn’t learn anything about economics. What he is saying is economic idiocy. The Hunter case establishes zero about what would happen in a free market. Here we had a supply of one and a demand of 24. Obviously, when the supply is one and the demand is great, prices will go up dramatically.”

Miller was right, of course. But major league players could not help but wonder what a free market, even one crowded with several other players, might look like. They did not have long to wait.





Binding Salary Arbitration (1973)

Part 16 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.


In the 1968 collective bargaining agreement the players union had achieved grievance arbitration, with the commissioner acting as sole arbiter. While this was an important gain, and Commissioner Eckert had ruled in their favor on many issues, an experienced labor negotiator like players’ union leader Marvin Miller understood the importance of getting impartial grievance arbitration into the agreement with the owners.

“[An impartial arbitrator] is the key thing in any labor negotiation,” commented sportswriter Leonard Koppett, “because that’s the only weapon the union has. If you don’t have that, you don’t have anything.” Without a third-party, impartial arbitrator there was no way for players to get a fair hearing. Owners had been acting with impunity, unencumbered by the limitations of the antitrust statutes, since they introduced the reserve clause in 1879.

download (15)In negotiating the second CBA agreement in early 1970 Miller hoped to wedge the door open for binding arbitration for player-owner grievances. The owners point person in the negotiation was Commissioner Bowie Kuhn, a priggish attorney who nevertheless loved baseball and was particularly concerned with the commissioner’s mandate to uphold the integrity of the game. Unfortunately for the owners, he also was a neophyte when it came to labor negotiations and didn’t really understand the long-term implications of some of Miller’s approaches. As for grievance arbitration, as long as it didn’t impinge on his ability to rule on integrity issues, he had no real objections.   So, among other small but real gains, in the second CBA approved on May 23, an outside arbitrator would now be used for all grievances not involving integrity of the game, an achievement Miller called the “Association’s most important victory,” to that point.

As has been noted in several previous posts in this series, under the existence of the reserve clause leverage in salary negotiations was blatantly skewed to the owners. Players had no alternative but to sign with whatever team owned their rights if they wanted to play baseball. With the principal of arbitration in place, Miller and the union next pressed for binding salary arbitration. Under Miller’s proposal, if the two sides could not agree to a salary, the dispute would go to a neutral arbitrator. Arbitration, with its defined criteria for the arbitrator, would force the clubs to play fair and would minimize the inequities among them.

The union successfully pushed through binding salary arbitration in the third CBA, concluded on February 25, 1973. Players with at least two years’ service time would have the right to have their salary dispute heard by a neutral arbitrator. That the newly agreed upon arbitration process was structured as “final-offer” arbitration also benefited the players. In final-offer arbitration, now commonly known as baseball-style arbitration, each side presents its salary request and the arbitrator must pick between them. He only has those two options; he can’t split the difference or pick some third amount. This helped force both sides to be reasonable and try to negotiate in advance—as opposed to taking an extreme position and hoping the arbitrator would split the difference. It also placed the owners in a position of having to negotiate in good faith.

136293Minnesota hurler Dick Woodson became the first player to have his salary arbitration case heard on February 11, 1974. Woodson asked for $29,000; the Twins offered $23,000. Over an 11 day period, 29 arbitration cases were heard before neutral arbitrators. Another 24 cases were filed but settled before the hearing, an additional benefit of final-offer arbitration. Woodson won his case, but overall the owners prevailed in 16 of the 29 arbitrated cases. Nevertheless, the players were clearly benefiting: even with their losses, 23 of the 29 received raises. Moreover, as Miller had grasped, arbitration forced notoriously tightfisted owners such as Charley Finley to pay competitive wages, increasing the salary scale for everyone. More than one-third of the hearings (10) were for Oakland A’s; nine received raises, some significant.

For the first time in many years, teams would have to manage around some payroll uncertainty when building their roster for the upcoming season. The final payroll would not be known until all the arbitration decisions were rendered. Team building was about to enter a new era in which creating and managing payroll flexibility would become a significant factor. And a couple years later, its importance would snowball.


Free Trade (1971)

Part 15 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.


Between 1965 (the year of the first Amateur Draft) and 1976 (the first year of Free Agency), baseball general managers had more power than they had ever had and would ever have. It was the era when baseball players had the least control over their careers, and it was also the era when owner wealth or revenue meant the least. A team could not buy its way out of trouble with bonuses to amateurs or veterans. If you had a poor team, you had two reasonable methods to improve: you could draft well over a period of years and then be patient; or you could make a series of astute trades. Ideally, you would do both.

This is where the general manager came in. Other than the occasional owner who was actually going bankrupt, the rest of the teams, even those in small markets like Baltimore, Oakland, and Cincinnati, could compete on equal footing with teams in New York and Los Angeles if they had a bright general manager, scouts, and development system. In fact, all three of those teams achieved more success in this period than before or since.

CuellarIn all three cases, much of their success could be attributed to their ability to trade. The Orioles great 1969-71 run was keyed by deals for Frank Robinson, Mike Cuellar, and Pat Dobson, while the A’s turned a good team into a great one by dealing for Ken Holtzman and Bill North.

But the greatest GM of this period, the man who built the best team, was Bob Howsam, who ran the Cincinnati Reds. Howsam was a master trader, having made impressive deals for Orlando Cepeda and Roger Maris during a stint running the Cardinals before taking the Reds job in 1967. His acquisition of Bobby Tolan put the finishing touches on his 1970 pennant winner, but his master stroke came after his team slid back in 1971.

Howsam met with his brain trust, including manager Sparky Anderson, the farm director, and the team’s top scouts, in September 1971, to map out their off-season strategy. As Howsam saw it, they were too slow, too defensively challenged (especially now that they had moved to Riverfront Stadium with its artificial turf and huge power alleys), and too right-handed. Howsam and his group went over his team position by position throughout the entire organization, and then put together a position-by-position ranking of every player in the major leagues to gauge how the Reds matched up.

Howsam expected his staff to know other baseball organizations as well as the teams themselves did. When he went to talk to the Pirates about a trade, he wanted to know the Pirate players who might be blocked or who might be underappreciated. He wanted to be ready for anything his counterpart might suggest.

The man Sparky Anderson wanted was Joe Morgan, a 28-year-old second baseman with the Astros. Morgan was a left-handed hitter, a great base stealer, and had more power than most middle infielders. He also had tremendous on-base skills that were undervalued at the time. It was no secret that Morgan did not get along with Astros manager Harry Walker – which might offer the opening the Howsam needed.

Howsam asked scout Ray Shore to look into the matter further and report back. Shore spent the last few weeks of the 1971 season with Astros, scouting Morgan. Shore knew everyone, and knew how to get the information he needed. One of his sources was Harry Kalas, a radio broadcaster for the Astros at the time. Kalas liked Morgan, thought him bright and competitive, and believed that Walker mismanaged him. Shore concluded that Morgan would be a great addition to the club.

Howsam’s scouts felt that the Astros were looking for power, and the Reds had three right-handed power hitters in Johnny Bench, Tony Perez, and Lee May. Bench was untouchable, and May was the one Howsam was willing to trade. He called up Astros general manager Spec Richardson and offered May for Morgan, straight up.

Richardson spent the next few weeks shopping Morgan around before getting back to the Reds. He asked to expand the deal by trading infielder Denis Menke for Tommy Helms (the Reds’ second baseman who would be displaced by Morgan).

download (14)Although Helms would be redundant, Howsam used this as an opportunity to get more players. This is where his scouts’ hard work paid off. Howsam asked for both Cesar Geronimo, a young centerfielder blocked by Cesar Cedeno, and Jack Billingham, a starting pitcher who had not broken into a deep Astros rotation. Richardson needed neither, as Howsam knew, but Spec felt he had to ask for utility man Jimmy Stewart. Realizing that the deal was just about done but always wanting one more player, Howsam said he’d agree if he could have young outfielder Ed Armbrister.

The deal was finalized at the winter meetings on November 29. 1971. May, Helms, and Stewart, for Morgan, Geronimo, Billingham, Menke, and Armbrister.

The reaction to the trade was mostly pro-Houston. May and Helms were very popular players in Cincinnati, while many observers thought of Morgan as a worse fielding version of Helms. This judgment would prove wildly incorrect. Over the next five seasons Morgan would be the best player in baseball, averaging .303 with a .431 on-base-percentage, 22 home runs, 113 runs, 62 steals, and winning four Gold Gloves. He had two spectacular MVP seasons in 1975 and 1976, capping off one of the best five-year peaks in baseball history, comparable to those of Willie Mays and Mickey Mantle.

Howsam later estimated that the Reds spent 3,000 man-hours working on the Astros deal, the equivalent of a single person working 40 hours a week for a year-and-a-half. The effort more than paid off for Howsam and his team.


What was missing in all of this strategizing and negotiating was any talk of money or salaries. Bob Howsam was a shrewd businessman on top of everything else, and would gladly exchange a veteran for an equally talented lower-cost solution. But in 1971 none of these players were making enough money to give any team pause, and the Reds likely did not increase their payroll with this deal. Forty years later, salaries and each player’s remaining years of control would be of paramount concern in any transaction, to say nothing of whether the players actually wanted to play for their new teams.

For anyone who grew up on the baseball of this time, it is easy to romanticize about how much better it might have been–to imagine your team trading their way to a pennant–without consideration for money or the people involved.

The Reds won the World Series in both 1975 and 1976, fittingly the last two years before free agency. Howsam later recalled a fleeting melancholy feeling in the winning locker room in 1976, knowing that no one would ever again be able to build a team the way he had.


Collective Bargaining Agreement (1968)

Part 14 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.


Although the baseball team-building game had changed many times by the late 1960s, most of the changes were made to help the owners. With the amateur draft in place, what was essentially the only power a player had–selecting which team to sign with to begin his career–was now gone. The owners controlled the entire career. Players could theoretically “negotiate” their annual salaries, but if they showed up with a lawyer the owner would likely throw them both out of the office.

While the Major League Baseball Players Association was formally created in 1954, the players’ only substantive accomplishment in its first 12 years was its pension and benefit plan, first established in 1947 (by a pre-MLBPA group of players) and steadfastly maintained in the years since. The union took pride in its pension plan, and the players otherwise accepted their situation. They had a part-time lawyer for a while, but when he suggested to the owners that he wished to negotiate other issues, the owners told the players to get rid of him. They did.

The players then hired Robert Cannon, a personal friend of many of the owners, as a part-time legal advisor. Cannon was a Milwaukee judge who really wanted to be baseball commissioner. His strategy was to remind the players continually how well-treated they were and to ask for nothing from the owners.

download (1)The players’ pension plan had long been tied to revenue generated by the All-Star Game and World Series. As this pool continued to increase, the owners were becoming increasingly uncomfortable giving up so much money to the players, and the tensions related to this disagreement finally caused the players to hire a full-time executive director. After considering a few other candidates, including Cannon, the players ultimately hired Marvin Miller in the spring of 1966. To say this was a watershed moment is an extreme understatement. In 2016 the MLBPA publicly celebrated its 50th anniversary-–the pre-Miller days don’t even count.

The owners were not happy with the appointment of Miller, and they tried to torpedo it. “We could tell from the reaction of the owners that Marvin would be good for us,” iconoclast pitcher Jim Bouton later said. “They hated him. They were saying that he would bring in goons with bicycle chains and baseball bats, and there would be violence and strikes and pickets signs, and we didn’t need that in our union. And of course, we all realized that we did need that.” Miller told the players that his job was not to get along with the owners—his job was to advocate and fight for the players.

One significant thing the players did not have was a collective bargaining agreement, the sine qua non for any union worth its name. Marvin Miller’s goal, from his first day on the job, was to get the owners to agree to a CBA, which would recognize the union as the legal representative of the players, and would subject the relationship to federal labor laws.

Before the first CBA, the owners made all the rules and the players had no recourse. The minimum salary was $7,000, which had been raised once since the 1940s. And even that was squishy-–Bouton claimed in his book Ball Four that some players were given less than that and were scared to complain. The players might ask to raise the minimum salary, and the owners might say “no.” The conversation was over.

Nothing was written down anywhere. The players had spring training allowances and in-season meal allowances, but none of this was strictly enforced. Players were supposed to have travel paid for if they changed teams, but good luck getting the money. “Before the union came along,” said Joe Torre, “player reps used to ask about things like broken shower heads in certain clubhouses or getting more towels.”

Curt Flood and Marvin Miller

After a year and a half of on-again, off-again negotiations, the first CBA was signed in February of 1968 and was in effect for two years. There were now two essential agreements covering the players: a CBA and a pension/benefit plan. The CBA increased the minimum salary to $10,000, standardized the base contract for the first time, increased meal allowances, and added schedule rules (for example: specifying how many days in a row a team could play).


The most important facet of the CBA was its mere existence. Miller recalled a 1966 meeting at which he mentioned that one team’s players were concerned they had a long stretch without an off day. Joe Cronin–the American League president and an early member of the Player Relations Committee–exploded at Miller about the schedule being the prerogative of the league office and who the hell does Miller think he is? Having scheduling rules, even minor ones, in the CBA established the precedent that the players had a voice in these matters.

Another vital component was the establishment of a grievance procedure, which Miller knew was a key component of CBAs of other industries. The procedure was very simple, merely requiring the player or union to fill out some paperwork and file it with the commissioner’s office. Commissioner William Eckert was the sole arbiter, which was not ideal, but the players won more often than not. In 1968, to cite one example, a few American League teams objected to staying in Baltimore’s substandard Lord Baltimore hotel and filed a grievance. Eckert ruled for the players.

Miller wanted the players to file grievances on everything–no matter how small–that violated the CBA. These victories, some for $25 or $50, led to increased compliance from the clubs and increased confidence by the players in their newfangled union.

The early CBAs were fairly short in duration–two or three years–because Miller believed each success was just a small victory in the larger battle. The 1968 CBA was a landmark, but Miller knew the struggle was just going to get tougher.

Compared with what was to come, the players had gained no real power over their careers. The pieces were starting to come in to place, though the owners were wholly unaware of it.