The Anti-Trust Exemption (1922)

Part 6 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.

 

In December 1915 the Federal League’s still solvent owners reached an agreement with the Major League owners to fold their competing league. In return, the Major League owners agreed to pay roughly $700,000, with FL’s owners receiving widely varying payouts. One problem with the deal came when the owners of Baltimore’s FL franchise, a large collection of Baltimore business and professional men, did not want to fold their club and disband the league—they wanted major league baseball in Baltimore.

Baltimore’s shareholders were angry with the other Federal League owners for agreeing to settle, and particularly angry with major league baseball’s owners for all the underhanded tactics used against the Federals in the battle for players. Rather than take the $50,000 they were offered as part of the settlement, Baltimore elected to file suit against their fellow FL owners and major league baseball.

PepperGeorgeWhartonAfter one misstep in court and some behind scenes negotiations that led nowhere, in September 1916 Baltimore filed suit charging major league baseball with numerous antitrust violations. Baltimore’s attorneys highlighted the myriad ways that Organized Baseball had interfered with the Federal League, noting in particular the reserve clause and the blacklist. Organized Baseball’s lead attorney George Wharton Pepper, later a US Senator from Pennsylvania, sloughed off his clients’ unseemly behavior and reliance on the reserve clause. Instead he argued that baseball was not subject to being regulated under Congress’s antitrust legislation because it was not actually commerce, and even if it was, it wasn’t interstate commerce.

Baltimore prevailed at the initial trial in 1919. The jury awarded the group $80,000 in damages; under the Sherman Antitrust Act provisions the award was trebled to $240,000 and Baltimore was also awarded legal costs of $24,000. In total, the Baltimore shareholders received a verdict for $264,000. In the months after the jury award, a compromise settlement seemed likely as both sides had strong reasons to consider one. At this point a monetary payment was the best Baltimore could hope for; a major league franchise for their city was simply not on the table. For Organized Baseball, a settlement offered the opportunity to pay a sum they could afford, admit no wrongdoing, and continue business as usual.

Nevertheless, no settlement was forthcoming and the case was eventually appealed all the way to the U.S. Supreme Court where Organized Baseball won a complete victory. In a unanimous opinion written by Associate Justice Oliver Wendell Holmes and released on May 29, 1922, the Court ruled that the personal effort of baseball players was not trade or commerce, and, furthermore, that as baseball wasn’t fundamentally interstate in nature, it was not interstate commerce. Thus, Organized Baseball could not be in violation of the antitrust laws because it did not meet two conditions necessary to be subject to them.

HolmerOWJr
Oliver Wendell Holmes, Jr.

This opinion was not as strange at the time as it seems today. The definition of interstate commerce used at the time was much more restrictive than how it has evolved. In addition, the court was much more concerned about the line between federal and state authority.

So what did this decision mean for team building? We can get some insight into what a counterfactual might have looked like by examining other professional sports. Other sports leagues behaved as if they had an antitrust exemption as well until 1957, when the Supreme Court oddly ruled that the antitrust exemption was an anomaly given to only baseball, and the other major sports were in fact subject to antitrust laws.

Unfortunately for football, hockey and basketball players, making sports leagues subject to antitrust laws did not lead to more evenhanded player control rules. The leagues instituted other expedients to limit the impact of the Court’s ruling on player freedom. For example, the National Football League introduced the “Rozelle Rule,” named after Commissioner Pete Rozelle, which gave him the power to decide on compensation to a team losing a free agent from the team signing one. The fear of losing one’s top players or draft picks as compensation was a strong deterrent against signing players at the expiration of their contract. Not until the 1970s and 1980s did the other sports begin to have true free agency.

The players in these other sports benefited indirectly, however, from the emergence of rival leagues. The antitrust laws tempered many of the more blatant actions–such as the blacklist and inducing players to break contracts–used by Organized Baseball against the Federals. These laws clearly made a difference. Successful rival leagues emerged in all three other major professional sports. The existence of these rival leagues benefited the players as the competition for their services helped drive up salaries. Roster building took on its own challenges as owners and GMs addressed both possible defections from their own squad and the potential new source of talent by going after players in the competing league. With its antitrust exemption baseball was effectively immune from this competition. After the demise of the Federal League, no competing major league ever again took the field.

For more on the Federal League settlement see this book.

 

Howie Roseman Proves a Skillful Team Builder

Saturday’s Minneapolis Star Tribune had a great article on Eagles GM Howie Roseman’s building of that team.  Owner Jeffrey Lurie encouraged the team to be aggressive both off and on the field—as highlighted by the fourth down call at the one-yard line at the end of the first half—and both Roseman and coach Doug Pederson took his directive to heart.

Roseman used all avenues to find players—one of the trademarks of great GMs.  He traded five picks to move up to number two overall to draft QB Carson Wentz.  When Wentz was ready to start, the Eagles traded starting QB Sam Bradford for a first and fourth round draft pick, also freeing up cap space which they used to sign free agent WR Alshon Jeffrey.  CB Ronald Darby and DT Timmy Jernigan came via trade, as did Jay Ajayi during the season for a fourth round pick.  Overall, eight of the Eagles starters were acquired in 2017.  The team also has its own Moneyball-market inefficiency philosophy: high draft picks that didn’t pan out with their original team.  Philly’s roster has 20 players who had been either first or second round picks.

The Trade Deadline (1922)

Part 5 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.

 

DuganJoe
Joe Dugan

On July 23, 1922 the New York Yankees sent Boston Red Sox owner Harry Frazee $50,000 plus three reserves and a pitcher to be named later for third baseman Joe Dugan and outfielder Elmer Smith. For the Yankees, the key player was Dugan, a highly regarded 25-year-old. For the Red Sox, the key was the money. Since the sales to New York of Carl Mays in 1919 and Babe Ruth after that, Frazee had been cashing in his players, mostly to those same Yankees. Dugan was one of the last of his prized players.

While not prohibited—the trade deadline at the time was August 1–these late July transactions by contenders were generally frowned upon. On the day of the deal the Yankees were in second place in the American League, 1.5 games behind the St. Louis Browns. Not surprisingly, the Browns organization and its fans went berserk. Though Dugan was pretty much an average player in New York, the Yankees overcame this small deficit over the last two months of the season to edge St. Louis by a single game.

The previous season the National League had witnessed a similar episode with a more significant player. On July 25, 1921 the Giants purchased star left fielder Emil “Irish” Meusel from Philadelphia Phillies’ owner William Baker. The Giants were running second, four games behind the Pittsburgh Pirates, and New York manager John McGraw wanted a third capable outfielder to go along with Ross Youngs and George Burns. To land Meusel, McGraw surrendered two players and $30,000, though the cash was not reported until several weeks later; it was originally described as a straight trade. Baker had been gutting his ballclub; at the time of the Giants deal they stood 25-62, and Meusel was one of the few good players left from what had been a fine team during the war.

MeuselIrish
Irish Meusel

To shield himself from the ire of his fellow magnates and his team’s fans, Baker charged Meusel with “indifferent” playing and claimed he had suspended Meusel several days before the trade. Suitably riled, Commissioner Landis investigated and determined that Meusel had not been suspended or even accused of malingering by his manager; Baker had simply fabricated the story. Nevertheless, Landis allowed the deal to stand.

The Meusel deal became especially galling for Pittsburgh when the Giants swept them in a crucial five game series at the end of August, with Meusel acting as the catalyst, hitting .500/.556/.938 for the series. By the end of the season the Giants had taken over first place, capturing the pennant by four games over the Pirates.

When the other free spending New York club made its similar pennant-changing deal a year later, the non-selling owners had seen enough. It wasn’t so much the trades themselves, but the perception of buying the pennant by the New York teams. The Giants had long been the biggest spending team and best in the National League, and once Jacob Ruppert and Til Huston bought the Yankees they were assuming the same role in the AL. In 1922, the two New York clubs met in the World Series for the second straight season, and would again the next year as well.

To confine most of the dealing to the offseason, at the joint major league baseball meeting on December 14, 1922, the owners voted to institute a June 15 non-waiver trading deadline. (Intra-league trades only – inter-league deals remained prohibited until 1959.) Any player moved after that date would have to clear waivers. Further testifying to the resentment of the owners and Commissioner Landis, they even considered a provision that would have prohibited the previous year’s pennant winners from making any in-season deals with other major league teams.

Sixty-four years later – in 1986 — the owners moved the trading deadline back to July 31, as much of the original impetus for the earlier deadline no longer applied. This six-week difference in the middle of the season has proved to be meaningful. For the vast majority of teams, it is almost impossible to decide whether to be a buyer or seller by June 15. Too much baseball remains to be played. Today teams can get a pretty good handle on their squads before deciding which way to move, and the later trade deadline has generated heightened publicity as teams concoct their often blockbuster deadline deals.

 

The Sale of Babe Ruth (1920)

Part 4 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.

 

Jacob Ruppert
Jacob Ruppert

When American League president Ban Johnson orchestrated the creation of an AL franchise in New York in 1903, it was with the hope that it would become one of the flagship teams in the league. This did not happen right away, as the team mostly struggled both on the field (no pennants for its first dozen years) and off (a pair of unsavory owners). The tipping point in the story, arguably the most important event in Yankee history, was the purchase of the club in 1915 by Jacob Ruppert and Tillinghast Huston. Within a few short years, the AL had its strong team, one that would compete both in New York (where the Giants had long dominated the city’s interest) and in all of baseball. Ruppert, whose family owned one of the country’s biggest breweries, was one of the first truly rich men active in the game, and dedicated the remainder of his life to the greatness of his team.

In 1915, a willingness to spend money to build a great team could only take you so far. Teams primarily acquired fully-seasoned players from the minor leagues and hoped that a couple would turn into stars. For the first few years of Ruppert’s tenure he relied on his field managers to advise on potential deals (there were no general managers yet), and the Yankees were active whenever talent became available. When they purchased the team during the Federal League war, the AL promised the new Yankee owners that some major leaguers would be made available from existing teams. The other AL owners proved not quite as openhanded, and the Yankees could only purchase Wally Pipp from the Tigers and Bob Shawkey from the Athletics. They landed a few others from the Federal League when that league disbanded. Ruppert’s first big purchase came a year later: Frank Baker from the Athletics for $37,500 when Connie Mack was completing the selloff of his stars. The talent had improved, but players like Baker were not available very often.

FrazeeHarry
Harry Frazee

Fortunately for the Yankees, Ruppert soon had another willing seller. The Boston Red Sox won four pennants in the 1910s, but their owner Harry Frazee was feeling a financial squeeze from his purchase of the team and Fenway Park, and a variety of theatrical interests. With several financial issues coming to head in 1919 and 1920, Frazee found himself severely cash-strapped. Frazee was a New Yorker and a social friend of Til Huston, and Ruppert had plenty of money. Frazee’s most sellable assets were his ballplayers.

By 1919 Red Sox star Babe Ruth was one of the best pitchers in the game and also one of the best hitters. After winning 65 games with a 2.02 ERA in his first three seasons, Ruth gradually transitioned to the outfield in 1918 (winning 13 games while leading the league in homers) and 1919 (winning 9 games and setting an all-time record of 29 homers). Along with Washington pitcher Walter Johnson, Ruth was one of the two best players in baseball.

With his financial squeeze mounting, on January 5, 1920, Frazee announced the sale of Ruth to Yankees. Frazee received a record sum of $100,000: $25,000 up front and three promissory notes of $25,000 each at a 6 percent interest rate, due in November 1920, 1921, and 1922. In addition, Ruppert lent Frazee another $300,000 to be secured by a first mortgage on Fenway Park. Without Ruth, the Red Sox – winners of four of the previous eight World Series – would not finish over .500 until 1934 and would not win the Series until 2004.

Frazee was not done, not by a long shot. Over approximately six years, Ruppert sent about $450,000 to the Frazee (plus the loan), and received an extraordinary haul of players. Besides Ruth, the Yankees also acquired Joe Dugan, Everett Scott, Carl Mays, Joe Bush, Waite Hoyt, Sam Jones, Wally Schang, and Herb Pennock, among others. When the Yankees won their first World Series in 1923, former Red Sox made up four-fifths of their starting rotation and four of their starting eight position players.

For more on the Harry Frazee’s sales, read this article.

It was probably inevitable that the Yankees would become the game’s greatest team. Jacob Ruppert was a rich owner devoted to spending his money to build a winner, and unlike many other owners he did not take cash distributions from his team, but reinvested in his ballclub. Just as important, he was a brilliant judge and manager of men. He built an extraordinary front office that became the model of all front offices to come. He hired Ed Barrow as general manager and two great managers (Miller Huggins, and then Joe McCarthy), all of whom he supported completely. He built the game’s greatest ballpark – Yankee Stadium – and soon drew the biggest crowds. But the suddenness of the rise was due mainly to the largesse of the Red Sox and Harry Frazee. The Red Sox had been the dominant team in the league for its first two decades, and Frazee essentially transferred all of the club’s talent to New York.

After two World Series losses, the Yankees championship in 1923 marked them as the marquee team in baseball. In the ensuing century they have usually been very well capitalized and very well run, and have largely retained their status as the best franchise in the game. For most successful teams in the past century, keeping up with or overtaking the Yankees has often been one of their most challenging obstacles.

New York Yankees great Babe Ruth

The Federal League War (1914)

Part 3 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.

 

In the spring of 1913 the Federal League began operation as an independent (unaffiliated with Organized Baseball) minor league in several large Midwestern cities. Since the AL-NL peace agreement a decade earlier, Organized Baseball had generally left these typically small independent leagues alone as long as they didn’t try and infringe on any established contracts or agreements. If they did, even in the slightest, Organized Baseball, often led by American League President Ban Johnson, descended on them aggressively.

At first, the Federals had little desire to challenge the establishment, mostly signing top local semi-pro players and a few aging ex-Major Leaguers and minor league journeyman. As the 1913 season wore on, however, some of the Federal League owners began considering a major league challenge, as the AL had done successfully in 1901.

Acting quickly, in late summer the FL brought in Jim Gilmore, a glib, well-connected Chicago businessman, as league president and began looking for wealthy league owners. Gilmore had an early success when he induced Chicago restaurateur Charles Weeghman to take over the Chifeds. During the fall the league made a few marginal player signings, but nothing that would generate any real buzz. Weeghman changed this.

TinkerJoeAfter the 1913 season the Cincinnati Reds sold player-manager Joe Tinker, the shortstop of the Cubs famous Tinker-to-Evers-to-Chance infield but no longer a star player, to Brooklyn for $25,000, a huge amount for the time. Under normal circumstances Tinker would have had no leverage. But with the FL threat afoot he demanded a $10,000 bonus and a three-year contract at $7,500 per year. Brooklyn agreed to the $10,000, but only a $5,000 annual salary at the time when top stars made roughly $9,000 – $12,000 and a mid-level regular around $3,000.

On December 27, 1913 Weeghman shocked the baseball establishment by signing Tinker to one of the largest contracts in baseball history, $36,000 for three years with $12,000 up front. The Federals had loudly signaled that they were ready to sign any player whose contract with Organized Baseball had expired. Over the next several months the Federals pursued many of baseball’s top stars and many from the high minors. They did not land many, but changed the market for all major league players.

A primary goal of any Organized Baseball team in 1914 was now simply to prevent the Federals from poaching its players. NL and AL owners resorted to underhanded tactics that would have been illegal under federal antitrust law, including blackballing players who jumped to the upstart league. More importantly, the new competition required Organized Baseball to nearly double its salary scale over the next couple years. In fact, only a handful of recognizable names jumped, several of whom were past their prime and became managers, such as pitcher Three Finger Brown and first baseman George Stovall. The Phillies lost the most players, including shortstop Mickey Doolin, second baseman Otto Knabe, and pitchers Ad Brennan and Tom Seaton.

During its first major league season in 1914, Federal League owners struggled to show a profit, with several clubs losing huge amounts of money. Once secret peace negotiations broke down in early November, the FL went back on the offensive, signing several significant players away from the major leagues, such as pitcher Pol Perritt, catcher Ivey Wingo, and first baseman Ed Konetchy.  But they still longed for a true superstar, and set their sights on Washington’s Walter Johnson, baseball’s best pitcher. Although Johnson had rebuffed them during the previous summer, he had seemed willing to listen.

JohnsonWalterWeeghman sent his manager Tinker, the Federal’s best spokesman, to Coffeyville, Kansas, to woo Johnson to the Chifeds. Tinker’s timing just happened to be perfect. After Johnson returned to Coffeyville that October he had received a contract in the mail from Senators owner Ben Minor offering just $12,500. When Tinker showed up on December 3, it took the two only 20 minutes to agree to a three-year contract at $17,500 per year. The Federals had finally made their game-changing signing and appeared to have materially changed the dynamic between the leagues.

Organized Baseball counterattacked swiftly. Washington manager and minority owner Clark Griffith hustled out to Kansas to meet with Johnson.   After a long grueling meeting in which he alternately called on Johnson’s loyalty and emphasized the negatives of the Federals, Griffith cajoled Johnson to disregard the contract he had signed with the Federals and re-sign with the Senators. Organized Baseball similarly managed to corral several other recent jumpers back into the fold.

Johnson’s defection back to Washington, along with many of the other players, devastated the FL’s owners. They felt like they had been fighting fair, generally going after players controlled only by the reserve clause, while Organized Baseball disdained the Federals, treating their contracts as if they did not exist. The Federals went to court to try to enforce the Johnson contract and several others, and to defend themselves from Organized Baseball’s own legal attacks, but these cases were costing the Federals tens of thousands of dollars.

The Federals decided to use the largest legal hammer they had, suing Organized Baseball for violating federal anti-trust laws. The FL’s attorneys wanted a sympathetic judge, and elected to file in Chicago in the court of Judge Kenesaw Mountain Landis, known as a trust buster. But despite Landis’s unspoken belief that Organized Baseball was acting in violation of antitrust laws, he refused to rule against them. In fact, he refused to rule at all. He simply sat on the case for all of 1915. At the end of the year, the Feds threw in the towel and reached the best settlement they could, receiving about $700,000 from the major league baseball owners and folding their league. Several owners, including Weeghman, were allowed to buy into major league teams. The NL and AL owners remembered Landis five years later when they named him baseball’s first commissioner.

After the Federal League folded, the power to completely control player movement returned to the clubs and salaries returned to their pre-FL levels. Had Walter Johnson and a few of his fellow major leaguers followed through on their contracts with the Federals for 1915 the league may have survived several years longer. If the FL had still been around a couple years later when America’s entry into the Great War dramatically cut into baseball’s profits, Organized Baseball may have been willing to cut a deal with the Federals that would have left a substantively different major league structure. One thing is for certain: like in 1903, the major leagues would not have allowed the salary explosion caused by the new league to stand.

For more on the Federal League Battle with Organized Baseball see this book.

 

 

The AL-NL Peace Agreement (1903)

Part 2 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.

 

Whatever one might think about the quality and style of the baseball played in the 19th century — the great players, the exciting pennant races, the personalities, the stories, the romance — we should all agree on one thing: for the historian interested in team management or roster building, it was a bit of a mess. There were five different major leagues (counting the National Association, whose major league status is disputed); there were teams that moved cities (including in the middle of a season), disbanded, or merged with other teams. There were owners who controlled multiple teams and swapped players between them at will. There were minor league teams that joined major leagues in mid-season. Some of these teams played only a handful of games in their history, but are still considered “major league” teams today, and their players have the same status in the record book as Willie Mays.

After the American Association folded in 1891 (technically a merger, and four of its teams joined the NL), the National League enjoyed the first stable period of its existence, and exploited its status as the only recognized major league. From 1892-1899, the single 12-team league had the same teams in the same cities, and enjoyed some of its more famous seasons. The Baltimore Orioles and Boston Red Stockings of the 1890s were legendary clubs.

In 1900 the National League dropped its four weakest franchises, providing the

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AL President Ban Johnson

opening for the American League (a strong minor league at the time) and its imperious president, Ban Johnson, to vie for major league status. The 1901 American League (now a self-described “major league”) would be made up of a mix of current NL cities (Boston, Philadelphia, Chicago), and former NL cities (Baltimore, Washington, Detroit, Cleveland) plus Milwaukee. Within two years they moved into New York and St. Louis.

The NL still had the best players, and the reserve clause meant that a challenge would be a tough slog. The AL respected the NL’s contracts, but not the reserve clause, and spent the 1900-1901 offseason traveling the country trying to sign NL players whose contracts had expired. Since nearly everyone had one year contracts, this offered a large field. For their efforts, the AL owners landed many of baseball’s top stars –including Jimmy Williams, Nap Lajoie, Jimmy Collins, and Cy Young—players who had never before known competition for their services.

Within a year it was obvious that the AL was a serious competitor – it was well capitalized, its franchises were in big cities (matching the NL in attendance for the 1901 season), it had good players, and it was unified under a powerful and competent president. Much more unified, in fact, than the constantly feuding and self-interested NL owners.

For about two years, major league players had options. Those who did not switch leagues – men like star shortstop Honus Wagner – could at least bring a little more leverage into negotiations with their current club.

The low point in AL-NL discord came in 1902, and ultimately led to the destruction of the AL’s Baltimore franchise. The Orioles (not the same as the 1890s Baltimore NL club that had folded) were managed by John McGraw, an NL star from the 1890s whose brand of umpire-baiting and general ruffianism put him at odds on a near daily basis with President Johnson, who wanted his league to be a cleaner, more respectable affair. Sensing an opening, the two most scheming NL owners decided to pounce. Cincinnati owner John Brush convinced McGraw to quit the Orioles and move back to the NL to manage the New York Giants in the middle of the 1902 season. Giants owner Andrew Friedman, Brush, and confidants then followed up by purchasing a controlling interest in the Orioles and releasing many of the best players. McGraw quickly directed many of his former charges to re-sign with him and the Giants.

Johnson had been itching to challenge the NL in New York. With the Orioles now decimated on the field and with a muddled ownership, Johnson had his chance. He soon announced that the AL would replace the Orioles with a new franchise in New York City, competing directly with the Giants. Freedman, who didn’t really like baseball anyway, sold the Giants to Brush, who in turn sold the Reds to local Cincinnati businessmen. The new Reds owners named August Herrmann as team president. The resultant National League – losing Freedman and gaining Herrmann — proved to be one of the more important upgrades in league history.

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Barney Dreyfuss

Without Freedman, a remarkably divisive figure, the remaining NL owners – led by Pittsburgh’s Barney Dreyfuss – soon agreed to peace talks with the American League. The resultant agreement essentially recognized the AL as an equal partner. The leagues remained separate legally, but once they agreed to recognize each other’s reserve lists the leagues were effectively a single monopoly that controlled the careers of its players. The emergent two-league 16-team setup made no changes to its map for 50 years, not until the Boston Braves moved to Milwaukee in 1953.

Sealing the partnership, at the end of the 1903 season the NL champion Pittsburgh Pirates and the AL champion Boston Americans agreed to play a series of games to determine baseball’s true champion. This became an annual event — the World Series – and has been played in 113 of the past 115 seasons.  The major leagues, as all of us came to know them, truly came into existence in 1903.

 

 

The Reserve Clause (1879)

Part 1 of our series on Important Moments in Team Building.  See introduction, and up-to-date list.

 

Arthur Soden

Boston Red Stockings owner Arthur Soden had a problem. He and the other National League magnates, who had set up their new league just a few years earlier, were losing money. Over the NL’s first three seasons no team turned a profit, and in 1879 only Providence had made money. It was not supposed to be this way. When their league was established in 1876, the NL owners thought they had addressed the flaws of its predecessor, the National Association. Under the leadership of Chicago owner William Hulbert, the man who should really be considered the father of American sports leagues, at its start the NL agreed on four principles soon taken for granted.

First and foremost the owners took control over who could be a member, creating what we now refer to as a “franchise”. No longer could ten guys from Keokuk, Iowa — who might have ponied up a dollar each for the $10 entry fee — compete with established teams from Boston and Philadelphia (as had happened with the National Association). Secondly, the owners granted territorial exclusivity to their member teams. Also, the league created a common schedule so that teams played a similar amount of games against the other teams in the league – the National Association left it up to their member teams to schedule games as they wished, meaning that some teams played vastly more games than others. Lastly, the league registered player contacts with a central office so that teams could not poach players under contract to other teams.

Nevertheless, it was not enough. Most significantly, with most players on one-year contracts, once a season concluded teams would lure players from their competitors by offering higher pay or other perks. Salaries in those early NL years consumed nearly two-thirds of a team’s operating budget. Not surprisingly, having players “revolve” between teams also hurt fan interest. As the financial losses piled up, teams disbanded on a nearly annual basis. Only the fact that some new hopeful would pop up to take their place kept the league from folding.

After four years of this, Soden had a solution. He recommended that each team be allowed to “reserve” five of their contracted players (which was about half of the team) for the next season—no other team would be permitted to sign them. On September 30, 1879 Soden’s scheme was secretly adopted by the National League. Once implemented, the system had its desired effect. Salaries fell dramatically, profits rose, and the league’s franchises became much more stable. The reserve system proved so successful for the owners that they eventually made it public and expanded it to nearly all the players.

With no competition for their services, reserved players had little recourse other than to hold out – to refuse to sign their contract. The associated threat that the player would retire to some other line of work was hardly more than a hopeful bluff. In a period of less than a decade players had gone from being able to jump from team to team for better salaries to being tethered to whatever team held their contract, effectively forever. The launch of the American Association as a competing major league in 1882 offered new competition for the players, but the respite was short lived as the two leagues quickly agreed to respect each other’s reserve lists.

John M. Ward

The players had one brief stab at power a few years later under the leadership of John Montgomery Ward, a star infielder with New York. Ward organized the first real players union, the Brotherhood of Professional Baseball Players, in the mid-1880s. In 1890, with backing from wealthy investors, the players launched their own league, the Players League. Once again salaries soared, but this time the National League fought back in the courts, arguing that the reserve clause, now inserted into the players’ contracts, legally prohibited players from negotiating with any other team. The NL owners did not win any of these challenges, and the Players League landed many of the top stars.

In the end, however, it didn’t matter. The Players League folded after just one year; the National League and American Association continued to agree to respect one another’s reserve lists; and the players once again had no leverage. Owners and GMs could go about their team building with only the most cursory concern over the desires and needs of their players.

The reserve clause remained a bedrock principle of the major leagues for the next 85 years. Even after an arbiter, and various collective bargaining agreements, chipped away at the scope of the clause beginning in the 1970s, most major leaguers (all those with less than six years service time) are bound by the clause to this day.

Today, much of the hot stove talk is around where various free agents are likely to land and their impact on a team’s chances in the coming year. Under the reserve clause regime there was no way to access significant mid-career players other than through trades or outright purchases from other teams. The former obviously required surrendering one’s own talent while the latter was only available under unique financial circumstances. For nearly a century, Soden’s 1879 brainstorm defined player-owner relations and narrowed teams’ roster options.

 

Important Moments in Team-Building

Three years ago, as our book was getting ready to launch, we wrote a blog series to count down the 25 best GMs in baseball history.

As our paperback is going to be released this spring, we are writing a new blog series to discuss 25 “Important Moments in Team Building.”  This series will run chronologically and, if read in order, will provide a broad history of the changes to the game that have effected player movement and the general manager.

The series wills start on Monday, January 29, and (hopefully) will run for 25 consecutive week days.  Thanks for reading!

1.  The Reserve Clause (1879)

2.  NL-AL Peace Agreement (1903)

3.  The Federal League War (1914)

4.  The Sale of Babe Ruth (1920)

5.  The Trade Deadline (1922)

6.  The Anti-Trust Exemption (1922)

7.  Branch Rickey’s Farm (1925)

8.  The Farm System Goes Legit (1932)

9.  Chasing Pennants in Boston (1935)

10.  Jackie Robinson (1947)

11.  Bonus Rule (1953)

12.  Interleague Trading (1959)

13.  Amateur Draft (1965)

14.  Collective Bargaining Agreement (1968)

15.  Free Trade (1971)

16.  Binding Salary Arbitration (1973)

17.  Catfish Hunter (1974)

18.  Andy Messersmith (1975)

19.  Pat Gillick and the Rule 5 draft (1977)

20.  Free Agent Compensation Draft (1982)

21.  Collusion and Tim Raines (1987)

22.  Albert Belle (1996)

23.  “Moneyball” (2003)

24.  The Theo Epstein Effect (2004)

25.  The Latest CBA (2016)

Mark and Dan

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Coming Soon: The Paperback! (And more blogging!)

In April 2018, In Pursuit of Pennants will be available in paperback!  The University of Nebraska Press is currently taking pre-orders, and I am sure your favorite on-line retailer will have the book at a much lower price when the time comes.

In the meantime, we plan to do some blogging here to get people ready for the launch.  Three years ago we counted down the list of the Top 25 GMs in history, one blog post at a time.  We have since revised this list, and it will appear in the paperback.

This time we will be blogging the biggest team building stories in history.  Coming soon!  In the meantime, enjoy the holidays.

— Mark and Dan

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