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TeamBoone
04-14-2006, 12:47 AM
Wednesday, April 12, 2006 1:13 AM PDT

The dreaded reserve clause

A few weeks ago in my copy of “USA Today,” an article buried deep in the sports section of the paper almost knocked my socks off.

It was a story on Major League Baseball’s winners and losers in a game in which the players and their union now run the asylum — a far cry from my growing up years when the Lords of Baseball (owners) invoked their dreaded “reserve clause” and players (employees) faced a take-it-or-leave-it decision.

The story included a table showing the 100 players who sought arbitration from a referee. Team by team, player by player, the table disclosed what the young athlete earned in the 2005 season, what he was asking for in 2006, what the team was offering and the arbiter’s final decision.

As I scanned the list, one player stood out like alarm bells were ringing. Now, I’ve never met the young man named Adam Dunn, an outfielder with the hapless Cincinnati Reds, but one thing I knew for sure and that was that his agent was no piker. I thought his demand was bizarre and outrageous.

Adam, all of 26 years of age, had earned $4.6 million in 2005, in a season in which he was one of nine major leaguers to hit 40 or more home runs.

But, he carried some heavy baggage in terms of a less-than-marginal .247 batting average and a major league-leading 168 strikeouts, a blemish he couldn’t hide.

The Reds had offered him a surprising $2.5 million-dollar raise to bring his 2006 salary up to $7.1 million, yet Adam and his agent were shooting for a cool $9 million.

The arbiter set his price at $7.5 million and Adam had to settle for a lousy $46,296 per each three-hour game he played — or didn’t play in.

That one-game sum is higher than the average salary Americans earn for a full year’s worth of work.

So moms and dads out there, buy your sons a baseball bat and fielder’s glove and encourage his love for the “Grand Old Game” — you never know!

A thought occurred in the form of a question, and that was how this insanity reached a state and a level where moms and dads and their kids were squeezed out of a visit to a big league ballpark by the ticket prices now staring us in the face.

For the answer to that question, we have to go back to the very beginning of the founding of the National League at the Grand Central Hotel in New York City in Feb. 1876.

Beginning with eight teams — Boston, Philadelphia, New York, Hartford, Louisville, Cincinnati, Chicago and St. Louis — the National League put the beer and whiskey leagues and rampant betting and fist fights in the stands out of business.

The league set up schedules in well-policed ballparks, banned Sunday baseball in deference to religious groups, and soda pop and hot dogs were the staples that permitted the league to flourish.

But, the league did something else.

By 1879, in an effort to end players jumping from one team to another for more money, the league found a terrific cure-all. They introduced the dreaded reserve clause that shackled players to one team for the next nearly 100 years.

In short, what the clause meant was that players (employees) would play for whatever the Lords wished to pay them, and if a player refused to sign a contract he could go back to the farm, factory, or mine in some jerk water town from whence he came — but, that player would be banned for life from playing in any organized baseball league in a game he loved.

I think Ralph Kiner, one of the first post World War II sluggers, said it best. Ralph, a New York Mets broadcaster for many decades, told his sad story once every season. Ralph, over radio or television, would recall his sad experience under the reserve clause.

Kiner had led the National League in home runs and runs batted in one season and expected a decent raise in salary.

So back in his California home that offseason, a contract well over his $12,000 stipend for the previous season was expected. Well, the contract arrived and his shoulders slumped when he read it.

The Pittsburgh Pirates had cut his salary by 20 percent, which in Ralph’s frame of thinking, had to be a gross mistake.

So he made what he called an “expensive” phone call to Pittsburgh and the Pirates front office — and lo and behold his boss, General Manager Branch Rickey, was on the other end of the line.

Branch Rickey, by the way, was the man who it was said invented the technique of tossing out a nickel and having the same nickel roll back to him and jump into his pocket.

After Mr. Rickey got through congratulating Kiner for the outstanding season he had, Ralph finally made his pitch.

“Mr. Rickey, I think there’s a mistake in my contract, sir. It calls for a 20-percent cut in my salary.”

Branch Rickey then recited the facts of life to his employee with a “No mistake, my boy. We finished last with you, Ralph, and we can finish last without you.”

Bob Murphy, Kiner’s broadcasting sidekick, would listen to Ralph’s story and say, “What did you do, Ralph?” and Kiner would laugh and say, “I signed that contract — what else could I do?”

The dreaded reserve clause finally fell in the late 1970s thanks to a U.S. Congress that stopped the Lords of the game in their tracks.

I wonder if the young “Big Leaguers” playing the game today know how lucky they are.

Ace Parker can be reached at evjenpar@mailbug.com or 224-9956.

http://www.napavalleyregister.com/articles/2006/04/12/sports/local/doc443c7ee2c18c6400162338.txt

The Baumer
04-14-2006, 01:06 AM
I got 100 dollars that this writer never even heard of Dunn before reading that article.

TeamBoone
04-14-2006, 01:22 AM
It certainly was a very uneducated view.

I swear, being a sports writer has got to be one of the best jobs. It doesn't matter if you do your homework so long as you turn in something by your deadline.

westofyou
04-14-2006, 01:24 AM
The dreaded reserve clause finally fell in the late 1970s thanks to a U.S. Congress that stopped the Lords of the game in their tracks.

Between the early 50's and the late 60's the MLB minimum remained the same, that helped keep salaries down. Most Ballplayers don't play but 3-4 years, when the bottom of the rung is set so low, the climb up is a slow trek and thus most never made a dime playing ball back then.

OTOH before the institution of the income tax there were some rich folks around that made so much money that most of their families never had to work again, some since the 19th century!!

westofyou
04-14-2006, 01:25 AM
I swear, being a sports writer has got to be one of the best jobs.Napavalley Register is a small town, regional paper, the guy probably spends most of his writing on HS sports and maybe a bike race in the Valley.

RedsManRick
04-14-2006, 01:57 AM
Somebody needs to learn some economics. People charge prices relative to what people will pay. Assuming they are intelligent, they do this in such a way that profit is maximized. Given the right to maximize profit (for owners to set ticket prices and negotiate media contracts as they see fit), there will be $X billions of dollars of income generated by the collective industry for the product it produces. Each person within that industry will be given a piece of the profit such that system wide profit continues to be maximized. This is the case in every industry.

If we were back under the reserve clause and the Reds said "Adam, you are going to sign for 500 grand this year or you won't play" that extra money not given to Adam Dunn would instead go to Bob Castellini. Is this somehow more fair? That the persons who drive the industry should not reap the benefits of their labor? Somehow this guy things one of two things:

a.) If baseball players didn't get paid so much, tickets and hotdogs would be cheaper

OR

b.) Owners should be able to make 50 million dollars a year in pure profit because they own the team and control the players. Players should leave the industry altogether if they don't like it.

Either way, I really wish I hadn't gone to college -- sounds like you can get a good gig writing without intelligence these days. I hope he realizes that he gets paid more in a single day to write a stupid article than many people in 3rd world countries make in a single year. He should volunteer for a paycut!

Buckaholic
04-14-2006, 03:09 AM
Someone help me with the "uneducated view" part because of this article. It was a decent article with some interesting information and intriguing quotes.

The guy has a relatively decent point that baseball salaries are out of control, and players are in fact extremely lucky they have the ability to make an insane amount of money for playing baseball. I happen to agree with the writer's assertion as a whole.

I don't find anything wrong with his view point. The article won't win him a pullitzer prize for the quality of his work, but it was a pretty good read in my opinion.

Caveat Emperor
04-14-2006, 03:20 AM
Someone help me with the "uneducated view" part because of this article. It was a decent article with some interesting information and intriguing quotes.

The guy has a relatively decent point that baseball salaries are out of control, and players are in fact extremely lucky they have the ability to make an insane amount of money for playing baseball. I happen to agree with the writer's assertion as a whole.

I don't find anything wrong with his view point. The article won't win him a pullitzer prize for the quality of his work, but it was a pretty good read in my opinion.

Basic point is thus:

There is a "market price" that fans will pay to watch Baseball be played -- a level where the price is not "too expensive" such that nobody shows up and the ballpark is empty. This price that fans are willing to pay stays the same no matter how much money the players make. If tickets were really "too expensive" nobody would show up at the ballpark and teams would be forced to reduce ticket prices in order to lure fans back. Since MLB is seeing attendance up everywhere, it indicates that tickets are priced at just about the correct "market" level.

The fallacy of the argument being made by this author is that, but for the millions and millions of dollars the players make, ticket prices would be really cheap. That's false -- if every major league player made $5.50/hr, tickets would still cost about the same as they do right now, because that's how much people are willing to pay. The only differnece is that the owners would just stick the money in their pocket instead of paying to to the players.

Case in point: the Florida marlins have, far and away, the lowest payroll in the majors this year. However, their ticket prices are roughly the same as they were when they were fielding a World Series champion. The savings resulting from reduction in payroll cost wasn't passed on to the fans in terms of cheaper tickets -- the owners are just putting the extra coin into their pocket.

SteelSD
04-14-2006, 03:23 AM
The interesting thing is that the Reserve Clause is the only thing players could attack legally because no unionized employee can file a suit for an anti-trust issue.

Most folks don't realize that Curt Flood actually lost and that Dave McNally (who was retiring) and Andy Messersmith were the guys who broke down the Free Agency barrier.

The real issue that made the owners cave was that arbitor Peter Seitz' ruling would have allowed players to become Free Agents if they played a single season after not signing a "renewal" contract. Faced with near-complete free agency, the owners negotiated a settlement with the player's union that allowed both Free Agency and arbitration.

And all that being said, choosing professional baseball as one's profession still requires a certain amount of near-indentured servitude to a team. That's the way it is and pro players knowingly trade freedom for the chance at big bucks every day.

Buckaholic
04-14-2006, 03:56 AM
Basic point is thus:

There is a "market price" that fans will pay to watch Baseball be played -- a level where the price is not "too expensive" such that nobody shows up and the ballpark is empty. This price that fans are willing to pay stays the same no matter how much money the players make. If tickets were really "too expensive" nobody would show up at the ballpark and teams would be forced to reduce ticket prices in order to lure fans back. Since MLB is seeing attendance up everywhere, it indicates that tickets are priced at just about the correct "market" level.

The fallacy of the argument being made by this author is that, but for the millions and millions of dollars the players make, ticket prices would be really cheap. That's false -- if every major league player made $5.50/hr, tickets would still cost about the same as they do right now, because that's how much people are willing to pay. The only differnece is that the owners would just stick the money in their pocket instead of paying to to the players.

Case in point: the Florida marlins have, far and away, the lowest payroll in the majors this year. However, their ticket prices are roughly the same as they were when they were fielding a World Series champion. The savings resulting from reduction in payroll cost wasn't passed on to the fans in terms of cheaper tickets -- the owners are just putting the extra coin into their pocket.

I would imagine if you stack up the inflation of baseball salaries against the raise in the average median income, at least by way of percentages, you will find that the baseball salaries have a much higher rate of inflation. Accordingly, I would imagine you will find the price of the average baseball ticket in most average or small markets have also risen higher than the average household income.

It's not hard to understand that the ticket prices have gone up because the player salaries have gotten so large. When owners are forced to pay these salaries to stay competitive, they in turn raise the price of tickets to budget the extra expenses.

If each player on a 25-man roster takes 10% off their salaries (assuming an average club payroll of $60 million), that extra $6 mil could theoretically lower the average ticket price by $2.40. You don't think the average family of four could afford a baseball game much easier saving 10 bucks right off the top?

It's simple economics, really. The writer's basic assertion is that with salaries being maintained, ticket prices would be more affordable. There is no question that while baseball tickets are still the most affordable of the major sports, the rate in which they've inflated exceeds that of the economy.

You have players making over $20 million a season now. Their production on the market in relative terms might dictate some of them deserve that, but that money is coming directly from the middle class baseball fan(s). In the limited estimates I've seen, gate receipts are responsible for nearly $32-40 million for the average small market baseball club. That's a large portion of a team's budget considering the average payroll is something around $60 mil, and the median is much less, I'm sure as the Mets, Yankees, Angels and Red Sox account for that number being a lot higher.

The example you used of the Marlins is a bad one, in my opinion. Wayne Huzienga has the Marlins locked into such a sick lease that the Marlins take virtually no profits off of club seating, parking or concessions at each game held at Pro Player Stadium. Most of those incomes go directly to Huzienga.

Yes, Huzienga tried pocketing after the World Series victory in 1997. This second time around, the Marlins cut payroll to $19 mil, but I believe there are several reasons for it this time. First of all, as mentioned previously, the Marlins don't take in the same profits that most ball clubs because of the aforementioned lease. Secondly, the Marlins have been staring the possibility of sharing costs to get a new stadium built in either Miami or wherever they move. I don't know all the logistics, but I also imagine shedding payroll was in part because of planning a probable move.

In defense of John Henry, I believe the Marlins had one of the worst reported profit margins in the majors last season (according to Forbes), despite the success they've had the last few years.

Back to my point.

I don't have the time or resources to give the exact number, but I guarantee you if you examine the rate of inflation from the average American salary in the last 10 years to that of the average baseball salary, the baseball salaries have skyrocketed much higher. And it goes without saying the increase in the average ticket price has probably risen at a similar rate, and that's directly or indirectly because of player salaries.

So in summation, his point is that one single player's raise theoretically could take another buck out of the pocket of the average baseball fan. I have no problem with baseball players getting paid millions. I also have no problem paying for baseball games. But when it gets to the point where the average family has a harder time affording a game because of said salaries, the priorities need to change.

Caveat Emperor
04-14-2006, 04:10 AM
If each player on a 25-man roster takes 10% off their salaries (assuming an average club payroll of $60 million), that extra $6 mil could theoretically lower the average ticket price by $2.40. You don't think the average family of four could afford a baseball game much easier saving 10 bucks right off the top?

It's simple economics, really. The writer's basic assertion is that with salaries being maintained, ticket prices would be more affordable. There is no question that while baseball tickets are still the most affordable of the major sports, the rate in which they've inflated exceeds that of the economy.

If the Reds players all got together and voted tomorrow to return 10% of the team's payroll (roughly $6 million dollars), what do you think would be the more likely of two outcomes:

A.) Bob Castellini thanks the players and immediately lowers every ticket price by $3 (projecting a 2 million attendance figure this year).
B.) Bob Castellini thanks the players, takes the $6 million and puts it in the bank.

You're right, it is simple economics. People with a good or service will charge the maximum amount of money that the market will bear for their services. If I sell Caveat's Widgets for $3, but market research tells me that I can sell the exact same amount at $4 per widget, you can bet I'll raise my price immediately because the market will let me turn a higher profit.

It's no different for baseball tickets: a bleacher seat is $10 because the Reds have done research that tells them people will pay that much for that particular seat. Similarly with every other ticket in the house. They sell the tickets at that price because people will pay, not because salaries are out of control.

gonelong
04-14-2006, 10:47 AM
I would imagine if you stack up the inflation of baseball salaries against the raise in the average median income, at least by way of percentages, you will find that the baseball salaries have a much higher rate of inflation.

True, but baseball salaries (both beginning pay rate and raises) were being held artificially low for decades upon end so thats not really a fair comparison.

... as I have said before ... I'd have no problem paying someone $10M a year if I was pretty much convinced I would make $12M a year off them.

GL

macro
04-14-2006, 10:58 AM
A thought occurred in the form of a question, and that was how this insanity reached a state and a level where moms and dads and their kids were squeezed out of a visit to a big league ballpark by the ticket prices now staring us in the face.

Despite all the talk for several years about the cost of attending a MLB game, you can still get into GAB (and many other parks) and watch a Reds game for $5 per person. That's cheaper than going to the cinema or the zoo. A family of four can go to a game for $20 and take their own food/drinks. The articles that I've read over the past ten years about the skyrocketing cost of going to a game have the family of four sitting in $30 seats, buying four $20 caps, two $10 pennants, four $4 hot dogs, and four $4 soft drinks.

I agree that the $5 tickets and carry-in food/drink isn't the most luxurious way to go, and I don't do it, but it can be done. Articles conveniently ignore this option.

westofyou
04-14-2006, 11:13 AM
The guy has a relatively decent point that baseball salaries are out of control,
Professional baseball is on the wane. Salaries must come down or the interest of the public must be increased in some way.

Al Spalding 1878

TeamBoone
04-14-2006, 12:21 PM
Despite all the talk for several years about the cost of attending a MLB game, you can still get into GAB (and many other parks) and watch a Reds game for $5 per person. That's cheaper than going to the cinema or the zoo. A family of four can go to a game for $20 and take their own food/drinks. The articles that I've read over the past ten years about the skyrocketing cost of going to a game have the family of four sitting in $30 seats, buying four $20 caps, two $10 pennants, four $4 hot dogs, and four $4 soft drinks.

I agree that the $5 tickets and carry-in food/drink isn't the most luxurious way to go, and I don't do it, but it can be done. Articles conveniently ignore this option.

I agree that a family of four can go to a baseball game and spend much less than is illustrated in your example.

But, in regard to the $5 tickets and taking your own refreshments, that depends entirely upon which park is being visited.

In the GAB, a family can do what you suggested, provided the $5 seats are available when they arrive at the park, as there are very few (two upper level small sections at the far OF corners).

And, I don't know this for sure, but I think the GAB is one of few parks (if any) where you are allowed to bring in food (other than snacks) and unopened soft drinks/water in sealed plastic bottles. Anybody know of other parks where this is allowed?

IslandRed
04-14-2006, 12:32 PM
And besides...


The dreaded reserve clause finally fell in the late 1970s thanks to a U.S. Congress that stopped the Lords of the game in their tracks.

What the heck did Congress have to do with the Messersmith case?

Dunn's case also never made it to the arbitrator.

RedsManRick
04-14-2006, 01:02 PM
The salary structure as was changed by the elimination of the reserve clause has nothing to with total size of the industry pie. The size of the industry, the total dollars brought in via ticket sales, is a function of supply and demand. What the elimination of the reserve clause did is allow players to have greater control over the size of their slice

There is some interaction insofaras competition between teams for player services puts an upward pressure on prices, but it's not as much as you'd think. At the end of the day, it's still a function of individual players fighting over who gets the biggest slice of pie. The owners are going to make the pie as large as possible regardless of big a piece of it goes to the players.

As other's have poitned out. If Junior only made 500k a year, it would stil cost 20 bucks to go a ball game because at the end of the day, that's the point at which profit is maximized. 20,000 people at 20 bucks a pop is better than 35,000 at 10 bucks a pop.

The only argument I see here is that while lower ticket prices may lead to a sub-optimal profit level in a given year (that is, 50% prices do not lead to twice as much attendence), it would grow interest in the sport over the long term as the ballgame becomes a cost friendly outing in the minds of the consumers. Increased interest would lead to more fans which effects not only attendence numbers, which would arguably rise, but also increase marketing revenue, merchandising, etc. However, that's one heck of a risk to take for an individual team when you still have to compete in the same salary marketplace. Regarding the larger premise, markets have a funny tendency to find the correct equilibirium in this regard.

BrooklynRedz
04-14-2006, 03:27 PM
I agree that a family of four can go to a baseball game and spend much less than is illustrated in your example.

But, in regard to the $5 tickets and taking your own refreshments, that depends entirely upon which park is being visited.

In the GAB, a family can do what you suggested, provided the $5 seats are available when they arrive at the park, as there are very few (two upper level small sections at the far OF corners).

And, I don't know this for sure, but I think the GAB is one of few parks (if any) where you are allowed to bring in food (other than snacks) and unopened soft drinks/water in sealed plastic bottles. Anybody know of other parks where this is allowed?

Tampa.

Buckaholic
04-14-2006, 04:00 PM
If the Reds players all got together and voted tomorrow to return 10% of the team's payroll (roughly $6 million dollars), what do you think would be the more likely of two outcomes:

A.) Bob Castellini thanks the players and immediately lowers every ticket price by $3 (projecting a 2 million attendance figure this year).
B.) Bob Castellini thanks the players, takes the $6 million and puts it in the bank.

I just read an article that quotes Castellini on this basic issue. Are you aware that he has already told all of his minority owners that the 44 club owners are to prepare themselves for not receiving any profit distribution from the ball club? This cat is serious about success. He said the profits will be kicked back into payroll right now.

You're right. Some owners will pocket money. But heck, for as much as a baseball team costs, they have to make some money on the deal, or it's not worth it. That said, not all owners are money-grubbing hounds that will shed expenses just to pocket a few extra bucks at the expense of the fans.

The Reds are fortunate that their ticket prices are still among the cheapest in baseball. Everyone can thank Marge Schott for that, because in the early 1990's as salaries began to boom, clubs began raising ticket prices. However, Schott was committed to keeping them down for the average fan. So even though Lindner and Allen have raised them a few times, they are still pretty cheap in comparison to that of the rest of baseball.

Not every market is quite as lucky, however.


Professional baseball is on the wane. Salaries must come down or the interest of the public must be increased in some way.

Al Spalding 1878

WOY, I'm not prognosticating the doomsday of professional baseball. I think baseball will still continue to survive and flourish, although popularity is not what it once was.

Despite that, the discussion at hand is about this particular writer's opinion baseball should make another attempt to get back to being fan-friendly and keep their best interests in mind. That's really all this is about in his eyes, and that's why he wrote this article to remind players of how it used to be and how lucky they are that it's not.

REDREAD
04-14-2006, 04:56 PM
I got 100 dollars that this writer never even heard of Dunn before reading that article.

I didn't take it as Dunn bashing.. His point was that Dunn almost doubled his salary to 7.5 million due to the threat of arbitration. The writer was wrong that the arbitrator didn't set his salary.

Just another article about how salaries have escalated, largely due to decisions the owners have made. Dunn was just an example because he got a huge raise this year.. Just like Juan Gonzales was an example years ago when he set the record of winning 5 million in arb.. which was considered insane back then.

REDREAD
04-14-2006, 05:08 PM
But when it gets to the point where the average family has a harder time affording a game because of said salaries, the priorities need to change.

Well, the only way things are going to change unfortunately is when attendence drops. Teams struggling for attendence end up having promotions for discounted seats, etc.

It all boils down to: Is it worth the cost for you? If enough fans say no, prices will drop. [Although I don't expect that to happen any time soon, if ever] In the meantime, see a minor league game or use the TV or radio. That's what I do. To me, Carl Lindner's product was not worth the time and hassle to drive down to Cincy with all my kids. It just wasn't fun. Now, I know it was worth it to some other people, and that's fine. But it's not worth it to me anymore. When we get a competitive team again, it will be worth it.

It will be interesting to watch the attendence figures of the Reds games this year. They have been in decline for awhile now (other than the GAB opening year blip up). John Allen's policy was to raise ticket prices to offset declining attendence (he said so in the paper), but obviously, there's a limit to that method.

TeamBoone
04-14-2006, 06:45 PM
I didn't take it as Dunn bashing.. His point was that Dunn almost doubled his salary to 7.5 million due to the threat of arbitration. The writer was wrong that the arbitrator didn't set his salary.


How can you feel that this is not a slight:


Adam, all of 26 years of age, had earned $4.6 million in 2005, in a season in which he was one of nine major leaguers to hit 40 or more home runs.

But, he carried some heavy baggage in terms of a less-than-marginal .247 batting average and a major league-leading 168 strikeouts, a blemish he couldn’t hide.

Again, he makes it sound that these things are super important when they are not if you look at all the other things he excells in (beyond HRs).

seligstinks
04-15-2006, 01:32 AM
What hasn't been mentioned here, is that under the reserve clause, things were not always "peaches and cream-" "outlaw" leagues would come along, ignore the reserve clause, and pay high salaries. The outlaw league would soon either fold, or agree to play under National League rules- including the reserve clause. There were four such leagues listed in the Baseball Encyclopedia between 1882 and 1915- one of them, the American Association, is where the present Reds franchise got started. Another "outlaw" became the American League. The Depression, World War II, and expansion are the probable reasons why no "outlaw" leagues seem to have been attempted after 1915. In restrospect, one wonders not why the reverse clause is no longer in effect; one instead wonders why the reserve clause lasted as long as it did, when any league willing to pay players what they were worth coud have stolen away all the NL and AL's good players.