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Tuesday marks the 50th anniversary of one of the most momentous days in baseball history. On December 23, 1975, MLB arbitrator Peter Seitz ruled that the clause in the standard player’s contract that allowed a team to renew the agreement unilaterally applied only for one year, not in perpetuity. This opened the door for players to play out their contracts and negotiate with any team, and kicked off 50 years of unimagined prosperity for both baseball players and team owners.
As we approach another negotiation between players and owners, at heart are the same issues that were being debated 50 years ago. How much freedom will players have to choose where they play and the amount they’ll play for, and how much freedom will team owners have to compete for those players’ services? Owners -- and most MLB commissioners -- have spent every year since that winter night in ’75 trying to stifle those freedoms, not without considerable success.
I wrote about the Seitz decision ten years ago, on its 40th anniversary, and I republish that piece today.
--J.
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The Joe Sheehan Newsletter
Vol. 7, No. 127
December 23, 2015
Mike Leake signed with the Cardinals yesterday for $80 million over five years, with an option for 2021. On its face, it's a huge deal for a pitcher who in six seasons has never received a Cy Young vote, who has never had an ERA below 3.37 (or an ERA+ above 112), who has thrown one 200-inning season. Mike Montgomery threw as many shutouts in a week last year as Leake has in his career. In six seasons, 177 games, 1083 2/3 innings, Leake has been worth 9.1 bWAR. At his best, including in 2015, he's been a three-win pitcher. It's hard, with no context, to understand how a pitcher with Mike Leake's track record, a pitcher who the casual fan had never heard of before yesterday, a pitcher who probably spent time on the waiver wire last year in your fantasy league, is now going to make a half-million bucks a start.
The seeds for Leake's contract weren't planted when he was drafted in 2009, though, or when he first picked up a baseball as a kid in California. They were planted 40 years ago today, far away from a baseball field, far away from baseball weather. They were planted on a piece of paper that changed the baseball industry, changed the sports industry, forever. On December 23, 1975, arbitrator Peter Seitz ruled that the reserve clause in the standard player's contract could not be renewed in perpetuity, but rather, for one year after the last signed deal. A player -- in this case, Dodgers pitcher Andy Messersmith -- who played through a season without signing a contract, playing on the renewed terms of his old one, would be a free agent after that season.
Baseball's owners reacted with their usual calm and forward thinking, locking out the players after the decision. Eventually, the MLBPA negotiated the terms with which we are familiar today, that a player with at least six years of service time can play out his current contract and seek employment with any team. At the time, MLB's owners claimed that free agency would destroy the game. What they learned, what we all learned, was that forcing teams to compete for talent would enrich not just the talent, but the teams themselves beyond anyone's imagination. Mike Leake's contract is one product of the Seitz decision. Another is $75 million a year for the rights to televise Arizona Diamondbacks games. Another is the average team being worth $1.2 billion. In 1975, Bill Veeck bought the Chicago White Sox, a historic team in a big market, for $10 million; in 2012, Ron Fowler bought the San Diego Padres, a 1969 expansion team with the smallest reach in the majors, for $800 million.
Forcing the owners to compete for talent brought baseball's business into the 20th century. An industry filled with sleepy family ownerships had to innovate, to grow, to compete not just for that talent but for revenue to pay that talent. The reserve clause was not just a barrier to the free flow of baseball talent, it was a binky for teams that were happy to throw open the doors in April, lock them up again in September, and consider that their business plan.
Those numbers above aren't just about free agency, of course. George Steinbrenner didn't invent cable television or the societal trends that have made televised sports the mother's milk of that dying industry. He did, however, lead the race to cable by moving Yankees games from free TV to cable in the 1980s, and later, to a team-owned network in the 2000s. Bud Selig wasn't the first owner to play cities off one another in an effort to get craven politicians to hand over the public purse. He just perfected the plan as the sport's commissioner for 20 years.
When you look at the big picture, though, you have to go back to 40 years ago, to Seitz examining the standard player's contract not as a vested party, but as a lawyer. You have to respect his dispassionate judgment in the face of incredible pressure; Seitz was fired by the owners, as was their right, immediately upon issuing his ruling. You have to appreciate his fealty not to arguments about the merits of freedom or the survival of baseball, but to the letter of the contract. It's a measure of how lazy the owners were, how convinced they were of their sacred right to the work product of baseball players, that the reserve clause was worded as weakly as it was. Had they simply written the clause differently at a time when they held all the power to do so, perhaps Seitz would have had to rule in their favor. Perhaps there would have been no weak contract clause to challenge. Perhaps players would have been bound to the teams holding their contracts in perpetuity, those teams would never have been forced to compete for talent, and baseball would never have moved into the 20th, much less the 21st, century.
We'll never know, of course. What we know today is that baseball is an industry that generates $9.5 billion in revenue, with franchises worth $36 billion, with players being paid close to $4 billion. The Peter Seitz decision made baseball players wealthy, but it made baseball's owners wealthy as well.
