1994 marked the beginning of the eighth strike in professional baseball, as negotiations between the union and owners over contract terms had been causing economic issues since 1972. As a result, there was no World Series that year due to these ongoing problems. With the expiration of the previous contract, all matters were open for discussion.
Prior to 1968, there were no collective bargaining agreements in place between the owners and players (Dolan 11). Consequently, the players lacked any influence over their working conditions and relied entirely on the owners. These owners possessed exclusive authority to decide whether or not to renew player contracts at the conclusion of each season. The players faced a straightforward decision: either accept the terms or abstain from participating in baseball.
Due to the imbalance in the labor situation, players made multiple attempts to establish a union, which proved difficult despite the apparent simplicity of baseball. Unsuccessful unions represented players during the twentieth century until the formation of the current union, called Major League Baseball Players Association. After negotiating with representatives from both sides for fourteen years, they finally achieved their first ‘basic labor agreement’.
Marvin Miller led the players in 1968, resulting in higher minimum salaries, improved health insurance plans, and increased retirement benefits. These “Basic Agreements” in major industries are typically intricate, leading to strikes and lockouts like the one that happened in 1994 in baseball, which was primarily driven by financial issues.
The interruption and eventual cancellation of the entire season was caused by two major issues. The owners voted 28-0 and agreed to share revenue, but only if the players accepted a salary cap. The issue of revenue sharing was directly connected to the salary cap. This action by the owners indicated that they had recognized the problem of inequality between big market teams such as New York, Los Angeles, and Chicago, and small market teams like Seattle, Pittsburgh, and Milwaukee.
The issue at hand was that the owners tied their revenue sharing to a salary cap, leading the players to believe that they were being tasked with resolving the owners’ financial inequality problem. In 1993, there was a significant disparity in team payrolls, with the Toronto Blue Jays having a payroll of $48.4 million, while the San Diego Padres had a mere $10.6 million payroll (Layden 17).
Despite causing disputes among owners on how the formula would be determined, the concept of revenue sharing, which involved transferring money from big market teams to small market teams, was considered a positive one. Interestingly, not all small market teams were struggling financially. In fact, some of them, like Baltimore, Cleveland, and Texas, were thriving due to the construction of new stadiums. The owners finally presented their collective bargaining proposal on June 14, 1994, a year and a half after voting to reopen the contract.
The owners presented a 7-year contract that included sharing their total revenue with the players, in a 50-50 split. In addition, they proposed implementing a salary cap over the next four years (Dolan 26). The players had been experiencing significant wage increases through free agency and did not want this trend to end. As long as the revenues did not decrease, the players would receive at least $1 billion in pay and benefits for 1994. The proposal also removed salary arbitration but allowed players with 4 to 6 years of major league service to become free agents, whereas previously it required 6 years for free agency. The player’s current club would have the right of first refusal in this case.
For players with less than four years of service, there is a proposed rising scale of minimum salaries. The specific minimum amounts will be negotiated later. Furthermore, players’ licensing revenue, which is approximately $80,000 per player, will need to be divided with the owners. Additionally, depending on the average obligation to the players resulting from a 50-50 split of total revenues, teams will be limited to a maximum payroll of 110 percent or a minimum of 84 percent (Dolan 33). The players have identified various shortcomings in the owners’ proposal.
The players currently receive 56% of revenues, but under the proposed changes, their portion would decrease to 50%. The players are also against sharing their licensing revenue and eliminating salary arbitration, which helps raise player salaries. Although free agency rules would be more flexible, a player’s current team could keep them by matching offers from other teams. Additionally, the players’ pensions, health coverage, and other benefits would be funded by their 50% share of revenues.
Donald Fehr, the executive director of the unions, expressed that if the owners’ proposal were accepted, player salaries would decrease by more than $1 billion over 7 years. On June 18, as expected, the union declined the salary cap and other significant aspects of the proposal. Instead, they proposed lowering the eligibility requirement for salary arbitration to 2 years and raising minimum salaries to $175,000 with a possible future increase to $200,000. This information was reported in the Monthly Labor Review.
The union dismissed the owners’ proposals, resulting in the owners rejecting the union’s offer shortly after. It was not unexpected given that no substantial bargaining had occurred. Richard Ravitch and Donald Fehr, the negotiators, primarily aimed to present their positions to the print and broadcast media. This aligns with the pattern of contract negotiations in baseball over the last twenty-five years and implied a high possibility of a work stoppage (Layden 26).
Baseball negotiations in the modern era have been marked by the presence of strong-willed individuals. Marvin Miller defied the traditional paternalistic relationship between owners and players and aimed to establish an adversarial dynamic that still endures today. As a result, striking became the players’ preferred option due to their limited alternatives.
If they had continued playing without reaching an agreement, the owners had the option to declare an impasse and likely implement their proposals. The timing of the strike, which started on August 12, 1994, was advantageous for the union as it caused maximum damage to the owners. At that point in the season, the players had already received most of their pay, while the owners were at risk of substantial losses due to three-fourths of their television revenues relying on postseason play. In preparation for a strike over the past four years, the Players Association had kept a portion of each player’s licensing revenues from merchandise sales such as baseball cards.
The Monthly Labor Review reported that a strike fund of around $175 million was gathered in preparation for the strike. The intention behind this fund was to offer each player with four years of experience nearly $150,000 to sustain them until the end of the strike. At the beginning of the strike, both parties agreed to engage in mediation overseen by the Federal Mediation and Conciliation Service. Mediators aim to persuade the involved parties to compromise and reach a resolution. However, unlike arbitrators, they lack the authority to enforce a solution. Hence, there is no guarantee that mediation would resolve the dispute.
Despite the efforts of Federal mediators, such as John Calhoun Wells from the Conciliation Service, there were no advancements in reaching a settlement in 1994. This lack of progress was due to the parties’ strong determination to remain in disagreement, which made it impossible for any mediator to succeed. However, the suggestions made by mediators did have an impact as some owners joined negotiations. As a result, bargaining power shifted from Ravitch to owners Jerry McMorris and John Harrington. The change was reported by the Boston Monthly Labor Review.
According to the owners’ regulations, a settlement demanded a three-fourths majority vote, leading to a significant challenge since the owners were divided into three main factions. These factions were primarily determined by the teams’ market size, with the small market teams incorporating Kansas City, Milwaukee, Minnesota, Montreal, Pittsburgh, San Diego, and Seattle. Conversely, the other group consisted of owners possessing teams in larger markets and some owners from smaller market teams that had recently constructed new stadiums and were experiencing financial success.
The clubs at higher risk of losing from a strike were Atlanta, Boston, Colorado, Los Angeles, both New York teams, Texas, and Toronto. The rest of the teams were somewhere in the middle, seeking moderate changes but vulnerable to pressure from either side (Layden 42). In late August, McMorris and the owners’ legal counsel, Charles O’Connor, proposed a graduated “luxury tax” to the union. This tax would be imposed on clubs with payrolls significantly above the major league average, based on their total payroll.
The proposal suggested implementing a graduated tax rate for clubs with payrolls exceeding the major league average. The tax revenue would be pooled and distributed to financially needy teams. However, the union perceived this idea as a disguised salary cap, as clubs might avoid signing high-salaried free agents to avoid increased tax payments. Despite their concerns, the union attempted to collaborate on the luxury tax concept by proposing a 1% tax.
The union proposed a 5 percent tax on the revenues and payrolls of the top 16 clubs, with the funds being distributed to the bottom 12 clubs (Dolan 111). They also suggested that home teams should share 25 percent of their gate receipts with visiting teams. However, the owners rejected this counteroffer and on September 14, 1994, announced the cancellation of the World Series for the first time since 1904 (Atlantic Unbound). In mid-October, President Bill Clinton appointed William J.
Usery, Jr. has been appointed by the President to mediate the dispute, making him an excellent choice. He previously served as the Secretary of Labor in the Ford administration and was also the director of the Federal Mediation and Conciliation Service.
Despite being 70 years old, Usery had continued to be active even after his Government service by privately mediating significant industrial disputes in the country. His expertise allowed him to find common ground among the parties involved and had the determination to steer them in that direction. However, when it came to baseball labor relations, Usery lacked knowledge of the complexities involved (Layden 55). Regrettably, Usery faced a similar outcome as the previous mediators, as the parties made some adjustments to their proposals but still remained widely divided.
The owners aimed to limit the increase in player salaries, which had reached an average of almost $1.2 million. The union, however, opposed this idea. Currently, the only agreement between the parties was that a form of revenue distribution should take place from wealthier to less wealthy teams. Towards the end of 1994, negotiations were becoming slower, and the owners declared an impasse, implementing the salary cap.
The union feared the declaration of an impasse as it would allow management to impose its own proposals. In response, the union lodged unfair labor practice charges with the National Labor Relations Board NLRB Atlantic Unbound to express its disapproval of the owners’ actions. Simultaneously, efforts were made to explore alternative ways of resolving the stalemate. As part of this shift, Ravitch stepped down as negotiator.
The owners stated their intention to employ replacement players if the strike was not resolved before the 1995 season began. However, Baltimore owner Peter Angelos surprised everyone by declaring that he would not utilize replacement players. This decision was further complicated by an Ontario law prohibiting employers, including the Toronto club, from using replacement workers. Similar to Angelos, Detroit manager Sparky Anderson voiced his refusal to work with the replacement players.
President Clinton was frustrated by Usery’s ineffective mediation. He decided to increase the pressure by calling the negotiators to the White House and stating that if a settlement was not reached by February 7, 1995, he would ask Usery to provide his own recommendations for the settlement. Although these recommendations would not be binding, the President hinted that they could be submitted to Congress for legislative action or used as a basis for arbitration (Layden 58). However, Congress did not support the idea of a legislative settlement. House Speaker Newt Gingrich expressed his uncertainty about Congress being the appropriate entity to organize the national pastime.
“We’re very hesitant to intervene,” stated Senate Majority Leader Robert Dole. Consequently, both Usery’s suggested settlement and the President’s bill failed to make any progress. The concept of arbitration was also unsuccessful, as the involved parties could not mutually agree to let an arbitrator determine their fate in such a detailed and intricate issue (Atlantic Unbound). One potential solution that seemed more feasible was the elimination of baseball’s exemption from antitrust laws.
Although the strike would not necessarily be ended, it would put pressure on the owners to make compromises due to the fear of facing antitrust litigation. A proposed bill would have enabled players to sue the owners if they unilaterally imposed work rules, but it would not have impacted other parts of the antitrust exemption. However, once again, Congress turned down the bill. Eventually, the strike concluded due to Government intervention, although not through the efforts of the President or Congress.
In 1994, after negotiations reached a deadlock, the owners introduced a salary cap. This action prompted the union to file unfair labor practice charges with the NLRB, alleging that the owners imposed the cap without attempting genuine negotiation in good faith. Although negotiations were reopened in December 1992, it took 18 months for the owners to present an offer. Furthermore, this offer included substantial modifications to the current agreement.
The Monthly Labor Review stated that the owners did not make substantial changes to their stance, leading to an impasse declaration and leaving them vulnerable to charges of violating labor laws. On March 26, 1995, the NLRB voted 3-2 in favor of pursuing a court ruling that would require the owners to restore the provisions outlined in the previous collective bargaining agreement. Before reaching this verdict, the Board had lodged a complaint asserting that the owners had breached the National Labor Relations Act by implementing their proposal without a legal impasse.
At first, it seemed doubtful that the owners could gather sufficient votes to implement a lockout. The NLRB had only filed a complaint against them and there was no official verdict on the allegations of unfair labor practices. This would have been a lengthy process. However, when the board decided to request an injunction, it expedited proceedings and brought the case to court for speedy resolution. Fehr saw this as an opportunity and claimed that with the protection of such an injunction, the players would end their strike. On March 31st, U.
S.District Judge Sonia Sotomayor issued an injunction in favor of the players, ordering the owners to restore free agent bidding, salary arbitration, and the anti-collusion provisions of the expired collective bargaining agreement. This ruling effectively ended the strike for the players (Layden 63).
The resumption of play by real big leaguers reaffirmed the proverbial notion that “all strikes must end.” The strike, although highly eventful, proved to be unproductive as the old contract provisions remained in effect. Consequently, the strike can be considered one of the most eventful yet futile strikes in history. Furthermore, the owners declared losses of $700 million due to the strike and an additional $300 million resulting from a delay in starting the 1995 season (Monthly Labor Review). Although veteran players received some protection from the union strike fund, it essentially amounted to their own money being paid back to them, leaving little or nothing for other players.
In 1995, the average salaries decreased by around 5 percent, falling from $1,168,263 in 1994 to $1,110,776. This drop was due to financially struggling clubs choosing cheaper talent from minor leagues and experienced players either being released or accepting significant pay cuts.
The cancellation of postseason play disappointed fans and athletes alike as it meant missing out on witnessing potential record-breaking moments. Tony Gwynn’s remarkable batting average of .394 put him in contention to become the first player since Ted Williams to achieve such a feat.
Five players, including Ken Griffey, Jr., Frank Thomas, Jeff Bagwell, Albert Belle, and Barry Bonds were on track to accomplish a remarkable milestone of hitting fifty home runs in a season. Collectively, they had amassed a total of 400 home runs for the season.
Cal Ripken, Jr. was poised to surpass Lou Gehrig’s record of playing 2,130 consecutive games in 1995, while the divisional races added to the thrill. Nevertheless, disgruntled fans made their displeasure known by decreasing attendance by 20 percent as a clear expression of discontent.
By the end of 1996, the game’s dark clouds were starting to disappear. The renewal of postseason play in 1995 reignited fans’ interest. The television agreements with NBC and ABC, which had been in effect since 1993, were terminated by the networks after the 1995 season. Thankfully, new contracts with NBC and Fox restored financial stability to baseball and ended the disastrous advertising agreements with the Baseball Network (Layden 77). In November 1996, a collective bargaining agreement was reached between all parties involved, eliminating a troublesome obstacle to long-term stability.
Only 3 weeks prior, the owners had declined a deal negotiated between their new representative, Randy Levine, and Fehr. The signing of Albert Belle, a free agent, by Chicago White Sox owner Jerry Reinsdorf played a significant role in ending the deadlock. Reinsdorf advocated for financial restraint among owners, but then proceeded to sign Belle for $55 million over 5 years, surpassing any previous player contract. Reinsdorf’s actions contradicted his words, leading to the dissolution of opposition among the owners, who ultimately ratified the agreement with a 26-4 majority (Monthly Labor Review).
The new agreement largely incorporates the components of the previous one, with minor modifications. Specifically, in 1997, minimum salaries were raised from $109,000 to $150,000. The primary change involves introducing a luxury tax on team payrolls exceeding $51 million in 1997, $55 million in 1998, and $58.9 million in 1999.
In 2000, there will be no luxury tax imposed. Players can also extend this agreement to 2001 without being taxed. The luxury tax proceeds are combined with funds from a new 2-percent player salary tax and placed into a revenue-sharing pool. Income generated through local broadcasting by wealthy clubs is also added to the same pool. Ultimately, this total amount is divided among thirteen small-market teams in order to improve their financial competitiveness (Koppett 233).
The anticipated effects of the new revenue sharing and salary limitations are predicted to be modest. Basketball and football currently face similar salary restrictions, yet the players in these sports still receive substantial economic benefits. Additionally, it is worth noting that these sports have successfully avoided work disruptions under the new arrangements. With any luck, baseball can follow suit.
As part of the new agreement, inter-league play was introduced for the first time during the regular season, which aimed to stimulate lagging attendance (Monthly Labor Review). However, the baseball strike of 1994 is regarded as the longest and costliest work stoppage in professional sports history, with many considering it a wasted opportunity for real modifications to be implemented.
Despite 234 days passing, over $1 billion in losses, no World Series, and no settlement, America finally regained its baseball.
