Major League Baseball did not establish its revenue-sharing program without a fight. It took until the 1996 collective bargaining agreement, the first signed after the contentious 1994-95 strike, and that plan was gradually implemented. The current plan, in which 34 percent of all “net local revenue” from all 30 major-league teams is subject to redistribution, has only been in place for the past 14 years.
Last week, I took a look at the beginning of Bud Selig’s fight for “small-market” franchises 30 years ago. “These negotiations were a fight for the Milwaukees of the world,” Selig told the Milwaukee Sentinel. “In the end, Milwaukee was the only franchise being mentioned.”
Selig and his coalition of small-market owners deposed Fay Vincent and installed Selig himself as acting commissioner just seven years later, in 1992. The next year, Selig and his group flexed their muscles and proved they were serious about forcing the big-market owners to seriously consider a revenue-sharing program.
In the early 1990s, “superstations” like Chicago’s WGN and Atlanta’s TBS were making baseball games widely available on television outside of a team’s home market for the first time. Both New York teams also had games broadcast on superstations — WPIX for the Yankees and WWOR for the Mets. In 1993, as the game’s collective bargaining agreement approached expiration the next year, small-market owners took aim at these sources of revenue for big-market teams through a little known clause in a decades-old contract.
The distribution of funds from local and cable telecasts was dictated by agreements dating back to the mid-20th century, 1956 for the National League and 1965 for the American League. Each league distributed the cash slightly differently — American League teams with superstations shared 20 percent of the revenue with the rest of the AL, and National League teams shared 25 percent of the revenue from each game with that game’s road team. The agreements contained critical clauses, according to the Sentinel: Each can be terminated when five teams in a league give notice. Without these agreements, small-market teams would have the right to block superstations from broadcasting any games in which they are involved. The result would be a substantial loss of revenue for the superstations which needed the baseball money to survive.
The Milwaukee Journal reported that San Diego, Houston, Pittsburgh, Florida, Montreal, St. Louis and Cincinnati all supported the blackout in the National League, and seven teams including the Brewers and Twins backed the blackout effort in the American League. This rift in ownership made things awkward for Selig, and the Sentinel report shows the absurdity of his attempt to act as neutral commissioner and Brewers owner at the same time.
The article read, “Interim commissioner Bud Selig, president of the Brewers, was reluctant to discuss the situation. His small-market team supports the coalition, athough as acting commissioner, he is required to appear impartial.”
Selig did say, “I wouldn’t make too much of this. I don’t think it’s an issue of leverage as much as the clubs taking a new look at decades-old agreements.” Another owner was a bit harsher, as he said, “I don’t know how far we’ll go with this, but we need to have the attention of the big-market clubs. They need to know we’re serious about a revenue-sharing agreement that will give us some significant help.”
It was unclear how much leverage the small-market owners actually had. The report suggested the previous renewal of the American League contract ran through 1994, which would mean nothing could happen until after the CBA expired regardless of the small-market coalition’s votes. Still, the point was made — there were enough small-market franchises willing to band together to make a real threat to a major source of revenue for the large-market franchises that were blocking a revenue-sharing program. Peter Gammons suggested furthermore that “a half-dozen financially distressed franchises” would make a mad dash to be the first team to relocate to the open market in St. Petersburg, Florida* and that the potential infighting between the owners could be enough to threaten baseball’s exceptionally lucrative antitrust exemption. The small-market franchises had the attention they desired.
*Jonah Keri’s The Extra 2% includes an excellent summary of the race to St. Petersburg, as the Giants and White Sox both nearly wound up moving to South Florida before the Rays were granted a franchise.
By the signing of the next collective bargaining agreement in 1996, Selig and his small-market coalition had won their revenue-sharing system and a luxury tax, the first of a number of small-market-forward measures enacted in collective bargaining agreements since. It was just 11 years after Selig’s impassioned fight for the “Milwaukees of the world,” back when he was the lone wolf treated like a crazy person by the rest of baseball’s suits. Selig didn’t even need a decade to get his troops in line and remake the baseball world in his image, as his deft threats to hit large-market owners where it really hurts them turned the tables entirely in his favor.