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Don Fehr: Page Two

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BA: You grew up in Kansas City. Is Kansas City a viable major league market? Can Kansas City be the next Seattle?

FEHR: I do not make predictions of that sort. I don't comment specifically about the fortunes of individual teams. All I can tell you is that I think Kansas City ought to be there. And there has been no suggestion recently that they're a contraction candidate under any scenario.

There are a couple of things which go into a club's operation. One is revenue, one is potential revenue, one is the operation and administration of the team. And we all have seen lots of teams that have a lot of assets, and they haven't used those assets all that well over the last 15 or 20 years. And we have all seen small-market clubs who seemingly do extremely well with low payrolls and low income. And that is something--those two phenomena are things we ought to pay attention to.

BA: Major League Baseball's claims of X number of teams losing X amount of dollars--what is the union's approach to those claims? Don't you guys have the right to audit those numbers?

FEHR: No. That's a complete myth. We have the right to certain information for purposes of revenue sharing. Revenue numbers. But we rely on the clubs for the most part to keep each other honest. We don't get cost information. We don't go in and audit the books of the clubs. We don't attempt to make judgments as to the real values of things, when you take into account related party transactions, or any of the rest of that kind of thing.

If I were to be told that there were a lot of unlawful firearms in my hometown, I don't think I could be accused of acquiescing if I said that I still didn't think it was appropriate to bust into everybody's house without a warrant.
At the commissioner's testimony before Congress in December, of the claimed $500 million in losses, $500 million-plus, a very large segment was amortization--which most people consider not to be a bad thing. It is rather an affirmative tax benefit. The second thing was interest--and until you detail what the interest is for and how it's used, and take into account that that's a deduction too, or can be a deduction too, and it's impossible to quantify that, it's tough to know what it means. While he claimed more than a couple hundred million dollars in operating losses, in a $3.5 billion-plus industry, those operating losses were concentrated in big-market, high-revenue clubs that nobody thought were in trouble.

BA: The Dodgers, for instance.

FEHR: The Dodgers, for instance. And so, you know, that was the basis for contracting Minnesota and Montreal. To the extent we have specific information that's covered by confidentiality agreements, I'm not in a position to talk about it. But we have a situation in which we have to negotiate an agreement. The clubs have to operate under that agreement, and each club operates on its own. There will be, we know now, significant additional revenue sharing in this agreement. And hopefully between that and all these cyclical changes, and with an improved economy, things will begin to get better.

I will say that it is unusual, to say the least, to have an industry whose revenues in 1996 go from $1.775 billion to somewhere north of twice that in five years, when the union does not negotiate wages, and their response is to have continual claims to financial distress. It suggests that to the extent that there is a problem, it's not very much wage related.

They're worried about competition for players. It might tell you more about the circumstances clubs are in to watch what they do, not what they say. You've got to understand that major league clubs--and this is true in football, it's true in basketball, it's true in hockey, and it's true in baseball--they all have a built-in interest in portraying themselves as not doing very well. And the reason why is really pretty simple. If you want public concessions from stadiums, you need to do that. If you want concessions from players, you need to do that. We tend to pay a lot more attention to what people on an ongoing basis actually do. It is meaningful.

BA: This is a quote from the 1986 Sporting News Guide recapping the '85 strike: "Both sides hired experts to analyze the club's data, and the discussion soon deteriorated into a dispute over whose accountants were right and which accounting methods were proper."

FEHR: Well, I don't want to characterize the dispute, but you could have all kinds of differing opinions as to the significance of certain facts, and as to what the remedy is, if there is a remedy there to be had. But that's not a terribly unusual thing to have happen.

BA: Speaking of history, what role does your prior experience with collusion play in your approach to bargaining today? You suggested eight or nine years ago that it had to color your feelings about the other side.

FEHR: That was a period of time in which the clubs just shut down the market, engaged in all kinds of outside-the-contract, inappropriate behavior, to violate their contractual obligation. We had bargained for a free market and were entitled to have it. What that tells us, not only from that experience but from the experience of things in other sports, is that you have a market out there. And the market operates under a set of conditions which you negotiate. And then some outside things happen. And what you're trying to do is, you're trying to predict how people are going to behave.

Now if you say, we're going to take a lot of money away from this team and give it to some other team, we think you can make predictions as to how people will behave in that circumstance, and what happens to the market. We think that when you add a luxury tax to that, and you add some other things to that, that you can predict pretty well. And so what the collusion does is it reinforces the notion that club behavior can be affected in very definite ways. And we are very conscious of that in bargaining.

Because in a very real sense, we cannot ever make a mistake. In a normal bargaining situation, in negotiating a three-year contract with the XYZ Company, at the end of that three years, if something didn't work out, most of the employees that were there to begin with are still going to be there, and you can go fix it for them. In baseball, we negotiate a five-year contract, and we come back, most of the players that are there on day one will not be there at the end of the contract. Which means if their opportunity has been lost or compromised in some way, you can't ever get it back. And that pressure, given the collusion experience, is very good.

BA: There are many owners, and many very influential owners--whether it's Bud Selig, Jerry Reinsdorf, George Steinbrenner, Bill Giles--who committed collusion, effectively sitting across the table from you still. Do you remember what they did?

This negotiation in a number of respects is qualitatively different than some other ones we've had. Specifically, the industry is vastly larger than it once was. And secondly, we had a long strike the last time. And I think both of those things are factors which people are cognizant of.
FEHR: Of course you remember what they did, but you bargain with them anyway. You have a legal obligation to. We settled the cases 11 years ago, and you hope it's not going to happen again. But what you take out of it is that the free-agent market can be affected by all kinds of things. And you make darn sure that there is nothing in the agreement that you voluntarily agreed to which is going to take it down. And secondly, you do your best to make sure that there can't be anything done extralegally to take it down.

BA: Turning to the draft, apparently there is more agreement on that issue than perhaps others.

FEHR: We have come to an understanding that we're folding players into some sort of a draft that are now not covered by the draft. That's part one. And if we can get everything else agreed upon, we think that maybe we'll be able to agree to that. But there are a number of things we'd like the clubs to look at in that regard, and one of those is substantially cutting down the numbers of rounds. When you get to the point when you have players that have a value insignificant enough that they're not cost items to the clubs to any measurable degree--which is, at some level, far, far, far less than 38 rounds, which we're down to now--there is no longer any justification for not letting that kid look for a job with whatever organization he wants to look at. The clubs are terribly, terribly resistant to that idea. If they hold to that view, then this is going to be a difficult issue.

The second part of the draft is one that relates to the competitive-balance issues, for Kansas City and the other clubs that you were talking about. And this is very important. We believe that there are ways to be of great assistance to the less successful clubs without somebody simply writing them a check. And the way you do that is you make players available to them. You do that by draft choices, including very high first-round draft choices. You do that by additional Rule 5 (draft) selections. You do that perhaps by a professional-player draft, where you can take somebody off someone's roster. And you give the recipient club the ability to trade or sell both the player and the picks. That is a very significant advantage for those clubs, and we think ought to be able to go a long, long way, in addition to some additional revenue sharing, to get us where we want to go. You're taking real hard assets away from the higher-income clubs, and you're depositing them at the clubs that are less well-situated.

BA: Would it be similar to the free-agent compensation pool draft that existed in '78 to '85, approximately? The Tim Belcher draft, if you will?

FEHR: You would allow a club that's less well-situated to take a player from a 40-man roster from a club that's more well-situated, allowing that club to freeze a certain number of players. We don't know exactly what that number would be. We'll see. But we think it can be very, very helpful.

BA: Let's jump to steroids. How would you assess any steroid use in the game?

FEHR: First of all, as I testified before the Congress, no one supports or condones the use of illegal substances or the illegal use of legal substances. That ought to go without question. Secondly, there are a number of substances, androstenedione being one, which may very well be steroids and are not illegal. The Congress of the United States and the Food and Drug Administration have seen fit to make those substances legal, such that they could be bought over the counter, in drug stores and in health food stores, without prescription--without even an age restriction. We have invited the Congress to look at that again. And if they conclude those substances are dangerous, regulate them. If they think they're dangerous to kids, prohibit their sale to kids.

BA: I'm not talking about andro. I'm talking about substances we already know are regulated and illegal, and that many players have alleged are being used to a not insignificant degree. No one knows the percentages, and no one knows whether the players making the assertions know for a fact of their use, or whether perhaps they're lumping in creatine and andro with what they call steroids. But at what point does the union's approach to the issue go from not condoning to acquiescing?

FEHR: If I were to be told that there were a lot of unlawful firearms in my hometown, I don't think I could be accused of acquiescing if I said that I still didn't think it was appropriate to bust into everybody's house without a warrant. A warrant requires a showing of cause related to an individual. Now, the constitutional protections against unreasonable search and seizure don't directly apply here. But we think there is something to the following notion: A, one ought not to make blanket accusations; B, if you're going to investigate someone, there is something to the notion that it ought to be based on reasonable cause to believe that that person is, or has been, doing something unlawful. That is a difference not between testing and no testing--it's a difference between mandatory testing of everybody, even those without suspicion, which would be the overwhelming majority, and for-cause testing, which would relate to specific individuals.

When we go in to bargain here, we are faced with what amounts to the assumption, absent an agreement by the clubs otherwise, that if the rest of the season is played, and the World Series ends, and there is no agreement, the clubs will lock out.
This is an issue which has been put on the table. We're discussing it with the players now. And it is an issue about which we will be negotiating over the next several weeks. I can't predict today what kind of an agreement is going to come out of that. I can suggest that it is often discussed as if it were a simplistic matter, and we do not treat it as a simplistic matter.

BA: But allegations are being made, perhaps not by the particularly informed ones, but by players not named Caminiti or Canseco, that it is being used, and illegal activity is taking place on a significant level. This is activity that could be having a serious effect on the competition on the field. My point is that, if only for public-relations reasons, which is different from a libertarian approach, is there an approach to the issue in between the education that MLB and the union do and mandatory random testing?

FEHR: Sure. There are all kinds of programs, for lack of a better word, that one could envision which would get at this issue in different ways. There are combinations of approaches which may make sense. Indeed, the clubs' proposal has a combination approach--it has a random testing and it has a for-cause testing portion to it. What we have to do is try to figure out, as we look at this, what the appropriate mix is between education, for-cause type approaches, where there is an appropriate level of mandatory random testing, or whether it's not needed. I'm not going to prejudge the results of our internal deliberations, much less the discussions we'll eventually have with the clubs, or will continue with the clubs.

BA: While you were growing up in Kansas City, when you were 10 or 12, Vic Power was your favorite player. You loved how his home runs would break windows in the left-field parking lot. What would you have thought, back then, if you found out he was on steroids?

FEHR: Oh, I don't know what I would have thought. It's impossible for me to say . . . (Long pause.) . . . It's very difficult for me to put myself back into that time and place. If at any time it became known that somebody that I was a fan of was engaged in illegal activity, it would have been a real downer and a big disappointment. No question about it.

BA: We're 8-for-8 in having work stoppages taking place before new collective bargaining agreements get signed. Why should anyone believe we won't go 9-for-9?

FEHR: All streaks end, sooner or later. (Laughs.) Seriously, though, you've got to look at it a number of ways. First of all, well, history is not irrelevant. It clearly is relevant. And it does influence decisions you make.

In fact, each negotiation is different. And this negotiation in a number of respects is qualitatively different than some other ones we've had. Specifically, the industry is vastly larger than it once was. And secondly, we had a long strike the last time. And I think both of those things are factors which people are cognizant of.

Having said that, the players are in what I perceive to be a very difficult situation. The commissioner last spring made an announcement that there would be no lockout during the course of the major league season. That statement was interesting mostly for what it did not say: It did not say that immediately after the World Series ended, the clubs would continue business as usual, if there were no agreement. It conspicuously avoided that. And he has conspicuously avoided that commitment ever since.

I can't tell you whether this is going to be done without a stoppage. I can tell you that is our most fervent goal. But we sort of feel like, given the circumstances we're in, that we're behind the 8-ball a little bit. That's a reality we have to deal with.
And that makes sense, from the club standpoint, because if there is going to be a labor dispute in baseball, the clubs would like to pick the time, and the place, and the ground. That's during the offseason. They would like to replicate what they believe to be the successful strategy employed by the NBA the last time around. That strategy was, "As soon as the championship series is over, we lock the players out, we refuse to sign contracts, and we sweat them, and we threaten never to play basketball again--until they give us what we want." Why did they do that? Among other reasons, because the owners' revenue at the beginning of a season is significantly less than it is at midseason or at the end of the season.

So when we go in to bargain here, we are faced with what amounts to the assumption, absent an agreement by the clubs otherwise, that if the rest of the season is played, and the World Series ends, and there is no agreement, the clubs will lock out. They will refuse to sign players. They will consider a unilateral imposition of terms. And they will dare the players to go on strike in spring training or at the beginning of the season at the period of time most economically advantageous to the clubs and least to the players.

Now, nobody wants a strike. Nobody wants a lockout, at least on the players' side. The players are committed to doing everything that they can to avoid it. But nobody can reasonably ask the players to bargain pretending that what happened in the NBA last time didn't happen. Or pretending that the clubs' rights after the end of the season wouldn't be what I've just described. Or forgetting that they tried to unilaterally implement in '94-'95. Those are realities we have to deal with.

That difficulty is further strengthened by the fact that while we haven't seen the documents--the clubs don't give this as part of the contracts--we believe that the agreement with Fox requires Fox to pay Major League Baseball anyway, if the World Series is not played as a result of a strike. In other words, the owners negotiated with Fox for what amounts to interim financing over the winter if they don't get a deal with the players. So we have to look at that too. And that forces us to look at dates. Or that forces us to look at circumstances which take all of that into account.

I can't tell you whether this is going to be done without a stoppage. I can tell you that is our most fervent goal. But we sort of feel like, given the circumstances we're in, that we're behind the 8-ball a little bit. That's a reality we have to deal with.

BA: In '81, I believe the June 12 strike date was set by a court in some way, that you had to do it by such-and-such date or you couldn't do it at all. August 6, 1985; August 12, 1994. What goes into the setting of a strike date?

FEHR: First of all, you don't set a strike date unless you believe that you have no other reasonable option, and that doing so will be a spur to reach an agreement. Sometimes in collective bargaining as well as other things, deadlines are helpful. Sometimes they're not; we learned that last time. But sometimes they are.

Then what you do is, you try to make a judgment as to what combinations of proposals, and deadlines if you have to set them, are likely to produce an agreement. It's really difficult to go into it more specifically than that, and we're . . . for reasons of confidentiality, that I owe my membership, I really don't want to go into it more.

The object is to reach an agreement without having to get that far. If, God forbid, we get into that situation where there's a lockout or there's a strike, you hope that it's settled on day one; if not day one, then on day two.

BA: Sometimes it has been. It's not always 50 or 250 days.

FEHR: Yeah, sometimes it has. I mean, in 1980, which was my first round of bargaining, it was settled at the wire. In 1985 it was one day. In 1990 it was a club lockout, but we were able to make up all the games. So we have examples of both. But the reason people think about it is that they remember the last one. The last one was a big one.

BA: Given the fact that the last one was a big one, will that be a deterrent on both sides to having it happen again? Or is the fact that baseball came back from it show that the industry can withstand another?

FEHR: Baseball is a great game. I think it's going to have fan appeal for as long as anybody wants to play it. We did benefit from a real hot economy during the years after the strike, too. All I can say is this: From the players' standpoint, and I hope from the owners' standpoint, nobody wants a strike. Nobody wants a lockout. Everybody wants an agreement. We want to find a way through this. You don't consider those options unless you feel that you have to. And our history suggests that we have to, on both sides. It would be nice if this time were different. We'll find out.

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