Major league baseball as we know it today began as merely a form of entertainment and good-natured competition. By the mid-1800’s the sport’s popularity had grown so much that the activity became more of a business. More and more teams and leagues were formed with the owners trying to gain the maximum benefit and financial gain from the increasingly profitable sport.
Analysis
As the popularity of baseball grew, the players also became increasingly aware of the value of their skills and sought ways to protect their interests while taking full advantage of their personal income potential, including exploring opportunities with other teams. Fearing the loss of players they relied on for profits, the owners joined together, without consideration for the players, and agreed to include provisions in player contracts that prevented the players from leaving one team and switching to another team. By avoiding communication with the players about their concerns and not collaborating to bring about a resolution, the owners’ actions led to distrust and the formation of unions in an attempt to strength the position of the players. The first head of the Major League Baseball Players Association (MLBPA) had experience as a hard-ball trade union negotiator who favored aggressive, pressuring tactics over the caring and fatherly approach of previous years. The owners responded by forming their own negotiating group, the Major League Player Relations Committee (PRC).
Thus began many years of major league baseball contract negotiations that involved battles over contract terms between the team owners and the unions that represented the baseball players. This era was characterized by distributive negotiation approaches with each of the parties trying to get the largest share of the available resources. One example was the negotiations for the third Basic Agreement in the early 1970’s where there was disagreement over the amount the owners should contribute to the players’ pension fund. The players’ union contended that surplus pension funds existed that resulted in a bargaining range that would allow some of those funds to be used to offset higher cost-of-living expenses. True to the distributive negotiation strategy, the owners avoided communication and initially refused to share applicable financial information. The parties failed to reach an agreement and the payers went on strike. The work stoppage forced the parties to hammer out a compromise agreement that yielded $500,000 for the pension fund. However, the dispute costs for the players’ union and the owners were $1 million and $5.2 million, respectively. A similar situation occurred in 1981 when the players and owners could not reach agreement on free-agent compensation. The issue was exacerbated by the media’s attention on the hostile relationship that had developed between the leaders of the players’ union and the owners’ group. The players once again went on strike, which was settled after 50 days with the help of Federal agencies. The dispute costs in this instance were $30 million in wages for the players and $72 million in lost revenues for the owners. Ironically, the settlement was very similar to the Union’s bargaining position, but at a significant cost to both parties. The relationship between the owners and the players continued to deteriorate in the midst of owner collusion, work stoppages, and increasing demands by the players. In 1992, the head of the PRC was removed from office and the owners made a commitment to inform the players that there will be no games played unless a deal is finalized, understanding that could mean they would not play for one or two years if need be. Failure to gain agreement on salary arbitration, a “salary cap,” free agent eligibility, and distribution of television revenue prompted the players to go on strike; a work stoppage that would last 232 days. While the amount of revenue lost was enormous, there were also dispute costs associated with losing popularity and fans frustrated with both the players and the owners for their inability to come together to resolve issues. Recommendation With the 2002 contract expiring in December 2006, and with the realization that there had been a work stoppage in almost every year a contract was negotiated, the leaders of the PRC and the MLBPA need to recognize that they need to work together cooperatively to achieve a mutually beneficial agreement, while avoiding the hostility and resentment of previous years that has hurt major league baseball. A positive step has been taken by the Baseball Commissioner by prohibiting anyone outside his office from discussing the pending negotiations. By doing so, hopefully misinformation will be minimized and the media fervor that has surrounded the talks in the past can be avoided. Additionally, the head of the MLBPA has listened and discussed the concerns of the players. From those discussions, a bargaining list has been developed that includes steroid use, contraction, the luxury tax, revenue sharing, salaries, and pension contributions. From here, Mr. Selig and Mr. Fehr need to take an integrative bargaining approach as they address these items. By cooperating, focusing, and collaborating on the mutual concerns the hope would be to identify constructive solutions that are beneficial to both groups. The key to this negotiation, and future ones, is the development of a partnership between the parties, rather than the adversarial one that has existed previously. The health of the sport seems good, which should provide opportunities to gain concessions from both sides that will ultimately result in benefits to the business as a whole. Additionally, given that the parties are knowledgeable of each other’s priorities, logrolling may be possible. By one side conceding something to the opposing side that is valued more by the opposing side, they can then gain something from the opposing side that is of greater value to them. Identifying and offering solutions that result in the maximum gain for the other party, as well as yourself, could be beneficial to future negotiations since demonstrating a willingness to compromise when necessary helps build goodwill for the future. The labor issues in MLB are unique and the contentious past history influences negotiations. However, acknowledging and understanding each other’s positions and maintaining a professional, positive tone during the negotiations can lead to a mutually beneficial agreement without the hostility and work stoppages that occurred in the past.