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CHAPTER 1
Part 1
The Contracts that Shaped Professional Sport
1.1 Babe Ruth
"I had a better year than him." Babe Ruth (allegedly) when asked why he should be paid more than U.S. president Herbert Hoover.
New York Yankees spring training camp in St. Petersburg, Florida, in March 1930 was conducted against the backdrop of the early days of the Great Depression. Fortunes had been lost, billions of dollars in assets were wiped out and millions of people were turned out of their jobs. Businessman Arthur A. Robertson told writer Studs Terkel years later, "On Wall Street the people walked around like zombies ... one of my friends said to me, 'If this keeps going on as they are, we'll all have to go begging.' And I said, 'Who from?'"
As bad as the Depression was that March, few could have forseen the economic misery of the long decade that lay ahead. In the case of George Herman Ruth, the man known to the public as the Babe, the slugging outfielder had no idea there was even an economic crisis going on as he talked about his contract negotiations in the Florida sunshine. "What's that you say?" he asked when told there were bread riots back in his adopted hometown of New York City.
Ruth had become the most famous American of his time. Since showing up in 1914 as an unpolished left-handed pitcher out of the Baltimore workhouses, he was now a household name — whether as the Babe, the Sultan of Swat, the Bambino or the King of Clout. He was a Falstaff who'd revolutionized the national pastime of baseball. With prodigious appetites for home runs, beer, women and attention, he'd been the embodiment of the Roaring Twenties with its soaring stock market and Prohibition parties.
"He was the best baseball player who ever lived," wrote Robert W. Creamer, a Ruth biographer, in a 1995 Smithsonian article. "He was better than Ty Cobb, better than Joe DiMaggio, better than Ted Williams, better than Henry Aaron, better than Bobby Bonds. He was by far the most flamboyant. There's never been anyone else like him."
Before Ruth, the home run was an anomaly in baseball. It was a game of hitting the gaps in the outfield, taking the extra base and sliding with your spikes high. John Franklin Baker got the nickname "Home Run" for hitting just 98 homers over his 14-year career. Baker was a member of the Philadelphia Athletics' "$100,000 Outfield" in the early 1910s. Only a decade later, Ruth would make Baker and his team look quaint. In his transition from successful pitcher to slugging outfielder, the Bambino would change the home-run landscape, setting the single-season record with 29 in 1919. The next year, the Babe was infamously sold by the Boston Red Sox to the New York Yankees for $100,000. Upon joining the Yankees, Ruth exploded with 54 home runs in 1920 and 59 in 1921.
In the world's financial capital, Ruth was the profitable face of his Yankees, leading them to seven American League championships and four World Series championships. He was the prime gate attraction at Yankee Stadium when it opened in 1923 and at the parks he visited with the Yankees and his many barnstorming teams. He was a familiar figure in the newspapers, on the movie screen and on the radios of Americans. It was fair to say that without Ruth, baseball might not have survived the ravages of the Depression intact. Whatever Babe was being paid, it was probably a bargain to Major League Baseball as it sought to navigate the challenging financial times.
As one reporter wrote, "This new fan didn't know where first base was, but he had heard of Babe Ruth and wanted to see him hit a home run. When the Babe hit one, the fan went back the next day and knew not only where first base was, but second base as well."
Not that Ruth's bosses appreciated his value as he contemplated his new contract offer in 1930. Ruth was coming off a three-year deal that had paid him $70,000 a year. When Yankees owner Colonel Tillinghast L'Hommedieu Huston stated that Ruth was being paid like a railroad president, he must've meant a very small railroad. As Leigh Montville points out in his book The Big Bam, for Ruth to be paid the equivalent of the 2005 Alex Rodriguez contract ($25 million per year) in the 1920s, he'd have had to be making $2.25 million. Ruth was still getting much more than any other player, however. When he signed his five-year deal for $52,000 a year in 1922, the next-best contract was for Home Run Baker, who made just $16,000.
Ruth had a lot of lead in his pencil in those 1930 negotiations with the Yankees. While no one had been able to precisely identify how much attendance would drop at Yankee Stadium without the Babe, the number was likely significant — and would become more significant as the Depression wore on. What we do know is that home attendance for all the teams on which Ruth played was 17,959,826. It was at least that much in the cities he visited in the Red Sox or Yankees uniform. Put simply, Ruth's presence turned crowds of a few thousand into tens of thousands. In today's sports economy, that would be a bargaining club with which Ruth could beat the Yankees.
But these were the days before players had agents or lawyers to help them when they went head-to-head with the financial acumen of the businessmen who owned teams. There was no salary disclosure, no public recognition of what a radio contract might pay a team, no shoe deals. It was a matter of faith that owners were giving players true value for their services. Some owners were generous. Others were reasonable. And some, like Chicago White Sox owner Charles Comiskey, were cutthroats who knew their leverage and used it. The underlying cause of the infamous Black Sox scandal — where Chicago players were bribed to throw the 1919 World Series — was the resentment of players who'd been skinned by Comiskey for salaries and bonuses they thought they were owed.
Owners also liked having it both ways. In 1902, a court case involving future Hall of Famer Nap Lajoie illustrates the point. Lajoie was under contract to the National League's Philadelphia Phillies but signed a contract with the American League's Philadelphia Athletics — this during a time when the National League and American League really were two separate leagues. The Phillies sued to prevent Lajoie from breaking his contract and attempted to get an injunction — an order from the court that would force Lajoie to work for the Phillies. Injunctions to force someone to work for another are rarely granted by courts because they are hard to enforce — imagine if a court ordered you to work at a job you just tried to leave (how hard would you work at it?) — and money compensates the employer. In Lajoie's case, he was seen as specially skilled enough; it was acknowledged that although "[h]e may not be the sun in the baseball firmament ... he is certainly a bright particular star" who could not be replaced.
Now, how irreplaceable was Lajoie? In his contract with the Phillies, as with most, if not all, baseball contracts at the time, the owners could terminate the contract with 10 days' notice. So while Lajoie could not quit the Phillies, they could fire him at will. Little wonder players settled fast and rarely pushed their leverage with owners like Comiskey backed by the flinty new commissioner, Kenesaw Mountain Landis. Negotiating was a one-way proposition.
Ruth was fortunate that the Yankees did not take the scorched-earth approach with him. Left to his own devices, the man with barely a grade- school education negotiated his own contracts using the tools available to him. That meant holding out and leaking stories to friendly writers to make his case in the newspapers. When he signed his first big deal in 1922, after coming over from Boston, he was at odds with Yankees owner Colonel Huston over the annual salary. Huston was offering $50,000 a year. Ruth liked the sound of $1,000 a week, and asked for $52,000. The two men haggled (and drank) until Ruth resolved to end the argument with a coin flip. Huston thought that a sporting proposition. After Huston was given permission to proceed, he flipped a silver half dollar. Ruth said tails. As the coin spun to a stop on the floor of Huston's hotel room in Florida, it came up tails. And thus Ruth was awarded $52,000 a year for five years.
He proved full value for the new contract as he filled Huston's coffers and pushed the Yankees to the beginning of what would be a monumental championship run starting in 1921. The Bronx Bombers won 20 World Series titles in 28 World Series appearances during a run that didn't end till 1964. The numbers he put up during those five seasons have stood the test of time when the claim is made for Babe as the greatest hitter ever. He slammed 194 homers, drove in 570 runs and scored 588 runs. In his contract year of 1926, he hit 47 homers, drove in 153 and scored 139 times in front of Lou Gehrig.
His next contract negotiation came in 1927, just before what many consider the greatest single season by a Major League team — the Murderers' Row of the 1927 Yankees. When the Yankees sought to renew his previous yearly salary of $52,000, Ruth felt compelled to play tough with the team. Ty Cobb was now being paid more than him, Ruth argued through his media surrogates. He sent a demand to the Yankees to be paid $100,000 a year and then headed to Hollywood to make movies and barnstorm across the nation, playing exhibitions and vaudeville shows to raise more money for his lavish lifestyle.
After a whirlwind winter filled with public appearances, Ruth arrived back in New York City to prepare for 1927 spring training. He played tight- lipped about what he might do if he didn't get his desired compensation. The media roiled with speculation. Then, almost as an afterthought, the months of speculation ended quietly in a three-year deal at $70,000 a year, signed days after his arrival in New York. Everyone professed themselves happy, and the Yankees, led by Ruth, won another two World Series titles in 1927 and '28. He hit a record 60 homers (a mark that lasted until 1961) and 165 RBIs in 1927.
By the time the $70,000-a-year deal ended in 1930, there was a little more urgency for a 35-year old Ruth. The big paydays were going to end within a few years for the veteran slugger, and there was no indication the Yankees or anyone else would hire him to manage a team — a long- held desire for Ruth. After years of the Bambino's larger-than-life personality and oversized ego, the Yankees were growing tired of his act. Illness, suspension, fights with managers, disputes with Commissioner Landis and a casual approach to conditioning meant that he had to now produce at his usual levels or else be faced with being shipped out of town. Again, the Yankees offered no raise, a move that caused Ruth to issue the ultimate public threat a player could use at the time: holdout or retirement.
He wanted $85,000 for three years. Either he got his money or he'd retire, he said in a letter delivered to all the New York sports editors. There was a concession to Father Time in Ruth's attitude about his new contract. "A few years ago I could not take this attitude. I would be obliged to sign at whatever terms for the same reason that 95 percent of all players have to sign — bread and butter ... well, there is enough bread and butter in our home, even if I do not touch another baseball for the rest of my life."
Ruth's ultimatum began a phony war in the press in which Ruth played the hurt party while the Yankees waited out their man. In previous years, negotiations had always wrapped up in time for Ruth to don his familiar No. 3 and start belting home runs in spring training. In 1930, the possibility of Ruth refusing to play until his contract was done seemed real. The stalemate dragged on until spring training in St. Petersburg. On the eve of the first game, Colonel Jake Ruppert — now handling Ruth's contract negotiations — offered two years at $75,000 per season. Ruth snorted that he would only sign for the $85,000-a-year figure he'd told the press. To back up the threat, he told writer Dan Daniel (one of several ghost writers used by Ruth) that he would not wear the Yankees jersey against Boston the next day unless he got his way.
As Daniel told the story (or embellished it to suit his purposes), he had become convinced that the optics of Ruth holding out for so much money as the Depression raged would be bad for the Babe. He reminded Ruth there'd been riots in New York City over the dire state of the economy. According to Daniel, Ruth professed ignorance of the suffering of many of his fans. Chastened, Ruth headed over to Ruppert's hotel in time to settle for the two years at $80,000 a year. The only concession he wrestled from the Yankees was the return of $5,000 in fines he'd paid under manager Miller Huggins for various infringements of team rules.
Getting $80,000 in 1930 was nothing to sneeze at for a 35-year-old athlete staring squarely the end of his career. Using the leverage they held over him, the Yankees could have ground him down to their original offer or lower. With his baseball income augmented by his many other endeavors, Ruth was well off by any measure and would remain so if he could curb his gambling habits. So while many of his teammates retired without notice or a final payday, Ruth was given a farewell tour — one that lasted another four seasons.
There was only one more World Series title in Ruth's tenure in the Bronx, but he happily pounded out 40-plus homers a year in concert with Lou Gehrig, who batted right behind him. When injuries finally slowed him down in 1934, Ruth hoped to stay on as the Yankees manager — as a sign of respect for his contributions over the years. But the Yankees dumped him off to the Boston Braves as a player/coach. The playing aspect ended just a few weeks into the 1935 season. Ruth, unhappy in Boston, didn't finish out the year. He tried a coaching gig with the Brooklyn Dodgers in 1938, but that too was a failure; he wanted to be manager, not a subordinate. Ruth was always a headline entertainer. He retired from the field with a whimper, not his traditional bang.
The business of being the Babe would consume him until his death in 1948. Still, Ruth's impact on baseball went past his exploits on the field. Ruth had shown his fellow players that there was serious money to be made in baseball, even in the worst economic times of the century. All it took was leverage. In Babe's case, that leverage was enormous talent fueled by a supportive New York press corps. It probably couldn't have happened had Ruth been the best player of all time in Cincinnati or Pittsburgh. While his compensation was more like that of the owner of a modest railroad, it was still more money than most of the green country boys who played the game could hope to see in 10 lifetimes.
Baseball's owners had been watching Ruth's spiraling salary, too. Even if it wasn't a king's ransom like those enjoyed by today's athletes, it was still cause for concern. The Yankees might have been able to pay such salaries with the revenues from their market, but other owners could not do the same in what was then still very much a regional sport. It was hardly a coincidence that no baseball player approached Ruth's levels of compensation until the 1960s.
In ensuring that Ruth's contractual largesse would not be matched for decades, Major League Baseball was aided by a legal decision that was reached just as Ruth started putting up his mammoth home-run numbers in the early 1920s. More than Ruth's salary demands, a case known as Federal Baseball Club v. National League defined baseball's financial landscape for over half a century. It was launched by the owners of the Federal League's Baltimore Terrapins against the National League and the American League for conspiring to monopolize baseball by destroying the Federal League.
While other teams in the Federal League had been compensated when the Federal League folded (one bought into the Chicago Cubs and moved them to Wrigley Field), the Terrapins had been left out. So they sued under the provisions of the Sherman and Clayton antitrust acts, claiming that baseball was violating antitrust laws. At trial, the defendants were found jointly liable, with damages of $80,000 assessed. The figure was tripled to $240,000 under antitrust law's "treble-damages" award. Baseball owners appealed, and the District of Columbia Court of Appeals reversed the decision, finding that baseball was not a monopoly. From there, it made its way to the Supreme Court of the United States.
Just as Ruth was making his name, the Supreme Court of the day was full of eminent legal personalities. Chief Justice William Taft (who was U.S. president from 1909 to 1913, and the first sitting president to throw out an Opening Day pitch), Oliver Wendell Holmes Jr., Louis Brandeis and Joseph McKenna were among those on the bench that heard the case. The issue was framed as whether baseball constituted interstate commerce or whether it was simply a set of intrastate businesses exempt from antitrust legislation. While the sport conducted itself in a number of states, lawyers for the two baseball leagues argued that their business did not constitute interstate commerce like a railway or steel company's business did.
(Continues…)
Excerpted from "Cap In Hand"
by .
Copyright © 2018 Bruce Dowbiggin.
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