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Donald Fehr: Labor Relations Essay

In baseball, there are a number of people who deserve praise for their exemplary contributions. These include the likes John Gaherin, Peter Gold, Sue Carr and Pamella Pits. But when it comes to baseball in relation to labor relations, only a few stand out. One is Donald Fehr. Fehr is a graduate of law at the University of Missouri, Kansas City. He is known both for his intelligence and exceptional negotiating skills, with his ability to absorb information on any subject be it legal or financial and use it to fit his purposes (CBC Sports, 2002).

As a child, he grew up in a middle-class family in Kansas City, reading as much books he could get his hand on to (Wright, 2008). When Fehr was 6 or 7, his family moved to Kansas City from his Indiana, his place of birth. It was his father who recommended Indiana University for his college. IU was his father’s first university, before participating in the World War II. As an undergraduate, Fehr majored in political science, and became a member of the debate team for a couple of years.

At such time, Fehr is said to have enjoyed playing pool and relaxing despite the instability

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imposed by Vietnam War (Wright, 3008). Fehr completed his degree in law at the University of Missouri, taking a job as clerk for the federal judge. Even during his years in law school, Fehr was already representing labor unions. After graduating from law school, he joined law firm, Jolley, Moran, Walsh, Hager and Gorder. Fehr became associated to baseball by mere accident. The law firm that employed him was hired by and represented the baseball union.

He acknowledged such accident in his lecture in IU Bloomington where he said that one needs to take full advantage of opportunities available: “Opportunities don’t come up in your full life all that often, you have to be prepared to take advantage of the ones that come your way” (Wright, 2008). As an employee of the firm, he assisted in the Messersmith and Mcnally free-agency arbitration case, a case involving the baseball contract stipulation binding players to their teams.

This led to his hiring by Miller as the association’s general counsel in 1977. It was after the federal judge upheld the ruling on Messersmith and Mcnally that Fehr’s career as baseball lawyer started to boom. It was under Miller’s tutelage that Fehr was able to know the intricacies of baseball law (CBC Sports, 2002). From then he was acknowledged as one of the fiercest negotiators in the field of baseball in the US, and became best known for his impact on labor relations in the field of baseball.

He has been holding the position of Executive Director of Major League Baseball Association since 1986, challenging the owners of baseball teams for their collusion. One of the most significant of Fehr’s achievement was his wining of the $280 million damages paid to the players. Fehr succeeded Miller as executive director of the Major League Baseball Players Association (MLBPA) after the latter replaced Kennet Moffet. As a protege of Marvin Miller, Fehr has then been known for his exceptional, shrewd and acerbic style of negotiating.

Meanwhile, Kenneth Moffet who played the role of peacemaker during the baseball strike in 1981, replaced Miller as MLBPA executive director. With Miller as leader, there was a larger possibility of future strikes. This was not the case with Moffet, who envisioned a more cooperative relationship with owners. Apparently, Moffet’s style did not work because it was only a year after that he was replaced by the MLBPA’s executive board because of his lack of authoritativeness in managing the association. A major issue in his ouster is his stand on drug abuse.

Many opposed his manner of handling the drug violators among the players. Among his views that were opposed was that the union should get involved or take action in disciplining players who got involved in drug abuse. It was Donald Fehr, who was then, the union’s general counsel, together with his assistant, Mark Belanger who opposed Moffet, with the view that the grievance procedure should by itself take care of the problem in drug abuse, as consistent with the maxim describing the traditional labor relations, “management acts, and the union reacts” (Staudohar, 1996).

Fehr has been opposed, for example, in steroid testing among players. Donald Fehr, whom shared a closed relationship with Miller and thus, the same leadership style, both characterized by their shrewdness in their approach to negotiations, replaced Miller after the latter’s interim leadership of the union. This happened in when Miller suffered a heart attack. Fehr’s ascension to being the union’s leader mobilized it not only to legal and business matters but most importantly,to the bargaining table.

He, for one, raised the union’s revenues from $2 million to $70 million from 1981 to 1992 by filing collusion cases and winning against the owners and by negotiating with the baseball card companies (Staudohar, 1996). The situation in labor relations in 1984 can best be described as typical, with the owners trying to enter into negotiations to hold down labor expenses and with the players at most, thankful for their salary increases, thinking no other reason to ask for more (Saudoher, 1996). The situation persisted even when the owners showed their books to the union.

Based on their financial data, 18 teams experienced severe losses in 1984 and were still expecting a $155 million deficit by 1988 (Rader, 2002). In this, Fehr was incredulous, thinking that such action by the owners was nothing more but a ploy to deceive the public, describing the figures in the book as “meaningless,” “example of voodoo economics” (Saudoher, 1996). To show how easy it was for owners to manipulate losses, he showed two examples: 1) by manipulating the depreciation losses each year and 2) by hiding profits in a sister company (Jennings, 1997).

The MLBPA decided to strike if no settlement was made on August 6 of that year. A week prior to that date, the owners offered to contribute $25 million annually to the pension fund. This however would be inversely tied to the annual salary increases when such increases would exceed $13 million. Fehr’s response was unfavorable to the owners. According to him, such proposal was a mere salary cap in disguise; something that could affect future negotiations (Jennings, 1997).

In August 1985, the two-day strike ended with the intervention of Peter Ueberroth, Kuhn’s replacement as commissioner. No clearcut victor could be established (Rader, 2002) as the owners agreed to the players’ proposal to restore the compensation system for free agents while the players agreed to increase the number of years required for eligibility for salary arbitration (Rader, 2002). After reaching an agreement, there was the rescheduling of the missed games (Wright, 2008).

In 1990, Fehr became successful in negotiating a total of $280 million to settle the free agency collusion filed by him against the Major League Baseball in response to his knowledge of conspiracy between the owners to keep the baseball players’ salary low (CBC Sports, 2002). This happened after the failure of the new basic agreement and after a lockout has been called by the owners (Wright, 2008). A minimum salary of $100,000, a $55 million increase in pension fund, plus better payments to the World Series teams was reached (Wright, 2008).

Such experience by Fehr instilled in him utter distrust towards owners, owing to his tough and acerbic negotiating strategies in the later cases (Jennings, 1997). After the lockout in 1990, a four-year negotiated agreement allowed a reopener by either of the owner or by the union. In 1992, the owners voted to reopen negotiations as both television channels CBS and ESPN suffered from losses, thereby causing a threat to their revenues from television. Also, CBS threatened non-renewal of contract upon occurrence or continuance of a lockout (Jennings, 1997).

This was aside from their problem on overcommitment on salaries. This problem gave rise to the owners’ desire to control the costs of labor. The owners decided to agree to share revenues among themselves on the condition that the players would accept a salary cap. The owners proposed to split their revenues with the players, 50-50, capping their salaries from 84%-110% of the average salaries. Included in their proposal was the elimination of salary arbitration. To compensate for this, they also proposed the liberalization of free agency.

This meant that players could become free agents immediately after four years. Players were only allowed to become free agents after 6 years back then. However, such reopening happened despite the lack of any revenue sharing agreement plan (Jennings, 1997). It must be noted that the MLBPA had no intention to reopen the labor agreement. According to Fehr, he was not informed of the vote made by the owners to reopen the agreement (Jennings, 1997). Naturally, their response to the owners’ proposal was rejection.

According to the union, the sharing of revenues should not be dependent of salary caps because such would only cause the players to lose about $1. 7 billion over the span of 7 years. This will happen as there would be no room for negotiations as a result of their lack of input during the decision making (Jennings, 1997). This was what led to the strike in 1994, which lasted for about 232 days affecting one season after the other. The strike caused a major loss for all including the players but most, to the owners as the former had already secured their salaries for the whole season.

The strike continued until the next season causing the first ever cancellation of the World series (Staudohar, 1996). That Fehr led the players union in the 1994 strike by the Major League Baseball and thereafter, became responsible for the cancellation of the World Series, the long shutdown of baseball from 1994-1995, he had been the subject of both praise and criticism (Jennings, 1997). Meanwhile, the owners thought that there was no real decision made by the MLBPA because the strike vote was a mere induction by pressure and emotion.

Also, they thought that the players would succumb once they felt the pressures that would be placed on them by their families. Fehr answered this by saying that the union made no mistake because they had relied on the information that the owners would at least attempt to have a bargain at such point (Jennings, 1997). This was supported by the MLBPA and the players who showed their unity, stressing that it would be wrong for the owners to assume an increase in their bargaining leverage because of the mere cancellation of the World series (Jennings, 1997).

To insure such solidarity, Fehr and the MLBPA issued fund checks and informed the players of the labor relations situation to prepare them for the then coming winter (Jennings, 1997). In 1995, the owners hired replacement players as their attempt to break the strike. Because of this, the union accepted the proposed revenue sharing but proposed a 25% luxury tax on team payrolls with a total of $54 million and above. This is different from the proposal of the owners who wanted to tax just $40. 7 million and at 50%.

According to Fehr, the tax imposed by the owners provided no fixed numerical threshold which makes it difficult to anticipate and react to (Zimbalist, 2003). Also, he said that if such tax would be imposed, it should be concurrent with the application of revenue sharing. This was not the case because with the entrance of revenue sharing was the exodus of the luxury tax imposed by the owners (Zimbalist, 2003). President Clinton mediated by causing both parties to bring representatives to the White House as well as establish a deadline for settlement.

The owners withdrew the cap only when it learned that the MLBPA filed complaints on unfair labor practices, together with the NLRB. Fehr said that he would use his power to end the strike only if an injunction was issued, forcing the owners to bring back the salary arbitration. The court ordered to issue the injunction, restoring the provisions of the collective bargaining agreement (Staudohar, 1996). The strike affected economically, not only the owners but also the players and the major-league cities and TV networks. There was also an apparent reduction in attendance in baseball games.

It was only in 1998 when Cubs Sammy Sosa and Cardinals player Mark McGwire did a homerun race that the public were able to restore their interest in baseball (Staudohar, 1996). Baseball America interviewed Fehr during the strike of 1993-1994 (Schwarz, 2002). Commenting on settling labor disputes, he said, “When we have a labor dispute, players have no choice. You can’t even think about saying, ‘Well, we won’t go on strike this time, maybe we’ll think about filing an antitrust suit. ‘ We can’t do what the football players did when the clubs went too far to try to restrain the market for players .

. . they were able to file an antitrust suit and say the laws prevent you from monopolizing too greatly. We can’t do that. (Schwarz, 2002)” Meanwhile, the disparity in team payrolls concerned the owners and fans. Their concern stemmed from the apparent dominion of the richest teams when it came to buying the best players. In 2003, Tampa Bay Devil Rays only had team payrolls amounting to $19. 6 million while the payroll of New York Yankees amounted to $152. 8 million. The winning records, however, showed that this concern was baseless when the team, Florida Marlins won the 2003 World Series.

The team was only 25th in highest amount of payroll with a value of $48. 8 million. Another labor dispute arose in 2002, after the expiration of the previous agreement. This negotiation came with the same concerns as with previous strikes. In this case, the subject focus was on luxury tax and revenue sharing. The commissioner Selig recommended a 50% luxury tax on payrolls above $98 million and that teams place fifty percent of their revenues after application of deductions into a large pool, to be equally distributed to all the teams (Staudohar, 2002). As expected, such offer was rejected by the union.

In an interview with Fehr by Baseball America in 2002 (Schwarz), Fehr described the status of the negotiations as “…slow. We’ve had a series of meetings. We continue to meet. Some things change, but the discussions are not moving rapidly. It’s not all that unusual in labor negotiations that they don’t move rapidly. But you kind of wish that they would. It would be better. But we’re plodding along (Schwarz, 2002). ” In any case, despite whatever change that happened in baseball labor, what was constant was the presence of Fehr in the players’ union (Wright, 2008).

Apparently, as a result of his efforts in collective bargaining, his numerous court victories and his closure of lucrative media-rights deals, average baseball players earned a lot more than the average person in the US. Just in 2004, for example, the minimum salary was $300,000 for a Major League Baseball player. After the 2000 season, Alex Rodriguez, the highest paid player signed a 10 year, free-agent contract with Texas Rangers. He transferred to the New York Yankees (Wright, 2008). Also in the same year, Fehr’s notoriety in his position on drug-testing of players caused the ire of some people and the Congress.

In 2002, the Baseball’s basic agreement provided for the prohibition of anabolic steroids and drug testing of players proposed to be done unannounced, anonymously and may happen to some players even twice (Wright, 2008). The result was positive for more than 5% of the players. According to the Players’ Association, the testing would continue until a drastic drop to 2. 5% over the two consecutive years resulted (Wright, 2008). In 2003, the tests resulting to more than 5% being positive. This caused an unsatisfactory reaction among fans and some legislators.

At a congressional hearing after, the senators showed their desire for leniency in drug testing among baseball players. Senator John McCain, for one, said that the Congress will act on Fehr’s failure: “Your failure to commit to addressing this issue straight on and immediately will motivate this committee to search for legislative remedies,” (Wright, 2008). Fehr replied by saying that “the point that society seems entirely comfortable saying that employment and business relations in sports may operate on a fundamentally different set of rules” (Wright, 2008).

He further invoked the constitutional right to privacy which should be respected as it applies to baseball players: “Consider that there is a record of every telephone call you make, of every e-mail sent, of every Web site you visit, and if you have a credit card, there’s a record of every purchase you make,” “As we adapt to this changing world, perhaps we should be more, rather than less, vigilant to protect whatever society desires as our core zone of privacy. The notion that if you are not guilty you have nothing to hide perhaps is just as wrongheaded now as it was 50 or 100 years ago” (Wright, 2008).

Even while advocating the interests of players, Fehr is able to point out that it is the teams who avail of the players through such “out-of-control” baseball salaries and are willing to dispense of such amounts to improve their teams and not the players (Jennings, 1996). “There are criticisms of Fehr, among them his failure to mount an effective campaign on Capitol Hill to overturn baseball’s antitrust exemption; another being the union’s coddling of substance abusers. But perhaps the strongest criticism has to do with Fehr’s limited vision for the union.

He has never attempted to expand its umbrella to 4,000 or so unrepresented minor league players, even though he condemns baseball’s treatment of them. Nor has he led the union to support social and economic issues–a higher minimum wage, universal health insurance, public job creation, an income-tax credit for the working poor, a stronger OSHA–dear to organized labor” (Marantz, 1994). Still, it was Fehr’s negotiation skills that pulled the baseball players through in collective bargaining agreements.

His skills in collective bargaining prevented the owners from imposing their business interests while prejudicing the rights of the baseball players. This has been done by putting up a system akin to the Major League Baseball. Such system, together with Fehr’s skill resulted in the free-market system among the players where players can accept or sign contracts only with the highest bidders and change teams upon expiration of contracts—an undeniably remarkable feat (Jennings, 1996). Works Cited CBC Sports. (2002). Fear the Fehr: Donal Fehr Profile. Retrieved 01 May 2008 from http://www.

cbc. ca/sports/story/2002/08/29/fehr020829. html. Jennings K. (1997). Swings and Misses: Moribund Labor Relations in Professional Baseball. US: Greenwood Publishing Group. Marantz S. (1994). Fehr and Ravitch on the campaign trail – Donald Fehr; Richard Ravitch; 1994 baseball labor negotiations – Cover Story. Retrieved 01 May 2008 from http://findarticles. com/p/articles/mi_m1208/is_n6_v218/ai_15668216/pg_3. Rader BG. (2002). Baseball: A History of America’s Game. US: University of Illinois Press. Schwarz A. (2002). One on One: Don Fehr. Retrieved 29 April 2008 from http://www.

baseballamerica. com/today/features/fehr070102. html. Staudohar P. (1996). Playing for Dollars: Labor Relations and the Sports Business. US: Cornell University Press. Staudohar P. (2002). Baseball Negotiations: A New Agreement. Retrieved 01 May 2008 from http://www. bls. gov/opub/mlr/2002/12/art2full. pdf. Wright M. (2008). Fehr Factor. Indiana Alumni Magazine. Retrieved 01 May 2008 from http://alumni. indiana. edu/magazine/issues/200407/fehr. shtml. Zimbalist AS. (2003). May the Best Team Win: Baseball Economics and Public Policy. USA: Brookings Institution Press.

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