Instructions Analyzing a Case Study Bargaining Strategy in Major League Baseball Review Case 4: Strategy in Major League Baseball from the textbook, Negotiation: Readings, Exercises, and Cases. After reading the case, address the following prompts: Assess the issues of conflict between the players and management during the history of the sport. Analyze mistakes made in negotiations and the effect of mistakes on the processes and outcomes of negotiations. Evaluate the interests and goals of each of the parties. Analyze the best solution and strategy for all parties involved, including each party’s best alternative to a negotiated agreement (BATNA). Submission Details: Submit your answers in a 3 page   Case 4 Bargaining Strategy in Major League Baseball  Introduction During the winter of 2005–2006, Donald Fehr was faced with some monumental decisions. As the head of the Major League Baseball Players Association (MLBPA), he had been arduously preparing for the upcoming round of negotiations between his union and the owners of the 30 major league baseball clubs (collectively known as Major League Baseball, or MLB). Being the representative of the labor force in a multi-billion dollar business was no easy task, even for a seasoned negotiating veteran. The health—even the very survival—of his union had hung in the balance each time a new basic agreement (the uniform contract between the two sides) was negotiated, and Fehr couldn’t help but remember past work stoppages, which hurt both sides tremendously. Fehr knew that hard bargaining with the ownership group might cause another strike or lockout, but with attendance levels at the highest they had ever been in the history of the sport, he needed to gauge his constituents’ (and his opposition’s) resolve to decide how to approach the process. History The Early Years Tumultuous labor relations in professional baseball were almost as old as the sport itself. What started as a “gentlemen’s game” in the mid-1800’s quickly turned into business when the general public started taking interest in the sport. Throughout the second half of the 19th century, different leagues were formed by American industrialists whose intentions were to capitalize financially on the sport’s growing popularity. Only two leagues stood the test of time, the National League, formed in 1875, and the American League, formed in 1901. In 1903 the two leagues merged to become Major League Baseball, which quickly became the most profitable sports business in America. When players began to realize that their unique skills could be marketed to the highest bidder, nervous owners began to seek ways to ensure that their moneymakers would not jump ship. In the most controversial move in baseball’s early history, the “reserve clause” was developed and implemented into player contracts. In a move that some considered a form of outright collusion, owners agreed amongst themselves that after each season, each club was able to “re.

1. Instructions
Analyzing a Case Study
Bargaining Strategy in Major League Baseball
Review Case 4: Strategy in Major League Baseball from the
textbook, Negotiation: Readings, Exercises, and Cases. After
reading the case, address the following prompts:
Assess the issues of conflict between the players and
management during the history of the sport.
Analyze mistakes made in negotiations and the effect of
mistakes on the processes and outcomes of negotiations.
Evaluate the interests and goals of each of the parties.
Analyze the best solution and strategy for all parties involved,
including each party’s best alternative to a negotiated
agreement (BATNA).
Submission Details:
Submit your answers in a 3 page
Case 4 Bargaining Strategy in Major League Baseball

2. Introduction During the winter of 2005–2006, Donald Fehr was
faced with some monumental decisions. As the head of the
Major League Baseball Players Association (MLBPA), he had
been arduously preparing for the upcoming round of
negotiations between his union and the owners of the 30 major
league baseball clubs (collectively known as Major League
Baseball, or MLB). Being the representative of the labor force
in a multi-billion dollar business was no easy task, even for a
seasoned negotiating veteran. The health—even the very
survival—of his union had hung in the balance each time a new
basic agreement (the uniform contract between the two sides)
was negotiated, and Fehr couldn’t help but remember past work
stoppages, which hurt both sides tremendously. Fehr knew that
hard bargaining with the ownership group might cause another
strike or lockout, but with attendance levels at the highest they
had ever been in the history of the sport, he needed to gauge his
constituents’ (and his opposition’s) resolve to decide how to
approach the process. History The Early Years Tumultuous
labor relations in professional baseball were almost as old as
the sport itself. What started as a “gentlemen’s game” in the
mid-1800’s quickly turned into business when the general
public started taking interest in the sport. Throughout the
second half of the 19th century, different leagues were formed
by American industrialists whose intentions were to capitalize
financially on the sport’s growing popularity. Only two leagues
stood the test of time, the National League, formed in 1875, and
the American League, formed in 1901. In 1903 the two leagues
merged to become Major League Baseball, which quickly
became the most profitable sports business in America. When
players began to realize that their unique skills could be
marketed to the highest bidder, nervous owners began to seek
ways to ensure that their moneymakers would not jump ship. In
the most controversial move in baseball’s early history, the
“reserve clause” was developed and implemented into player
contracts. In a move that some considered a form of outright

3. collusion, owners agreed amongst themselves that after each
season, each club was able to “reserve” five players that could
not be sought after by the other teams. In this regard, the five
players on each team that were reserved had no right to switch
teams if they found the conditions deplorable or found that they
could make more money elsewhere. Eventually this clause
would be written into all contracts, and players who chose to
dishonor the clause were blacklisted from organized baseball.
Opposition to the reserve clause became a rallying point for the
players, and several unions were formed over the next few
decades in an attempt to give players bargaining leverage and a
bigger voice. The Brotherhood of Professional Base Ball
Players (1885), the Players Protective Association (1900), the
Baseball Players’ Fraternity (1912), the National Baseball
Players’ Association of the United States (1922), and the
Association of Professional Ballplayers (1924) all had formed,
in part, to oppose the reserve clause. However, those unions had
trouble sustaining member interest and financial backing and
eventually disbanded. During the time of these unions’
formations, the anti-union sentiment was high among the
general public due to several highly publicized instances of
labor union violence. The unions’ failures meant the owners
maintained complete control over their players’ salaries,
benefits, and livelihoods. Illegal Restraint of Trade? By
restricting the movement of labor from team to team, which in
almost all cases would be over state lines, it seemed to many
that the owners were illegally restraining trade, a violation of
the Sherman Antitrust Act. Several legal challenges were
mounted against organized baseball by rival start-up leagues
who were angered when they were denied access to the player
market. In 1922, the United States Supreme Court ruled that
baseball was a sport, not a business, and since it was conducted
in local ballparks for local fans, it was mainly involved in
intrastate commerce. The Federal Baseball Club v. National
League decision (aka the Holmes decision, named after Judge
Oliver Wendell Holmes) would ultimately give baseball an

4. “antitrust exemption.” In 1953, the Supreme Court would
reaffirm the ruling after a player (George Toolson of the New
York Yankees) filed suit, claiming the reserve clause was
illegal and was threatening his livelihood. Chief Justice Earl
Warren reiterated that baseball “was not within the scope of
federal antitrust laws,”1 and that action taken against the
exemption should be by the U.S. Congress, not the courts. The
reserve clause would remain untouched and embedded in
players’ contracts until the mid-1970s. The Major League
Baseball Players Association In 1946, a Mexican league was
hiring several prominent U.S. players, creating competitive
pressure on American player salaries. U.S. owners wanted to
avoid a bidding war with the Mexican League. That same year,
a labor lawyer convinced U.S. players to organize the American
Baseball Guild. This union’s existence concerned management
enough to cause them to bargain over a uniform players’
contract. The contract called for a minimum player salary
($5,000) and a guaranteed pension plan. Players contributed the
bulk of the retirement funds, paying into the pension plan until
their tenth season; owners contributed to it primarily from
radio, television, and post-season ticket revenue. The union was
short-lived, fading into obscurity by the end of that same year;
however, the pension fund endured. By the early 1950s funds
for the pension plan fell short, and the players felt it was in
their best interest to organize once again. In 1953, the Major
League Baseball Players Association (MLBPA) was formed to
serve as the players’ main bargaining body and the owners
implicitly voluntarily recognized the union by allowing it to
operate the pension fund and by contributing to the fund. The
union was led by player representatives and legal advisors until
1965 when it hired its first full-time executive, Marvin Miller,
an economist with the Steelworkers Union. Miller brought with
him experience in industrial relations and a hard-line bargaining
approach. In response, the owners formed the Major League
Player Relations Committee (PRC) to serve as their negotiating
body. In 1968, the two sides hammered out the 1st Basic

5. Agreement, a uniform contract that established (among other
things) a formal grievance procedure for players and a
significantly increased minimum salary level. Baseball historian
Lee Lowenfish writes, “[the owners] conceded more rights in
the 1st Basic Agreement than in all previous decades of the
sport.”2 The Early 1970s: Players Challenge the Reserve Clause
In 1972, the MLBPA and the PRC ran into trouble while
negotiating the 3rd Basic Agreement. The major disagreement
between the two sides stemmed from the amount the owners
were willing to contribute to the players’ pension fund. Players
union head Marvin Miller claimed that there was a surplus of
pension funding that could be used to offset increased cost-of-
living expenses that the players had been incurring. The owners
showed solidarity (which has been rare throughout the league’s
history) by refusing the MLBPA’s demands. The union even
went so far as to file an “unfair labor practice” claim with the
National Labor Relations Board when the owners refused to
share certain financial information with them (the information
was eventually provided). On April 1, 1972, a day that the
Sporting News would call “the darkest day in sports history,”3
the players went on strike. The strike did not last long, as the
two sides eventually reached a compromise on the contribution
amount ($500,000). The half-million dollars that the players
received in increased pension contributions was far less than the
salary losses they incurred during the two-week long strike. The
owners, who had talked the union down from their initial
proposal of a $1 million increase in contributions, had lost $5.2
million in revenue.4 Shortly after the strike of 1972, the reserve
clause was threatened once again. Outfielder Curt Flood of the
St. Louis Cardinals challenged the legality of the reserve clause
in court, and in Flood v. Kuhn, the Supreme Court once again
upheld the Holmes decision. Flood was successful, however, in
attracting Congress’s and the media’s attention to the reserve
clause issue. In 1974, pitcher Catfish Hunter sought to become
the league’s first free agent when the owner of his team (the
Oakland A’s) dishonored a provision in his contract. Hunter’s

6. case went to a three-man arbitration panel, which had been
created and outlined in the 3rd Basic Agreement. The panel
voted 2 to 1 that Hunter had the right to “shop his services” to
other clubs since his own club did not honor the legally binding
contract. Hunter became baseball’s first free agent. A year later,
two players (Dave McNally and Andy Messersmith) challenged
the clause once again. The two teams that held the rights to
McNally and Messersmith had renewed the players’ contracts
for the 1975 season, and for different reasons, both players
refused to sign them. They played out the season anyway,
without being under contract, and when the season concluded,
the clubs employed the reserve clause once again. The players
claimed that the reserve clause only provided that clubs could
renew the contracts for one year, and that since they were not
under contract during the 1975 season, the clubs were not
within their rights to renew them for the 1976 season. The case
went to arbitration, and by a 2 to 1 vote, the McNally and
Messersmith won. The players had won the right to offer their
services to the highest bidder (a process called “free agency”),
and the reserve clause was dead. The new labor environment
would become even more turbulent as free agency shook the
economics of the game to its core. 1976 to 1989: Free Agency
Becomes the Norm In 1976, the MLBPA and the PRC were split
on the new free agency issue. The owners wanted players to
gain free agency eligibility after 10 years of professional
service, while the union proposed a five-year requirement.
During Spring Training, the owners instituted a lockout.
Commissioner Bowie Kuhn, who was technically an “employee
of the owners,” ordered the owners to end the lockout, a move
that lost him favor with many on the management side. The two
sides eventually agreed on an eligibility minimum of six years
of professional service, and compensation in the form of a draft
pick for the team who was losing the player. Prior to the start of
the 1980 season, the two sides were again far apart when
negotiating the 5th Basic Agreement. The major issue was the
compensation that a team would receive after losing a free

7. agent. The proposals that the PRC presented were seen by
Marvin Miller as an attempt to “dismantle free agency in its
infancy.”5 On April 1, the players again went on strike. They
agreed to start the season on the scheduled opening day, but
promised to resume the strike on May 23 (the week that
attendance usually plateaued) if no agreement had been reached.
On the morning of May 23, the two sides reached a deal which
basically provided that the free-agent compensation issue be
studied for a year, after which negotiations regarding the issue
would reopen. The committee that was selected to study the
issue produced nothing substantial, and in 1981, the two sides
were again having trouble finding common ground. The
MLBPA’s Marvin Miller and the PRC’s president Ray Grebey
had developed a bitter rivalry that the press could not get
enough of. On May 29, the players went on strike once again.
The strike lasted 50 days. The National Labor Relations Board,
Congress’s Federal Mediation and Conciliation Services, and
the Department of Labor all attempted to help the parties end
their strike. On July 31, the two sides reached a deal that would
provide the team losing a free agent compensation. The team
that lost the player would receive a player from the “signing”
team. The union won a free agency system that was similar to
their own bargaining position—but at a heavy price. Players lost
a total of $30 million in wages, and the owners lost roughly $72
million in revenues.6 Miller, Grebey, Kuhn, and other key
figures in the negotiation process left their positions, and
baseball witnessed labor peace and an attendance boom over the
next four years. In 1985, with Donald Fehr heading the MLBPA,
the two sides were determined to avoid a work stoppage while
negotiating the 6th Basic Agreement. The two main issues that
divided the two sides were once again free agent compensation
and pension contribution levels. Several issues were agreed
upon early (e.g., a drug review board would investigate cases
where a player was accused of using cocaine), but it was still
not enough to avoid another work stoppage. On August 6, the
players went on strike, but with the 1981 strike still fresh in

8. their minds, the two sides reached an agreement within a day.
The risk of alienating the fans, who were spending more money
than ever on baseball, proved to be the driving force behind the
speedy resolution. The Early 1990s: Salary Arbitration,
Revenue Sharing, and “The Big Strike” In 1990, the owners
instituted another lockout while bargaining with the union over
the 7th Basic Agreement. The disparity between large market
teams (such as the New York Yankees and Los Angeles
Dodgers) and small market teams (such as the Kansas City
Royals and Milwaukee Brewers) was growing. With a larger fan
base, large market teams were able to attract significantly richer
television contracts from local networks. Because no salary cap
existed, large market teams could sign better players due to
their ability to offer high salaries. The owners saw this as a
major problem, and proposed a “revenue sharing” program, in
which large market teams would share a certain portion of their
local revenue with small market teams. Their justification was
that by increasing competitive balance, playoff races would be
closer, attracting more people to the ballparks late in the season
and producing higher television ratings. The union opposed a
revenue sharing proposal because, if the large market teams had
less money, they could not afford to offer top dollar contracts to
free agents. Players employed by teams that received revenue
sharing would not necessarily benefit either, because those
teams were not obligated to spend the funds on player salaries.
The owners tried to preempt a strike by locking the players out
of spring training. After 32 days, an agreement was reached; the
revenue sharing issue was put on hold. In 1994, the owners
realized that not only was competitive and financial disparity
hurting their profits, but salary arbitration was driving up salary
levels. Beginning with the 1985 contract, players with three
years of major-league service who felt that they were underpaid
could demand that their salaries be adjusted upward through a
process called “final offer arbitration.” The process worked as
follows: The player’s representative presented evidence that the
player was underpaid, relative to peers with comparable

9. records. The team owner’s representative presented evidence
that the player was equitably compensated, given other players
in his peer group. Each side proposed a salary figure. The
arbitrator then had to select either the player’s proposal or the
owner’s proposal. Teams had been more inclined to pay players
a little bit more than what they were worth instead of risking a
loss in the final-offer arbitration process (where they stood to
pay considerably more). The owners suggested an overhaul of
the entire economic structure of the league: eliminating salary
arbitration, phasing in a “salary cap” (where a team’s total
payroll was limited to a specified amount), lowering free
agency eligibility, and splitting television revenue 50/50 with
the players. Fehr and the MLBPA, on the other hand, rejected
these proposals. On August 11, 1994, the players went on strike.
This time, the strike lasted 232 days, and the World Series was
cancelled for the first time ever. The courts, the NLRB,
Congress, the FMCS, and President Clinton all intervened at
some point during the stoppage. The strike eventually ended
when Judge Sonia Sotomayor of the United States District Court
in Manhattan granted the NLRB’s request for an injunction. The
NLRB was claiming that the owners had implemented their
proposals during the strike without the existence of a good-faith
impasse. Baseball resumed on April 26, 1995, with the old
contract provisions being re-implemented. Historian Paul
Staudohar calls the strike “one of the most eventful, but
unproductive, ever.”7 The owners estimated their total losses to
be in upwards of $1 billion, and the players saw their salaries
drop considerably as cash-strapped clubs sought cheaper talent
from the minor leagues. Some fans turned to minor league teams
for baseball entertainment; others abandoned the game
altogether. Meanwhile bargaining continued. The 8th Basic
Agreement wasn’t agreed upon until late December, 1996. A
revenue sharing program was implemented, but the owners did
not receive their highly sought salary cap. Labor Relations
Developments from 1998 to 2002: The Curt Flood Act and
Contraction In 1998, Congress passed the Curt Flood Act. The

10. law called for an end to baseball’s storied antitrust exemption,
but only as it applied to labor relations. The premise of the bill
was to “reduce the chance of future strikes by allowing players
to bring an antitrust suit against the owners if labor negotiations
stall.”8 All other aspects of the exemption still applied. In July
2000, the owners tried to partially rectify the problem of
competitive and financial disparity by eliminating (or
contracting) two teams from Major League Baseball. Their
rationalization was that by having two of the poorly performing
clubs gone, the revenue sharing burden would be eased
substantially. Congress unsuccessfully attempted to stop the
contraction, and the union responded by filing a grievance.
Eventually, the owner of the Montreal Expos (one of the teams
that was being considered for contraction) sold his team to an
ownership group made up of the other 29 owners for $120
million. They moved the team to Washington, D.C., renamed it
the Nationals, and then found a buyer for the team.9 The issue
of contraction was put on hold. In 2002, the two sides entered a
bargaining process that was calmer and more productive than in
previous bargaining sessions. The owners wanted to implement
a “luxury tax” (a team exceeding a certain payroll threshold
would pay money to MLB and those funds would be
redistributed among the other teams) and a competitive balance
draft (the eight worst teams could select players from the eight
best teams). Fehr and the union opposed these provisions (the
original proposal by the owners was a 50 percent tax on all
salary spending over $84 million), and disagreements over a
proposed expansion of the drug testing policy also arose. The
union set a strike date of August 30, and the two sides struck a
deal the night before the work stoppage was to take place. A
luxury tax with higher thresholds than originally proposed was
implemented as a way to slow rising player salaries, and,
perhaps just as importantly, the post-season (which accounts for
a large portion of baseball’s revenue) was saved. The Upcoming
10th Basic Agreement The 2002 contract was set to expire in
December 2006. The history of labor relations in professional

11. baseball—the lost revenue from strikes and lockouts, attempts
to control escalating players’ salaries, and clauses found in
prior contracts—all cast a long shadow over the 2006
negotiations. Baseball Commissioner Allen H. (Bud) Selig
issued an order to all MLB employees that no one outside of his
office was to discuss upcoming labor negotiations. While the
MLBPA’s Fehr planned to travel to each of the teams to listen
to player concerns in the early spring, as of December 2005 the
following issues seemed prominent: 1. Steroids In the fall of
2005, with negotiations over the 10th Basic Agreement still
months away, the two sides were forced to bargain over a drug
testing program. The endless media coverage over certain
players’ alleged steroid usage was harming Major League
Baseball’s image greatly, and Congress (most notably Senator
John McCain, R-Arizona) had been threatening to act if the two
sides could not develop a tougher policy.10 The controversy
began when a book by ex-slugger Jose Canseco claimed to
reveal the extent to which major league ballplayers were using
and abusing steroids. The steroid issue had been gaining
momentum for several years prior, as home-run records were
broken and balls were flying out of the park like never before.
In what some say was an attempt to garner media attention and
solidify anti-drug stances with the public, several Congressmen
became involved, even subpoenaing several former players and
executives to testify in front of the Government Reform
Committee in March of 2005.11 The MLBPA complained that
the union should be contacted before either current or former
players spoke out publicly on this issue. Fehr and Commissioner
Selig were far apart on the issue of punishment for steroid
users, with Fehr’s proposal being far more lenient than
Selig’s.12 Fehr was calling for suspensions of 20 games for the
first time a player was tested positive for steroids, 75 games for
the second penalty (with some flexibility, based on
circumstances), and a lifetime ban for the third penalty. Selig
countered with an absolute ban of 50 games for the first
penalty, 100 games for the second penalty, and a lifetime ban

12. “for anybody dumb enough to be caught a third time.”13
Congress was threatening to act if the two sides could not
voluntarily agree on a drug testing program for steroids.
Amphetamines also became a topic for discussion. Owners
wanted to expand the drug testing program to include
amphetamines, albeit with lighter penalties than for steroids.
The union leadership generally opposed this expansion of the
drug testing program, but again Fehr was sensitive to
Congressional pressure. 2. Contraction In 2002, “contraction”—
a possible decrease in the number of MLB teams and/or
relocation of poorly performing clubs—was a prominent topic.
However, with the transformation of the Montreal Expos into
the Washington, D.C. Nationals, it was unlikely that the topic
would be a part of the 2006 negotiations; the owners had sent
signals that contraction was no longer a pressing issue.
However, it was possible that the topic could reemerge, if only
as a “throw-away” issue. The 9th Basic Agreement stated that
the owners had until July 2006 to notify the union of
contraction/relocation plans. 3. The “Luxury Tax” Financial
disparity was a topic that the PRC would certainly not consider
to be “throw-away” issues. Owners argued that because some
teams could afford to pay high salaries, they could hire the best
players and make it unlikely that most other teams could make
the playoffs. To restore competitive parity, the owners wanted
to continue, and even expand, the luxury tax that had been
implemented in 2002. The players union remained
philosophically opposed to any formula such as the luxury tax
(which they considered to be a type of flexible salary cap) that
might hurt player incomes. However, as Murray Chass of The
New York Times wrote, “. . . the owners would be hard pressed
to make proposals based on economic hardship. Industry
revenues didn’t reach $2 billion until 1997, and last year [2005]
it soared to $4.7 billion.”14 The luxury tax which was laid out
in the 9th Basic Agreement only affected a few teams (most of
the penalties were paid by the New York Yankees), so both
sides could have trouble proving or disproving its worth. It

13. started in 2003 with a tax threshold of $117 million and rose to
$136.5 million in 2006. Certain alterations to the complicated
tax formula—the tax increased with each offense—could be
proposed during bargaining, but it was doubtful that team
owners would agree to a complete overhaul of the system so
early in its existence. 4. Revenue Sharing In addition to the
luxury tax, MLB used revenue sharing (e.g., from television
contract rights and ticket sales) to distribute income from the
most profitable teams to the least profitable teams. In 2004 and
2005, Major League Baseball witnessed its highest attendance
levels ever, with 73,022,969 and 74,915,268 fans passing
through the turnstiles, respectively.15 With luxury box and
ticket prices rising, this attendance boom signaled an
unprecedented rise in gate revenue. While this helped improve
the profitability of the smaller-market teams, the union was
concerned about how these funds were used. Minimum team
salary levels needed to be addressed. After the Florida Marlins
club received luxury tax and revenue sharing funds, it slashed
its payroll to $15 million ($20 million less than the second
lowest payroll). To the union leaders, such a move exposed
holes in the revenue sharing program—in effect, funds were
being transferred from some owners to other owners, but there
was no guarantee that the players would see any of those funds.
5. Salary Levels The average salary earned by a MLB player
rose 7 percent—about double the inflation rate for 2005. The
average MLB player certainly seemed well-paid, with a 2005
salary of $2.4 million. However, this figure was skewed by the
very high salaries paid to star players, some of whom earned
over $20 million annually. The minimum annual salary was
$327,000. The union wanted to increase that minimum. 6.
Salary Arbitration and Free Agency How long one must play
before becoming eligible for salary arbitration and/or free
agency remained an issue. The union wanted to shorten the
length of time so that high-performing players could increase
their income to be comparable to their peers. The owners
wanted to keep it where it was, or perhaps even lengthen the

14. eligibility requirements. The appropriate compensation a
signing team should pay to the team losing a free agent also
remained a topic of potential discussion in contract
negotiations. 7. Pension Contribution Levels The union wanted
owners to increase their contributions to the player’s pension
fund. Owners balked at this request, citing declining television
revenues, which were used to fund pension contributions. The
World Series television contract that Major League Baseball
could sign with the FOX network might be the X-factor in the
owners’ approach to bargaining over economic matters. A large
percentage of baseball’s revenues came from national
broadcasting contracts, which gave a network the right to
broadcast playoff games, the All-Star Game, and a certain
number of games throughout the regular season. The previous
contract with FOX, which ran from 2000 through 2006, was
worth $2.5 billion, but unfortunately coincided with the lowest
television ratings in the sport’s history. The World Series
ratings in 2000, 2002, and 2005 were the three lowest-rated
broadcasts since the Series began airing in 1968.16 Because of
this surprising trend, the new contract with FOX, which was to
be signed in July of 2006, was rumored to be worth
significantly less (estimated at $1.75 billion over seven
years).17 Since the owners used large portions of the television
contract to fund the players’ pension fund, the claim of
financial hardship by the PRC could rear its ugly head during
Basic Agreement negotiations. 8. Strike Risks The potential
alienation of baseball’s fan base by undergoing another work
stoppage might prove to exert more influence over bargaining
matters than any other factor. Past work stoppages had cost both
players and owners significant amounts of money. A strike
could result in team owners attempting to bring in “scab”
players (e.g., minor league players) or it could result in the
decertification of the union by disgruntled players. 9. The
Media and Public Perception Finally, with any labor relations
situation, the media play an important role in the approaches
that the two sides take to bargaining. In prior negotiations,

15. national media attention to labor contract negotiations was
considerably more intense than in other industries. The ESPN
television network only added to the scrutiny as it
complemented traditional media outlets, such as Sports
Illustrated magazine and the USA Today, New York Times, and
Washington Post newspapers. The MLBPA was recently accused
of shielding drug addicts and criminals because of its stance on
steroid testing. Yet to give in to owner demands for a tough new
drug testing policy would only lead to media criticism that “the
strongest union in America” was ineffective and could be beaten
by determined owners. Such criticism could cause some union
leaders to encourage taking a hard-line approach to regain the
confidence of their constituents. The Big Decision: What
Bargaining Strategy Should Fehr Adopt? Donald Fehr realized
that he could go one of two ways when the bargaining sessions
were to begin during the 2006 season. On one hand, he could
probably secure the “basic” increases in minimum salary and
pension contributions without a lot of resistance from the PRC
and its leader, Commissioner Bug Selig. Although the owners
might claim that the decreased television revenue put them in a
less desirable financial position, Fehr knew that he could
retaliate by going to the media with the astronomical industry
revenue figures that baseball was currently realizing. With gate
revenues and industry profits at an all time high, a hard-line
approach and the threat of a strike or anti-trust lawsuit might
allow the union to secure better wages and benefits than they
had ever imagined. On the other hand, Fehr knew that the public
image of the union had suffered because of past “strikes by
millionaires” and because of the union’s current resistance to a
tougher steroid policy. As Fehr mulled his options and planned
his bargaining strategy, he perhaps hoped that Jose Canseco
wasn’t planning on writing another book anytime soon. Source:
This case was prepared by Daniel T. Romportl and William H.
Ross, Jr., both of the University of Wisconsin–La Crosse. Used
with permission from the authors and the Society for Case
Research.