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October 24, 2006

Donald Fehr

Andy MacPhail

Allan H. "Bud" Selig


RICH LEVIN: I want to thank everyone for coming today for this very important announcement. Commissioner Selig is going to say a few words and then Don Fehr and we'll open it up to Q and A. Commissioner?
COMMISSIONER BUD SELIG: Thank you, Rich, and good afternoon everybody.
I am very pleased and proud today to join Don Fehr here in making this very important and historic announcement. Today Major League Baseball and the Major League Baseball Players' Association have reached a new five-year labor contract that guarantees no interruption in play through the 2011 season.
This is historic for a number of reasons. First, it is the longest labor contract in baseball history. Second, we reached the agreement nearly two months before the deadline. And third, by the end of this contract baseball will have gone 16 years without a strike or a lockout, which is the longest period of labor peace since the inception of the Major League Baseball Players' Association.
Those of you who have been around for a number of years, and there are quite a few of you in this room, know how different these negotiations were. They were without the usual rancor, they were without the usual dueling press conferences, they were without the usual leaks. In other words, these negotiations were conducted professionally, with dignity and with results.
These negotiations were emblematic of the new spirit of cooperation and trust that now exists between the clubs and the players.
We're in the midst of baseball's golden age. More than 76 million fans attended our games this season, setting an attendance record for the third consecutive year. And we produced 5.2 billion dollars in revenue, which quadruples our revenue total 14 years ago.
The main reason, in my judgment, for this golden age is labor peace. And the new basic agreement assures labor peace into the next decade. It gives us the opportunity to continue to grow the game in all ways and continue the golden age of our great sport.
You have a summary of the new agreement before you. The basic components of the 2000 contract, meaningful revenue sharing. I believe these components have altered the economic landscape of the game, and have allowed us to enjoy remarkable parity. As many of you have written over the last few weeks, whoever wins the World Series this year will be the seventh different World Series champion in as many years.
I've always said that it is most important that the fans of as many clubs as possible can go into a season with the hope and faith that their team will compete for the postseason. On this past Labor Day there were 17 teams that had legitimate shots at reaching the playoffs. Major League Baseball today has parity, thanks to an economic system that is working for both the clubs and the players.
I want to thank all of you on the dais here tonight. You were the negotiators. You've spent a great deal of time and energy to make sure that our national pastime will continue uninterrupted for another five years. All of you have demonstrated great patience, great common sense and intelligence and above all dignity. I thank you and on behalf of everyone in baseball we thank you. Don?
DONALD FEHR: First of all, thanks, Bud, for the kind remarks and I appreciate all of you being here tonight.
I've been representing the players on an everyday basis for some 29 years and three months. And throughout most of that period of time what marked our relationship with the clubs was one of certainly respect for each other's skills in the legal sense, but a lot of acrimony, a lot of disputes.
I mentioned at the concluding bargaining session that I'd been waiting for most of that time to see if we could ever get to the place where we reached an agreement prior to expiration. And while I always understood intellectually it was possible and that was the goal, I'm not really sure I believed that it could happen and certainly that it would happen until this time. And one of the things you do when you have a situation like this is you try to ask yourself why. And certainly the economics were good. Certainly we had found a way to structure the various parts of our arrangement such that the needs and the things which were important to the other parties were respected within the confines of what each side could agree to.
But I want to echo one thing that the Commissioner just said, what was really different this time was that the approach to bargaining, while it had its difficult moments, any negotiation does, was very workmanlike, very pragmatic, very day-by-day, with, if you will, an artificially created deadline. There was a shared desire to see if we could resolve this well ahead of time and if we could get it done by about the time of the World Series, before the free agency declaration period began. There are no immediate consequences if we don't meet it, but we did. And that, I think, suggests that the approach taken by the parties, which reflects not only the approach taken by the negotiators at the table, but necessarily the approach taken by the 30 Major League clubs, and by the 800 or so Major League players, because without their support then the negotiators don't have much to negotiate with.
So I would like to, first of all, express my own appreciation to the one group of people on whose behalf I work and without whose support simply could not function, and that's the players. There were lots of them involved in this negotiation, a hundred or more at the table, many more than that involved in individual meetings, many players at the table on a repeated basis. And when we say the players are what makes the organization work, we mean that literally.
Secondly, to our own staff, my own staff, for the tireless efforts they put in, including the people that are here, but also Gene Orza and others that are not at the table because we ran out of room.
Third I also want to express our appreciation to the people sitting to my left.
I've been in a lot of negotiations over a lot of years. As I told Andy MacPhail in my first round of negotiations, his father was on the other side. That's how long I've been doing this. I think that the attitude that the negotiators brought to the table also was an important factor here, and we appreciate that very much. Thank you.
I do want to say one of the great problems in past negotiations and Don and I started our careers about six years apart, but we've obviously been through a lot of these things, now, and learned a lot. From our standpoint the ownership, the ownership is fractionalized, angry, angry at each other, always angry at the Commissioner and angry with the players, and it was not that way this time. I think the greatest manifestation of that are these two gentlemen like this, Larry Dolan and Andy MacPhail, and they represented their group really well with the kind of dignity and class that I talked about. And of course, our staff, and Bob DuPuy and Rob Manfred, and Jennifer Gefsky, I don't want to forget anybody here. They have done a great job.
And I, too, will say to everybody sitting to my right here, that when you have a goal and you do it with the kind of respect and professionalism that didn't exist here for a long time, this is a wonderful day, and quite frankly, this is a wonderful story.
RICH LEVIN: Would anybody else on the dais like to say a few words?
We'll take questions.

Q. This is more for the Major League Baseball side: What role did the success and the future prospects of Major League Baseball Advance Media and the overall strength of the industry play in your guys' ability, that you feel comfortable moving forward with this agreement?
COMMISSIONER BUD SELIG: Well, as I said, you've all heard me say this ad nauseam over the last year, and it just keeps getting proven on a daily basis, this is the golden era in every way, including the economics of our sport have improved dramatically, and that's good. That, after all, made for a more wholesome atmosphere. We didn't have to quarrel about a lot of things. So overall it was a very, very important part of the environment that continues peace. And the fact that we've been able to get our house in order was critical.

Q. But with respect to BAM specifically?
COMMISSIONER BUD SELIG: The sport as a whole, all the components of our economic landscape.

Q. It says "drug program continues," is anything changed in the drug program?
DONALD FEHR: No. It's just that the - if I could answer that - the expiration date is extended to be concurrent with this agreement.

Q. If I could ask a follow-up: I assume, was there any discussion about having blood tests performed? You have a situation which many drug experts say players, if they wanted to, could take performance enhancing drugs, HGH.
COMMISSIONER BUD SELIG: The answer is no. We've been through that carefully. There is no test. We are funding a study with Dr. Donald Catlin in UCLA. We will try to be in the forefront. The Players' Association has been very cooperative on this score. And we're going to do everything we can. But there's no sense discussing something in which there is no test.

Q. If there was a test that this gentleman is doing a study, would you start negotiations again? Is there something in the agreement that allows you to open up this door if a test is viewed as a true test?
COMMISSIONER BUD SELIG: My father taught me two generations ago never to deal in hypotheticals.
DONALD FEHR: If a urine test is developed and scientifically validated and all the I's are dotted and T's are crossed, there is an understanding that we will adopt that test. Blood tests we will talk about when one is validated. But as far as I know, and we check fairly frequently on this, there is not that testing available yet.

Q. Could you explain the changes in the free agency dates? And does that start this year, this December?
DONALD FEHR: It does start this December. The changes in the free agency dates came about in the following way, we were interested in moving the tender date back a little bit because with the December 20th tender date and what happens is that you're very quickly moving into the Christmas period and you lose that whole opportunity to negotiate. We thought that it would be better for players to have a greater opportunity to negotiate before the holidays, once those decisions were made and the clubs would be able to take advantage of that extra time, too. After some discussion they agreed with that. That, then, caused us to back up the salary arbitration option dates for free agents.

Q. Don, there's a mention in here of the provision requiring revenue sharing recipients to spend receipt to improve on field with modifications. What are those and what was your level of concern that some teams that were getting a lot of revenue sharing money had significantly low payrolls?
DONALD FEHR: I think that there are two things. First of all, you obviously have a generalized concern when you look at what the landscape is. Having said that, we have always believed that the best way to do that is to create the right kind of positive incentives, not negative incentives. And one of the things that the 31 percent marginal rate does in terms of revenue sharing, which is 17 points lower than it was for recipients under the prior agreement, we think gives them a big incentive to raise revenue. You don't raise revenue very long without having a better team on the field. We think that does it.
There also were some modifications in the other language relating to enforcement of that provision just to make sure that if circumstances require it we can do that, but the most important thing is the margin rates.

Q. This is for Ray and Craig: In the past when there were disputes and stoppages, fair or not, a lot of fan criticism came down on the players, and you were considered greedy and so on during the strike. Could you two guys talk about the importance of this labor peace from the players' perspective.
CRAIG COUNSELL: Well, I think we see it very similarly as the Commissioner said. Labor peace is good for the game. Its interest is at an all-time high. We feel that the focus is on the field. It's good for baseball, and it's good for us, as well. So I think this time around the atmosphere was completely different. It feels like more of a working relationship to the players and we believe that's a good thing.
RAY KING: Just to echo what Craig said. Anytime you have peace, it's a good thing. I remember going back to when I was in Milwaukee, I was wondering if the bus was going to leave. We got something done, like Don said, two months prior. I think it's great for the game and the fans can root for a great game of baseball. Like the Commissioner said, it's a great era to be playing the game of baseball.

Q. Gentlemen, just an explanation on how you feel the entire package of what you did is going to affect baseball, the economics over the next five years. I notice also in the free agent dates all of the salary arbitration, returning to clubs, all of that stuff is gone. So I would assume now that club has a chance to sign a free agent up to the first day of the season or whatever.
DONALD FEHR: I wish I was a perfect predictor about how the economics would all work out. Maybe if I was I'd have a job in Washington somewhere, but I'm not.
Having said that, what you try and do in an agreement like this is to create the right kind of incentives for people to do to engage in the kind of entrepreneurial activity you want them to engage in. We don't know what the economic climate will be in the country. It's been good, we hope it stays good. We believe modifying the revenue sharing the way we have, you're going to get a lot of interest in individual clubs in doing what they can to improve their own performance, and that will show up both in the bottom line and we think in what they do with players, as well as on the field.
COMMISSIONER BUD SELIG: Just to add to what Don said, having spent my whole adult life worrying about things like that, the last agreement produced, as I said today, stunning growth and revenue. I believe that five years from now people will be stunned how well we grew the sport. Don used the word "entrepreneurial," and I agree with that a hundred percent. I think this agreement encourages that and I'm very confident that it will produce the same results that we're all concerned about and that I certainly am, not only economic growth, but parity.

Q. For both Don and Bud: Before doing this agreement, many of the same people worked together on the World Baseball Classic. To what degree did that cooperation contribute to being able to do this deal as timely as it was done?
COMMISSIONER BUD SELIG: It was a wonderful experience, and I think all of us loved the World Baseball Classic. Don and I have always talked a lot about the internationalization of the sport and the things we could do. And that was the first really dramatic foray we made and we made it together. We made it as partners. They were wonderfully cooperative and it produced an event that exceeded everybody's finest expectations. So I would say that it was a great precursor to what happened here.
DONALD FEHR: I'd just add to that, on our side Gene Orza and Judy Heeter, but I think mostly Gene deserves the credit for the WBC. What we created for ourselves was something we couldn't do without the other side on, with real deadlines in a fish bowl that everybody was going to see. And what it produced was a realization that you really could do things together, that your normal anticipation that somebody is going to do something you don't like because that's your perception from the past, didn't have to be that way. I don't know what the direct carryover was, I'm not sure you can measure that, but it seems to me that the mood that it helped sustain was very important.

Q. For a long period in the '80s and '90s you had those free agent deadlines for re-signing, because the association was concerned that teams might not pursue free agents as long as this previous club would still negotiate. What has changed where you guys are comfortable not to have those deadlines?
DONALD FEHR: I think a couple of things. First of all, it represents a bet on our part, the kind of deference to former clubs which we saw after the '85 contract was decided is not likely to come. And that secondly, because of the other provisions that have been agreed to for a long time, if we get into that situation, we have the ability to enforce the contract.
Once you say that, then increasing the flexibility of both players and clubs becomes a desirable goal.

Q. Don, several agents have characterized the debt service rules as self-imposed salary cap that can be manipulated by club borrowing. Is there anything in modifications to that that would change that perception?
DONALD FEHR: I'm not sure who would have described it that way and why they would say that. My own belief at this point is really a couple of things, that the clubs have expressed the view that maintaining some form of debt regulation is important, for a lot of reasons I need not go into here. And our interests at that point is in making sure that it wouldn't have ancillary effects that were negative on players. And we're reasonably satisfied, first of all, that we've been able to cover that in the agreement. Whether we would have come to this on our own doesn't matter. This is an effort in accommodating, as I said before, to the extent you can, consistent with your own views, what the needs and interests of the other party are.
COMMISSIONER BUD SELIG: Let me just add to that, I don't know what people have said, but I said it, and many of you who have had the pain of listening to me every day would understand that the seriousness of the debt and the extent of it was a concern. It was a concern to bankers and economists, anybody who looked at it. And so, therefore, the fact that we were able cooperatively to work on something, because after all, if that debt related to significant economic downturns or worse, all of us would be affected, both players and management.
RICH LEVIN: We'll take a couple more.

Q. This is for Craig and Ray, but Andy and Rob, please correct me if I'm wrong: Clubs over the pass five or even ten years have talked about perhaps wanting to have some sort of cap on bonuses, some sort of slotting structure to maintain some sort of order to the amount of money that is paid to amateur players when they enter the game. That does not appear to be a part of this agreement. And so, Craig and Ray, what I'm wondering is to what extent did the players want to maintain the ability of amateurs to make as much money as they could, rather than keeping those salaries down, perhaps to benefit the current Major Leaguers?
CRAIG COUNSELL: Well, I think from our perspective we've always believed in a free market. And to try to allow players whatever their value is, that that's what they're able to earn. And I think we try to continue that for all players. I think a big part of this agreement, what we tried to do, is have gains for all classes of players, from the first-year, 40-man-roster player to the rookie to the midlevel free agent, to the market-maker free agent and I think even the amateur player goes into that. You try not to miss any player. We try to help all classes of players. And I think that's where it goes.
ANDY MACPHAIL: I would just say from a club perspective it wasn't just an economic issue. There was some concern that some of the better amateur talent was floating down to more moneyed teams, and that the whole philosophy of the draft is that the best player goes to the team with the worst record the prior year. And the concern with clubs was to get that club that was drafting as much leverage that they can have, so they can select the best player they possibly can, not just the player they think they can sign.

Q. How will the section on compensatory draft picks to clubs losing free agents affect clubs, especially low revenue clubs who might make their living off of those draft picks?
DONALD FEHR: I'm not sure I understand the question. The compensation for free agents in this structure, all the details have been moved around a little bit, is still the amateur draft choice selections. And in that regard it would function much the way it has.
ANDY MACPHAIL: The one other thing I would add is that while from a players' standpoint the deterrent for signing a Class B free agent has been removed. The club that would sign wouldn't lose a draft pick. On the other side the team that would lose that player is more likely to get a better pick than they would have than they would have in the existing system. The vast majority of picks, our club we signed Jacque Jones from the Twins, they got a fourth round pick. In these terms they're going to get a sandwich pick.

Q. With no contraction hearing, and you've talked so much about the financial strength of the game, and over your tenure as Commissioner you've talked about the small market team and helping those small market teams, and you've had all this revenue sharing and whatnot, does this golden era signal an end for troubles for a Tampa Bay, a Florida, and what Florida has gone through with winning and torching and winning?
COMMISSIONER BUD SELIG: No system is ever perfect in any sport or in most everything in life, but we have made substantial improvements in the system. And I believe that the small and medium market teams today are in far better and different shape than they were five years ago, and if you go back a decade it is a stunning difference.

Q. Don, I don't see this in the details, here, but I think there's one item that a lot of people in this room are more interested in than any of the ones that are listed and that is the talk of reduced access to the clubhouses for reporters. I wonder if you could tell us what has been done and why.
DONALD FEHR: Essentially what players were looking to do with very minor modifications was to enforce the existing rules on access to clubhouses so that there will be some period of time prior to games and before players go out on the field in which clubhouses aren't completely open. I will be astonished if it has any material impact on anybody's ability to do their job. And I think everybody will have come to that conclusion very quickly into next season.

Q. I see that the luxury tax threshold rises steadily through the agreement to 178 million dollars by the end of it. Is that done with the thought that by the end of the agreement no team will actually have to pay luxury tax threshold? If not, what is the philosophy?
DONALD FEHR: From our standpoint, if it were up to us, there wouldn't have been any tax, or up to the clubs it would be a different one. You have to compromise. We already have one club that's well above the 178 million, and we're a long way from being there. If the Commissioner is right, and I certainly hope he is, that the revenue is going to continue to go up, then you're going to see salaries continue to go up, because to a greater and lesser degree those are linked. What it was in the end is a compromise of competing interests, much as the rest of the agreement was.
COMMISSIONER BUD SELIG: The only thing I would add to that is as revenues rise, I think the structure of this part of the agreement is the same as what it was the last time. And I think you will see if we all do our work properly that revenues will rise dramatically and, therefore, it has a meaning, a great meaning.

Q. I guess this is for Andy since you addressed it before: This thing about the fact that there's the limitations on bonuses to go to draft picks. I gather, and you raised the club's concerns about this, but I gather they weren't addressed by this agreement, since there's nothing in there about it. And my other question, part and parcel with this, can you tell us what impact you think this August date now, the deadline for signing draft picks is going to have?
ANDY MACPHAIL: I think after looking at the whole package, you've got three different things: More leverage for the clubs as it relates to their first, second, sandwich round picks, their third round picks. They have an extra year protection for their professional players. So you have to take a look pretty much at the whole package and what additional leverage or options the players and the clubs have in that environment.
RICH LEVIN: Thank you very much.

End of FastScripts...

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