07-06-2002

LOBBYING: Hardball

"Steroids in Baseball," screamed the cover of the June 3 edition
of Sports Illustrated. Inside, an article documented a dizzying increase
in steroid use among professional baseball players-a revelation that
rocked big-league clubhouses from coast to coast.


In the article, former major-league star Ken Caminiti credited his 1996
National League MVP award to the use of the performance-enhancing drug.
Before he started injecting steroids, Caminiti had never hit more than 26
home runs in a season. After one year of steroid use, he smashed 40 homers
and boasted a .326 batting average. "It's no secret what's going on
in baseball," Caminiti told the magazine. "At least half the
guys are" on steroids.


The article hit Major League Baseball like a beanball. Baseball
Commissioner Bud Selig, who represents team owners and whose family owns
the Milwaukee Brewers, urged players and their union to accept mandatory
steroid testing as part of a new labor contract. The union balked.


Then Congress stepped up to the plate. Before the next edition of Sports
Illustrated hit the newsstands, two powerful allies of major-league team
owners scheduled a congressional hearing on steroid use: Sens. John
McCain, R-Ariz., the ranking member on the Senate Commerce Committee, and
Byron Dorgan, D-N.D., who chairs the panel's Consumer Affairs
Subcommittee.


Last fall, McCain joined Arizona Diamondbacks owner Jerry Colangelo in his
private suite for a World Series game, and Dorgan's former top Senate aide
is now Major League Baseball's chief Washington lobbyist. At the June 18
hearing, the two senators demanded that the players accept steroid testing
as part of any new labor pact.


"My hope is that this hearing will ... help develop some pressure to
do more testing," Dorgan told witness Donald M. Fehr, the executive
director and general counsel of the Major League Baseball Players
Association.


Fehr squirmed. "Successful collective bargaining is not likely to
take place in public," he said. "Even before a Senate
committee." But under pressure from the senators, Fehr gave some
ground: "We will have a frank and open discussion" on the
topic.


For Major League Baseball and the owners of its 30 franchises, the session
was a home run. With an assist from their Senate allies, team owners had
swiped a key element of leverage from the players and their union.
Although Fehr did not explicitly promise to accept mandatory testing, the
lawmakers made it clear that the players should not use the steroid issue
as a bargaining chip in labor talks with the owners.


McCain and Dorgan say they brought up the steroid controversy on their own
and were not put up to the task by the baseball owners. And lobbyists for
the owners deny they helped set up the ambush. Still, the hearing was a
good example of how Major League Baseball and team owners-who have
suffered heavy criticism over the years from fans, the press, and
politicians-are now profiting from key Washington relationships. The
owners hope these political connections will help constrain the players
union during the current round of labor negotiations, baseball's first
since the disastrous 1994 strike that canceled the World Series.


"In today's world, the political climate is relevant to how we
conduct our business, and therefore it's important to be well represented
in Washington," Colangelo told National Journal.


Baseball is indeed alive in Washington. But unlike the pastime played with
leather balls, wood bats, and double plays, the inside-the-Beltway game
relies on hard money, political connections, and power plays.


In the past two years, Major League Baseball and a team of savvy owners
have drafted a roster of lobbyists, opened a political fundraising arm,
and begun pouring money into the political arena. Meanwhile, the league
has adopted a more aggressive stance on Capitol Hill, a strategy designed
to help ink a landmark collective bargaining agreement this
summer.


The rival players union has strengthened its lobbying muscle as well. To
prepare for the labor talks, the players union has compiled a squad of new
lobbyists to join its seasoned lineup in Washington. (See this issue, p.
2012.) The union's headquarters is in New York City, but like the owners,
the players hope to use Capitol Hill allies to strengthen their position
during the contract talks.


Financial Woes


The refurbished lobbying efforts come at a crucial time for Major League
Baseball. The league's most recent labor contract expired last fall, and
negotiations on a new deal are bogged down. In 1994, the last time the
owners and players tried to renew their labor contract, it took a 232-day
shutdown of the game to get the two sides to shake hands.


This year's talks could be headed in the same direction: Players are to
meet on July 8-one day before the All-Star Game in Milwaukee-to decide
their next move.


"I see big trouble ahead," said Sen. Jim Bunning, R-Ky., a
former pitcher who was elected to baseball's Hall of Fame after 17 years
in the league. If another strike cancels the World Series, Bunning
predicted, "the fans will never come back."


What's more, Major League Baseball is facing a financial crisis. Quite
simply, the league's economic system is broken. Since 1995, average team
payrolls have doubled to $66 million, according to league figures.
However, only ball clubs in the richest television markets-such as those
perennial pennant contenders, the New York Yankees-can consistently afford
to field playoff teams. That's because the league's revenue-sharing plan,
which is supposed to spread the wealth to small-market teams, is paltry in
comparison to those in other professional sports such as the National
Football League.


Last season, the Yankees collected $217.8 million in revenue from tickets,
television contracts, and concessions, versus $9.8 million for the
Montreal Expos.


"Unless baseball fixes its income disparity, half of the teams will
be condemned to the basement before the season even begins," says
Sen. Mike DeWine, R-Ohio, a lifelong Cincinnati Reds fan and the top
Republican on the Judiciary Committee's antitrust subcommittee.


DeWine's comments echo the findings of the owners' Blue Ribbon Panel on
Baseball Economics, which was funded by the league in 2000. The panel
reported that clubs with payrolls in the bottom half of the league did not
win a single postseason game from 1995 to 1999. And no team outside the
top quarter in player payrolls has won a World Series game in the past
seven seasons.


Selig says that only five teams made a profit last season, while the
remaining 25 teams ended up in the red. Overall, Selig said in House
testimony last fall, the league lost $519 million last year-although that
figure has been widely disputed and the league's critics complain that the
owners have yet to open their books to a thorough independent
accounting.


To get out of the financial hot corner and to restore competitive balance
in the game, Major League Baseball has proposed a far-reaching plan to
restructure its finances. The owners hope to rein in ever-escalating
player salaries, double the size of the league's revenue-sharing program,
and close down a pair of money-losing teams.


But as with the steroid-testing plan, the players rejected the
offer.


The impasse over the labor contract goes beyond the half-dozen issues on
the table. Baseball's billion-dollar owners and million-dollar players
simply don't trust each other. The players believe the owners exaggerate
the league's financial woes to justify a salary cap and greater revenue
sharing. After all, the owners have been predicting financial disaster for
the game ever since the establishment of free agency nearly three decades
ago. More recently, an April article in Forbes disputed Selig's contention
that the league was losing money.


Meanwhile, with the average player earning more than $2 million a year,
owners hardly see baseball players as upright, card-carrying union
members. "The union is philosophically opposed to the one type of
agreement [salary cap and revenue sharing] that has worked in other
sports," said Rob Manfred, the head of the league's negotiating
team.


Power Hitter


With the players and owners at loggerheads, both sides have beefed up
their lobbying teams. Last year, Major League Baseball spent $1.2 million
on lobbying in Washington-using mostly outside law firms. That amount was
double the league's 2000 total and twice as much as the National
Basketball Association, NFL, and the National Hockey League spent
combined, according to PoliticalMoneyLine, a nonpartisan campaign finance
research group.


Managing Major League Baseball's lobbying team is Lucy Calautti, the wife
of Sen. Kent Conrad, D-N.D., and a former chief of staff to
Dorgan-Conrad's home-state colleague.


Despite the rise in lobbying spending, Calautti says that the league's
operation is more streamlined than a few years back when it paid nearly
$1.8 million a year to house a Washington office and field a half-dozen
lobbyists from outside firms. From her own office at the law firm of Baker
& Hostetler, Calautti oversees a dozen baseball lobbyists and plans to
spend about $1 million a year on lobbying-although that figure should drop
once a new labor deal is signed, according to baseball sources.


Calautti's partner is William Schweitzer, a longtime Republican managing
partner at Baker & Hostetler. Calautti oversees a set of outside
lobbyists led by former Rep. Martin Russo, D-Ill., the president of
Cassidy & Associates. The league also hires lobbyists for specific
issues, such as Robert Garrett of Arnold & Porter for copyright
matters; consultant Stephan Bell for state legislation; and occasionally
consultant Stuart Gordon.


Calautti, a Senate aide for two decades, is a well-respected Democratic
insider who knows how to play the game in Washington. "She's smart.
She's effective," said Rep. Steny H. Hoyer, a Maryland
Democrat.


Calautti says her job is to explain to members of Congress what Major
League Baseball is doing to fix itself and "what we are trying to do
to change the game." The owners are "committed to ending the
competitive imbalance in baseball," she said, "so the Kansas
City fans can hope their team can go to the World Series." Calautti
and other league lobbyists also spend a lot of time protecting the
baseball owners' 80-year-old prize: an exemption from antitrust
law.


A lifelong baseball fan, Calautti often caught the end of a New York Mets
game at nearby Shea Stadium while on her way home from school. After
serving in the Navy, Calautti moved to North Dakota and landed a job with
the state's tax commissioner, Byron Dorgan, now a U.S. senator. She met
her husband, Kent Conrad, when Dorgan hired Conrad to run his unsuccessful
campaign for the state's congressional seat in 1974. The couple was
married a few months after Conrad entered the Senate in 1987.


After about two decades as Dorgan's top aide, Calautti began flirting with
the idea of working for Major League Baseball when she met Selig at the
1999 All-Star Game at Fenway Park in Boston. In a recent interview at her
office, Calautti recalled the moment. "I conjured up my courage-my
heart was pounding, really, really pounding-and I walked down the aisle,
tapped him on the shoulder, and introduced myself." Calautti asked
for Selig's phone number and later "asked him to keep me in
mind" if a job opened up.


One did. In February 2000, Selig closed the league's lobbying office down
and let go Alan Sobba, the Republican who had run it since 1997. A few
months later, Selig named Calautti to head the league's lobbying effort.
Calautti, who had left Dorgan's staff a few months earlier, set up shop at
the Connecticut Avenue office of Baker & Hostetler, which had been
representing the league.


Even though the league retained Republican Schweitzer and several other
GOP lobbyists, Selig's decision to replace Sobba with a big-name Democrat
upset many congressional Republicans. "There were a lot of insiders
who did not want her hired," said one Republican lobbyist. "She
is a very partisan Democrat at a time when the GOP controlled the House
and Senate."


"These kinds of things are important in Washington," said Rep.
John A. Boehner, R-Ohio, who keeps a close eye on K Street for the GOP
leadership.


No one was more upset by the trade than House Majority Leader Dick Armey,
R-Texas. Armey, who was born in Cando, N.D., has feuded with almost
everyone involved in the North Dakota delegation, including Conrad,
Dorgan, and Calautti. In the late 1990s, Armey and then-House Speaker Newt
Gingrich infuriated state officials by holding up an emergency flood
relief measure to protest the Census Bureau's decision to keep using
statistical sampling instead of an outright count.


After Calautti joined Major League Baseball, the word on Capitol Hill was
that Calautti was banned from Armey's office. That word apparently never
reached Calautti. One day, she showed up for a meeting at his office,
irritating Armey, according to sources at the meeting. Calautti says she
doesn't recall the episode. But she says that Armey has "teased"
her about their prior encounters. "He has always been very
gracious," she said.


Armey and other Republicans thought Selig should have stayed with Sobba, a
well-liked Republican who tried to boost the league's visibility after he
became the league's top lobbyist in 1997. To help raise baseball's
profile, Sobba opened a glitzy Washington office on Pennsylvania Avenue,
complete with stadium seating in the reception area. He also maintained a
healthy list of outside lobbyists, including Bill Timmons, Larry Harlow,
and Tom Korologos of Timmons & Co. The use of outsiders swelled the
league's lobbying expenses to almost $2 million in 1999.


Sobba, to make the league more of a player on Capitol Hill, persuaded
Selig to invite influential lawmakers to baseball games. In fact, it was
Sobba who suggested that Selig bring Conrad (and his wife, Calautti) to
the 1999 All-Star Game. It was a fateful decision.


"It just seemed like Lucy was lobbying for the job behind Alan's
back," one baseball insider complained.


When Calautti took over the league's office, she purged most of the
outside firms, including Timmons-which had been baseball's lead firm for
decades. Calautti refused to discuss personnel moves, but said she was
told to cut down on expenses.


In other areas, Calautti has followed Sobba's lead by trying to boost the
league's influence on Capitol Hill. Calautti persuaded Major League
Baseball to begin a political action committee, enabling club executives
to reward their congressional allies and to seek new ones. Since beginning
operations last fall, the committee has raised $157,450 from the front
offices of nearly a dozen major-league clubs, according to
PoliticalMoneyLine.


The PAC has doled out only a few thousand dollars so far, mainly to
members of the House and Senate Judiciary Committees, which have
jurisdiction over the league's antitrust exemption, the owners' key
issue.


Baseball started its PAC, Calautti said, "for the same reason that
the nurses, the homebuilders, and the Realtors started a PAC: They all
recognize the importance of being involved."


The league has also more than tripled its soft-money contributions this
political season. So far in the 2001-02 cycle, Selig and Major League
Baseball have made $200,000 in soft-money donations, more than they gave
in the entire 1999-2000 campaign, according to the league. Baseball split
these soft-money contributions evenly between Republicans and Democrats.
Major League Baseball also kicked in $100,000 to help pay for the
Bush-Cheney inauguration, according to PoliticalMoneyLine.


The contributions bought baseball a seat at major political fundraisers,
such as the GOP's annual president's dinner, where Selig dined with Rep.
Henry J. Hyde, R-Ill., the former chairman of the House Judiciary
Committee.


In addition to political contributions, Calautti said, the league
distributes hundreds of game tickets to lawmakers, congressional aides,
and reporters. Bringing a member of Congress to a game is one of the most
effective ways to establish a relationship, baseball lobbyists say.
"The best place to meet an owner is to go to a game-it's their pride
and joy," said Sobba, who still wears a watch with the distinctive
red-and-blue emblem of Major League Baseball on its face.


The league has established a clearinghouse for game tickets and responds
to about 500 purchase requests a year from Capitol Hill. Most of the
tickets are for games at Baltimore's Camden Yards; games against the
Yankees and Red Sox are the biggest draws.


For the July 9 All-Star Game in Milwaukee, Selig plans to invite a handful
of lawmakers to join him at the ballpark of his own Brewers, which he
holds in a blind trust while serving as commissioner. During last fall's
World Series, Selig invited Sen. Joe Lieberman, D-Conn., to a game at
Yankee Stadium and McCain to a Diamondbacks game when the series shifted
to Arizona.


Despite Selig's ease with lawmakers at ball games, he is less comfortable
on Capitol Hill, say those who know him well. "He doesn't like going
to Washington," Sobba said. "Selig wants to keep the game
between the lines. Anything else is a distraction."


Politically Connected Owners


Selig's reticence reflects the league's historic unease with Washington, a
feeling shared by many large U.S. corporations. "Baseball used to be
uncomfortable with congressional hearings. We just want to be left
alone," Calautti said. "There have been some really tough
hearings for baseball over the years."


Indeed, Congress rescinded part of the league's coveted antitrust
exemption in the 1998 Curt Flood Act, which weakened the owners' control
over labor talks. At one Senate hearing before the repeal, Sen. Patrick
Leahy, D-Vt., the Judiciary Committee's top Democrat, brandished a
baseball bat to drive his point home.


Still, Selig is close with many lawmakers, including Sen. Herb Kohl, the
Wisconsin Democrat who holds the gavel at the Judiciary Committee's
antitrust panel. Selig and Kohl grew up together, were roommates in
college, and now are colleagues: Kohl owns Milwaukee's professional
basketball franchise, and Selig's family owns the baseball club. Because
of their friendship, Kohl does not vote on baseball issues. Selig is also
close to Rep. F. James Sensenbrenner Jr., R-Wis., who heads the House
Judiciary panel and represents suburban Milwaukee.


Like Selig, most of baseball's owners are politically astute and cultivate
close relationships with lawmakers. After purchasing the Boston Red Sox,
for example, the new owners flew to Washington to introduce themselves to
the congressional delegation.


In fact, many Washington insiders believe that the league's politically
minded owners give baseball its juice on Capitol Hill. "The owners
know how to play the game," said one sports lobbyist. "Sports
and politics have always gone hand in hand."


An informal committee of seven politically aware owners advises baseball's
Washington office. The seven are the Colorado Rockies' Jerry McMorris; the
Chicago White Sox's Jerry Reinsdorf; the St. Louis Cardinals' William
DeWitt; the Orioles' Peter Angelos; the Tampa Bay Devil Rays' Vincent
Naimoli; the Red Sox' John Henry; and the Diamondbacks' Colangelo.


As wealthy businessmen with multiple interests, the owners pump a lot of
money into politics. Baseball owners contributed a total of $3.9 million
in hard and soft money during the 1999-2000 election, according to the
nonpartisan Center for Responsive Politics. So far this cycle, the owners
and their corporate interests have given $1.8 million to Capitol Hill, 57
percent to Democrats.


Carl Lindner, the owner of the American Financial Group, Chiquita bananas,
and the Cincinnati Reds, was the sixth-largest individual political
contributor in 1999 and 2000, with $1.1 million, according to the Center
for Responsive Politics. Orioles owner Angelos was one slot back, with
$940,000 in donations. The Cardinals' DeWitt served as one of President
Bush's fundraising "Pioneers," hauling in more than $100,000 for
his presidential campaign.


Meanwhile, a number of ballclubs are owned by big league businesses,
including AOL Time Warner's Atlanta Braves; Disney's Anaheim Angels;
Tribune Co.'s Chicago Cubs; News Corp.'s Los Angeles Dodgers; and Rogers
Communications' Toronto Blue Jays (Rogers is a Canadian media giant).
Lobbyists for those corporations say they rarely work on baseball issues.
"I've got enough fish to fry," said Shaun Sheehan, the top
lobbyist for the Tribune Co., which also owns Tribune Broadcasting,
WGN-TV, and the Chicago Tribune.


This year, a new Washington insider entered the exclusive ranks of
baseball owners: George Mitchell, the former Democratic Senate majority
leader who joined a team of investors to purchase the Red Sox. And who can
forget that the current resident of the White House-George W. Bush-once
owned a portion of the Texas Rangers.


Seeking Leverage


Like any other $3.5 billion-a-year industry, baseball's profit-loss record
is partly due to rules set in Washington. League lobbyists work with other
content providers on legislation to protect the league's 8,000 hours of
copyrighted telecasts each year, with insurance lobbyists on a federal
terrorism insurance package, and with other sports leagues to ban
banner-tugging planes over its arenas. But the issue that baseball
lobbyists care most about is the concession that no other sport has: the
antitrust exemption.


"The antitrust exemption is baseball's red button," explained
Rep. John Sweeney, R-N.Y., who sported a Yankees uniform while playing
centerfield during the congressional baseball game on June 20.


The exemption gives owners tremendous power to move, sell, or shut down
teams. But it also gives lawmakers leverage to meddle in baseball's
affairs. "We are a lightning rod because of the antitrust
exemption," Calautti said. "If Congress wants to talk about
something, they have a legislative vehicle to ask us to talk about it-so
we always have to be prepared."


Baseball won the exemption in a 1922 Supreme Court ruling issued on what
has been called Justice Oliver Wendell Holmes's off day. Holmes ruled that
baseball was more like "entertainment" than like interstate
commerce. As a result, baseball owners are not subject to laws against
collusion, price fixing, and other monopolistic activities that would be
deemed illegal in any other billion-dollar business.


Except for modifying the exemption in 1998, Congress has never made a
strong push to remove the privilege. But that changed overnight last fall,
when Selig announced just two days after a thrilling seven-game World
Series that the league planned to shut down two teams-most likely the
Montreal Expos and the Minnesota Twins.


"Contraction," as it is called, was part of a broader plan
unveiled by Major League Baseball after the labor contract expired last
November. As part of the plan, the owners also proposed salary limits and
a more robust revenue-sharing formula to fix what they contend is the
league's ailing financial condition and to erase the competitive imbalance
among teams.


The contraction plan brought a swift reaction from Congress. Soon after
the announcement, lawmakers led by House Judiciary ranking member John
Conyers Jr., D-Mich., introduced legislation to strip baseball of its
exemption.


Some lawmakers sought to capitalize on the controversy to protect a
hometown team-or to land a new one. Sens. Paul Wellstone and Mark Dayton,
both Democrats from Minnesota, championed a measure designed to safeguard
their beleaguered Twins. Virginia's delegation hinted it would support
rescinding the exemption unless the league moved a team to Northern
Virginia.


"When they start talking about taking people's teams away, our teams,
then we start talking about the rationale for their antitrust
exemption," said Rep. Melvin Watt, D-N.C. "People get pretty
emotional about their baseball, apple pie, and Chevrolets."


At a House Judiciary Committee hearing soon after the league's
announcement last fall, lawmakers battered Selig. Minnesota Gov. Jesse
Ventura, eager to protect the Twins, told the committee, "Major
League Baseball is really no different than OPEC. It controls supply and
it controls price with absolutely no accountability."


Conyers added: "If G.M., Ford, and Chrysler tried that in Detroit, we
would have a lot of people outraged."


Some observers have speculated that the owners proposed the contraction
plan to pressure the players union on other labor issues. "Collective
bargaining is all about leveraging the opposition," said Roger
Abrams, dean of Northeastern University's law school and author of several
books on baseball. "What you want to do in collective bargaining is
come up with things that you can give away." Major League Baseball
officials deny the charge and counter that it is the players union that is
seeking to use the antitrust exemption to gain an advantage in the labor
negotiations.


"It's fairly common when we have a labor dispute for there to be talk
of our antitrust exemption on Capitol Hill," said Tom Ostertag, the
league's general counsel. Calautti added: "If the players association
wants to divert our attention from our mission, they go to Congress and
encourage hearings on whether or not we should lose the antitrust
exemption."


Still, Major League Baseball lobbyists swarmed Capitol Hill, arguing that
removing the exemption would cause more teams, not fewer, to shut down or
move. Since 1971, when baseball's Washington Senators left the city for
Texas, 26 professional football, basketball, and hockey teams have moved,
according to baseball officials. Over the same stretch, not a single
baseball team has relocated. "Because of the antitrust exemption, we
have a stability in the game," Calautti said.


Major League Baseball also asserts that eliminating the exemption would
devastate the minor leagues. Today, Major League Baseball spends about
$150 million a year on operational expenses for its 160 minor-league
teams. If the antitrust exemption were removed, owners say, they might
find it too risky to invest in a major league prospect.


"If you take away the antitrust exemption, you begin to see the
erosion of the minor-league system," says Rep. Sherwood L. Boehlert,
R-N.Y., who recently sold his Class A Utica Blue Sox to retired Orioles
great Cal Ripken Jr.


The league knows that the minor-league argument is a powerful one, since
every state and nearly half the congressional districts are home to a
minor-league club. "Members of Congress really care about that
argument." Calautti said.


Despite the league's lobbying, Selig was forced to postpone contraction
for at least a year. The postponement undercut support for Conyers's bill
and forced him to pull it just a day before a committee vote. But with
contraction still an option for next year, Conyers has not let up the
pressure. His staff demanded that the league provide more details about
its financial condition, and Conyers has publicly doubted the bleak
financial picture outlined by Selig.


"Selig and his crew have to be measured very, very carefully or we
will end up in the wastebasket," Conyers said in an interview.
"What you see is not what you get with him."


Major League Baseball believes that Conyers's efforts are "not
helpful to the game," Calautti said. "Mr. Conyers wants to look
at the New York Yankees and say that baseball is wealthy. I think he
should look at his Detroit Tigers, who are losing money. He doesn't talk
about [the Tigers] because the players association doesn't want him
to."


Conyers is one of the few lawmakers who battle with the big league these
days. More typical was a Senate Judiciary Committee hearing in February at
which lawmakers tried to pressure union President Fehr into accepting a
new, more robust revenue-sharing plan that was proposed by the owners. In
the past, the union has opposed a stronger revenue-sharing program,
believing it would take money away from teams that were willing to spend
more on free agents.


Then came June's Senate Commerce Committee hearing on steroid testing.
Though Calautti said the league doesn't keep track of "who scores
points" at home, she acknowledged that "our hearings lately have
been a success."


Lobbyists for the players union have criticized the senators for
pressuring the players on an issue that is under discussion at the
bargaining table. "It certainly doesn't hurt the owners to have that
come up as an issue as they are going into collective bargaining,"
said Marianne McGettigan, the union's top lobbyist.


It's too early to tell whether the league's work on Capitol Hill will
weaken the players' resistance to steroid testing, revenue sharing, and
other issues on the table.


But if Major League Baseball can persuade its players to accept a new
labor agreement favorable to the owners, at least part of the credit
should go to the games that baseball plays in Washington. "We'll take
credit for helping in our own small way," Calautti said.


If no agreement is reached this summer, baseball could be headed for
another strike.


-Brody Mullins is a reporter for National Journal's CongressDaily


Brody Mullins

National Journal