Pension pay isn't peanuts, but it's just as traditional

Sporting News, The, August 15, 1994 by Michael Knisley

What's a silly little $7.8 million between the two big-business sides in the labor negotiations?

Not much, actually, in the big-picture finances of major league baseball. In fact, it amounts to about one medium-sized free-agent contract. Hardly seems like enough to set off the flares that nearly resulted in a one-week move-up of the work stoppage still scheduled for Friday.

The owners chose last week not to make the $7.8-million payment into the players' pension and benefit fund, a payment traditionally made August 1. Dick Ravitch, head of the Player Relations Committee, sees the situation simply as an obligation that expired for ownership when the collective-bargaining agreement lapsed.

"The contract required a payment on August 1. The contract expired this last April," Ravitch says. "I'm unaware of any situation in which the employer makes a payment when he's not contractually obligated to do so according to the terms of the collective-bargaining agreement."

Some labor lawyers disagree, however. In their view, the owners' declaration is very unusual and, perhaps, illegal. Under National Labor Relations Board regulations, management cannot post new working conditions until a bargaining impasse has been officially declared, and these negotiations are far from that point. Until an impasse is reached, the old contract remains in place, governing actions of both sides.

To the players' association, the pension fund has a resonance that harkens back to the days before baseball's labor force was protected by a union. The fund was established in 1946, seven years before the union was organized, and made available to players who had been in the majors five years or longer and had reached the age of 50. It has been an issue in nearly every negotiation for a collective-bargaining agreement.

The amount of owners' contributions to the pension was one of the immediate issues in the 1972 work stoppage, baseball's first; and it was a hot spot again in 1985, when players walked out for two days. As recently as 1990's spring-training lockout, one of the sticking points was ownership's initial stance against pension increases.

Last week, the issue again became the gauntlet that escalated the hostilities. "Stripped to its essence, their position is, 'We found a loophole, and we're going to take advantage of it.' Why do you want to do business with somebody who does that?" says Don Fehr, executive director of the players' union.

Only once previously in baseball's labor history has the timing of a work stoppage coincided with the schedule of owners' contributions to the pension. That was in 1985, when the players' association announced in early June that it had set a strike date of August 6. That year, the owners made the August 1 payment.

This year, the non-payment becomes yet another contentious issue to be resolved before a settlement can be reached. Any agreement will include a reinstatement of the pension plan; but the players will insist the owners pay the interest they missed during the time they didn't have the $7.8 million in the fund; owners will insist they have no legal obligation.