Two For The Money -- Today's Ballplayers, Old-Timers Feud Over Pension Fund

From the Kansas City Royals' $22.2 million payroll - the richest in baseball - to Oakland A's slugger Jose Canseco's record paychecks, even casual fans know our national pastime is awash in money.

But one of the biggest fortunes in baseball is also one of the game's best-kept secrets, monitored by the computers of a Cleveland actuarial firm.

It's a half-billion dollar retirement fund, a treasure chest so coveted it has provoked a bitter feud among some of the greatest heroes of the game.

The Major League Baseball Players Benefit Plan is the wealthiest pension in professional sports and one of the most generous - and unusual - in America.

A special exemption from Congress allows ballplayers to take higher pensions than almost anyone else. And unlike most plans, in which workers must put in five years to guarantee any pension at all, ballplayers are vested after their first day in the big leagues.

In a three-month study, including an actuarial analysis, The Kansas City Star found a tax-exempt retirement fund so bloated it is close to federal funding limits. It's so weighted toward current high-paid players that some claim it may violate Internal Revenue Service discrimination rules.

And it's so rich that players are scrambling for new ways to spend the windfall.

Meanwhile, some founders of the pension plan, who gave up $250 in salary in 1946 to seed the fund, exist at the edge of poverty. Hundreds of the 5,000 former major-leaguers living today never qualified for a pension.

Some have sold uniforms and World Series rings just to get by; others go begging for money from baseball charities.

``We've got some very selfish people in baseball,'' said Buzzie Bavasi, the former general manager of the Brooklyn and Los Angeles Dodgers. ``We've got too many players today who want to be the richest people in the cemetery.''

In fact, each generation of ballplayers has taken a more generous share of pension money at the expense of older retirees, pension records show.

``That's the law of the land,'' said Joe Garagiola, the ``Today'' show regular and former catcher, who runs a charity for former players.

``Hey, we don't have a lot of Mother Teresas in short pants among ballplayers, you know.''

Former Kansas City lawyer Donald Fehr, executive director of the Major League Baseball Players Association, acknowledges anger and resentment among former players over the pension issue.

But Fehr said complaints come mainly from players suffering from ``born-too-soon disease'' - bitterness over missing out on baseball's big paychecks.

Fehr said modern-day players have approved generous pension increases over the years for older retirees, including a 30 percent boost in 1985. And he says the plan will soon approve even bigger increases for retirees.

But according to actuarial studies, the plan may have no choice. Studies prepared for a group of former players, and one prepared by Lewis & Ellis Inc., a Dallas-based actuarial firm, show today's pension plan may be forced to increase pensions for old-timers or owners could risk losing their tax exemption on annual contributions.

``This pension plan is one of the best things that ever happened to baseball in my lifetime,'' said former baseball commissioner A.B. ``Happy'' Chandler. Chandler pushed for the plan in the 1940s, after baseball greats Dazzy Vance and Grover Cleveland Alexander played an exhibition game at his home in Kentucky.

After the game, Chandler joined the two former players for lunch at the local country club and discovered they didn't even have the money to pay for their meals. ``I felt so sorry for them,'' recalled Chandler, now 92.

``These new fellows ought to give some to the old-timers,'' Chandler said. ``They ought to be just and decent and respectable.''

`Go Blow It'

The Major League Baseball Players Benefit Plan pays pension, disability benefits and life and health insurance for former players and some coaches, trainers and managers. It also provides current players with free health insurance.

The plan is governed by a four-member board of trustees - two players and two management representatives, including Michael Herman, who is a consultant to the Kansas City Royals and financial adviser to Royal owner Ewing Kauffman. They decide who will administer the fund and how the $502 million in assets will be invested.

The players association negotiates how much the game's 26 owners will contribute to the plan. In the past, owners typically handed over one-third of their broadcast revenues. But that changed when revenues skyrocketed several years ago. Owners recently signed, for instance, a new CBS contract worth $1.06 billion over four years.

Had the payments stayed at the traditional one-third of broadcast revenues, contributions during the current contract would have exceeded $80 million a year - almost certainly pushing the fund past the IRS limits for tax exemptions on contributions.

John Westhoff, associate counsel for the owners' Player Relations Committee, said this year's contributions stopped just short of breaking the IRS limits, which would have allowed owners to stop making contributions. ``I will tell you we are damned close now,'' he said.

After negotiations this spring, players agreed to take $55 million a year in contributions, up 41 percent from last year's $39 million - and nearly four times the level of payments just five years ago.

The windfall has intensified the running feud between retirees and current players. Fehr, who will make $475,000 this year and is earning credits toward a $90,000 pension paid for by the union, says today's players and owners have been negotiating this summer on how to spend the additional money, with significant improvements for former players a high priority.

But today's players are likely to push first for several improvements for themselves before doling out more money to old-timers. An almost certain benefit is an increase in their own future pensions from the current $90,000 level - the IRS maximum last year - to the new IRS ceiling of $102,000.

Fehr blames owners for not doing more to help former players. ``The improvements we have negotiated for years (for older retirees) have almost always been against the clubs' wishes,'' he said.

Westhoff replied that owners historically have pushed for pension improvements but have been foiled by the players union.

``The position of the union has always been, `We got ours. If you want to give some money to the older guys you gotta kick in something on top of that,' '' Westhoff said.

Westhoff said he is not sure older retirees will get the increases they hope for ``because current players want to make sure they can max out under the current law'' with $102,000 pensions.

Such riches astound older retirees, who currently are seeking at least a minimum pension of $500 a month - or $6,000 a year. They also complain of the plan's health-insurance premiums, so high that hundreds of former players have dropped the plan because they can't afford it.

``It's a dirty shame what's been happening to us,'' said Ken Keltner, former third baseman for the Cleveland Indians.

``I got a wife now in a nursing home. She had a stroke and she can't walk and she can't talk. Thank God I get Social Security, or I'd be out walking the street.

``I asked one of the young ballplayers about it, and he said to me, `Go blow it.' He says, `You guys are gone.' ''

Such grousing by veterans is a ``bad habit,'' according to Mark Belanger, a former shortstop for the Baltimore Orioles and a $165,000-a-year assistant to Fehr. ``No matter what kind of raise or benefit increase we give them, it is never enough.

``They have a bad habit - every one of them - of saying, `With all that money you can give us more.' And the answer to that is, `Yes we can, but we are not going to.' ''

Since the players union began exerting its muscle about 1968, Belanger says, ``current players have fought all the battles to establish the pension plan to where it is today. They are the ones who should reap the benefits. The old-timers will get improvements, but they will take what we give them. There were no battles fought prior to 1968 - none.''

Founding the plan

Baseball in the first half of this century was an owner's game, ruled with little dissent by the likes of Charles Comiskey of the White Sox, Branch Rickey of the Dodgers and others.

Baseball legends like former Kansas City Blues manager Joe Kuhel, known as the fanciest first baseman in the big leagues when he played, had to borrow money from family members to pay travel expenses. Baseballs used in batting practice were so old and tattered, kids in the bleachers threw them back.

Today, Bo Jackson breaks his bat after striking out. Former New York Yankee first baseman Babe Dahlgren remembers waiting weeks for bats to arrive - three at a time - then getting billed if he broke one.

By 1946, many pros began fleeing to higher salaries in the short-lived Mexican baseball league, risking a five-year ban from baseball in the United States. To challenge the owners' domination, Harvard-trained lawyer Robert Murphy formed the American Baseball Guild.

Like other early union attempts, it failed quickly, but not before worried owners granted a weekly player allowance during spring training - known to this day as ``Murphy money.'' They also increased moving expenses to $500 and limited annual salary cuts to 25 percent. And they approved the first minimum salary, $5,000 - which, even in today's dollars, is less than half the current minimum of $100,000.

And the owners instituted a pension plan, sketched out by Marty Marion, a St. Louis Browns and St. Louis Cardinals shortstop who retired in 1953. It called for players to contribute $250 a year, matched by the owners.

Like most plans, the pension fund discriminated from the beginning. Few ballplayers who played before 1946 were included. ``Our actuaries told us we couldn't go back forever because we didn't have the money,'' Marion said.

But founders didn't want to be excluded from future benefit increases. ``When the fund was first set up,'' recalled Hall of Fame slugger Ralph Kiner, now a broadcaster for the Mets, ``it was set up so that any increases would take in all the players in the fund.''

By 1950, the pension plan was subsidized by broadcast revenues. As TV and radio rights soared, so did fund assets.

More and more, pensions became weighted toward younger players. The pension committee added a ``variable annuity'' benefit, boosting pensions by an amount dictated by the stock market in an effort to help keep up with cost-of-living increases. To give current players as much as possible, they excluded any player who retired in 1951 or before.

In December 1962, Frank Crosetti, a former Yankee shortstop, sued the fund on behalf of the 246 retirees who were left out. They claimed ``breach of representation'' because of earlier promises that fund increases would be divided equally among all retirees.

``The thing is, we old-timers - Frank Crosetti and myself and others - we fought like hell for the pension,'' recalls Bill Jurges, a former shortstop with the Chicago Cubs.

``We had the Mexican leaguers get blackballed and all that stuff. We haven't been treated right, to be honest with you.''

The pension committee settled out of court in 1965 for $750,000.

The players became more financially sophisticated, and in 1966 they hired Marvin Miller as the first executive director of the players association.

The plan profited mightily under Miller, a former United Steelworkers union official, who began negotiating escalating contributions to the pension plan in the late 1960s.

By 1967, Miller had persuaded owners to nearly double contributions to the pension fund, to $4.1 million a year of their broadcast revenues. He used some of the money to improve pensions for retirees, but again, the fund boosted pensions mainly for active players, this time cutting off new benefits to players retiring before 1957.

The result was another lawsuit by another plan founder. Former Yankee right-hander Allie Reynolds sued the plan on behalf of himself and the now more than 1,700 other former ballplayers not covered by the new improvements, claiming the plan eliminated baseball veterans from ``the hugely increased benefits'' stemming from ``the efforts and struggles of pre-1957 ballplayers.''

In an affidavit in the case, Miller stated that if Reynolds won, ``it would take money out of the pockets'' of the current players ``whose activities are generating the increased income for the benefit plan.''

Reynolds lost the case in 1969 when a federal judge ruled any earlier agreements on sharing pension increases were voided by negotiations between the younger players and owners.

`Best in the world'

Since that court decision, the pension gap between old-timers and today's players has widened to about $80,000 a year in some cases.

Today's plan bunches 3,800 members - current players, vested retirees or widows - into one of six classes, each with a different maximum pension. As in most plans, the longer a player played, and the later he chose to take his pension, the higher the benefits.

Former players generally are put into three broad groups:

-- Post-1970 retirees who were paid relatively well during their careers, and therefore qualify for the government's maximum pension. Ten-year veterans who start drawing checks at age 62 are getting $90,000 pensions and may soon reach the $102,000 level.

-- Retirerees who earned less during their careers. Under IRS rules, employees not eligible for the maximum pension can receive retirement checks based on their highest three-year average salary. But ballplayers helped lobby Congress for an exemption to the rule; as a result, players can receive $68,200 a year in pension benefits even if their average high salary was less.

-- The last group is the pre-1970s retirees. These players, too, could legally earn up to $68,200 in pensions under the special exemption but aren't given the option because plan officials say the plan can't afford it.

Moreover, to qualify for their highest pension, the old-timers had to play 20 years - twice the time required today - and wait until 65 to draw their checks - three years longer than today. This gave them maximum pensions ranging from $23,200 to $47,000, depending on when they retired. But many of the 800 or so players in this group began taking their checks as early as age 45 and make thousands less.

In fact, despite the high maximums, low pensions for older players bring the average paid by the plan to about $16,000 a year per player.

To many in baseball, the pension classes represent more than just age differences. They're also a line between the powerless, club-owned players of yesteryear and the strong, cohesive union of today.

In a pension dispute with owners in 1972, Miller led the players on a 13-day strike - the first general strike in baseball. Today, players still boast about having ``blood on their jerseys'' from that sacrifice and others.

Miller, who is drawing a $90,000, union-funded pension now, believes baseball retirees - particularly those who retired before 1970 - are getting what they deserve. ``The old-timers will never band together against the owners because they have been (subservient) to the owners their entire lives and they're not about to change,'' Miller said.

Still, even some recent retirees feel sympathy for the ones who started the plan. ``The benefits today are the best in the world,'' agrees former pitcher Tug McGraw. ``But it doesn't go back very far. How can you even take the money without having guilt feelings over those guys that didn't have a Marvin Miller?''

Veterans like Hall of Fame pitcher Early Wynn go farther. ``The people who have had the least to do with the pension are the ones making out the best,'' said Wynn, who retired from the Cleveland Indians and started the Ex-Major League Baseball Players Old-Timers Pension Committee.

Wynn's group has been fighting for pension improvements for eight years.

``Early Wynn is a plain ignorant man,'' Miller replied, adding that the pitcher has never understood how the plan works.

``There is no pension plan in the United States which overall has treated its former employees one-50th as well as the major-league players have treated former players all through the years,'' Miller said.

``It is astounding that some retirees feel the players aren't liberal or don't care.''

But a comparison with Miller's own former union, the United Steelworkers, raises questions about that claim.

Pensions for some retired steelworkers are as high as or higher than those paid to many old baseball players, according to union officials. And unlike the old players, many former steelworkers pay only a fraction of their health care costs, or none at all. Pensions for United Auto Workers union members are almost as liberal.

Discrimination?

Jim Bunning, a former right-handed pitcher who served on the pension committee in 1969, defended the plan when it was sued in the late 1960s for discriminating against old-timers.

Now Bunning, a U.S. congressman from Kentucky, is on the other side.

Bunning is serving on an ad hoc committee, led by former Boston Red Sox catcher Gerry Moses, that is pushing for pension increases for old-timers.

The committee, made up of various coalitions of former players, including Wynn, arranged for an independent actuarial study of the plan to figure out how much money was available for older retirees.

The committee refused to release its report, but Bunning says the study showed that the plan is ``very well-funded - not overfunded - but very well-funded.'' Consequently, he said, the plan could give significant improvements to old-timers, even at last year's level of contributions.

The group has met with Fehr and asked that all retirees' pensions be improved significantly or, if that is not possible, that all retirees receive a minimum pension of $500 a month. They also asked that widows' pensions not be reduced, as the plan rules now require.

The independent study's analysis: The fund could easily afford ``very handsome increases'' for retirees, according to David Lively, a pension specialist for Lewis & Ellis, consulting actuaries whose clients include large companies in midwestern cities.

Lively's study of the plan also shows the fund may have to give large increases to retirees in order for owners to keep getting their annual tax exemption for contributions.

``The increase in contributions is so massive,'' Lively says, that the plan could commit tens of millions of dollars to retiree pensions and still maintain its current obligations.

The Bunning and Moses group also commissioned a legal analysis of the plan but refused to release its findings.

But in a confidential letter to Moses, Boston lawyer Morris M. Goldings said the plan may violate IRS rules by discriminating in favor of high-paid players who retired recently.

``It is apparent that the benefit plan is unfair to the old-timers,'' Goldings said in the letter. The lawyer said the plan favors high-paid players several ways, including the class system giving recent retirees five times the benefits of older players. Other problems include rules that allow current players to retire with full benefits at 62, while earlier retirees had to be 65, and the slashing of vesting rules from four years to, after 1980, one day.

IRS officials said they could not respond to discrimination questions on a specific plan.

Fehr declined to respond to the legal questions.

`Only memories left'

Johnny Temple, former second baseman for Cincinnati, earned $38,000 his highest-paid year in baseball. Today he gets a pension of $1,050 a month, after retiring in 1964 with 13 years in the majors.

Temple says he can't afford health insurance offered under the plan and has trouble making ends meet. ``I have spoken to Donald Fehr a couple of times and got no encouragement at all. He basically told me not to bother him.''

Temple passed up an appointment to the Naval Academy to play ball. His brother, Chub, signed as a pitcher with the Reds the same day Temple did. But Chub injured his arm, dropped out of baseball and went to work for DuPont. He retired last year and gets a $32,000 annual pension and has full, free medical coverage for himself and his family.

``I've got a bunch of awards and trophies and plaques, but what does that get me?'' Johnny Temple asked. ``Absolutely nothing. All we have left are the memories of when we were in the big time.

``All those years, Chub always thought I was the lucky one. I'd trade for what he has in a minute.

``I would have been better off if I had never played a game of major-league baseball.''