Interest Is Growing on Selig Loan

In a sport rife with Machiavellian relationships and entanglements, the fact that Commissioner Bud Selig appeared to violate a major league rule when he secured a short-term loan for his Milwaukee Brewers from a company controlled by Minnesota Twin owner Carl Pohlad--who may now receive a handsome payoff via elimination of his franchise--is just one more embarrassing development for baseball and its commissioner.

It is the type of thing that can happen, as one major league executive pointed out Wednesday, when you make the mistake of having a club owner as commissioner, increasing the risk of potential conflicts.

Of course, the last time baseball had a semi-independent commissioner, Selig and his Great Lakes Coalition--which included his longtime friend and ally Pohlad--led the backdoor assault that forced Fay Vincent to resign and ultimately gave Selig the reins as acting commissioner.

It was in that capacity, and while still president and chief executive of the Brewers, that Selig received a $3-million bridge loan from a financial firm owned by Pohlad. This was in mid-summer of 1995. Selig put up $795,000 of securities and money market funds as collateral, and the loan was paid off at 10.5% interest--1.5% above prime rate--within 90 days, when the Brewers secured longtime financing from Nationsbank Inc.

The process clearly seemed to violate Major League Rule 20 (c), which states that no club or owner or any other member of a club “shall directly or indirectly loan money” to anyone from another club without the loan being disclosed to and approved by the commissioner and the other clubs.

Because Selig was already serving as acting commissioner, he may have felt that he could act autonomously and did not need the approval of the other clubs.

Robert DuPuy, who is Selig’s lawyer and baseball’s chief legal officer, has acknowledged that Selig did not ask for approval nor receive it. DuPuy, however, said he did not consider it a rules violation because “this, in my view, was a loan made by a bank at arm’s length. It would be different if [Pohlad] was lending the money, but this was a regulated financial institution lending money.”

Interpretation aside, it is difficult to believe that Selig simply chose Tempus Investment Corp. out of the yellow pages without dialing his pal, Pohlad, to see if he might be able to arrange a loan through one of his financial institutions.

The rule exists to protect one team from having undue and unfair influence over another, and Selig--responsible for setting the tone and example for the industry he now headed--disregarded it, a transgression appearing more sinister now because of contraction and the possibility that Selig and his fellow owners will buy out Pohlad for about $150 million or considerably more than he might receive--Forbes values the Twins at $99 million--if he sold privately.

In other words, a little quid-pro-quo favor for that favor Pohlad did for Selig in ‘95?

Major league owners hurrying to Selig’s support have denied that, insisting that it is Pohlad who is doing them a favor by agreeing to eliminate his Twins at a time when there are too many teams, that the ’95 loan was negotiated in the aftermath of a long work stoppage when many teams were scurrying to secure financing any way they could and, said Chicago White Sox chairman Jerry Reinsdorf, it wasn’t as if the acting commissioner violated a federal statute.

“It was one of our rules,” Reinsdorf said, “and if we choose to enforce it or not enforce it, that’s our thing.”

A cynic, of course, might question the purpose of having a rule if it’s not going to be enforced, but let’s not dwell on that.

The real issue--if not one of trust and credibility--is one of perception, and the public view of Selig and his industry, on all counts, has been damaged again.

Rep. John Conyers Jr. (D-Mich.), seizing the rules violation for political advantage, went so far as to send a public letter to Selig in which he accused the commissioner of a conflict of interest in the contraction scheme, questioned how much Selig’s Brewers (now in trust and operated by his daughter) would profit regionally from elimination of the nearby Twins and demanded he resign.

Conyers also said he is asking the House Judiciary Committee, of which he is ranking member, to reopen its probe into the possible removal of baseball’s antitrust exemption and may subpoena Selig to appear again.

Should Selig resign?

Was the ’95 violation--revealed Tuesday by the Star Tribune of Minneapolis and the St. Paul Pioneer Press--that grievous?

Is the Selig/Pohlad relationship as it relates to contraction a little too cozy?

Well, what’s the big deal?

This is simply the deteriorating and insidious nature of a game in which baseball itself loans money to clubs and guarantees loans, in which teams loan money to players they are already paying millions to, in which a TV network of the Fox stature is allowed to own a team while negotiating and maintaining regional contracts with teams it competes with for players and wins, not to forget a national contract that pays the teams up front, lockout or not.

Pohlad, at least, is in the banking business, and Selig took advantage of it.

That the acting commissioner and Brewer owner should have recognized the conflict as represented by the rule is as obvious as the odor that has surfaced when it is linked to contraction and the relationship with Pohlad.

Clearly, however, Selig’s constituency doesn’t care about conflict or perception or they never would have hired one of their own--initially giving Selig a five-year contract and recently extending it for three.

In reality, it is one more storm in a winter clouded by the ongoing absurdity of contraction and the union and legal challenges to it.

A winter in which the commissioner’s orchestrated outcome of bidding for the Boston Red Sox has drawn the attention of the Massachusetts attorney general.

A winter in which his appearance before the House Judiciary Committee to plead baseball’s economic woes was lampooned by committee members and media.

A winter in which Selig has talked about baseball’s role as a social institution while wasting a) little time in erasing the memory of a classic World Series and b) showing little regard for a distracted nation’s disinterest in another baseball dispute by persisting with the controversial contraction scheme at a time when a new labor agreement seems far more important to the game’s welfare.

Wednesday, Selig appeared before wary union lawyers and players to finally and officially begin the labor negotiations, laying out management’s case for a more restrictive tax on high payrolls and increased revenue sharing among owners.

Selig believes the system has to change if baseball is going to bridge the revenue disparity, restore competitive balance and remove the need for further ... well, loans.