Bud Selig and a company controlled by Minnesota Twin owner Carl Pohlad arranged for a $3-million loan to the Milwaukee Brewers in 1995, a deal being called a possible violation of baseball rules.
Former commissioners Bowie Kuhn, Peter Ueberroth and Fay Vincent said Tuesday the loan was unprecedented and might have broken the rules. Former players' association head Marvin Miller said it was a clear violation, although Selig's lawyer said there was nothing improper about the loan.
"It's such a treacherous thing," Vincent said. "It would raise in my mind all sorts of concerns."
Selig was president and chief executive of the Milwaukee Brewers at the time, as well as baseball's acting commissioner.
Selig, elected commissioner in July 1998, is behind the plan to eliminate two teams before next season, most likely the Twins and Montreal Expos. Pohlad could receive more in a contraction buyout than he would if he sold the franchise.
The loan, first reported Tuesday by the Star Tribune of Minneapolis and the St. Paul Pioneer Press, was made by Tempus Investment Corp., one of Pohlad's companies.
Selig personally put up a minimum of $795,000 of money-market funds as collateral and the Brewers guaranteed the full amount. The loan was made in June or July 1995, according to Bob DuPuy, Selig's lawyer and baseball's chief legal officer. DuPuy said the loan was at 10.5% interest--1.5% above the prime rate at the time--and it was repaid within 90 days when the Brewers secured longtime financing from Nationsbank Inc.
"This, in my view, was a loan made by a bank at arm's length in the ordinary course of business," DuPuy said. "It would be different if Carl was lending the money, but this was a regulated financial institution lending money. No one was particularly troubled by it."
Selig and Pohlad did not return telephone calls seeking comment.
"Even if you believe that major league baseball should be insulated from antitrust laws--which I don't--this is the kind of questionable behavior that could make you think twice," said Sen. Paul Wellstone, a Minnesota Democrat who has been critical of Selig's contraction plan.
Major League Rule 20 (c) states: "No club or owner, stockholder, officer, director or employee [including manager or player] of a club shall, directly or indirectly, loan money to or become surety or guarantor for any club, officer, employee or umpire of its, his or her league, unless all facts of the transaction shall first have been fully disclosed to all other clubs in that league and also to the commissioner, and the transaction has been approved by them."
Officials of two teams, speaking on the condition of anonymity, said Tuesday their clubs were never told of the loan.
"It's really horrifying," Miller said. "This is a violation of baseball rules by an owner who is also the commissioner."
Rule 20 (c) is one of baseball's protections against one team having unfair influence over another.
"I don't know of another case where an owner lent money to another without approval. I don't know of a case where an owner lent money with approval," said Vincent, who was ousted in 1992 by a Selig-backed group of owners.
Ueberroth, as did Kuhn and Vincent, confirmed that such a loan was unprecedented but otherwise declined comment. Kuhn took a lawyer's view, wondering if Tempus was actually run by Pohlad, a billionaire banker.
"Is this sufficiently close to the top of the chain to qualify as Pohlad? That I don't know. These are not easy areas," said Kuhn, commissioner from 1969 to 1984.
Selig planned to address a negotiating committee of players today, a day after the union and owners resumed collective bargaining talks.
The sides met for about an hour on Tuesday, the first talks since negotiations to settle the union's grievance on Selig's contraction plan broke down last month.
"It's clear he's the guy who has to be involved if anything is going to get done," union head Donald Fehr said, adding he would go into greater detail after today's session.