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MLB official says 'nothing improper' about 1995 loan

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Associated Press


NEW YORK -- Three former baseball commissioners think that when Bud Selig arranged for a company controlled by Minnesota Twins owner Carl Pohlad to loan $3 million to the Milwaukee Brewers in 1995, the deal may have violated baseball rules.


A trio of current owners see no problem with the loan.


"It's such a treacherous thing," former commissioner Fay Vincent said Tuesday. "It would raise in my mind all sorts of concerns."


Vincent said the loan was unprecedented, as did former commissioners Bowie Kuhn and Peter Ueberroth. All three said it 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, a view also taken by Chicago White Sox owner Jerry Reinsdorf, Houston Astros owner Drayton McLane and New York Mets co-owner Fred Wilpon.


Selig was president and chief executive officer 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 percent interest -- 1.5 percent 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."


McLane, who learned of the loan Tuesday, said that many teams were scrambling for money at the time.


"The agreement, I think, was honorable and ethical," he said. "I don't see any way this can be construed as something that wasn't fair and legal and honorable. It was an honest deal. If anyone got an advantage in the deal, it was the Pohlad banking company, because they got a solid loan above the prime interest rate at the time."


Reinsdorf said he found out about the loan the following year.


"We have a lot of rules we don't necessarily enforce all the time," Reinsdorf said. "What is the big deal? It was for a short time, 45 or 60 days. Everybody would have voted for it had it come up. To me, it's a like a cop sees a guy going 62 (mph) in a 55 zone. You let him go. What's the harm?"


Miller took the opposite view.


"It's really horrifying," he 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.


DuPuy said that earlier in 1995, bankers were approved as part of Arizona's ownership group that had arranged loans to other teams to players. He said concessionaires who are limited partners of some teams, such as Aramark Worldwide Corp., lend money to clubs they have financial interests with.


"This was just coming off a strike," DuPuy said. "Everybody was scrambling when it came to finances. There was less scrutiny given to sources of funds at that time."


Wilpon said criticism of the loan was "outrageous."


"You're talking about two men of the highest, highest integrity," Wilpon said. "I'm offended by making it a cause celebre. It pains me."


Selig said eliminating the Twins would not result in a significant increase in attendance or TV viewership for the Brewers.


The contraction plan has been stalled by an injunction issued by a Minnesota judge, an order Selig and the Twins asked the Minnesota Court of Appeals to overturn.


Selig became controlling owner of the Milwaukee Brewers in 1970. Following Vincent's ouster, Selig became chairman of baseball's executive council, which took over the powers of the commissioner. In that capacity, Selig was baseball's acting commissioner until owners formally gave him the job in July 1998.


Selig put the voting rights for his Brewers' shares in trust when he became commissioner and the team's management was taken over by his daughter, Wendy Selig-Prieb.

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NEW YORK (AP) -- The House Judiciary Committee's ranking Democrat urged Bud Selig to resign Wednesday, saying the commissioner appeared to violate major league rules in a 1995 loan from a company controlled by the owner of the Minnesota Twins.

Rep. John Conyers Jr. of Michigan said the loan created an 'irreparable conflict of interest' for Selig in his plan to fold two franchises, a proposal that most likely would include the Twins.

"In light of this disclosure and your apparent unwillingness to reveal other financial information that you assert supports your decision to eliminate two baseball teams, I regret that I must call on you to resign as commissioner of major league baseball," Conyers wrote in a letter to Selig that the congressman released.

Selig released a two-page letter to Conyers, saying he "was both stunned and disappointed to receive your letter."

"Let me be unequivocal," Selig wrote. "The suggestions made in your letter are wholly unacceptable."

Conyers accused baseball of lying to the committee and asked Rep. F. James Sensenbrenner, the committee chairman, to hold another hearing on baseball's antitrust exemption. Conyers was critical of Selig when the commissioner testified in Washington last month.

Selig's top lawyer admitted this week that in 1995, a company controlled by Minnesota Twins owner Carl Pohlad arranged for a $3 million loan to the Milwaukee Brewers, run at the time by Selig and now by his daughter, Wendy Selig-Prieb.

Former commissioners Bowie Kuhn, Peter Ueberroth and Fay Vincent said the loan was unprecedented and might have broken the rule prohibiting loans from the owner of one team to another without approval of all the teams in that league and the commissioner.

"Before any further decisions are made on the elimination of a team, there are many questions which the public needs answered," Conyers wrote. "What are the facts about the loan? Did the loan violate baseball's own rules? Are there any legal ramifications of such a violation? How much additional television revenue will the Brewers receive from the elimination of the Twins? What types of agreements, informal or formal, have been reached between you and Mr. Pohlad in connection with the elimination of the Twins?"

Selig, in his first public response to the revelation of the loan Tuesday, told Conyers the Brewers' "survival was in question" at the time of the loan, which followed the 232-day strike that wiped out the 1994 World Series.

"To suggest somehow that there is a conflict of interest between this and the contraction decisions made by the Clubs in 2001 and 2002 is preposterous," Selig wrote.

"Our conflict rules regarding loans from club to club are to prevent undue influence being exerted by one team over another. This was a short-term loan from a lending institution which was owned by the family of an owner, and was at arm's length and for a commercial rate of interest. The loan was made and paid in full six years prior to any consideration of contraction by the industry."

Selig cited a decision by baseball's executive council earlier in 1995 to approve banks who had loaned money to other teams and to players as non-controlling investors in the Arizona Diamondbacks.

"The Executive Council determined not to consider that a conflict under the rules," Selig wrote. "As a result, I do not view the Brewers' loan to be an issue. In addition, the loan was made and paid off prior to the next scheduled owners' meeting. I am absolutely confident that had the loan been outstanding at the time of the meeting, it would have received approval at that time."

Conyers claimed that "according to industry experts, the Brewers stand to double their television revenue if the Twins are eliminated."

"Your job as commissioner is to do what is in the best interest of baseball," Conyers wrote. "As I review the interests of baseball's fans and the local communities, businesses and workers, it is clear to me that it is in the best interest of baseball for you to tender your resignation. I ask that you seriously consider taking this step to clear the air as baseball addresses the serious issues it confronts."

Selig disputed that.

"The Brewers expect no increase in either ticket sales or broadcast revenues if the Twins are in fact one of the teams eliminated," Selig responded. "It is our full intention to retain existing broadcast territories and protect the contracted clubs' territories as an asset of the industry as a whole."

Conyers also disputed a letter he received from Bob DuPuy, Selig's chief lawyer, saying the committee staff "worked out a solution" that would allow the players' association to discuss detailed financial information it had received in confidence from the commissioner's office.

"Baseball's representation that an agreement had been reached on the disclosure of financial information to the committee is blatantly false and fails to satisfy my request," Conyers said. "It also appears to bolster the assertions of union representatives, namely that if all records were publicly disclosed, your claims about the financial health of major league baseball would be proven to be false."

DuPuy said he had reached the agreement with Perry Applebaum, a member of Conyers' staff. Applebaum could not immediately contacted for a response

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