Steinbrenner

by Bill Madden

  “I’ve studied every aspect of this contract, George,” Evans said. “I can’t find where you have any legal standing for hiring Williams.”

  Steinbrenner thanked Evans and hung up the phone. The next day, the Yankees held a press conference at Feathers-in-the-Park restaurant, near their new, temporary Shea Stadium offices, introducing Dick Williams as their new manager. In the contract negotiated by Paul, Williams was to receive an annual salary of $90,000 for three years and, in a separate agreement made personally by Steinbrenner, the Yankees would indemnify him for any damages he might incur if Finley filed a lawsuit claiming he had breached his contract. Because of the legal complications, Steinbrenner decided not to attend the press conference, leaving Paul to handle the tough questions. At one point, Paul was asked if the Yankees believed they were on solid legal ground in hiring Williams.

  “We absolutely believe that,” Paul said. “Our lawyers right here have assured us of this.”

  He then pointed to two men sitting in the front row of the press conference, neither of whom Evans, watching on TV, recognized.

  “Right there and then was how I found out our firm was no longer George’s general counsel,” Evans said.

  The next day, Finley filed a federal lawsuit in San Francisco seeking to prevent Williams from managing any team other than the Oakland A’s for 1974. Nevertheless, on Sunday, December 16, Paul got a call from Steinbrenner expressing confidence in the Yankees’ position.

  “I just talked to Bowie,” Steinbrenner said, referring to the commissioner, “and he told me he’s delighted we’ve signed Williams. He also encouraged us to compensate Williams for any indemnification with Finley.”

  Thus, the stage was set for the first of many occasions when George Steinbrenner would be called to defend himself and his actions before the higher authorities of baseball. In this case, it was American League president Joe Cronin, who summoned him to Boston for a hearing on December 18 to determine the legality of the Tigers’ hiring of Ralph Houk as their manager and the Yankees’ subsequent hiring of Williams. It had been the strategy of the Yankees’ new attorney, Martin Saiman, that they not contest the possible tampering on the Tigers’ part for Houk in order to strengthen their own case for signing Williams.

  Until the hearing, Williams had never met Steinbrenner. His only contact with the Yankees had been with Gabe Paul, who instructed him not to say a word “to anyone—anyone,” when he arrived in Boston. Keeping that in mind, Williams purposely kept his head down as he walked across the hotel lobby to the check-in desk. When he suddenly heard a voice from behind one of the columns in the lobby shouting, “Dick! Dick!” he pretended not to hear it. Finally, as he was checking in, he felt a tap on his shoulder.

  “Dick,” said the voice behind him, “I’m George Steinbrenner. Didn’t you hear me?”

  Turning around, Williams said: “Hell, yeah, I heard you. But you told Gabe to tell me that I was not to talk to anyone! How was I supposed to know you were you?”

  After hearing testimony from Campbell and Houk on the first day, Cronin gathered all the Yankees and A’s parties the following morning for what would be a much lengthier session on December 19. In presenting the Yankees’ position, Paul said that “without prejudice, in exchange for hiring Dick Williams we’re prepared to offer Oakland the contract of pitcher Larry Gowell and $150,000, payable over three years, or the contract of pitcher Tom Buskey and $150,000, or the contracts of Buskey, Gowell and outfielder Ron Swoboda and $125,000.”

  Finley, sitting across the table, shot back: “I have no interest in any of those players. The players I want are outfielder Otto Velez and pitcher Scott McGregor. If the Yankees don’t want to give me both of them, I’ll take Velez and $100,000, or I’ll take Velez and another outfielder, Terry Whitfield, plus a pitcher, Doug Heinold.” (Heinold was the Yankees’ number-one draft pick in 1973.)

  Paul, his face flushed with anger, was clearly taken aback. Velez and McGregor were the Yankees’ two top prospects. In a press conference later that day, he referred to them as “our crown jewels” and expressed his outrage at Finley’s overreaching. Cronin apparently was unmoved by the Yankees’ complaints.

  On December 20, the Yankees received a teletype from Kuhn informing them that, after consulting with Cronin, he had decided to grant Houk the right to sign with Detroit. A few minutes later, a second teletype came in informing them that Williams’s contract with the Yankees had been disapproved. When Paul called Steinbrenner to tell him the double dose of bad news, the Yankees owner reacted with predictable indignation.

  “This is outrageous!” Steinbrenner bellowed into the phone. “We need to get new lawyers! How could they blow this?”

  Though publicly he vowed that “this is not a dead issue,” Paul knew the game was over. After hanging up with Steinbrenner he decided immediately to begin pursuing their second choice, Bill Virdon, who had just been fired as Pittsburgh Pirates manager one year after guiding them to a 96-win first-place finish in the National League East. Paul had admired Virdon both as a player who’d been one of the best defensive center fielders ever and as a manager with a reputation for being a sound tactician and strict disciplinarian. Paul had even tried to convince Steinbrenner to sign Virdon weeks earlier, as soon as it became clear that Finley was going to contest them over Williams.

  A week after the notification from Kuhn, Paul instructed Lee MacPhail, who was finishing out his term as Yankee GM, to call Virdon and ask if he’d be interested in managing the Yankees, with the agreement that he’d step down once Williams became available. Somewhat surprisingly, Virdon said he was amenable to taking the job under those circumstances, as long as there were certain monetary guarantees in his contract, which he would discuss with Paul shortly after the new year. Two days after he spoke with Virdon, MacPhail got a phone call from Kuhn in which the commissioner said he had never given Steinbrenner his blessings to sign Williams—as Steinbrenner had maintained in that phone call to Paul on December 16—and that it had been a mistake to give him any encouragement to have Williams institute a suit against Finley. When informed of the conversation by MacPhail, Paul was dumfounded.

  “Why would [Steinbrenner] have told me all that?” Paul wondered on his tape-recorded diary entry that day.

  Paul’s meeting with Virdon was scheduled for January 3, but the day before, he got a phone call from Steinbrenner, who was again in a fury, this time over the fact that his scheme to have Williams sue Finley (with the Yankees paying his legal expenses) was all falling apart.

  “You and MacPhail let me down!” Steinbrenner exploded into the phone. “We had an agreement with Williams that was something we all wanted and signed off on!”

  Rather than arguing with Steinbrenner, or even mentioning that Kuhn had denied ever having okayed the Yankees’ signing of Williams, Paul just listened. When Steinbrenner finally stopped speaking, Paul reminded him of the meeting with Virdon the next day.

  “I will not go for Virdon!” Steinbrenner screamed. “You guys want him! I don’t want him!”

  Now Paul was furious. It was too late in their conversation with Virdon for Steinbrenner to back out like this. This was no time for Steinbrenner to be embarking on one of his petulant tirades. They had a manager to hire! After hanging up the phone in exasperation, he said to himself: “I should’ve told him to stick this job up his ass. Here he is acting like he had nothing to do with all this when he instigated all of it and made up conversations he had with Kuhn. This guy has to be crazy!”

  Paul decided to keep the meeting the next day. Much to his surprise, Steinbrenner himself strode into the Yankee offices at 9 o’clock sharp that morning. “He was in good spirits, with no hint of the belligerency of the previous night, and he was immediately taken by Virdon,” Paul said in his tape entry that day. “We covered all the bases—coaches, managing techniques, discipline. This was the same guy George had wanted no part of the night before!”

  It was then left to Paul to complete the financial
arrangements with Virdon.

  “I have been authorized to offer a salary of $40,000 for you to manage the team and $25,000 if you have to be a coach,” Paul said. Virdon insisted on the $50,000 he’d been making in Pittsburgh, while agreeing to have it reduced to $40,000 if the Yankees hired Williams and he had to become a coach. Upon having Virdon’s request relayed to him, Steinbrenner told Paul to go ahead with those terms on a one-year contract.

  As for Williams, he had resigned himself to sitting out the year and collecting Finley’s money when, on June 27, 1974, the California Angels fired their manager, Bobby Winkles. The Angels’ owner, Gene Autry, who had poured millions of dollars into the team but enjoyed little success since its inception in 1961, immediately contacted Finley about Williams. This time, Finley didn’t ask for any compensation—at least not publicly. “I’m letting Dick go to the Angels not for his sake but because of my affection for Gene Autry,” Finley said.

  According to Williams, though, that was not entirely true.

  “Years later, Finley bragged to me that he got $100,000 from Autry for me,” he told me.

  With Mike Burke, Howard Berk, Lee MacPhail, Bob Fishel and Ralph Houk all out the door and Dick Williams briefly in and then out as well, the first year of George Steinbrenner’s Yankee stewardship had been one of uneasy transition.

  Gabe Paul would tell friends that he’d never been around anyone quite so mercurial and ill-tempered in all his years in baseball. The initial wave of defections from the Yankees was not limited to just the front office and the dugout. Three of the original limited partners, Nelson Bunker Hunt, Sheldon Guren and Ed Ginsberg, divested themselves of their Yankee stock after that first year. For Guren and Ginsberg, Steinbrenner’s attorney pals from Group 66 in Cleveland, a bad real estate venture in Texas forced them to sell their shares back to Steinbrenner. Hunt, on the other hand, was one of the wealthiest men in the country but had no interest in being involved in baseball. As he explained to me in a February 2008 telephone interview, “I only invested with George as a favor through a mutual friend of ours and always it was with the understanding that I could sell it back as soon as I wanted.”

  Those three original partners got out before they could discover what another limited Yankee partner, John McMullen, would learn later in the decade. When asked in 1979 why he was selling his Yankee stock, McMullen, who a few months later purchased the Houston Astros for $13 million, famously replied: “I came to realize there is nothing in life quite so limited as being a limited partner of George Steinbrenner.”

  Chapter 4

  Watergate and Catfish

  BY THE END OF his first season as Yankees president, Gabe Paul was beginning to wonder what he’d gotten himself into with “this Steinbrenner,” as he frequently referred to him. In his years as general manager of the Cincinnati Reds and Cleveland Indians, Paul had run the day-to-day baseball operations largely without interference by the owners, who trusted Paul’s judgment on players and salaries and generally left him alone while concentrating on their other businesses.

  Paul had taken Steinbrenner at his word when the new Yankees owner had said he would be too busy with his shipbuilding business and would be leaving the running of the team “to the experts.” “It didn’t take long for him to become an expert,” Paul bemoaned. As the 1973 season went on and Lee MacPhail began phasing himself out as Yankees GM, Paul found himself constantly putting out brush fires started by Steinbrenner, from the Dick Williams fiasco to the barring of Joan Steinbrenner from the Yankee Club.

  “Thank God,” Paul thought, “he’s had this Watergate business to consume himself with.”

  What had at first appeared to be an isolated break-in at the Democratic campaign headquarters in the Watergate Hotel, in Washington, D.C., was by the summer of 1973 raging into a major scandal, with the Nixon administration accused of a litany of crimes ranging from conspiracy, burglary and wiretapping to obstruction of justice and illegal campaign fund-raising. It was the latter criminal activity in which George Steinbrenner allowed himself to become ensnared, and as his first season as owner of the New York Yankees played out, he was beginning to feel the walls of justice closing in on him.

  When Richard Nixon’s former attorney, Thomas Evans, who was then general counsel at American Shipbuilding Co., introduced Steinbrenner to Herb Kalmbach, the deputy finance director for the Committee to Re-elect the President (CREEP), in March of 1972, he didn’t know how much money Steinbrenner intended to donate. Nor did he have any idea that Kalmbach was already engaged in a patently illegal scheme to raise money for Nixon.

  At Steinbrenner’s first meeting with Kalmbach, the deputy finance chairman informed the Yankees owner that if he wanted to make a donation to the president, to get his attention, it would have to be a meaningful one—as in $100,000. When Steinbrenner didn’t blanch at the figure, Kalmbach provided him a list of some 40 separate organizations that were branches of CREEP—groups with patriotic names such as Dedicated Americans for Effective Government and Loyal Americans for Government—that would funnel the money to Nixon’s campaign. Kalmbach further instructed him to write 33 separate checks for $3,000 and one additional check for $1,000, since, according to federal law, gifts exceeding $3,000 required the disclosure of the donor’s name.

  The law was scheduled to be amended on April 7, 1972, after which the names of all political contributors would have to be disclosed. But under Kalmbach’s direction, Steinbrenner was able to beat the deadline by one day. On April 6, he delivered checks from six of his American Shipbuilding Co. employees made out for $3,000 apiece and, in violation of Kalmbach’s instructions, two more for $3,500 each. (It was those last two checks, in excess of Kalmbach’s explicit instructions, that alerted the Watergate investigators and ultimately led to Steinbrenner’s indictment.) The origin of this largesse from the AmShip employees turned out to be bonus checks totaling $42,325.17 from Steinbrenner, which, after taxes, wound up to be $25,000. For the remaining $75,000, Steinbrenner wrote out 25 personal checks for $3,000, each of them to a different committee on the list Kalmbach had provided him.

  “The concept of getting money through corporate employees was George Steinbrenner’s idea and not my idea,” Evans told me emphatically in a 2008 interview. “It was something George had developed when he was raising money for Democrats. I only learned that he had used this mechanism with Kalmbach months after he had done it.”

  Evans explained that, in 1968, he’d developed 33 or more committees for fund-raising purposes, each of which had separate charters and separate officers and could act in its own behalf. But sometime in the 1970s, someone developed a similar list that had the same officers for each committee.

  “That meant that they were, in fact, all one committee—and that was a violation of the law,” Evans said.

  On November 13, 1973, two employees of the American Shipbuilding Co., Matthew E. Clark Jr., the director of purchasing, and Robert E. Bartlome, the company’s secretary, testified before the Watergate Committee in Washington that a total of $25,000 in corporation funds was given to the Republicans through a sham bonus plan in 1972, and that other false bonuses had been given to “loyal” AmShip employees in 1970 and ’71 and subsequently passed on as political contributions. Clark and Bartlome went on to testify that attempts had been made to cover up their illegal contributions through such devices as placing false backdated memorandums in the company’s files and listing some of the expenditures on the company’s books as “research.”

  Clark and Bartlome said that when they were subpoenaed to appear before the Watergate Committee in 1973, they, along with the other AmShip employees involved, agreed they would not perjure themselves. According to the two, when they informed Steinbrenner of their intentions at a meeting in the company offices, he put his head down on the desk and moaned: “I’m ruined! This company is ruined!” But then, Clark said, Steinbrenner handed him $200 in cash and said: “Have a nice weekend.”

  Steinbrenner had hired the high
-powered Washington attorney Edward Bennett Williams, whose previous clients included Frank Sinatra, Playboy publisher Hugh Hefner, mob boss Frank Costello and Teamsters union chief Jimmy Hoffa. Through Williams, Steinbrenner exercised his constitutional right under the Fifth Amendment not to testify.

  It would be another five months—on April 5, 1974—before Watergate Special Prosecutor Leon Jaworski handed down a 15-count indictment of Steinbrenner. The indictment charged the 43-year-old Steinbrenner with having set up a phony bonus system for trusted employees who then wrote out checks for campaign contributions. It also alleged that he’d authorized the employees to submit fictitious expense vouchers to receive reimbursement.

  “I’m a fighter, not a quitter. I am totally innocent and we will prove it in court, where this case belongs,” Steinbrenner said in response to the indictment, which stunned Yankees employees who had been unaware of how deeply involved the Yankees owner had actually been in the Watergate affair.

  All through that summer of ’74, Steinbrenner spent most of his time working with Williams on his defense. Finally, on August 23, in a U.S. district court in Cleveland, he entered a guilty plea of illegally authorizing $25,000 in campaign contributions to the Committee to Re-elect the President as well as illegally contributing $1,000 to the reelection campaign of Democratic senator Vance Hartke of Indiana and $500 to the campaign of Democratic senator Daniel Inouye in 1970. In addition, he pleaded guilty to a second count of being an accessory after the fact by attempting to cover up the contributions. The Associated Press reported that Steinbrenner was the 17th person and American Shipbuilding Co. the 14th corporation to be convicted or indicted for illegal federal campaign contributions in conjunction with the Watergate scandal.

  Under the provisions of the original indictment, Steinbrenner could have received up to six years in prison and been fined as much as $15,000. But with the renowned Williams handling his defense, he was spared any jail time at his August 30 sentencing before Federal Judge Leroy J. Contie Jr. Rather, he was fined $10,000 on the felony illegal campaign charges and $5,000 on the misdemeanor “accessory after the fact” charge. In addition, AmShip was fined $10,000 on each of the two felony counts.