John Montgomery Ward, star shortstop of the New York National League team, secretly formed the Brotherhood of Ballplayers. Its existence was announced in August 1886; in fall 1887 the Brotherhood demanded recognition by the owners, with members not signing contracts until it was granted. The Brotherhood Committee of Ward, Ned Hanlon, and Dan Brouthers held meetings with the NL, leading to a new form of contract that defined all relations between the league and its players, with no additional restrictions contained in outside documents. Section 18 of the new contract contained a clause allowing the club to reserve the player for the next season, provided that the full salary be written in the contract; a salary reduction constituted a release. Because of the $2,000 limit (broken by all teams in under-the-table deals with star players), the clause was not consistent with the status quo. The League Committee solved the problem by promising to strike the limit from the National Agreement. Players went ahead and signed contracts for the next season, but the limit wasn’t stricken, “owing to the alleged refusal of the other party to the agreement, the American Association [the other major league at the time], to consent,” according to the Reach Guide. At this point, the American Association was in no position to buck the National League, so it was probably acting under NL orders. As a result, clubs were able to reserve players at reduced salaries the following fall.
At the same time, three NL clubs (Indianapolis, Pittsburgh, and Washington) stated that they needed a larger share of the gate receipts in big cities. The other owners voted down a change in the division of the gate, so John T. Brush of Indianapolis proposed a reduction of players’ salaries on these clubs (despite the fact that these teams already paid lower salaries than other clubs). This was done by setting player ratings from “A” to “E” with prescribed salaries for each rating. This action was taken while Ward was overseas on tour with Al Spalding; Ward returned in April and insisted on the repeal of this rule, which would eventually reduce salaries throughout the league. Spalding, the chairman of the league committee appointed to deal with this controversy, stonewalled.
The Brotherhood, in a July 4, 1889 meeting in New York City, secretly organized the Players’ League for the following season. Word leaked out in September, but all was denied until November. Chicago star Cap Anson was the only player who remained with the NL at first. The NL repealed the classification system, invoked the reserve clause, and moved Cincinnati and Brooklyn from the AA to the NL. In response to these moves and to generous contract offers, some players abandoned the new league. But a lawsuit against Ward failed when, in January 1890, it was ruled that the “contract was lacking in mutuality, unconscionable and inequitable.” The National League transferred Indianapolis’s players to New York, which had lost all but three of its members to the Players’ League, and then bought out Indianapolis and Washington for $65,000. The NL played an eight-team schedule, with the former AA teams, Brooklyn and Cincinnati, carrying the NL at first. Pittsburgh played most of its games on the road. Although a good pennant race saved attendance after a bad slump in June, the NL as a whole lost $300,000 for the season, a tremendous sum at the time. On October 4, Cincinnati was lost to the Players’ League, sold for $40,000. But the financial backers of the Players’ League had also taken a licking and, unaware of the extent of the NL’s losses, they caved in to the NL that winter.