Room For Three
It was the year 1913, and baseball had only recently started to become a national spectacle - President Taft had thrown out the first pitch of the 1912 World Series, giving it some credibility. People were coming to the games in droves, and John T. Powers decided it was time to cash in.
Powers was a successful Chicago entrepreneur who saw profits in baseball. He had already tried to begin a league before, but hadn't gotten enough outside support. He devised to form a 6 team league to complement (rather than compete) with the American and National Leagues. He corralled a few other wealthy industrialists and together they formed the Federal League.
The Members
To garner support and interest, they hired Cy Young and Deacon Phillippe (both former Major League standouts) as managers. The teams were located in Chicago (the Whales), Cleveland (Spiders, which coincidentally was the name of the Cleveland team before the Indians), Pittsburgh (Rebels), Indianapolis (Hoosiers), St. Louis (Terriers), and Covington, Kentucky (Blue Sox). They played a shortened 6-week season, and in the process, the team from Covington moved to Kansas City (and became the Packers) and Indianapolis won the championship.
Separation of Powers
Major League Baseball didn't officially recognize the Federal League as a farm system, so it stood as a completely independent league at this point. The problem was that many of the players in the National and American leagues had reserve clauses in their contract: they didn't have the right to sign with other teams or play in other leagues. The Federal League respected these clauses, only signing semi-pro players and free agents to stock their league.
Interesting Developments
In 1914, however, Powers was ousted as president of the League, and James Gilmore took over. He brought in some big guns - oil magnate Harry Sinclair and Brooklyn millionaire Robert Ward - and expanded the league, adding teams in Brooklyn (the Tip-Tops) and Buffalo (Blues), and relocating the Cleveland team to Baltimore (Terrapins).
He also made the very daring move of signing fresh free agents - and not just anybody: Joe Tinker, Three Finger Brown, Claude Hendrix, Jim Delahanty, and Edd Rousch all signed to play with Federal League teams. Funneling thousands of dollars into their new partnership, four brand new stadiums were built for the league, including Wrigley Field for the Whales (it is still in use today by the Chicago Cubs.) On opening day, 27,140 people gathered to watch the Blues take on the Terrapins. It was a rousing success, and the league continued in the fashion all the way to its first playoff and championship (which Indianapolis again won.)
Clash Of The Titans
Major League Baseball began to get very nervous about the Federal League: being a smaller, more robust league, the Federals had lots of advantages to offer players. The league also looked like it was going to refuse to honor the reserve clauses in Major League contracts. Something had to be done.
When the Federal League announced it wouldn't honor the reserve clause, baseball players began jockeying between the leagues, trying to find the highest bidder. Walter Johnson came very close to signing with the league, only to be lured back by a fat contract (underwritten by the entire American League at the behest of his team's owner Clark Griffith.) Chief Bender and Frank "Home Run" Baker defected to the league. Shortly following this, a stern warning was released: any player who went to the Federal League would be banned from Major League Baseball for life. To counteract this, the Federal League sued Major League Baseball, claiming their reserve clause violated antitrust laws.
Still, some players couldn't resist the outrageously improved salaries of the Federal League and jumped. The 1915 season began (with the debt-ridden Indianapolis sold and relocated to Newark, and attendance in the league rose over 20%. Luckily for the league, the championship came down to the very last game, with the Chicago Whales holding on by 1/10 of a percentage point over the St. Louis Terriers. At the final game of the Whales, over 40,000 people showed up.
Resolution
The winter after the 1915 season, members of from all 3 leagues convened for discussion, and a settlement was reached. The Federal League disbanded, and each owner was paid $600,000. It is agreed that 2 Major League teams will be sold to Federal League owners (these teams turned out to be the St. Louis Browns and the Brooklyn Dodgers), and that the ban on Federal League players will be lifted. Most of the players returned without incident, although there are quite a few stories of players being snubbed or harassed by their teammates for their treason.
Still the issue of baseball's anti-trust practices hadn't been addressed. The disgruntled owners of the Baltimore club continued with the lawsuit against the MLB, taking it all the way to the Supreme Court in 1920, where it was determined that baseball is not interstate commerce, and cannot be held liable for anti-trust infringements. This exemption later proved to be a major fighting point for players in the 1970s.
Summary
The Federal League only had a few moments in the sun, but in the end, it had been created to profit, and it had done so marvelously, to the tune of $600,000 for each owner. Since then no league has ever emerged to compete with Major League Baseball - the initial costs today would be enormous.
You ever get the feeling when you're writing that what you're writing just isn't coming out how you want it to? This kind of feels like that. I think I covered all my speaking points, though, so .. if you have any suggestions, please /msg me.