NEW YORK -- Baseball ended its most painful losing streak.

With a little more than three hours to spare, the sport averted a strike Friday when negotiators pulled off a surprise by agreeing to a tentative labor contract.

Commissioner Bud Selig called the deal "historic,'' the first time since 1970 that players and owners accepted a new collective bargaining agreement without a work stoppage.

"All streaks come to an end, and this was one that was overdue to come to an end,'' union head Donald Fehr said.

The deal that pulled baseball back from the brink penalizes big spending on player salaries and gives poorer teams a bigger share of the wealth.

In return, the union received a guarantee that baseball won't eliminate teams through the 2006 season. And for the first time, players agreed to mandatory, random testing for illegal steroids.

"It came down to us playing baseball or having our reputations and life ripped by the fans,'' said Steve Kline, the St. Louis Cardinals' player representative. "Baseball would have never been the same if we had walked out.''

Perhaps that was why owners gained their most significant concessions since 1985 -- maybe even since the start of free agency 26 years ago -- with an agreement that runs until December 2006.

Selig and Fehr, longtime foes, wrapped up the deal during a morning session that averted the sport's ninth work stoppage since 1972. The previous eight negotiations resulted in five strikes and three lockouts.

"I think a lot of people thought they'd never live long enough to see these two parties come together with a very meaningful deal and do it without one game of work stoppage,'' Selig said.

Still, the pact has not been signed and parts weren't even in writing. It was unclear when it would be ratified.

For most of the morning, players weren't sure whether they'd be packing bags or playing ball.

"It was close. I was about to make my flight arrangements to go home,'' Chicago Cubs outfielder Roosevelt Brown said as he arrived at Wrigley Field for that first game, against the Cardinals.

A walkout threatened the final 31 days and 438 games of the regular season, and fans were angry at players and owners for their repeated quarrels over a business that generates $3.5 billion annually.

Fan Tony Pencek was sitting in a bar across the street from Wrigley when he heard the news. He immediately ran over to the ballpark and bought a ticket for the game.

"America needs this. Especially with September 11th coming up,'' he said. "You need to get people's minds off of it. And for something good to happen is great.''

As the hours dwindled, lawyers had shuttled between the commissioner's office and union headquarters, crunching numbers and exchanging revised proposals.

Two lawyers from each side bargained until 2 a.m. before the sides broke for caucuses. Players gave owners a proposal during a 20-minute meeting that began at 4 a.m., and owners responded with a counteroffer about 6:30 a.m. The union returned with a response at 9:15 a.m.

The final meeting, which completed talks that began in January, lasted almost three hours. As soon as it ended, teams started heading to ballparks.

With the deal, owners gained concessions from one of the most powerful unions in the nation. The players' association has lifted the average salary of its members from $51,501 in 1976 -- the last year before free agency -- to $2.38 million this season.

As part of the agreement, all teams will have to share 34 percent of their locally generated money, up from 20 percent. That money is divided evenly among the 30 franchises and is intended to help middle-market teams. Owners can spend the money on their teams or pocket it, without restriction.

Also, a luxury tax will be levied on high-payroll teams to try to curb increases in player salaries.

Teams will pay a tax ranging from 17.5 percent to 40 percent of the portions of salaries above $117 million in 2003, $120.5 million in 2004, $128 million in 2005 and $136.5 million in 2006. The money raised by the luxury tax will be used for player benefits and various player development programs.

The revenue-sharing component of the deal could mean $1 billion changes hands between higher-revenue and lower-revenue teams over the life of the contract, according to ESPN.com's Jayson Stark. However, there is no requirement that the teams spend their shared revenue on payroll.

The pact also saves the Minnesota Twins and Montreal Expos until at least 2006. Owners attempted to fold the teams after last season.

The deal, however, could mean the Expos will move to Washington. Selig said in January that relocations would be discussed after an agreement.

The minimum salary will rise next year from $200,000 to $300,000.

Since the last strike in 1994-95, a 232-day stoppage that forced cancellation of the World Series for the first time since 1904, the New York Yankees have won four titles. For that very reason, Selig and many team owners said they needed changes to restore competitive balance.

The mid-market teams figure to be the biggest winners in the deal, receiving much more of their competitors' money.

The biggest losers are the Yankees, whose $242 million revenue last year was $40 million higher than any other club. The Yankees, who paid $28 million in revenue sharing last year, expect the new deal will increase the amount they give up to more than $50 million next year. The Mets, Boston, Seattle and San Francisco also will have to pay more.

"It's going to affect a lot of teams with high payrolls, there's no question about that,'' Yankees pitcher Steve Karsay said.