MLB’s advise and consent policy
ESPN ran an innocous little feature which includes MLB’s advisory reply form. I always find things like this interesting, because I’m a rules geek, but what’s particularly cool about seeing this is thinking about how this is part of a larger campaign by MLB to keep salaries down. It’s putting a paper trail to what’s been going on for a while, and it’s part of a whole strategy that’s been effective to lower labor costs in any way they can.
Collusion, where the teams get together and conspire to control bidding on free agents, is strictly prohibited. Selig once led the owners in this and the player’s union won a complete victory in court. The fine of $280m was so large that it’s been used as justification for the last round of expansion, which is bunk but a whole other post.
I have to give credit to Selig for learning from his mistakes. Determined to lower the cost of labor however he can, Selig’s moved cautiously over his term to use his power as Commisioner to put pressure on salaries, and he’s done so without getting into legal trouble.
The draft has been the most obvious because the MLBPA doesn’t care about it. Every year, MLB is a little more involved, and puts more pressure on teams to make conforming offers to their draft picks. They’re trying to move towards unstated but de-facto slotting of the kind the NFL and NBA have as part of their rules, where pick #1 gets $a, pick #2 gets $b, and so on until down the line. Ownership groups dig this because it means that they pay less for those insociant youngsters, but front office sentiment is mixed. It means that if there’s an amazing draft coming up, those players get screwed, which is okay by GMs, but as slotting becomes inflexible it will also mean that in a bad draft, they’d be obligated to pay a lesser player the same amount. It would also mean less flexibility to look to signability guys if you have a ton of early picks from losing free agents, or to look to pay a potential pick a lot to not go to school on an athletic scholarship if you have local connections that might help.
We’ve also seen MLB deflate salaries by running a lot of information through the labor counsel office, which handles arbitration. What happens here is at the end of the year, say Bavasi’s thinking about offering arbitration to Dan Wilson. When he talks to MLB, he’ll say “I’m not offering contracts to these guys. Now this Dan Wilson guy, I don’t know, you should see the fan mail he gets…”
And MLB will say “Funny you should mention that. Having talked to some other guys, I think there will be six to eight free agent catchers on the market…”
So Bavasi declines, figuring Wilson would get more in arbitration then the M’s could re-sign him for, or find a suitable alternative. In doing this, baseball’s helped push more players each year into the free agent market, and kept players out of arbitration, and reduced their willingness to offer lucrative extensions. After all, why offer a guy a premium deal if he’s going to be a commodity in a month?
Now, this doesn’t technically violate the CBA… well, maybe it does. It’s certainly close. But that’s not for me to argue, it’s for the MLBPA, and they haven’t filed a suit yet.
This new wrinkle is interesting because it implies that teams thinking about, say, Carlos Beltran, would ask MLB what a reasonable contract would look like for four years. And MLB would return this form referenced by ESPN in which they’d say “30-40m, based on these other guys”.
There are are some intentional flaws even in this formal document. It neglects a rise in revenues, or inflation — say top center fielders are making $5m/year, and the league signs a deal to broadcast in holovision, and every team suddenly makes twice as much national broadcast money. The comperables will still be based on the old money. There’s also a couple issues of judgement and applicability in who MLB choses to pull as comperables, what their specific situations were, and then there’s the jump to the number they put at the top, which is also a judgement call.
Now the form’s filled with caveats and warnings about how every situation is different, but if this becomes widespread, it would help to bracket the initial offers from teams in a pretty narrow range.
And then, if MLB is reviewing contract offers themselves, they can start giving teams trouble if their offer is out of line with others. This would prevent the kind of Alex Rodriguez deal from occurring again, where the winning offer was far higher than the second-highest offer. This, again, doesn’t obviously violate the CBA, but it’s still not in the spirit of fair play. If someone wants to spend far too much money on a player, why not let them?
Part of this has traditionally gone on through back channels, which MLB’s trying to shut down. As agents like to play the disinformation game and inflate the number of teams, or offers they’d received, teams had the opposite intention, because they were best served by not over-bidding. So teams leaked contract offer information to the press, or even in discussions with other teams would mention they’d made an offer, or were thinking about making an offer… and it would get around pretty quickly. In the last bargaining agreement negotiations, MLB wanted to have a clearing house of offers — so a team could call up and say “who else has put in offers on Beltran, and what were they?” It was a formalization of this past back-channel network, and it got axed, so teams went back to using the press.
As MLB wants to keep that kind of thing quiet, they now made formal a process that they hope keeps the initial bidding in a small range, even if they don’t put pressure on the bidding that follows.
There have been rumors that MLB’s been doing something even more egregious than this, by actually controlling who gets what offers in, but information on even what specific allegations are is scarce — and if they were doing it, they’d be in court almost immediately. It’s worth mentioning as part of understanding why the players are so suspicious about the whole thing, and the MLBPA is particularly jumpy lately.
Even beyond those moves, Selig’s attempts at enforcement of the debt/equity rules (where teams can’t have debt, including futre contract obligations, in excess of a certain percentage of team value, which… well, you know how that can be manipulated) put a damper on team spending even beyond the salary cap itself.
There’ve been two major factors in the market correction of the last two years. The smaller’s that there are more smarter teams that understand the concept of replacement level and are good at the cheap scrap-recycling. The far larger has been the massive weight applied to the whole process by MLB, and seeing what happens this off-season is going to be interesting.
Comments
16 Responses to “MLB’s advise and consent policy”
Glad to see someone else is up at this hour, reading about baseball!
I wondered about that, and it really seemed that there were more players denied arbitration than in past years. Now I know why. I thought it was because teams learned from the Braves mistake of offering arb to Greg Maddux a couple of years ago, figuring some team would pick him up and they’d pocket the draft pick. Of course, that didn’t happen, and they were forced to trade Millwood in a straight cash deal. Of course, that deal turned out pretty good for them, but at the time, it looked terrible.
Derek,
you should go take a look at some of the stories leaked out by an agent in hockey (for which he has now been decertified by the Players Association) regarding their software for the agents. I have attached a link, but more or less the agents submit all the information about their clients, what offers they have received from teams, and it generates reports on every player based on stats, service time etc, and clusters them to help the agents know what sort of deal is commonplace, and what sort of offers similar players are getting.
Dollars to doughnuts, the MLBPA has something similar, and if not, they should.
http://www.startribune.com/static/nhl_score.html
Dear Yankees,
Thank you for asking about ERIC MILTON. We believe he is comparable to ROGER CLEMENS and RANDY JOHNSON. Based on these comparables, we believe his contract value to be 7 years at 15 MILLION per year.
Thank you for using the MLB player contract review service.
Yours,
Bud Selig
HAHAHAHA @ Bud
I’d love to hear what Doug Pappas has to say about this. Sigh.
Dear Arizona:
Here are some comps for Willie Bloomquist. We feel his grit and scrappiness compares with DEREK JETER and ALEX RODRIGUEZ. Therefore, as a free agent, he should be compensated thusly. An appropriate contract would be in the 10 yr & $150 million range.
–Bud
Because then every GM has to pay for one moron’s mistake, since they’ll spend the next several years battling with agents who insist that Player B deserves a Player A salary since their performance compares well — ignoring the fact that Player A was grossly overpaid in the first place.
In general, I don’t see what MLB is doing as out of bounds. The players want to make as much as possible, the teams want to pay them as little as possible. Player agents certainly use whatever means they can to inflate the bidding, and logically the league will do everything it can to keep the prices down. That’s just the way it goes; a free market cuts both ways. As the ESPN column pointed out, the league is now issuing a paper trail on the process that can be examined and, if necessary, introduced as evidence in court. If it’s collusion, the courts will act accordingly; until then, it’s just bargaining.
I agree. The baseball marketplace is not companies working against each other, really. It is not open and free the way the general marketplace is (ex Intel and AMD compete head to head in a way that New York and Boston and Seattle do not). If the owners aren’t colluding to keep prices down, I see it as emininently sensible to share information that benefits all of them.
off-topic-
I was under the impression that Aramis Ramirez was a free agent this year, obviously he is not because he isn’t listed as one on MLB.com, but still it seems like there was talk about him, does anyone know hos contract situation?
ARAM is up for arbitration this offseason but is not considered a free agent (due to what i’m guessing has to do with his MLB service time?). The Cubbies will most likely try to sign him to a 3-4 year deal to avoid a pricey ruling for next season.
*SIGH*… I’m moving to Cuba.
On:
I’m sorry, but just because something like this creates trouble for someone else doesn’t mean they should be able to stop it.
On
This is wrong. In your Intel v AMD example, there’s less direct competition between the companies than between teams in baseball. Both Intel and AMD have diverse product lines, many of which conflict with each other.
Every baseball team wins a game by giving another team a loss. Every player move can help or hurt one team, and in so doing it hurts or helps every other team. Intel and AMD can both grow sales while fighting for the desktop market, but every baseball team can’t get better next year.
Baseball is not an open market in some senses, certainly, but it is direct competition.
I think that there is less economic competition between the teams – obviously there is a great deal of competition on the field. To revise my example, a fictional Derek of Seattle needs to buy a new bike. He can buy a Schwinn, a Trek, a Kona etc… He reads about all the different bikes and picks one. It is in the bike companies interests to compete head to head against each other economically. This same Derek, a man of average means, also wants to go see a baseball game. He is locked into going to the Seattle Mariners. It is in all of baseballs interest to make sure Derek likes baseball. It is not in the rational interest of, say, the Boston Red Sox to tell Derek that he doesn’t want to be a Mariners fan, he wants to be a Red Sox fan.
That being said, however, the rational economic interests are often overriden by the competition on the field. I see this move by the MLB front office as a way to ensure that the rational needs of MLB, a company made up of 30 shareholders, are not completely subsumed by the teams individual desires to get the best players at any cost.
The better analogy is that Schwinn would love to see Kona and Trek go out of business but the Yankees couldn’t exist without the 29 other teams.
One of my strategies for dealing with the Yankees if they ever get REALLY out of control is for the other 29 teams to say, “OK, we give up. You win.” Then they drop out of the league and form another one leaving the Yankees to win every year by default.
re #13: Derek, baseball teasms do not truly compete with each other economically. Within their operating areas they are either monopolies or duopolies. What Seattle does with ticket prices, concessions, etc., does not directly affect Oakland and vice versa.
If baseball were a truly competitive market, you, David, and Jason could line up some investors, assemble a roster for an MLB team to compete with the product put out by Lincoln, et. al., and submit a competing offer to MLB and the Stadium Authority to provide MLB baseball in the Seattle market. Or you could create a second team in the Seattle market to compete with the Mariners.
That what would be a competitive marketplace.
In a competitive marketplace at least one team, if not two, would relocate to the Northeast to take advantage of the greater revenue and profit opportunities available there. The added competition would reduce the revenues available to the Mets, Yankees, and Red Sox, and force them to cut payroll.
There is (or shold be) competition in player signings, but other than that limited aspect, baseball teams in no way compete in economic terms.