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October 4, 2010

Contractual Matters

Market Corrections

by Jeff Euston

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Ever since arbitrators ruled that baseball’s owners had acted in concert to fix prices for talent for three years in the late ‘80s, collusion has loomed near the surface of the game’s labor relations.

The rulings, which resulted in a $280 million settlement for players from the free-agent pools after the 1985, 1986, and 1987 seasons, ensured that the issue would remain a point of discussion each time the owners and players opened talks for a new collective bargaining agreement. Under Article XX (E) of the CBA, “Players shall not act in concert with other Players, and Clubs shall not act in concert with other Clubs.” A player found to be injured by collusion is entitled to triple damages.

Former commissioner Fay Vincent has suggested that the costly damage award was the owners’ primary motive in proceeding with expansion for 1993 and 1998. The 2006 labor deal included a settlement of claims by the Major League Baseball Players Association that management might have conspired against free agents after the 2002 and 2003 seasons. The agreement called for the owners to pay—without admitting guilt—$12 million in luxury tax proceeds to settle all collusion claims and other pending grievances.

But collusion has remained an issue under the current labor deal, which will expire after the 2011 season. In November of 2007, after Alex Rodriguez opted out of his contract with the Yankees, the Players Association expressed concern that the owners might have conspired to limit the ultimate price of his next free-agent deal. And in 2008, the MLBPA claimed to have discovered evidence that owners had acted in concert to prevent the signing of 43-year-old Barry Bonds, but the deadline for a grievance in that case was extended until after the end of Bonds’ criminal trial. Representatives of the players’ association also had expressed concern about possible collusion against free agents after both the 2008 and 2009 seasons.

The possibility of grievances in the 2008-09 cases loomed until last week, when management and the players’ association quietly brokered a deal. The players agreed not to file collusion charges in exchange for an agreement with the owners on a series of changes to the rules governing the free-agent market. From a broad perspective, the deal takes the collusion issue off the table just as negotiations on the next CBA are set to begin in earnest in the coming months—a positive development as other sports prepare for possible work stoppages.

More narrowly, the changes address procedural concerns of both sides, particularly the slow-paced markets of recent winters which have left players like Johnny Damon (2010) and Manny Ramirez (2009) looking for jobs after spring training has started.

Many of the changes will accelerate the off-season calendar, beginning this upcoming winter. Once the World Series ends, any eligible player will become a free agent, eliminating the requirement that a player must file for the right to hit the open market.

The day after the final game of the World Series marks the beginning of the five-day period during which clubs have exclusive negotiating rights with their players who have become free agents. During the exclusive window—which ran 15 days under the old rules—a free agent may engage in general discussions with other clubs but may not discuss contract details or sign elsewhere. For a team like the Red Sox with potential free agents like Adrian Beltre and Victor Martinez, the practical effect is to push the club to hammer out agreements before the players are able to entertain offers from the other 29 teams. Any option for 2011 must be exercised or declined within three days of the end of the World Series. So Beltre, who holds a player option for next season, faces an accelerated calendar as well.

Under the new agreement, teams must offer salary arbitration to free agents by November 23 in order to be eligible for draft-pick compensation if the player signs elsewhere. The previous deadline was December 1. Free agents who are offered arbitration must accept or decline by November 30 instead of December 7. Clubs must offer contracts to all players by December 2 instead of December 12 in 2010.

The deal also revamps the procedure for the sharing of medical information about free agents among all 30 clubs, with players receiving their official medical records from the Commissioner’s office.

 Additionally, clubs, players, and agents are restricted in the ability to conduct free-agent negotiations in the media. All parties reportedly are prohibited from speculating about or disclosing the length and value of offers before a contract is signed. That might appear to take half the fun out of the process, but the hot-stove calendar will have to go without.  

Jeff Euston is an author of Baseball Prospectus. 
Click here to see Jeff's other articles. You can contact Jeff by clicking here

Related Content:  Collusion,  Free Agents,  Players Association,  Free

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