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September 16, 2008

Future Shock

Pedro-gate Update

by Kevin Goldstein

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When Pedro-gate first began, all eyes were on September 10, the day when arbitrator Shyam Das would hear the case, and after which he would likely make his ruling within 30 days following the submission of written arguments from both sides. The day before the hearing, sources revealed that the witness list was "surprisingly long," and on the next day during the hearing itself, none of the major parties involved in the case were even in attendance: the Pirates brass was with their team in Houston, Scott Boras was in his Southern California office, and Alvarez was working out with his former teammates at Vanderbilt. In fact, only two people even testified last week; Commissioner Bud Selig, and Dan Halem, Major League Baseball's number two labor lawyer, who didn't even finish his time on the stand. Now we know that the next days (note the plural) for the hearing will take place on September 23 and 24, and both sides are already talking about Das' October calendar, since we won't be nearly done after those next two meetings.

In other words, kick up your feet and grab some popcorn, because this might take awhile. These developments have led to a number of phonecalls and e-mails asking me what's going on. What has happened to a case that looked on the surface to be a simple matter of MLB going against the rules of the collective bargaining agreement? Discussions with multiple sources close to both sides of the table have revealed that we're no longer talking about a simple rule infraction; we're now talking about a conspiracy.

As one source surmised, the union is going "all-out" on this issue, and will attempt to prove that not only did MLB break the rules of the current collective bargaining agreement, but that teams like the Pirates joined with MLB in a conspiracy to break the rules with malice and forethought, and thus deserve a significantly stronger penalty than they've received in the past. This could include what is becoming an ever-growing range of possibilities, including free agency for the players involved, a public apology and admittance of guilt from Selig himself (one source joked that, "Selig would probably rather make Alvarez a free agent than do that"), as well as the possibility of Pittsburgh forfeiting any compensation pick they might expect for losing Alvarez should the arbitrator rule that he goes back into the draft next year. Two key points to the union's argument could be:

1. We've Been Here Before, And To No Avail. Because we have been. On multiple occasions, MLB has been brought in front of an arbitrator due to the draft. Time and time again, the arbitrator has ruled in favor of the union, and at the same time has provided little or no real remedy to the situation, other than repeated stern warnings to not do it again. Yet, they did do it again, and the union will argue that the teams, in conjunction with MLB, decided to go this extension route with full knowledge that they were in violation of the CBA, and that they didn't care, as the arbitrator's response to such action in the past has been little more than a slap on the wrist. In other words, the crime was pre-meditated because when weighed against the expected punishment, it would be well worth it. One goal here is to anger the arbitrator, and to show that MLB has no respect for his judgment or for the process-and as anyone who has been through a legal proceeding knows, you do not want to be on the wrong side of a judge who feels that she or he is not receiving proper respect.

2. The Concept Of 'Best Interests Of All Parties' Is A Farce. MLB has all but admitted to providing extensions in this year's draft, but they have argued that doing so was in the best interest of both sides. On the surface that makes sense: it's good for the team to sign their draft picks, it's good for the player to get his career going, and it's good for MLB to add more talent to the pool. However, the union will argue that there are a pair of key issues in the granting of an extension that proves that such an action was not in the best interest of the union.

  • If MLB was so convinced that granting extensions was an innocent act in the best interests of all parties, why did they at no time call the MLBPA and inform them of the decision? If it was such a no-brainer, the union would have surely agreed to it, correct? Wrong, as the union understands that extensions add imbalance to negotiations once the deadline becomes a moving target with only one side having real knowledge of when that new deadline expires, and only one side having the ability to get such extensions in the first place.

  • The second that the extensions were granted, MLB took the right of representation away from the players. Agents are not part of the union, but they are certified by them, and that certification requires agents to follow the rules of collective bargaining in their dealings with a team. That means that technically they could not negotiate on behalf of their clients after midnight without breaking their own rules. Now what happened between the Pirates, Boras ,and Alvarez, only those three parties truly know, but the union has a pretty compelling case on this issue, and there is little argument that Pedro Alvarez agreed to the deal, and that the Pirates were no longer talking to Boras (who was with Alvarez in his California office) when the deal was agreed upon.

Another open question involves the connectedness of other players, primarily number three overall pick Eric Hosmer. Stories here differ, as some believe that the union will claim that Hosmer agreed to terms before the deadline, but that the deal was not communicated until after the deadline, while other versions of Hosmer's night point to him signing well after the deadline. MLB will stick to that side of the story in order to provide the linkage. While Alvarez has been placed on the restricted list, Hosmer's status within MLB's eBIS information system is "pending active," which is normally reserved for players who have agreed to terms but have not had their contract approved by the commissioner's office.

There has also been some mention of Julio Borbon, a Rangers farmhand who was a supplemental first-round pick in 2007. Initial reports had him going unsigned at last year's deadline until the next afternoon, when it was revealed that he had signed a major league deal worth $1.3 million. Discussions with multiple sources from both sides of the fence have this one likely not being germane to the case, as it seems somewhat clear that Borbon at least agreed to terms before the midnight deadline, and that any delay from then on was a matter of miscommunications. Multiple sources have complained that the Memorandum of Understanding-which detailed the new draft rules that began in 2007-does not have any specificity as to manner of communicating agreements. The union complains that it's a one-sided aspect of the system that is only between teams and MLB, with the MLBPA shut out of the process.

We'll know more about the constantly changing angles in this case following the two days of hearings next week, but it seems that from most perspectives the case is becoming far more complex, rather than simpler, as it goes on. At one point, it was hoped that we'd have a quick resolution to this issue, but now both sides are merely hoping for this to be worked out by the time we flip the calendars in three and a half months.

As it stands right now, even that seems a bit optimistic.

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

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22 comments have been left for this article. (Click to hide comments)

BP Comment Quick Links

Jeff Cain

Great continuing coverage. Nit: It's Dan Halem not Hamel.

Sep 16, 2008 09:22 AM
rating: 0
 
BP staff member Kevin Goldstein
BP staff

That's fixed. I'd I'm glad your enjoying the coverage.

Sep 16, 2008 09:52 AM
 
billm21

Excellent coverage, as usual, Kevin. This one is going to get ugly before it's resolved. It certainly looks like the union and/or Boras are trying to get sweeping changes to the whole system, perhaps including abolition of the draft altogether.

One now has to wonder whether Alvarez knew what he was getting into when he refused to sign his contract. If the resolution of this case results in some major change to the rules of baseball, it will forever be linked to his name similar to free agency being connected to Curt Flood. Flood willingly sacrificed his career for what he believed to be the greater good. While it's not the same situation with Alvarez, who will likely be back on the field next year with some team and have a long career, his name will forever be connected to whatever changes result from this case ... for better or for worse. One wonders if that's what he really wanted when he agreed to this course of action.

Sep 16, 2008 09:52 AM
rating: 1
 
BP staff member Kevin Goldstein
BP staff

It's a really interesting question. I don't know if Alvarez and Boras engaged in a conspiracy themselves to agree and then unagree. It's possible, but I think it's more likely that somewhere between agreeing and not signing, Boras convinced his client that he could get him more money. I'm not sure they're going for sweeping changes, I think the union more FINALLY wants some real punishment for MLB's continual disregard for the draft rules.

Sep 16, 2008 13:22 PM
 
Evan
(47)

This is great coverage, and the entire episode is hilarious.

MLB is the last big sport to have a strong union for its players. The NHLPA buckled during their recent strike. The NFLPA was broken badly and is now effectively useless. (I don't know anything about the NBA)

The MLBPA built up a lot of political capital in agreeing to all those changes to drug testing, and now they're calling in that favour. Good for them.

Sep 16, 2008 10:14 AM
rating: 0
 
mymrbig

Wow, declaring Alvarez a FA or sticking him into the 2009 draft pool, and then not giving the Pirates a compensation pick would royally screw the Pirates. Seems like the Arbitrator should fine MLB or something, rather than screw an individual team. Hell, who cares if the Pirates, Royals, or anyone else requests an extension? MLB was the party who granted the extension. And how does anyone know that MLB would not have granted an extension if asked by a player or a player's advisor?

I fully support the idea of a firm deadline with no extensions and I think MLB should probably receive some kind of punishment (I don't know what). But I don't think the punishment should be levied against a single team unless there is some pretty damning evidence against that team.

Sep 16, 2008 10:21 AM
rating: 0
 
Yankfan21

I have been of the mind for some time now that Boras's ultimate goal was to further weaken the draft structure with this stunt. And to be honest, it would definitly be in the best interests of the draftees to have the draft weakened or eliminated.

I do not buy into the idea that eliminating the draft would mean the Yankees, Red Sox and Tigers would hog all the best talent up while other teams would get no one. That does not happen now in either free agency or the international signees market. Otherwise Inoa, Rafael Rodriguez, Juan Duran, etc... would all be Yankees.

In this system, guys like Smoak and Alvarez would command much higher salaries - possibly in the 12 - 12 million range (or more). Even a team like the Yankees or the Tigers or Sox could only sign so many unproven talents to big ticket deals like this. And even now, it is not as if the drarft stops teams from grabbing high talent guys later on for more money - See Porcello, Rick, Melville, Tim and a host of others.

IF anything good is to come of this - let's see if Boras can use it to break the draft and put an end to the farce that it has become.

Sep 16, 2008 11:27 AM
rating: 0
 
kcboomer
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I think we all know that BP never heard of a Union grievance they didn't think came from On High Itself. This grievance has nothing to do with draft. It is all about power. They got their noses rubbed in the dirt over the PED's thing and are simply looking for some payback.

How about a simple solution like:

1) Pedro either signs the contract or goes back into the 2009 pool. All other contracts are considered as acceptable.

2) MLB pays $2M into a charity of the Union's choosing.

3) Change the reporting procedure to include notification of MLBPA of an agreed upon contract. They can then be the monitors of the deadline.

Sep 16, 2008 11:43 AM
rating: -4
 
chico123

“The second that the extensions were granted, MLB took the right of representation away from the players.”

Agents are “Advisors”. Draftees are not a part of the Union. Scott Boras may have no legal right to act on Pedro Alvarez’s behalf. It is semantics but IF true, it damages the Union’s likely call for a heavy penalty.

Sep 16, 2008 12:19 PM
rating: 0
 
BP staff member Joe Sheehan
BP staff
(17)

The use of "advisors" is a means of working around the NCAA's rules, which call for a player to lose his eligibility if he hires an agent. Because god forbid a 20-year-old get professional advice about which collusive, greedy, disingenuous, manipulative, labor-exploiting entity he chooses to work for. The NCAA makes MLB look like Google.

IOW, the semantics are there to benefit the player. MLB has no issues with players having advisors, and deals with agents where players just go ahead and hire them. It's the NCAA--which is a diseased organization--that forces the play-acting.

Sep 16, 2008 12:40 PM
 

Can we stop calling every controversy ____-gate? It really only applied in one instance (the actual Watergate scandal) and is vastly overused and unoriginal now...but great article anyway.

Yanksfan21: Although the big market teams didn't capture Inoa, Rafael Rodriguez, and Juan Duran, they are able to sign international prospects in much larger quantities. A team like the A's may land a major international prospect, but teams like the Red Sox and Yankees land more. And at the age of 16, its really to tell what they are going to become, so I would say quantity, at that point in their careers, is better than quality (not to say the Red Sox/Yankees international prospects are not quality).

Sep 16, 2008 12:29 PM
rating: 0
 
James Martin Cole

The Red Sox did not sign many international prospects this year.

This is exactly what people said about free agency, and parity has increased, not decreased in the free agency era.

Sep 19, 2008 13:36 PM
rating: 0
 
Patton1941

I still fail to see a legal rationale for declaring Alvarez a free agent even if a conspiracy is proven. Unless is can be proven that the Pirates had no intention of ever signing Alvarez AND it is also illegal or in violation of the CBA for a team to draft a player with no intention of signing him, then he should go back into the draft pool just like all the other unsigned draftees. Based on Kevin's article, it appears the conspiracy is MLB abetting the Pirates to sign Alvarez beyond the agreed upon deadline. Since Alvarez would have returned to the draft had no extension been given and the agreement not been signed, it seems logical that he returns to the draft. Since the Pirates are precluded from drafting him again, awarding Alvarez free agency to punish a conspiracy makes no sense. Fining MLB and the Pirates and/or taking away their compensatory pick is a more appropriate remedy for conspiracy.

Sep 16, 2008 13:08 PM
rating: 0
 
Bob Wagner

So the rich get richer and the poor get poorer. I guess since it's alright for Borbon and Hosmer to keep their deals even though they went past the deadline, let's stick it to the Pirates, since they don't actually have ink on a contract. Three wrongs don't make a right.

It's supposedly a conspiracy when Alvarez MIGHT have gone past the deadline before agreeing, but it's not a conspiracy when Hosmer and Borbon did...yet it's the same agent. Something's rotten in Denmark...and it's just a question of who is more to blame...Boras or Selig.

Punishing ONLY the Pirates doesn't make sense, and eliminates all sense of fairness.

Sep 16, 2008 13:44 PM
rating: 0
 
gluckschmerz

As the late great Myron Cope would say, "Yoi! And Double Yoi!!"

It sure is tough being a baseball fan in Pittsburgh. Sigh...

Sep 16, 2008 15:36 PM
rating: 0
 
PeterBNYC

Emperor's New Clothes Meme: Sorry, friends, no one covered themselves with glory here. Alvarez, it seems to me, was poorly (if not atrociously) "advised" by Mr. Boras, if Boras, without Alvarez's knowledge or awareness, was using Alvarez to break the system. MLBPA is breaking lances on behalf of a guy who is not (yet?) a union member! Is this the triumph of altruism? I think not. My greatest surprise is that the Pirates, an organization that really can't afford this sort of stuff, and represented by a chief executive who supposedly really, really knows his way around MLB Rules, "conspires" to break them? Or maybe not? The explanation that works for me: all these heavy hitters decided to be careless about the rules, thinking they could do so with impunity, until one of them, Mr. Boras, decided his competitive advantage was in (or that he had nothing to lose by) blowing the whistle on (himself and) his client. Sad that Alvarez's career will be affected by this- does anyone out there really think it's to his advantage to miss a year (my estimate) or more of development in the high minors while this sorts itself out? And will an eventual deal make Alvarez whole? Last I remember how it works, Alvarez (or his "advisor") have succeeded in pushing out a year further his salary arbitration and free agency years. What a cluster____k.

Sep 16, 2008 16:09 PM
rating: 0
 
chico123

Joe, I agree with your comments. I think MLB will use the semantics to their advantage. If MLB wants they could gain leverage v the draftees by exploiting the NCAA's rules.

Sep 16, 2008 16:14 PM
rating: 0
 
bwebb23

"there is little argument that Pedro Alvarez agreed to the deal, and that the Pirates were no longer talking to Boras (who was with Alvarez in his California office) when the deal was agreed upon."

If this is true, doesn't it seem like Boras had this plan in mind from the beginning? It seems very unlikely Boras would bow out of the negotiations at the very end because of the governing rules of the CBA. I can't see him being in the office and stating "It's 12am, I can no longer talk here." Sure seems like if he did this he knew this would be the road he would take. If so, well played.

Sep 16, 2008 16:47 PM
rating: 0
 
wtmiller

This another claim I don't really understand. The Pirates, according to the union, called Boras on his cell phone. How exactly were he and Alvarez supposed to be both on the phone when Alvarez expressed his agreement. And by all accounts this all happened in the space of something like 4-5 minutes. It's a stretch under the circumstances to say the Pirates "were no longer talking to Boras" when the time frame is so short. And is the union claiming that Boras actually informed the Pirates he could no longer talk to them, or informed Alvarez he could no longer represent him in the negotiations, or did Boras just silently withdraw himself? How believable is that?

Sep 16, 2008 17:27 PM
rating: 0
 
wtmiller

Kevin --

I'm curious about the basis for the statement that MLB has "time and time again" committed violations relating to the draft and has been slapped on the wrist. I only know of three cases. One was the Drew indy ball case where MLB changed the rules unilaterally and after the fact, and got a slap on the wrist. One was the Drew wrong address case, which MLB won. And one was the case where some teams failed to mail out contracts, which was clearly nothing more than a screwup by several teams and resulted in a lot more than a slap on the wrist, given that some of the players became free agents.

I realize there are probably labor disputes all the time that fly under the radar. Have there been other cases?

Sep 16, 2008 16:56 PM
rating: 0
 
chunkstyle

Isn't there a reasonable solution here?

1. As deadline extensions should be beneficial to both sides of the negotiation, make the process of granting an extension regulated and transparent to both sides. Since both sides would surely want this, they should be able to hammer out the details.

2. Grant Alvarez and the Pirates an extension to re-open negotiation. This may not seem to be in the Pirates' best interest, but it sure beats making him a free agent or facing alternative punishments, and it would allow them to mend the fences with Alvarez.

3. Any punishing of MLB to be done should be limited to something that either doesn't affect draftees (a fine?) or benefits them somewhat (increase minimum salary, or enhance basic contract in some way)

Both sides benefit here, with the particular parties emerging in a positive manner, while MLB and MLBPA strengthening a deadline process that, frankly, sounds a bit ham-fisted, and in such a manner that will accomodate both sides in future years.

Sep 17, 2008 03:59 AM
rating: 0
 
billm21

This may sound a little crazy, but if I was running the Pirates organization I would privately be wishing that Alvarez be put back into the draft pool and that I would instead receive the compensatory pick for next year's draft. Whether right or wrong, Alvarez is going to forever be known as the player who said yes to a contract and then reneged on it. It's going to be a tough sell to change that image in Pittsburgh. In addition, by the time you get him on the field next spring, he will be nearly a year removed from any high level competition and, assuming that he last played summer ball between his sophomore and junior years, almost two years since he hit regularly with wood bats in meaningful games. Don't forget that he missed a big chunk of his junior season with a hamate injury. By the time this mess gets straightened out and he reports to spring training next year, Alvarez will have played only 40 games in a year and a half. You might say that he's still a sure thing, but there are no "sure things" in baseball. (If so, then Ruben Rivera would be into his second decade as an all-star center fielder for the Yankees instead of playing in the Mexican League and Rick Ankiel would already have 3 or 4 Cy Young trophies on his shelf instead of having to revive his career as a hitter). We don't know what effect the time away from the game will have on Alvarez --- probably very little or none at all. But I don't know that I would want to hand $6M or more to Alvarez at this point. To me, he becomes riskier every day that he isn't playing baseball.

Sep 17, 2008 08:44 AM
rating: 0
 
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