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.