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Home Pete Toms LWIB: MLB, MLBPA Continue to Dance Over Collusion

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LWIB: MLB, MLBPA Continue to Dance Over Collusion PDF Print E-mail
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Pete Toms Article Archive
Written by Pete Toms   
Sunday, 15 November 2009 20:57

Last Week in Bizball by Pete Toms

This week in LWIB, the longstanding mistrust between MLB and the MLBPA over “collusion” surfaces again.

LWIB, the incoming executive director of the MLBPA Michael Weiner, chose to make some timely and very high profile comments suggesting that the MLB owners are conspiring to “depress” compensation for this off season’s crop of free agents. Is the next battle in the quarter century war over “collusion” in MLB about to waged? Jerry Crasnick reported for ESPN

Although Weiner declined to use the word "collusion," his comments hint at an orchestrated effort by club officials and are the latest salvo in a tug-of-war between players and teams that was heightened during a slow-developing free-agent market last winter.

"I don't think it's an accident that in recent weeks, management officials, without attribution, have been making predictions about what's going to happen in this year's free-agent market," Weiner said. "There have been predictions about the [money] players will get, what players will be offered [salary] arbitration and what players will be non-tendered [contracts].

"If we could prove there was a plan by management to use the press to try to depress free-agent salaries, in our view that would be a violation of our contract," he said.

Those remarks concerning a possible concerted effort amongst the owners to limit the compensation awarded free agents this off season were not the first that Mr. Weiner has made in the press on the subject. During the World Series, Nick Cafardo of The Boston Globe published similar remarks from Mr. Weiner. Mr. Cafardo characterized Mr. Weiner’s stance on the matter;

Incoming Players Association executive director Michael Weiner said the union will closely monitor offseason transactions to see whether collusion among teams to hold down free agent signings is alive, as several established players settled for short-term deals last offseason.

Mr. Weiner will officially succeed outgoing MLBPA executve director Donald Fehr next month. The timing of Mr. Weiner’s public remarks is likely not coincidental. There have been a series of media reports that many player agents have been pressuring the MLBPA since last off season to file a collusion grievance against the owners. The Associated Press reported in July;

As Michael Weiner prepares to take over from Donald Fehr as head of the players' association, several agents said they are pushing the union to file a collusion grievance against teams over their behavior during the free-agent market last winter.

AND

The decision on whether to go ahead with a grievance will be one of the first major decisions for the players' association since Fehr announced his pending retirement last month and its executive board recommended Weiner, the union's general counsel, for the top job.

When the subject of “collusion” in MLB is raised, it is most often associated with the era of the mid 80’s, ending in a 1990 settlement which awarded the players $280 million. The labour peace in MLB of the last 15 years has perhaps left the impression that “collusion” is a relic of that previous era of fractious labour relations. But suspicions and allegations of “collusion” by the MLBPA have been a staple of labour relations throughout this decade. In fact, a collusion settlement was negotiated in the last round of CBA negotiations. Sports Law Professor Marc Edelman published a paper in 2008, “Moving Past Collusion in Major League Baseball: Healing Old Wounds and Preventing New Ones" - PDF.

Coming on the heels of Baseball’s new and promising collective bargaining agreement, the 2002-03 off-season brought the first new allegations of collusion in Baseball since 1988-89. These new allegations claimed that, much like in 1987-88, MLB club-owners again concertedly submitted identical bids for certain free agent players.

Although the MLBPA never made any of its evidence publicly available, independent information compiled from newspaper reports seems to indicate that certain players were receiving identical bids from multiple teams. Although the 2002-03 off-seasons did not seem to produce any “smoking gun” invitation to collude, there were plenty of troublesome statements-such as those made by owners and staff of the Atlanta Braves, Boston Red Sox, Los Angeles Dodgers, and New York Mets about the need to reduce payroll throughout the league. In addition, Commissioner Selig suggested the need for payrolls to fall throughout Baseball.

Ultimately, on October 24, 2006, in conjunction with signing Baseball’s current Basic Agreement, MLB club-owners settled the Collusion IV grievances by paying $12 million in damages to the MLBPA. The parties reached this settlement without an arbitration hearing. Therefore, unlike in Collusion I, II, & III, Collusion IV produced no formal finding of fault.

(Editors note: Also see Collusion I, II, and III (a hard lesson learned) from Rob Neyer's Big Book of Baseball Blunders)

Select Read More to see the rest of the latest Last Week in Bizball

The 2007-08 off season saw the MLBPA accuse the owners of colluding against free agent Barry Bonds, who did not receive a single contract offer after posting an OPS of 1.045 in his last season. The aforementioned Marc Edelman wrote at The Sports Law Blog in July:

With respect to the game's newest collusion allegations, concern of such behavior first surfaced during the 2007-08 off-season when Bonds's agent Jeff Borris announced that he believed the reason why Bonds did not have a single contract offer was collusion. After reviewing the available evidence, the MLBPA announced in October 2008 that it had made a preliminary finding of collusion. However, rather than file a traditional labor grievance against the MLB club-owners, the union instead attempted to resolve the matter through private negotiation.

Last month, Ronald Blum reported for The Associated Press that the allegations over “Bonds” remain unresolved.

….players and owners have had an agreement since last year extending the deadline to file a collusion grievance over the lack of offers to Barry Bonds after the 2007 season. That deal says the union has until after the end of Bonds' criminal trial to file a grievance.

In the aforementioned blog entry from Professor Edelman, he notes that the MLBPA might be motivated to file a collusion grievance over “Bonds” in order to protect themselves from their own (former) union member.

While the MLBPA has broad discretion to determine when, if at all, to file a formal collusion grievance, like any union, it is bound by its duty of fair representation. This means that the MLBPA cannot act in an arbitrary, discriminatory, or bad-faith manner against any of its members. Union membership includes even those who have opted out of joint licensing programs, such as Barry Bonds.

Refusing to file a collusion grievance, even after reaching a informal finding of wrongdoing, might place the MLBPA at some risk of facing a claim from Bonds for breach of the duty of fair representation. This risk, in essence, might eventually pressure the MLBPA to file a collusion grievance, presuming their talks with the MLB club-owners do not reduce union concerns of wrongdoing. For these reasons, I fully expect the MLBPA to begin more aggressively addressing these recent concerns of collusion.

Allegations of “collusion” in last off season’s free agent market also remain unresolved. From the aforementioned report last month from Ronald Blum:

Players and owners have agreed to push back the deadline for a collusion grievance over last winter's free agents until the end of this offseason.

Agents for players have been asking the union for several months to file a grievance.

"It preserves the players' claims, and the commissioner's office hasn't admitted any wrongdoing," union general counsel Michael Weiner said Tuesday. "I would characterize this as a standstill agreement."

The relatively “soft” free agent market of last off season was widely attributed to the clubs’ uncertainty over their projected revenues for 2009 and beyond. However, player agents making accusations of “collusion” argue that this trend is more established, that free agents have met diminished demand since the 2006-07 off season. As for last off season, some player agents are suspicious that not all of what transpired in the free agent market can be explained by owners’ concerns about the economy. Jerry Crasnick wrote in his aforementioned piece of last week, “Numerous agents complained privately about players receiving the exact same offer from several clubs, prompting the union to consider filing a collusion grievance.” And from the aforementioned Associated Press report from July:

"There are too many things that need to be explained," said Seth Levinson, who represented nearly a dozen free agents following the 2008 season. "In my experience, there are no coincidences in a monopoly."

This off season, owners’ concerns about the future financial prospects of their franchises might meet with increased scepticism. Despite legitimate fears over the impact the recession would have on the 2009 season, in the end, industry revenues were flat. (According to MLB COO Bob DuPuy) Recently, Fitch Ratings released a positive report on the state of MLB and The Sports Business Journal reported that MLB will soon renew it’s “credit facility” after failing to do so at the same point last year. If the diminished demand for free agents continues this off season, will the “it’s the economy, stupid” argument be viewed as credibly as it was last off season?

Adam Rubin of the New York Daily News, reported LWIB on comments made by player agent Scott Boras during the General Manager’s meetings in Chicago

Boras chastised owners of some teams for pocketing revenue distributed through MLB that the agent labeled at $80 million per club. He accused the owners of financing the purchases of their teams by pocketing that money rather than investing it in players. He also suggested MLB is rolling in cash, even if teams are crying poverty.

"I would say, based upon their 'bad economy' forecasts from last year, I would not invest in their stock choices," Boras said.

If the owners are, or have been in recent years, colluding to control salaries for free agents, will their conspiracy be more difficult to prove than was the case in the late 1980’s?  David Pinto reacted to Michael Weiner’s recent comments:

It strikes me that MLB has learned to walk the fine line between compliance with the CBA and collusion. Weiner is trying to trying to knock them off the line, but he’s going to have a tough job of doing so. I don’t think anyone is going to leave the smoking gun statement that Peter Ueberroth did in the 1980s.

The “smoking gun statement” that Mr. Pinto refers to is then commissioner Ueberroth’s private address to the owners in October of 1985. In his book “May the Best Team Win, Baseball

Economics and Public Policy”, author Andrew Zimbalist wrote that during that owners meeting, the commissioner “reportedly scolded them for overspending on mediocre free agents.” During that same meeting, Mr. Zimbalist wrote that:

Lee MacPhail, director of the owners’ Players Relations Committee, delivered a speech arguing that players with contracts of three years and more spent nearly 50 percent more time on the disabled list than those with one-year contracts and that the average player with a three-year contract or more experienced a nearly twenty-point decline in his batting average after signing the contract.

The ultimately failed attempts of the owners to “collude” in the mid 1980’s also included, at one point, a very structured and formal approach. In his comprehensive retrospective on the history of MLB labour relations from the formation of the MLBPA in 1965 to the strike of 1994, John Helyar wrote in “Lords of the Realm”;

It was called the Information Bank, and it was simplicity itself. A club making an offer to a free agent reported it to the PRC. That was called an information “deposit”. A club wanting to know what others bid for a free agent could call the PRC and make an information “withdrawal.”

The idea was to stimulate the market enough to blunt charges of collusion, while at the same time keeping a rein on the market. The signal was clear: Okay, guys, you can bid now. But don’t top the other guy’s offer by much.”

As Mr. Pinto alluded to, if there is a collective approach within MLB to controlling free agent compensation, the approach is more subtle than that used in the 1980s. Last November, former Federal Reserve chairman Paul Volker (former “Blue Ribbon” panel member also) addressed a meeting of the MLB owners to discuss the state of the economy. At the time, Barry Bloom reported for MLB.com, “Selig declined to elaborate on Volcker's remarks, but he said a message had obviously been sent to the owners.” The absence of offers to free agent Barry Bonds was not the only development during the 2007 off season to cause consternation amongst the players side. Again from Marc Edelman’s aforementioned paper, “Moving Past Collusion in Major League Baseball: Healing Old Wounds and Preventing New Ones."

…Selig allowed MLB clubs’ general managers to meet with one another and discuss their 2007 off-season rosters plans by openly stating what players they were making available for trade. This marked a substantial change from the past practice at General Manager Meetings.

The idea of club general managers openly discussing personnel plans was first suggested by General Manager Meetings co-chais Theo Epstein and Larry Bienfest as a way to create more dialogue and stimulate trades. The MLB clubs, however, never informed the MLBPA in advance about these activities, nor was the MLBPA invited to send counsel to police them.

Record industry revenues have resulted in extended labour peace in MLB. If the next CBA (the current one expires in December 2011) can be negotiated without labour interruption, commissioner Selig might rightfully claim that improved labour relations is his greatest legacy.

However, with unresolved allegations of “collusion” the past two off-seasons, and a strong likelihood of another this off season, there is potential for a return to more divisive relations. Mistrust between the two sides arising from the collusion settlements of the 1980s has never subsided. Outgoing MLBPA executive director Donald Fehr (who will remain one of the most important participants in the next CBA negotiations) is believed to still harbour bitter resentment toward commissioner Selig over the collusion wars of the 1980s. Mr. Fehr’s successor, Mr. Weiner, is also a veteran of the collusion era, joining the MLBPA in 1988. Mr. Fehr and Mr. Weiner will never forget that arbitrator George Nicolau (one of two arbitrators to rule in favour of the MLBPA in the 80s collusion cases) identified commissioner Selig (then Milwaukee Brewers owner) as one of the most active owners in their attempts to manipulate the free agent market. Former commissioner Fay Vincent described commissioner Selig as one of the “ringleaders” of collusion. Commissioner Selig has never admitted to playing a role in the “collusion” of the 1980s and many owners and club officials of that era (including Mr. Ueberroth) have never been convinced that their activities were anything other than an attempt to operate MLB in a fiscally responsible manner.

At the same time, heading into his first CBA negotiation as executive director, Mr. Weiner needs to prove to the players and their agents that he will be as formidable a leader as his predecessor. As well, there is a growing constituency of veteran players in the MLBPA who have been openly critical of the diminished opportunities they meet in the free agent market while “rookie compensation” is escalating.

Whether there is or is not collusion in MLB, the issue is once again a point of contention in labour relations. And the history of labour relations in MLB informs us that if there is an issue capable of wrecking labour peace it is collusion.


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