Friday, January 2, 2009

More reader mail: The "C' Word

More reader mail, via Shysterball, so that's doubly good. Though this is more of a guest posting and the last time we did a guest post call, I asked for a donation to a charity. I'll contact the author Jay Gargiulo of the newly-formed FackYouk blog to see if he'd be interested in doing something. His blog is brand-spankin' new so in honor of my blog's first birthday, I granted Jay his wish. Particularly since he's chatting about the Dreaded "C" Word.

UPDATE: Jay just made a donation to the American Cancer Society. Big props for Jay and his blog team at FackYouk!


The word "collusion" gets thrown around a lot in baseball circles, most recently in reference to this gentleman, and shortly before that, this guy and as Joe said in the comments it's only a matter of time before it's said in conjunction with Manny. In all three cases, I would tend to take things at face value and conclude that these are 30 teams all acting rationally and coming to the same conclusions.

An interesting fact that I was unaware of: It was Sandy Koufax and Don Drysdale who created the need for these regulations by demanding joint negotiations with the Dodgers prior to the 1966 season (Wikipedia). As a result of the leverage provided by these transparent negotiations, the two pitchers received the two largest contracts in baseball history at the time. The owners were obviously none too pleased, and wanted to ensure this was not allowed to happen again.

In 1968, when Marvin Miller negotiated the first Collective Bargaining Agreement, he ensured that the owners were not allowed to collude either. The final language in the CBA reads "Players shall not act in concert with other Players and Clubs shall not act in concert with other Clubs."

According to Roger I. Abrams in his book Legal Bases, the owners didn't see how this restriction could ever apply to them. They were wrong. In the age of free agency, players gained the upper hand and were now able to negotiate with all other teams, and the resulting competition drove salaries upward, theoretically.

In 1986, a year when only four free agents switched teams and free agent salaries declined by 16%, the Player's Association filed a grievance against the owners, claiming that they had been acting together so as not to bid for each others players. The arbitration process consisted of 32 days of hearings spread out over almost a year, and in the end Arbitrator Tom Roberts ruled in favor of the players. Again according to Legal Bases, the rationale was that:

"Reaching a formal agreement was only one of many ways for two or more parties to act in concert. Some 'common scheme or plan' would be sufficient to provide a violation of that parties' bargain."
Which makes me think back to this. Remember when Bud Selig had ex-Federal Reserve Chairman Paul Volcker speak to owners and executives of all 30 teams in November?

For roughly 45 minutes. According to several people who attended the meeting, Volcker discussed what led to the current economic plight and where things might be headed. His assessment was not upbeat, the attendees said.

At the end of his presentation, Volcker took several questions from owners and officials but did not specifically address how the economy could affect the 30 teams, big market and small, in the months to come.

Those who spoke about Volcker's remarks did so on the condition of anonymity because they did not want to be linked to the public discussion of a private meeting.
The off-season was already under way, but basically no free agent signings had occurred yet. On a certain level, you have to think that Selig knew that Volcker's assessment wasn't going to be "upbeat". They certainly must have spoken recently about the state of the economy before Selig asked him to address the owners.

Selig said he first broached the idea of having Volcker address the owners when he saw him at a World Series game last month.

You think they might have had some sort of a discussion about the economy when they ran into each other at the World Series? The World Series obviously took place in October, a month when the market posted triple digit fluctuations in 20 out of 23 days of trading. If Selig respected Volcker's opinion enough to have him address the franchise owners of his mega-billion dollar corporation, then he would surely have sought some expert insight in such turbulent financial times. Men of much smaller intellects and bank accounts were discussing the economy at that time. It was the most important and prevalent conversation echoing throughout the country and had been since the Lehman bankruptcy over a month before.

So what I'm getting at is... doesn't that sound like "acting in concert" or at least promoting or encouraging "a common scheme or plan"? Not surprisingly, neither Selig or Volcker have commented on the what was said during the 45 minute address. Even if Volcker didn't "specifically address how the economy could affect the 30 teams", doesn't this at least create the appearance of impropriety?

Maybe teams would have come to the same conclusions and almost universally ratcheted down spending (save for the Yankees, who have historically taken their own stance against the MLB). But if you were an executive or owner, wouldn't you be more reluctant to spend after hearing a pessimistic assessment of the economy from an ex-Federal Reserve Chairman who had "warned against the credit collapse for several years"?


Jay said...

If anyone is interested, here is a follow up to this post that cites a few more sources and discusses the 2003 collusion case as well.

Hope you enjoyed the piece, and thanks again to Jason for putting it up.

Mark said...
This comment has been removed by the author.
Mark said...

Not sure I'm buying the basic premise there. It doesn't matter that it's just the Yankees doing this: you still have 2 of the biggest contracts ever being signed this winter, after Volcker's little chat with the owners. That's not really screaming collusion to me.

On the other hand, I remember reading an opinion once (I don't remember who, or when, sorry), that eventually all free agents were going to stratify into two levels, more or less: mega superstars, and everyone else; with mid-range contracts becoming increasingly less common.

The gist of that was that it's wiser to spend megabucks on a superstar who you know will help your team, rather then medium bucks on a pretty good player whom you hope will help. So is that what's happening here? I guess we'll know if the Yankees sign Manny and Adam Dunn too. :-)

Jay said...

Mark - That's an interesting point about free agent stratification. I would guess that's helped along by a weak economy in which the small and mid-market teams are hit pretty hard, and the big market teams really are not (yet). A few teams compete for the marquee FAs and get their fill, while the budget conscious bottom feeders are still picky about who they want to invest in.

Also, if you read the follow up post, I'm not demanding the collusion be investigated, but rather pointing out that Selig obviously knew the tenor of what Volcker was going to say, and that was the reason he had him speak. I think that part is fairly obvious, (in retrospect) and I think it's wrong.