Archive for Business

SCOTUS Rejects Appeals in MLB Antitrust Cases

In April, I discussed two then-pending cases before the U.S. Supreme Court challenging Major League Baseball’s long-standing exemption from antitrust law. Since that time, the Court had had the two appeals scheduled for consideration on three occasions, only to reschedule its deliberation each time. Although it wasn’t immediately clear why the Court was repeatedly postponing its consideration of the two appeals, this rather unusual delay raised the possibility that several of the justices were potentially interested in reconsidering baseball’s controversial antitrust exemption.

Despite any possible behind-the-scenes maneuvering, the delay ultimately proved to be for naught, as the Court announced on Monday that it was declining to hear either appeal, effectively ending the two cases. This means that MLB will continue to operate largely outside the scope of federal antitrust law for the foreseeable future.

As is normally the case, the Court did not explain on Monday why it was denying the two appeals. The Court did reveal one piece of potentially relevant information this morning, however, noting that Chief Justice Roberts recused himself from any consideration of the appeal in the Wyckoff v. Office of the Commissioner of Baseball case. It’s not at all clear why Chief Justice Roberts opted not to participate in the Court’s deliberation of the case.

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The Supreme Court, Sports Betting, and the Future

Back in March, I wrote about a pending case before the U.S. Supreme Court concerning the Professional and Amateur Sports Protection Act of 1992 (“PASPA”). PASPA is a federal law which makes sports betting illegal — or, more precisely, requires states to make sports betting illegal. The Supreme Court weighed in on Monday, and we have an answer.

From Justice Alito’s opinion:

The PASPA provision at issue here—prohibiting state authorization of sports gambling—violates the anticommandeering rule. That provision unequivocally dictates what a state legislature may and may not do. And this is true under either our interpretation or that advocated by respondents and the United States. In either event, state legislatures are put under the direct control of Congress. It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine.

This “anticommandeering” rule is what I mostly addressed back in March. Remember that the United States is, basically, 50 separate sovereign entities (the states) which ceded power to a unifying government (the federal government) for important matters — things like a military, a common currency, social-welfare programs. But the federal government has (in theory, anyway) limits on its power: it can only do what the Constitution says it can do. And the Constitution says that the federal government can’t order the states to pass, or not pass, laws. To the Supreme Court, telling the states they couldn’t legalize sports gambling was a bridge too far.

Perhaps most importantly, however, the Supreme Court went one step farther:

[W]e hold that no provision of PASPA is severable from the provision directly at issue in these cases.

Let me explain that. When the court declares a law unconstitutional, it is, in essence, nullifying that law. That’s a principle that goes back to a 19th-century case called Marbury v. Madison. But nullifying statutes is something courts typically do very reluctantly — and so they try, whenever possible, to separate the acceptable parts of laws from unconstitutional ones. In other words, a law with both a constitutional provision and unconstitutional provision would be split in two, with the unconstitutional part nullified and the other part remaining in effect. That’s called “severing” the law. But by saying PASPA wasn’t severable, the Court decided that all of PASPA is unconstitutional, and so all of PASPA is void. That’s actually a really big deal, because part of PASPA concerned prohibiting the advertising of sports gambling, and now that prohibition is gone.

Naturally, this has caused a variety of reactions.

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Mike Clevinger, Ben Zobrist, and When Shoes Aren’t Just Shoes

Mike Clevinger is a pretty great pitcher. He throws 94 mph. He’s cut his walk rate in half since last year. He’s been the best starter so far this season in one of the league’s best rotations.

Mike Clevinger also has pretty great shoes. They’re designed by by artist Jonathan Hrusovsky. Look at these things.

Ben Zobrist is a pretty great player himself. In his age-37 season, he’s recorded a batting line about 15% better than league average. He still plays multiple positions well. He’s the eighth-best player by WAR over the last decade.

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You Can’t Blame Tanking for the Lack of Competitive Teams

Tanking is a problem. Professional sports like baseball are built on the assumption that both sides are trying to win. Organizations putting forth less than their best efforts hurts the integrity of the sport and provides fans with little reason to engage. That said, the perception of tanking might have overtaken the reality of late. Competitive imbalance is not the same as tanking. Sometimes teams are just bad, even if they are trying not to be.

Tanking concerns are not new. Two years ago, just after the Astros and Cubs had turned their teams around, the Phillies were attempting to dismantle their roster by trading Cole Hamels. The Braves had traded multiple players away from a team that had been competitive. The Brewers, who traded away Carlos Gomez, would soon do the same with Jonathan Lucroy after he rebuilt his trade value.

The Braves, Brewers, and Phillies all sold off whatever assets they could. Two years later, though, those clubs aren’t mired in last place. Rather, they’re a combined 54-37 and projected to win around 80 games each this season in what figures to be a competitive year for each. While the Braves and Phillies could and/or should have done more this offseason to improve their rosters, neither resorted to an extreme level of failure, and the teams are better today than they would have been had they not rebuilt. While accusations of tanking dogged each, none of those clubs descended as far as either the Astros or Cubs. None came close to the NBA-style tank jobs many feared.

One might suspect that I’ve cherry-picked the three clubs mentioned above, purposely selecting teams with surprising early-season success to prop up a point about the relatively innocuous effects of tanking. That’s not what I’ve done, though. Rather, I’ve highlighted the three teams Buster Olney cited by name two years ago — and which Dave Cameron also addressed — in a piece on tanking.

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A Former Yankees Prospect on the Athletics Is Suing the White Sox

Lots of things went right last year in the Yankees’ run to the American League Championship Series.

This wasn’t one of them.

The player you see here is Dustin Fowler, who was making his major-league debut for the Yankees. Fowler, in a haunting echo of Moonlight Graham, never got to bat in that game; he had been due up in the top half of the second. Fowler suffered an open rupture of his patellar tendon on the play and required emergency surgery.

During his recovery, he was traded to the Athletics in the Sonny Gray deal.

How Fowler is expected to develop as a player in the wake of his injury is a worthy line of inquiry; however, it’s not the one I’ll pursue here. Rather, my interest is in the lawsuit that Fowler filed against the White Sox in the wake of his injury — a lawsuit that remains pending.

Fowler’s suit, on the surface, is pretty simple. Fowler has sued two parties — both Chicago White Sox, Ltd. (the limited partnership that owns the White Sox) and the Illinois Sports Facilities Authority (the Illinois government agency that actually owns Guaranteed Rate Field, where the White Sox play). The complaint alleges two counts, one against each Defendant, and sounds in both simple negligence and a peculiar creation of Illinois law known as “willful and wanton conduct.” Essentially, Fowler alleges that, although the wall into which he crashed was padded, an electrical box located there wasn’t.

Here’s the relevant passage:

Let’s start with the obvious question: whither the electrical box? It’s hard to tell from the video. A still image from the above provides some sense, but it’s also easy enough not to notice.

In fact, the Chicago Tribune reported after the game that video seemed to show Fowler missing the exposed electrical box, which is there to provide wifi to fans. Based on that video, the Tribune reported in the same story that no changes would be made to the stadium.

The Tribune, however, appears to have been a bit premature in their reporting. Later image seemed to suggest Fowler did make contact with the electrical box. (You can see the best ones via Newsday here.) The fact that the box is so hard to see — it’s designed to blend in with the wall — is actually part of Fowler’s lawsuit.

So we know the box is there, and that — it appears, at least — Fowler’s knee did impact it. So that leads to the second question: are the White Sox and the ISFA legally responsible?

Last year, Nathaniel Grow took an excellent look at workers’ compensation for professional athletes. Like in many states, Illinois has a law which says that, for the most part, you can’t sue your employer for an injury you suffer on the job. That’s the reason workers’ compensation exists. In Fowler’s case, though, while he is suing for an injury that occurred on the job, he is not suing his employer. As a result, this isn’t a workers’ compensation issue, and Fowler’s negligence claim isn’t barred on that basis.

Michael McCann did a nice run-through of Fowler’s suit back when it was first filed, and I encourage you to read it in full. But negligence law in torts is a lot more complicated than it might seem, and since I’m an Illinois lawyer, I figured I might examine this from a more local perspective. To establish negligence, a plaintiff generally has to plead and prove all of the following:

  1. The existence of a legal duty owed by the defendant to the plaintiff;
  2. The breach of that legal duty by the defendant;
  3. That the breach by the defendant caused an injury to the defendant; and
  4. That the injury is a real and cognizable harm.

Lawyers generally turn these elements into the shorthand of DBCH, which is short for duty, breach, causation, and harm. Illinois follows the traditional negligence standard, with those same four elements: “To state a cause of action for negligence, a plaintiff must plead the existence of a duty owed by the defendant to the plaintiff, a breach of that duty, an injury proximately caused by the breach, and damages.”

The tricky thing with negligence suits is twofold, though. First, you are basically punishing a defendant for what it did or didn’t do even though those actions weren’t intentional. That means that, every time you find for a plaintiff, you are necessarily saying the defendants have to undertake an obligation to protect people that otherwise wouldn’t exist. That, of course, has real social and economic costs, so courts tend to be wary of pushing the creation and application of legal duties too far. Second, because we’re talking about unintentional conduct here, there are a lot of defenses to negligence that don’t apply anywhere else in the law. These are things like contributory or comparative negligence (sometimes called comparative fault), assumption of the risk, and others which vary by state.

The first question, then, is whether the White Sox and ISFA owed a legal duty towards Fowler. In this case, there are two types of possible duties. (Actually, there are more, but we have limited space here.) There could be a “duty to warn.” That would mean anything from a sign down the right-field line saying “beware of box,” to actually telling Fowler about the box’s existence before the game, to just painting the box a bright shade of yellow so it stands out. On the other hand, there could be a “duty to protect” Fowler, with things like padding on the box or just the complete relocation of the box to somewhere outside the field of play.

Obviously, all of these points relate to the defendants, because the defendants are the ones with control over the box. That doesn’t always happen in negligence cases. What that means, though, is that a court will have to decide whether the law imposes a duty on ISFA and the White Sox either to warn players or protect them from hidden on-field hazards and — if so — how far that duty goes. Many states have accepted what’s called the “Learned Hand Rule” as the gold standard for whether to impose a duty on a defendant. Named for Judge Learned Hand (yes, that really was his name), the Learned Hand Rule uses what’s called “law and economics” to determine whether a duty should be imposed on a defendant. I personally think of the Learned Hand Rule as the “FanGraphs Method” of Negligence. Professor Doug Holden explains why:

This formula lists three factors:

1. Probability of harm (or likelihood of injury) and = P
2. Gravity of harm (or seriousness of injury) as weighed against = L (loss or liability)
3. Burden on defendant (or injury sacrificed) to take adequate precautions = B.

Therefore, if B < P x L, then you have unreasonable behavior. If you have unreasonable behavior, then there is a breach of duty.

This is a useful little algorithm for identifying breach of duty. In practice, however, judges don’t like to sit and calculate such variables like Learned Hand did. So somewhere along the line, the Learned Hand rule went from functioning as a mathematical calculation to serving as a guidepost to then becoming the rule that a party has a duty to all persons who could suffer a “reasonably foreseeable” harm as a result of the former’s actions.

Illinois follows that “reasonably foreseeable” standard. So, in this case, the question is whether it was reasonably foreseeable that a player like Fowler would injure himself on the electrical box. Given that much of the rest of the wall is padded, it’s clearly foreseeable that a player could be injured by colliding with an unpadded wall. By extension, it seems reasonably foreseeable that an unpadded box could also cause harm. Therefore a duty does exist to take adequate precaution. And theoretically, since the burden on the defendant is minimal — like spray-painting the box yellow or a few feet of padding — the Hand formula weighs in favor of Fowler, too.

Next is whether the ISFA and White Sox breached their legal duty to Fowler. To that point, we know they didn’t pad the box. We also have no reason to believe they warned Fowler, either. Of some relevance here perhaps is a doctrine in the law called “res ipsa loquitur.” Res ipsa loquitur basically means that if a defendant exercises exclusive control over an object — like an electrical box — and the object harms someone, the law presumes the defendant was negligent even in the absence of evidence of negligence. Here, I think there is that evidence of negligence, though: the existence of the padding elsewhere. Remember when we discussed protective netting that I explained the “voluntary undertaking doctrine”?

Here’s a refresher:

The Illinois Supreme Court, for example, explained in Nelson v. Union Wire Rope Corp. that, where a company voluntarily does something it wasn’t legally obligated to do, that company is liable for failing to do so reasonably. In some states (like Illinois, for instance), this is known as the voluntary undertaking doctrine.

If the ISFA and White Sox voluntarily undertook to protect fielders by padding the wall but didn’t pad the box, that’s negligence because they failed to complete the job reasonably.

Next are causation and harm. Did the box cause Fowler’s injuries? Well, the impact is what tore his knee open. I could talk about proximate cause and cause-in-fact, but we don’t really need to here. Because the injury was foreseeable and a direct result of an impact with the box, causation’s probably satisfied.

So what defenses do the ISFA and White Sox have? Their primary argument is probably going to be that they didn’t owe Fowler any duty. But in an Illinois court, that’s unlikely to hold water simply because Illinois courts have adopted the reasonable foreseeability standard. And they could argue that Fowler assumed the risk of being injured, but it’s hard to argue that running into things is part of baseball the way being hit by a pitch is. And they can’t argue that Fowler wasn’t injured, because even though he’s back and playing, his injury was very real, which in and of itself entitles him to damages under Illinois law.

So they tried something else. Shortly after Fowler filed his lawsuit, the ISFA and White Sox removed the case to federal court. The White Sox then moved to dismiss the case, arguing that it was preempted by the CBA. The White Sox invoked the Labor Management Relations Act (“LMRA”), a federal law stating (in Section 301) that federal courts, and federal law, govern all employment disputes where the rights of the parties have been collectively bargained. As the White Sox argue, “Plaintiff alleges that he was injured as a result of an incident that took place only because he was employed as a Major League Baseball Player pursuant to a highly regulated contractual employment relationship that specified all of the rights and duties of the respective parties – including with respect to Players health and safety.” Here, the White Sox point to Article XIII of the CBA, which governs players’ safety and health.

Here we return to the issue of “willful and wanton conduct” cited at the outset of this piece. In Illinois, under a case called Ziarko v. Soo Line Railroad, willful and wanton conduct represents something more severe than just negligence, but not so severe as intentional conduct. It’s akin to recklessness. And generally, in Illinois, you can’t disclaim willful and wanton conduct by contract. Moreover, Fowler argues, the CBA doesn’t actually cover situations like this, which means the CBA doesn’t preempt Fowler’s claims.

On that basis, Fowler wants the case sent back to state court.

This is one case where both sides appear to have strong arguments, and there’s ample case law going both ways. I tend to think Fowler has the better of the argument, but I don’t see this as being a clear-cut issue, particularly given the unusual set of facts. Many of the cases cited by both sides, like Stringer v. NFL, concerned situations where the player was injured by or on his own team’s facilities or lack of care. And even there, courts often split the proverbial baby, allowing some claims through and not others. The issue is currently being briefed, and Judge Gary Feinerman will rule sometime in June or July.

Meanwhile, Dustin Fowler hasn’t yet exhibited the form that made him a top prospect when he debuted last June. After a 138 wRC+ last year at Triple-A, he has just a 84 wRC+ for Oakland’s highest affiliate this year through 97 plate appearances. On the plus side, he’s already stolen five bases.


The Supreme Court Might Reconsider MLB’s Antitrust Exemption

Successfully suing Major League Baseball under federal antitrust law is no easy task. Not only does the league typically hire the best legal representation money can buy, but it is also the beneficiary of a unique, judicially-created antitrust exemption generally shielding it from liability under the Sherman Antitrust Act.

Nevertheless, an enterprising plaintiff every so often decides to try his or her luck at convincing a court to set aside baseball’s exemption and hold MLB liable for various, allegedly anticompetitive practices.

These challengers typically hope to overcome baseball’s antitrust exemption in either of two ways. Initially, the plaintiffs usually try to persuade the trial court that the exemption does not apply to whichever of MLB’s business practices is at issue in the case, asserting that the league’s legal protection should instead be narrowly construed.

And — as is the case more often than not — when that strategy fails to work, the plaintiff’s fallback plan is to hope to be able to convince the U.S. Supreme Court to overturn its prior decisions affirming the exemption and instead hold that MLB is no longer immune from legal challenge under the Sherman Act.

Two such cases contesting MLB’s antitrust exemption are currently before the Supreme Court, both of which have been covered here previously at FanGraphs during their earlier stages of litigation.

In the first case, Wyckoff v. Office of the Commissioner, two former scouts have accused MLB teams of illegally colluding to depress the market for the services of professional and amateur scouts. Meanwhile, the second case — Right Field Rooftops v. Chicago Cubs — involves a claim that the Cubs have unlawfully attempted to monopolize the market for watching their games in-person by purchasing a number of the formerly competing rooftop businesses operating across the street from Wrigley Field and also blocking the view of some of the remaining rooftops by installing new, expanded scoreboards.

In each case, the plaintiffs failed to convince the trial court to construe the league’s antitrust immunity narrowly, and now they must hope they can convince the Supreme Court to reconsider the nearly century-old exemption it first created back in 1922.

Unlike most previous challenges to the antitrust exemption, however, the Wyckoff and Rooftop plaintiffs are not necessarily asking the Supreme Court to directly overrule its prior decisions and strip MLB of its antitrust immunity. Instead, the parties are primarily urging the Court to take their respective cases to clarify just how broadly baseball’s exemption ought to apply.

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Would MLB Lose That Much Money in a 154-Game Season?

In 1961, the American League added two teams. To ensure that the 10 teams played an equal number of games against each other, the league moved from 154 games to 162, while the National League stayed put at 154. The following season, the National League followed suit, expanding both the number of teams and the number of games on the schedule. With the exception of strike seasons, the MLB schedule has remained at 162 games. The current setup has teams play 19 games against teams in their own division, with 66 games of the remaining games coming against the rest of the league, and 20 against interleague opponents. This year, more off days pushed up the start of baseball season. That early start coupled with horrendous weather has caused a large number of postponements, which has led to calls for a 154-game season. While I personally prefer the current schedule, a reduction in games is pretty doable.

First, let’s talk about a reason that shouldn’t be used as a justification to shorten the regular season: this year’s postponements. While postponements are drawing a lot of attention, we are likely dealing with a set of unique circumstances that won’t affect future seasons. The season did start a few days earlier than we’ve typically seen, but the biggest factor in all of these postponements isn’t the early start; it’s the bad weather. The number of postponements and cold weather games this season compared to past seasons suggests that this year’s weather is an anomaly unlikely to cause similar disruptions in future seasons. Cutting eight games from the schedule after more than 50 years because of somewhat unusual weather in one year seems unnecessary. If the goal is to move the season back to early April, a half-dozen Saturday day-night doubleheaders later in the summer would accomplish the same thing.

Players certainly seem like they would be willing to drop down to a 154-game schedule, as getting a few extra days off was an important negotiating point in the last round of collective bargaining with the owners. Removing eight games from the schedule would allow players the same number of days off they just bargained for and allow the league to start the season in early April instead of late March. From a pure feasibility standpoint, there is some merit to it, and it doesn’t seem like it would make a ton of difference to fans. The season would be about as long as it used to be; the handful of extra off days spread out over the course of six months wouldn’t make its presence deeply felt. The feel of a baseball season would hardly be impacted. The impediment, seemingly, would be money.

Over at The Athletic, Jayson Stark did some excellent reporting discussing the potential for a 154-game season. Particularly illuminating to me was the nugget that a vast majority of teams would be happy to drop down to an 154-game schedule. Stark did indicate that the minority of teams who would object to a shorter season would have very loud objections.

Stark estimated that a team like the Yankees might lose more than $10 million in gate and concession revenue. Losing four home dates, assuming a couple are less desirable weekday games in April plus a couple Monday games in the summer probably, might have a slightly smaller affect than that as the number of tickets sold for those games is likely to be somewhat lower than average. I am skeptical that teams could raise prices enough to recoup all of that money lost. I would be surprised if teams aren’t already doing whatever they can to maximize ticket and concession revenue. They may be able to get some of that money back, however, particularly from season ticket holders. They could, for example, provide 5% less inventory by taking away four games, but only drop season ticket prices by 3%, thus getting back some of the lost money while still providing a discount compared to what season ticket holders previously paid.

In his piece, Stark discussed the potential problems that might emerge with teams’ contracts with regional sports networks. Contractually, it is possible teams promised a certain number of games, making a change in the schedule challenging. But in terms of revenue, the money lost would be fairly insignificant. The lost revenue for regional television partners would be pretty minimal as the vast majority of that income derives from cable subscriber fees rather than advertising. Nationally, baseball would have little trouble fulfilling any of their deals, as the number of national games seems unlikely to change.

If the Yankees’ lost revenues are somewhere around $10 million, we might be able to roughly estimate the total losses to be somewhere in the $100 million to $150 million range before considering mitigation through some minor price increases. While MLB owners haven’t ever easily given up that much money, we are probably looking at something in the range of 1% or less of total MLB revenues. There might be talk of the players having to sacrifice pay, but these small decreases in overall revenue shouldn’t significantly alter the player-owner split as it is currently structured, and would be the subject of bargaining. Players get the off days they crave, the season starts in April, and the revenue split for the players and owners would likely remain roughly the same.

Financially, dropping eight games from the schedule is probably a lot more feasible than one might think. Of course, making the situation financially feasible doesn’t necessarily make it a great idea. I realize this makes me a bit of a curmudgeon, but I’m used to records and performances based on a 162-game schedule. And the baseball season is long. That’s a feature, not a bug. While 154 games might not feel that different, as someone who consumes baseball in a near-constant fashion all of the months of the year, I would rather have those 120 meaningful regular season games than not have them. The grind of the season with relatively few of the teams qualifying for the playoffs helps make the regular season more special than that of the other major sports.

These reasons aren’t necessarily compelling enough to keep the schedule the way it is. Perhaps someone else can come up with better ones. But it certainly doesn’t seem like finances should be a major impediment.


How the Angels Could Get Out of Paying Albert Pujols

Albert Pujols is signed through 2021 on a 10-year, $240-million deal that is widely considered the worst contract in baseball. In 2011, his last season with St. Louis, Pujols posted a then-career-worst 4.0 WAR. He’s yet to best three-and-a-half wins with the Angels and, last year, was worth negative 1.9 WAR. There’s no doubt the Angels would get out from under this onerous deal if they could.

Yesterday, Meg Rowley held a chat. In said chat, a commenter named Yo-Yo asked this question.

Yo-yo was referring to this article from Baseball Prospectus in which Matthew Trueblood speculates that Albert Pujols is actually 40 and not 38, and thus two years older than he claims. Per Trueblood:

To anyone who followed baseball closely around the time of Pujols’ explosion onto the scene in 2001, this will come as no great surprise. Four of Pujols’ first six player comments in Baseball Prospectus Annuals make reference to the rumored discrepancy between his listed and real ages. Pujols’ age became a topic of some discussion in the run-up to his hitting free agency in 2011, and a panel of experts that included industry-leading writers and front office members alike formed a near consensus that he was older than listed. It’s been several years since the issue has been treated or talked about seriously, but my recent Twitter poll asking respondents how old they think Pujols is (noting that he’s listed at 38) found just 35 percent believed the party line.

Now, Trueblood doesn’t really present anything close to what would be considered real evidence of Pujols having falsified his age, let alone conclusive proof. But the idea of baseball players, particularly from the Dominican, being older than listed isn’t a new phenomenon. Miguel Tejada might be the most famous case, but Hall of Famer Vladimir Guerrero, and lesser known players like Octavio Dotel and Wandy Rodriguez, among others, were, too. Again, that doesn’t mean that Pujols is guilty of doing the same thing, but it does, perhaps, help to explain why those pesky rumors just won’t go away. And, as Trueblood explains, it’s an understandable thing to do for young Dominican players.

Firstly, let’s make sure to say this: I am not accusing Pujols of what I would consider unethical or truly fraudulent behavior. Pujols’ background and early life story are unique, involving living in the Dominican Republic until mid-adolescence, then immigrating to the United States. He and his family were in a difficult position, when they came here in 1996: Pujols would not be eligible to attend American high school, at least in a normal setting, if he were 17 or older. That didn’t just put his baseball future at risk; it threatened his chance to pursue opportunities of all kinds on even footing with his peers.

But Yo-Yo presents a fascinating question. If Pujols were, in fact, two years older than the Angels thought when they signed him, could they use that to get out of their contract with him?

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The CEO of Big League Advance Makes His Case

Last Monday, I wrote on this very site about both the lawsuit Indians uberprospect Francisco Mejia has filed against Big League Advance (“BLA”) and also BLA’s counterclaim. With the rise of branding contracts in professional sports, Mejia’s lawsuit likely represent a harbinger of things to come — rather than an aberration unlikely to be repeated — as a new frontier in sports litigation develops.

Shortly after publishing that piece, I spoke with BLA Chief Executive Officer Michael Schwimer about his company, the Mejia lawsuit, and what the future might hold. Schwimer, it should be noted, was good enough to spend a full hour being grilled by an attorney while simultaneously fathering his two young children, an arrangement most reasonable people would consider to be less than ideal.

Big League Advance

Schwimer himself is a former major-league pitcher, owner of an abbreviated 48-inning career with the Philadelphia Phillies marked by a lot of strikeouts (9.62 K/9) and a lot of walks (4.25 BB/9). After leaving the game, he started Big League Advance. Schwimer said he started BLA because of his own experience in the minor leagues. “I was reffing basketball games [to make ends meet],” Schwimer told me. “I was babysitting.” Schwimer believed there was a better way, and BLA was born.

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The MLBPA Is Doing Work in the Field

The Major League Baseball Players Association has its offices on the 24th floor of a gleaming glass skyscraper at 12 E. 49th Street, in the heart of midtown Manhattan, just around the corner from the Commissioner’s offices on bustling Park Avenue. Spend some time lingering outside the Association’s steel-columned steps, and you’re likely as not to see just the folks you expect to see heading in and out of the building: old labor hands raised on tales tall and short of Marvin Miller’s legendary two decades as union boss, hard-bitten union attorneys trained in every detail of employee-side labor law brought on board during the Don Fehr era, and maybe even a few folks who joined the Association during Michael Weiner’s tragically short tenure at the top of the org chart.

What you won’t see, though, is much sign of Tony Clark’s signature hires as executive director of the Association. That’s because they’re at the ballpark.

The Association has always heavily involved players in its governance, of course — it is, after all, their union — but generally speaking only through the old player-representative/executive-subcommittee structure established in the 1960s, and not in the form of retired players actually on staff. Marvin Miller came from steel organizing, and the resumes of staff at the Association have, until recently, been populated heavily by previous work in the world of organized labor — folks coming out of the National Labor Relations Board or from other unions — and not necessarily work in baseball itself. Only in the waning days of Weiner’s leadership (with Clark as his deputy) did the Association really begin to seek out and hire former players to help advance and shape its work.

That process has accelerated significantly under Clark’s directorship. He is himself a former player, of course. If you glance around pretty much any spring-training camp these days — and a fair number of regular-season clubhouses besides — you may well see a broad-chested baseball man there off to the side, perhaps graying at the temples a little, taking some 23-year-old kid under his wing and teaching him the ways of the union. Bobby Bonilla. José Cruz. Steve Rogers. Javier Vázquez for international work. Phil Bradley, Jeffrey Hammonds, and Mike Myers, too. These are the men Clark has tasked with serving as the Association’s primary faces on the field, and its principal communicators with and to a membership that seems increasingly to have reason to be restive.

“They act kind of like a field organizer would in a typical union,” said a Players Association spokesman who declined to be named for this story. “Their job is to stay close in contact with all the guys on the 25-man roster [of the teams to which they’re assigned], and keep a constant communication going with them.” That’s an especially critical task for this union at this moment, because unlike most labor unions, this one doesn’t have a single factory floor or break room upon which to fall back as a natural meeting ground or organizing space. It just has its members, scattered far and wide at ballparks around the country. That presents obvious logistical difficulties.

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Francisco Mejia and the Legal Limits of Brand Contracts

Back in 2016, Phillies third baseman Maikel Franco signed a contract with a company called Fantex. The terms were fairly simple: for a payment of $4.35 million, Franco agreed to pay Fantex 10% of all of his future earnings. Fantex would also be allowed to sell its “share” of Franco to investors, thereby generating additional revenues. Franco and Andrew Heaney were the pioneers, signing “brand” contracts with Fantex back before they were fashionable.

At the time, a friend of mine asked me what I thought of the deal, and I surprised him by panning it. “Just wait for the lawsuit this type of deal will generate,” I said. Evidently, that wait is now over.

On February 21, 2018, Indians catcher (and potentially third baseman and left fielder) of the future Francisco Mejia filed a lawsuit against a company called Big League Advance Fund I, LP. You can read the complaint here, plus BLA’s answer and counterclaim here.

So what is this about? Evidently, Mejia signed three contracts with BLA, which guaranteed him a $360,000 payment in exchange for 10% of his career earnings. If this sounds like Franco’s Fantex deal, you’re mostly right — but Mejia says there were some red flags with BLA which make this contract unconscionable.

According to Mejia’s Complaint,

Defendant BLA’s business plan involves utilizing various “runners” who approach up and coming baseball players in areas such as the Dominican Republic. These runners (usually former baseball players) advise prospects that Defendant BLA will advance them considerable sums of money, to be repaid by a percentage of the player’s future earnings. The prospects are generally young, uneducated and unsophisticated. Few speak English. Most, if not all, come from very modest families who are struggling financially.

According to Mejia, BLA approached him when his mother was very ill and struggling with medical bills. The contracts were signed, says Mejia, without a translator, and BLA even paid for Mejia’s lawyer just so the contract could state Mejia had the advice of counsel. Mejia says that BLA employees showed up at his house unannounced to collect a payment of about $10,000 after Mejia made the big leagues and threatened to bar him from playing if he didn’t pay. And, according to the Complaint, given Mejia is projected to earn over $100 million in the major leagues, BLA stands to recover over $10,000,000 against a $360,000 investment, which Mejia says is unconscionable.

If you’re interested in seeing the contract, it’s available here. That’s the third one Mejia signed — the one that’s the subject of the lawsuit.

So what does “unconscionable” mean, anyway?

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The Marlins Are Claiming to Be British

I love the Miami Marlins. I love them because I love baseball and thinking about baseball. I also love them, though, because I love the law and thinking about the law. At this moment in history, no source is more dependable for simultaneously providing raw material on both fronts — baseball and the law — than the Miami Marlins. Whatever that organization’s flaws, they are not uninteresting.

I’ve written here on multiple occasions about the lawsuit the City of Miami and County of Miami-Dade has filed against Jeffrey Loria for purportedly denying them what they believe they are due of the net proceeds from the $1.2 billion sale of the Miami Marlins to the Derek Jeter/Bruce Sherman ownership group.

Surprisingly, the case now offers a new twist — specifically, the Marlins have suggested that the dispute should be heard by an arbitrator, not state court. And to do that, the Marlins are claiming to be a citizen of… the British Virgin Islands.

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Examining SMT’s Lawsuit Against MLBAM

On Thursday, a company called Sports Media Technology (“SMT”) sued MLB Advanced Media (“MLBAM”) over Statcast. The complaint in the lawsuit is 92 pages long, and I read it so you don’t have to. But if you did want to, here it is.

According to the lawsuit, in 2006, MLB and MLBAM entered into a contract with SMT to develop PITCHf/x. However, according to SMT’s lawsuit, MLBAM then breached that contract, poached at least one key engineer from SMT, then used SMT’s PITCHf/x technology to create Statcast.

According to SMT, Sportvision and MLBAM signed a contract before SMT purchased the company that gave Sportvision exclusive rights to provide use of their PITCHf/xpitch-tracking system for three full MLB seasons. However, SMT now alleges that MLBAM has not only failed to live up to that agreement but they’ve also been working with third parties to emulate that technology. Per SMT, that not only fails to fulfill the contractual obligations of their agreement but also is a misuse of their patented technology.

Now let’s make one thing clear at the outset: the Complaint represents only one side of the story. We don’t know if it’s true or not, and SMT’s case has real problems. We’ll get to those in a second.

Some reports have pegged this as a simple breach-of-contract suit, framing it as SMT suing MLBAM for prematurely terminating the deal in 2016 so as to proceed with developing Statcast. But that’s not really accurate.

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Inside Baseball: How MLB Transactions Actually Get Done

Sometime late in the afternoon of March 11th, word broke on Twitter that the Phillies were “moving close” to a deal with then-free agent Jake Arrieta. In the hours that followed, several national and local writers confirmed that the two sides had reached a verbal agreement on a complex multi-year contract, though all involved cautioned that no deal was official yet.

And indeed it wasn’t. Before any major- or minor-league transaction can become officially official—before, indeed, a player can appear on a team’s roster or begin receiving paychecks from said team for their services—team, league, and (mostly in the case of free agent signings) agency officials have to work together to confirm each and every minute detail of the transaction in baseball’s system of record: the Electronic Baseball Information System (eBIS).

The gap between when verbal agreement is reached and when a deal is finalized in eBIS is most familiar to us as the interstitial period that comes between word of a big deal breaking in public and the team making that deal official. But the same process applies to thousands of transactions every year, big and small, and when we speak of a deal becoming Official—or, for that matter, a player being placed on waivers or reassigned to the minor leagues or drafted—what we really mean is that that transaction has been recorded and approved in eBIS.

It’s possible that the details of how this system works are only interesting to me, A Known Process Nerd. But on the off chance that might also be interesting to you, I spent some time talking about how the system works with Morgan Sword, the league’s Senior Vice President for League Economics & Operations, and Ned Rice, one of three Assistant General Managers for the Phillies, and the man mostly responsible for that team’s eBIS interactions (you may also recognize him as one of the men who greeted Arrieta’s plane on the tarmac in Florida on the evening of March 13th—the two men have known each other since their time in Baltimore).

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MLB Opening Day Payrolls Down from 2017

Now that real baseball has finally started, we are very likely going to spend a lot more time here at FanGraphs discussing the game on the field. That’s a very good thing for all of us who love the sport. Before wading too deeply into the new season, however, let’s take one more look at how this offseason affected payrolls.

This past winter was an unusual one, with a number of free agents receiving significantly less than expected, and players and teams holding out for contracts all the way until the season’s start. Most of our pieces contained a general caveat that we would need to wait until all players had signed to really determine the effects of this offseason. I even spent some time wondering if we would have to wait until after next offseason to determine the longer-term effects of this past winter.

As we have now reached Opening Day, we have the opportunity to look at current payrolls and compare them to the same point last year. Here’s where we sit on Opening Day, per Cot’s Contracts.

The Boston Red Sox are well out in front of all teams, followed by the San Francisco Giants, Los Angeles Dodgers, Chicago Cubs, and Washington Nationals. Notable by their omission, the New York Yankees don’t appear among the top five. This is notable for several reasons.

  • The Yankees haven’t placed outside the top three in MLB payroll since 1992, the year Marlins owner Derek Jeter was drafted. Melido Perez and Danny Tartabull were the team’s top-two players.
  • The Yankees haven’t been outside the top two in MLB payroll since 1994, the last time a baseball season ended without a World Series.
  • The last time the franchise had an Opening Day payroll lower than $167 million before this season was 2003, before Alex Rodriguez had ever played a game for the club.

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Whither the Independent Leagues?

Last week, Congress passed — and President Trump’s signed into law — the Save America’s Pastime Act as part of the omnibus spending bill funding the operation of the federal government for the foreseeable future. As Sheryl Ring and I each noted last week, the act created a new exemption to the federal minimum-wage and maximum-hour laws applying to minor-league baseball players.

Specifically, under the new provision that went into effect on Friday, so long as Major League Baseball pays its minor leaguers the federal minimum wage for 40 hours per week during the regular season, the players will not be entitled to any additional pay for overtime or offseason work under federal law.

Although most commentators initially focused on the effect the provision is likely to have on those playing for one of MLB’s affiliated minor-league teams, Baseball America‘s J.J. Cooper noted last week that the new exemption could have dire implications for teams belonging to non-MLB-affiliated, so-called independent minor leagues (such as the American Association, Atlantic League, Frontier League, and Pacific Association). Yahoo’s Jeff Passan expressed a similar concern on Monday, while SB Nation’s Marc Normandin argued that these independent teams deserve to go out of business if they cannot afford to pay their most important employees the minimum wage.

Undoubtedly, the obligation to pay players the minimum wage would likely impose a financial hardship on many independent-league teams. But it’s not at all clear that that will actually be the end result of the Save America’s Pastime Act.

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MLB Teams With the Most Dead Money in 2018

As this offseason confirms, the way in which clubs spend their money has changed perceptibly over the last decade or so. Where it used to be commonplace for an organization to pay a player for what he had already done, teams have increasingly begun to compensate players for what they’re likely to do in the future. We see the emergence of this trend most clearly in long-term extensions for younger players, a development that has led to missing free-agent classes.

Of course, that doesn’t mean clubs have stopped signing free agents altogether or stopped exposing themselves to risk of any kind. Teams still need to address weaknesses, and one means to do that is by way of the open market. In some cases, the performances they expect fail to materialize. In some of those cases, teams decide they’re better off paying someone else to take care of the problem. This is how teams end up with dead money on their payroll.

Dead money is generally any money a team is paying out to a player who no longer appears on their 40-man roster. There are three types of dead money:

  1. Money paid to players who have been released. Those players are free to sign with other teams, but the team releasing the player still owes the money remaining on the contract.
  2. Money paid to other teams as compensation for players who have been traded. Generally, we see teams cover a portion of a contract to receive a better return in trade.
  3. Money paid to players who are still in the organization, but who have been removed from the 40-man roster. Any team could have claimed these players if they were willing to take on the contract, and the player probably could have elected fee agency, but then he would forfeit his right to the guaranteed money.

Last season, nearly $300 million of MLB payroll was of the deceased variety, a sum that was double the amount of the prior campaign. Over the past year, we’ve seen the contracts of Carl Crawford, Josh Hamilton, Jose Reyes, and Alex Rodriguez all come off the books. The result is a $100 million decrease in the amount of dead money from last year. The graph below shows the teams who are paying the most money this season to pay players not on their roster.

Boston takes the top spot this year thanks entirely to Rusney Castillo and Pablo Sandoval. The Los Angeles Dodgers’ dead money, meanwhile, is spread out over seven players. Because of their original trade with the Padres that removed Matt Kemp from their roster, they are actually paying an amount higher than his current salary after having reacquired him. And the Dodgers would actually place higher on this list if they had released Adrian Gonzalez instead of taking on Matt Kemp’s contract when their former first baseman was dealt to the Braves and then released. The team could also still increase its total if the front office decides Kemp is not a fit for the current roster.

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The Minor-League Wage Battle Might Be on the Verge of Ending

­On Sunday, the Washington Post reported that the omnibus spending bill currently being considered by Congress may include statutory language insulating Major League Baseball from liability for not paying minor leaguers minimum wage. This may be the first time on FanGraphs that we are going to be discussing an omnibus spending bill. But it’s relevant in this case.

Readers are likely familiar with the lawsuits filed by Minor League Baseball players alleging that their pay — generally around $1,100 per month for first-year players, with no pay for spring training — is a violation of a law called the Fair Labor Standards Act because it failed to pay minor leaguers even minimum wage. Thus far, the suits have had mixed results: one suit that attacked Major League Baseball’s antitrust exemption was dismissed last summer, but another suit, which has been pending for over three years now, remains extant. Paying minor leaguers minimum wage would cost MLB franchises an extra $5.5 million per year. Minor leaguers are not members of the MLBPA.

Nathaniel Grow already covered the problems these suits face in a pair of excellent articles I recommend highly. My own take, as someone who has personally litigated about two dozen class actions in one form or another, is that one suit, in particular, has a shot. (The reasons why are complex enough to deserve their own article, but if you’re curious, that case is Senne et al. v. Office of the Commissioner of Baseball et al., and I think that Garrett Broshuis, the plaintiffs’ lead attorney, had the right idea in the very clever way he pleaded his complaint.) That said, even if none of the lawsuits had any legal merit whatsoever — which is not, I believe, the case — defending such suits is expensive, and there is always risk inherent to any contested litigation.

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The Mound-Visit Rule Might Have an Enforcement Problem

Major League Baseball’s new pace-of-play rules, including the new mound-visit limits, have already been covered at this site. Accordingly, this post won’t address the rules themselves. Rather, I’d like to examine what happens when a player breaks those rules — or, possibly, what won’t happen when a player breaks them.

Catchers Willson Contreras and Martin Maldonado have already said they won’t follow the new mound-visit rule. Specifically, they said they are willing to pay fines rather than comply if the game is on the line.

As a lawyer, my entire job is to research, apply, and interpret rules of one sort or other. So when I hear that two players are going to willingly not follow rules, it piques my interest. And that got me wondering… is a fine all they’d face if they did, as they said, ignore the rule and go out for that seventh visit?

The first issue is whether they’d even be allowed to go out a seventh time. Joe Torre thinks (and reports confirm) that umpires just won’t even permit the seventh visit at all. But as a practical matter, how will the umpire prevent it, exactly? It doesn’t seem that the umpire will be able to throw himself bodily in the path of every wayward catcher. So there have to be some consequences for violators. And this is where things get weird.

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Ronald Acuna, Willie Calhoun, and Service-Time Manipulations

Kris Bryant has become the handsome, clear-eyed face of service-time manipulation.
(Photo: Arturo Pardavila III)

Three years ago, Kris Bryant ranked as the best prospect in baseball. Then 23 years old, Bryant had brutalized minor-league pitching the year before and destroyed the competition in spring training with nine homers and 17 total hits in 44 plate appearances. Despite a clubhouse that now included Jon Lester and manager Joe Maddon among others — part of the Cubs’ signal to the world they were ready to compete — Bryant was easily one of the best 25 players in the organization, probably among the top five, and eventually proved during the season he was Chicago’s best position player.

And yet, the Cubs opted not to start the season with Kris Bryant on the roster. Once Bryant had spent enough days at Triple-A to extend his team control by a year — to become a free agent after the 2021 season instead of the 2020 campaign — the future MVP received a callup to the majors.

Bryant is still the most famous and most obvious case of a team’s effort to manipulate player service time to the potential detriment of the on-field product, but it happened before Bryant, has happened since Bryant, and is likely to keep happening. This season, there are several prominent players who might be kept off their major-league rosters for a time so that the team might save money and gain control of the player for an extra season.

For those unfamiliar with how service time works in these instances, here it is briefly. Players achieve free agency once they have six years of service time. Although the season lasts 187 days, a player is considered to have played a full season if he appears on an MLB roster or disabled list for 172 days. In any season where a player hits the 172-day threshold, that counts as one season of service time. If a player belongs to the roster for fewer than 172 days, he must combine those days with days from another campaign to reach the official “full season” mark.

Kris Bryant’s case is a useful example of this work. In 2015, he was on the roster for 171 days. That time counts only as a partial season. In the last two years, Bryant has been on the roster for more than 180 days each year, and each of those seasons count as one year of service time. At the end of the 2020 season, Bryant will have five seasons and 171 days of service, one day short of the six seasons necessary for free agency. As a result, he will need to play in 2021 to become a free agent. An extended discussion of service time appears in the FanGraphs glossary.

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