By Mark Cardillo
Each year, representatives from all 30 Major League Baseball (“MLB”) clubs, Minor League clubs and baseball guests from around the world meet for four days to discuss the business of baseball. This year’s destination is the Walt Disney World Swan and Dolphin Resort near Orlando, Florida and the winter meetings will be held from December 6 – 9. The winter meetings serve many purposes. There are meetings for team physicians, team trainers and scouts, among other departments. Most importantly, it is an opportunity to discuss current legal issues facing the sport and to develop a consensus about those issues, if possible.
This year’s winter meetings are no different. Significantly, with the Collective Bargaining Agreement (“CBA”) set to expire at the beginning of December 2011, collective bargaining, free agency and salary arbitration will certainly be a focus of the winter meetings. “As long as the free agent market appears to be non-collusive this winter I don’t think there are any potential roadblocks to a peaceful settlement of the next CBA in 2011,” said Lee Lowenfish, author of “The Imperfect Diamond” and “Branch Rickey: The Ferocious Gentleman.” The CBA also covers topical issues such as expanding the playoffs, drug testing and contract negotiations between players and agents. These issues are expected to be a primary focus at the winter meetings.
One current compensation issue that may be discussed is the prospect of a player owning part of a team as a means of compensation, and this has spurred a new approach to negotiating on behalf of the players. Technically, a player is allowed to request part ownership of his franchise, as well as other baseball entities. According to former MLB Commissioner Fay Vincent, with the concern of future tax increases, any sophisticated ballplayer may want to consider being compensated by securing an ownership interest in of one of these entities: their franchise, MLB.com, MLB Network, the World Baseball Classic, Inc.. According to Michael Weiner, the Executive Director and General Counsel for the MLB Players Association, “there is nothing in existing labor law that will preclude us to allow players to own a piece of MLB.com, MLB Network or the World Baseball Classic, Inc.” This raises the question of whether this deferred payment could be considered a part of a player’s salary for the purposes of the salary cap and this is also likely to be a topic of discussion.
The CBA also addresses the issue of drug testing. Since MLB enforced its new drug testing policy, the number of homeruns has decreased and some have observed that this indicates that MLB’s current approach is working. Some managers are emphasizing using “small ball” skills, such as bunting, hit and runs, stealing bases. But this raises the question of whether “small ball” is what people want to see? According to ballparksofbaseball.com, overall attendance at MLB games has decreased from a high of 79,447,312 people in 2007 to 73,124,790 people in 2010. This downturn in attendance may also be due to other circumstances, such as the economic downturn.
The upcoming meetings are also likely to address reforms that are needed in the Dominican Republic, the largest supplier of MLB talent outside the United States. With MLB point person Sandy Alderson departing from the Dominican Republic and heading to New York to be the New York Mets’ General Manager, MLB’s continuing efforts to address corruption in the Dominican Republic will likely be addressed. MLB has brought in Jorge E. Perez-Diaz, a partner in the Puerto Rican law firm Pietrantoni Mendez & Alvarez LLP, to replace Alderson. Perez-Diaz will most likely explain the differences between U.S. and Dominican labor laws and how they impact hiring and firing of personnel and the importance of securing cooperation in order to eradicate the use of banned drugs and corruption in the Dominican Republic.
Ideally, all Dominican players that arrive to play in the United States must submit to the same standards as every other ballplayer that plays here. One legal issue that makes MLB Senior Vice President Dan Mullin’s job difficult is that MLB is not allowed to require “pre-employment drug testing” in the Dominican Republic. Part of Mullin’s job is to target buscones, or local independent talent scouts in the Dominican Republic, some of who allegedly inject their players with illegal drugs before their players sign professional contracts with MLB teams. However, once a young Dominican player signs a contract with a professional team, they are eligible to be tested, subject to the terms of the CBA.
The Dominican Republic has also been under scrutiny because of recent reports that U.S.-based agents are loaning agency money to Dominican ballplayers. The most recent instance involved super agent Scott Boras. “Whenever money changes hands between agents and players, it is something that can cause potential trouble,” said Mullin.
Another likely topic at the winter meetings is the draft. Mullin believes that the subject of the draft comes up each year. “I certainly wish the draft would be much smaller as it is in the other sports,” said Lowenfish. “After the first few rounds there is no big money to be made for amateur free agents in baseball so why continue it the way it is?” It seems the answer to this question is that owners will always desire power and control. Owners feel comfortable with the way the draft is now and they plan to keep it that way. The prospect of an international draft is an issue that will be discussed. One concern is the effect on the Dominican Republic if MLB internationalizes the draft. The owners have differing opinions about the prospect of an international draft. Ever since MLB included Puerto Rico in the MLB Player Draft, baseball in Puerto Rico has struggled. If MLB were to include the Dominican Republic, many people in the Dominican Republic fear the same thing would happen.
One resolution to assist MLB with balancing competition is to limit the number of free agents teams are allowed to sign. Today, it seems as if financially stable teams unload their payroll on the best free agents and procure as many as they can afford, thereby making it difficult for small budget teams to compete.
Clearly, MLB faces a variety of legal issues at the upcoming winter meetings. As MLB’s business is evolving and becoming more sophisticated and global, the legal issues presented also become more complex. Whether each issue can be addressed, and a consensus reached about how best to resolve those issues, remains to be seen.
Mark Cardillo is a graduate student in Columbia University’s Sports Management Program and is the sole proprietor of www.ProBaseballInternational.com He can be reached at mark.cardillo@gmail.com.
