Bud Selig and “The Best Interests of Baseball” Part I

Last year, after a rather long, drawn-out feud, Bud Selig managed to wrest control of the Los Angeles Dodgers away from owner Frank McCourt using the “Best Interests of Baseball” clause of the powers granted to the Commissioner’s office. The reason McCourt was stripped of his ownership was, he and his wife had been caught with their hand in the cookie jar, using the team’s assets as their own personal slush fund/piggy bank. That’s a big no-no. Things got so bad that, for a while, there were questions about whether or not the team would be able to meet its payroll commitments.

Obviously, when fielding a sports team, about the worst thing that could happen is not being able to afford to put players on the field.  This led Bud Selig to invoke the little-used “Best Interests of Baseball” clause to strip Frank McCourt of ownership, putting the Office of the Commissioner in charge of the team. This action was taken to protect the integrity and reputation of one of the most storied franchises in the league. Los Angeles fans rejoiced. The egomaniac McCourt was going to be gone and magically, the Dodgers were going to be a perennial contender again. But therein was the rub. From 2004 through 2012 (the period during which McCourt owned the team), the Los Angeles Dodgers made the playoffs four times, winning the NL West three times and settling for the NL Wild Card once. Additionally, McCourt managed to find a way to clean up his financial mess by convincing Fox Communications to provide a lucrative $1 Billion television deal to put the Los Angeles Dodgers back on track.

However, Selig was unhappy with McCourt’s solution. By “settling” for $1 Billion, McCourt was devaluing the value of future lucrative television deals for other teams in other markets.(In fairness to the league, this was a deal light in cash – but it was a deal negotiated between one team and one broadcaster in a free market, and both sides were happy.)  So, despite fielding a team that was still winning (even if there were areas for significant improvement) and getting his financials in order, McCourt was stripped of the team. This set a precedent.

Shortly after the league kicked McCourt to the curb, the Los Angeles Dodgers were sold to a group that included NBA legend Magic Johnson. The new ownership, looking to redefine the team, and to make a bold media statement that a new era had begun then proceeded to make a historic trade of mind-boggling proportions with the Boston Red Sox. The Dodgers received Adrian Gonzalez, Josh Beckett, Carl Crawford and Nick Punto in the biggest waiver trade in league history. In return, the Red Sox received salary relief, James Loney, Rubby De La Rosa, Ivan De Jesus, Allen Webster and Jerry Sands. In one fell swoop, the Los Angeles Dodgers acquired a stable of star names, and a quarter of a billion dollars in salary commitments. On the other side, Boston shed their commitments, obtained some marginally decent talent, and the financial freedom to rebuild the storied franchise.

The trade took place after the non-waiver trading deadline. No one else was able to offer counter-proposals. And all it took was a phone call on a Saturday afternoon in August. Despite the enormity of the deal, and the dearth of comparable talent going to Boston, the Commissioner’s office signed off on the trade, and it was done. It seems that, in this case, the best interests of baseball were served by allowing the Dodgers to suddenly take the sort of debt and contracts that would render a smaller market team insolvent. This should have been a warning sign. This is where sane minds should have spoken up. But, they didn’t  Apparently, the deal was so mind-boggling that no one ever imagined anything like that might ever happen again.

Question: If an owner fielding a competitive team that finds a way to clean up his own financial messes can be stripped of a team, then how is it an owner repeatedly found to be in violation of the CBA, that fails to regularly field competitive teams, and may have defrauded an entire city still has his team?


What’s Happening to Baseball?

I started out composing a rather lengthy post about the recent trade between the Toronto Blue Jays and the Miami Marlins and how the many warning signs that this sort of thing was coming were ignored; beginning with Commissioner Bud Selig unceremoniously stripping horrible owner Frank McCourt  of ownership of the Los Angeles Dodgers last year, followed by the post-deadline trade between the Boston Red Sox. However, I found myself taking forever to get to the point. It’s not a simple subject to discuss by any means. So, instead of one long post about the situation, I’ll be spending the next few days putting up various sections about what happened and, my reaction to it all.

While Baseball may be experiencing unprecedented prosperity, if recent bullshit shenanigans continue, that could change in a heart-beat. If the game as a whole is unable to right the ship quickly, smaller market teams across the country are in a world of trouble.

Time to Fix Posting Season

This year, like every year it seems, a top tier talent wishes to leave the Japanese NPB via the posting system, the world of MLB is awash with rumblings about how the system is inherently broken. Some claim unfair trade practices by large market teams such as the Yankees or Red Sox. Others complain that it is unfair to the player, giving MLB teams that win the posting all the leverage a la, “Sign with us at this low figure or go back to Japan.” Still others claim that it is simply a matter of NPB getting fat by engaging in the athlete version of human flesh peddling. All of these complaints are to one degree or another basically true. What is also true is that without some sort of system in place, Japanese baseball would suffer greatly, and not just the NPB, but the entire Japanese Baseball system, all the way down to school-aged talent.

So what can be done then? Well, let’s look at what the posting system is first, then we can address the various issues that it addresses or creates.

Most, not all, players playing professional ball in Japan are subject to a type of reverse contract that stipulates that players who are not yet free agents are prohibited from negotiating with any other team once their current contracts expire. Most players reach free agency by putting in nine to ten years of service in the league. Additionally, if a player and the team he is beholden to cannot reach a new contract agreement, the team can choose to grant him free agency. They are not required to do so, but they may if they wish.  Any free agent is exactly that; free to sign anywhere, including MLB. Needless to say, it’s pretty apparent where reverse contracts seriously impair the rights and earning privileges of a player. That’s why in American in the 1970s MLB was introduced to a player named Curt Flood that forever changed the landscape of player’s rights, collective bargaining, and free agency. Don’t hold your breath for the Japanese Curt Flood anytime soon. It’s not going to happen.

Moving on though, we now come to the posting process itself. Any player in the NPB that is still not a free agent may ask to be posted. The team that he is obligated to however, are the ones that determine whether or not to accept the request. More often than not, it appears that they do. There have been notable exceptions however; most notable being in 2005 when then Yomiuri Giants pitcher Koji Uehara asked to be posted and the ownership refused because they do not support the posting system as fair and valid. Once a player is posted, there is a four day window in which MLB teams may place a closed bid. No one knows what everyone else is bidding, or even who. At the end of four days, the highest bidder is revealed and the team can choose to accept or decline. It should be noted that no posting has yet been declined by a team. The winning poster then has 30 days of exclusive negotiating rights with the player. If the player signs, the posting team gets the posting fee and the player is now a member of the MLB franchise. If no contract is reached, the posting fee returns to the MLB team and the player returns to the NPB and nothing changes. This eliminates a player competitively marketing his skills. He has one and only one MLB destination to negotiate with. It also opens the door for teams like the Red Sox to pay $11MM more than another team in order to win said negotiating rights because of the closed auctioning system. Such increases in the posting fee seriously hurt the willingness of the team to negotiate higher priced contracts with the player.

At any time, either the MLB team or the NPB team can pull out of the process. The player has no leverage at any point in time. In fact, the only thing they can do is ask for the process to be started.

This system obviously favours major market teams such as New York, Boston, Texas, and Los Angeles. Sure, not every posted player is going for Matsuzaka or Darvish money, but such players are always and forever completely unobtainable by small or mid-market teams while the player is in their prime. How’s that for competitive balance?

So why not just do away with reverse contract and the posting system and put together an international draft that includes Japan you say? Because to do so would cripple the NPB to the point of becoming irrelevant. And that’s just bad for baseball and Japan altogether. Without some sort of compensatory system in place, every top tier piece of Japanese talent would be leaping to MLB with a quickness and there would be little or nothing that NPB could do to stop it. The most money and the best chance to become the very best player possible exists in MLB, and nothing is ever going to change that. Yet without a strong NPB there is a decided trickle-down effect. Eventually the many baseball academies that are funded by the NPB to develop the rich pool of Japanese talent would all wash up. Without a strong NPB there simply isn’t the call for or the resources for them. And without the developmental academies and the opportunity for young ball players to aspire to playing on a high level stage, eventually the great depth of exceptional talent in Japan begins to dry up. It never completely goes away, but stars out of Japan become a rare thing.

But enough with the doom and gloom. The real issue at hand is what to do about this great big mess? Obviously the system is broken, and some folks like super-agent Scott Boras have had ideas on the matter. However, the agent-driven solutions are not likely to be accepted since the only real winners in the process are the agents. So how to fix things? Well, here’s my take.

First, any player in the NPB with more than one year of service time may request to be posted. The request cannot be denied by the team, it must be honored. Then, once the posting season starts and teams select who they want to bid on, things change. The posting period goes from 4 days to 10. The bidding however is not done through closed auction, but is an open auction for all teams. The highest bid is then guaranteed negotiating rights (no refusal allowed). Teams can place competitive bids instead of trying to out-guess what others might bid. The winning team would then have 30 days to negotiate a deal. But here’s the new catch, whether the team is able to sign the player to a deal or not, they lose the posting fee (with one exception, which I’m getting to). The open auction will keep teams from seriously overpaying for the rights by simple virtue of knowing where the real bidding market it. The guarantee loss of the posting fee will ensure that the larger market teams do not overbid just to block other teams from having the chance to sign. Heck, a total posting cap could even be instituted that behaves much like the total signing dollars for the Rule 4 draft. Sure, gone would be the days of $50MM posting fees (probably) but in this case there is at least a measure of insurance for the NPB team that they will be getting compensated. Next step, after a team wins the bid and puts the money in escrow they then negotiate a contract with the player. Sign and trades are entirely acceptable and may be negotiated by the player if they wish. If no contract is reached, the player returns to the NPB. The NPB team can then choose whether or not to accept the second highest bid and allow the player a second chance to negotiate a contract. If the team accepts the second highest bid, the first MLB team is off the hook and they go on their merry way. If the NPB chooses to retain the player and not make him available to the second place bidder, the initial winner of the auction still forfeits its posting fee. The same would go for the second team if they failed to sign the player. By ensuring that a posting fee is forfeit regardless of whether a player is signed or not, the player is given exceptional leverage compared to what he has now. But wait, there’s more. Once a player accepts a contract with an MLB team, the NPB team that posted him has 7 days to match the contract. A matching contract would be rare, but it would be a way for a team to attempt to protect its assets. If a contract is matched, the posting fee returns to the MLB team and the player returns to the NPB. However, to protect the player, any years in the contract that would extend beyond ten years of service time become mutual options. So for instance, player A has seven years of service and is posted. They sign a 5 year contract but the NPB matches it. The player returns to the NPB. However, after three years the player has reached 10 years of service, eligible for free agency. The player and team then both have the option to continue the last two years of the contract or to opt out. A player opting out is a free agent and goes wherever they want, including MLB, and with no further compensation to the NPB team.

Nothing is ever going to stop the very best talent from leaving Japan to play in MLB. But it’s about time that the playing field was leveled. Players need more rights and leverage, MLB teams need more parity in the ability to grab high-end talent, and the NPB teams need some sort of compensation for losing treasures.