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Baseball owners' game of collusion.


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In the spring of 1966, Los Angeles Dodgers general manager Buzzie Bavasi was in a fix. The great Sandy Koufax and his co-ace Don Drysdale, coming off a season in which they’d gone a combined 49-20, decided that they were underpaid. Holdouts were more common in those days before free agency and salary arbitration than people now remember–Mickey Mantle, baseball lore has it, refused to sign a contract one year until Yankees general manager George Weiss produced pictures of him cavorting with women who were not named Mrs. Mantle and wondered if the press might be interested in them–but Koufax and Drysdale had a novel strategy. Jointly refusing to sign their contracts or report to spring training, they demanded $1 million, to be split evenly between them over the next three seasons. For 32 days they refused to report to spring training, and when they finally did, it was with new one-year contracts in hand worth $125,000 for Koufax and $110,000 for Drysdale. Given that since before World War II the unofficial salary limit had been $100,000, the experience was an unnerving one for baseball owners.

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A footnote, really, in the history of the game, but for one thing: visions of future joint holdouts–Willie Mays, Orlando Cepeda, and Juan Marichal all insisting on something like their market value from the Giants, for instance–gave owners nightmares. So, in the basic agreement they were negotiating with the then-nascent players’ union, they insisted on protection against this prospect. The players agreed, demanding only reciprocity; this agreement survives in today’s Collective Bargaining Agreement (CBA) as Article XX, section E, paragraph (1), which unambiguously states, “Players shall not act in concert with other Players, and Clubs shall not act in concert with other Clubs.” It was for violating this deal in the 1980s that owners agreed in the early 1990s to pay the players $280 million, a payment which drove expansion as owners sought to recoup the money by charging huge fees for the rights to new teams. Sandy Koufax decides he’d like to get paid something like what he’s worth, and 40 years later you get to watch the Florida Marlins cavorting around in teal uniforms; what better illustration of the law of unintended consequences?

Now, the CBA makes for fairly dull reading (“If any such loan bears no interest rate or an effective interest rate more than one and one-half percentage points below the Imputed Loan Interest Rate…”), but the above-cited clause is completely unambiguous, written in plain English no one could possibly misinterpret: “Clubs shall not act in concert with other Clubs.” This does not mean that the owners don’t think they’ve found a loophole, which would be something like Wile E. Coyote finally finding an Acme rocket sled capable of catching the Roadrunner.

The owners do believe they’ve found a loophole; as a matter of fact, it is why the ominous shadows of collusion are falling across this weekend’s winter meetings in New Orleans, obscuring such other topics of interest as the imminent reinstatement of Gamblin’ Pete Rose, author of the forthcoming My Prison Without Walls, and an investigation by the Wisconsin state legislature into whether Milwaukee Brewers owner/MLB Commissioner Bud Selig committed something like fraud when he claimed a taxpayer-funded stadium (one which ended up costing around $800 million, by the way) would allow his wretched team to be competitive.

“Collusion?” you ask. “Why, just the other day I was reading an article in the paper where my team’s GM was talking about how market forces and the economy and the war on terrorism were conspiring against him, and that’s why he had to let our center fielder go. Also, aren’t these teams just figuring out that it’s dumb to give long contracts?”

In a word, “No.” When you look around the baseball labor market, several things are striking. First and most obviously, teams are exercising some fiscal restraint. Shortstop Miguel Tejada is a former MVP, a good defender who hits 30 homeruns every year. Comparable players like Derek Jeter make upwards of $17 million a year; the best offer Tejada’s had so far seems to be for three years and $24 million. Total.

Second, teams are declining to offer salary arbitration to their free agents. This used to be an empty formality; in recent years, though, more and more veterans have actually been accepting arbitration, and teams are now terrified of it, as it judges players according to the rules of the old baseball market. Greg Maddux got $15 million in arbitration last year; that’s around double his actual market value.

Third–and perhaps most important–clubs are, for the first time, declining to offer contracts to players whom they expect to get larger awards in arbitration than they want to pay. (This is called non-tendering.) Hence, in late December, the market is flooded with a new crop of free agents, driving everyone’s market value down.

This all doesn’t mean teams are colluding. On its face, it seems baseball clubs have finally figured out that they’ve been grossly overpaying free agents, who are usually in decline by the time they hit the market, and that the lag between player’s real-market value and the value an arbitrator will assign has them scared of arbitration. There is, though, an alternative explanation, one with some weight behind it.

Take Frank Coonelly, who has the bland title of chief labor counsel for Major League Baseball. Among his duties, according to multiple sources, is handling arbitration for MLB. This entails a few things, among them keeping tabs on who will be offered arbitration and who won’t. Teams sharing information about arbitration is not specifically illegal under the CBA, and it doesn’t take a conspiratorial turn of mind to see how any sentient baseball executive could exploit that.

Let’s say you’re the GM of the Houston Astros. You’ve just traded your relief ace, Billy Wagner, to the Phillies to clear some payroll, and now you need another closer. There are some good options on the market. Keith Foulke especially appeals to you, and you’re thinking about making him an offer. But here comes Frank Coonelly. He wants to talk about your arbitration cases, and he also wants to know what players you’re thinking about non-tendering this year. The Marlins, he mentions, are probably going to non-tender their closer, Braden Looper, in December. Well, you think, Looper’s not as good as Keith Foulke, but he’ll sure be a lot cheaper. And anyway, if Foulke is still on the market then, you can let his agent know you’re ready to sign Looper. That’ll take away some of his leverage.

To be clear, the above is hypothetical, and shouldn’t be taken as insinuating anything about Houston GM Gerry Hunsicker. But that scenario is not only very realistic, it’s almost certainly happening. If it’s not, Coonelly should be fired for not pressing the advantage this loophole offers him. Whether or not it violates the CBA is an open question, but there’s little doubt that it violates the spirit of the anti-collusion clause.

If MLB was doing nothing more than this, you’d have to just tip your cap to them for outsmarting the players’ union. But there’s reason to think they are doing more. A player agent, when I was talking to him about Coonelly, flatly said, “The clubs are calling him before they sign people.” A colleague of mine was talking routinely to one club and asked about a free agent they’d been rumored to be interested in, who had signed with another club. They told him that they hadn’t been able to sign him because “we didn’t get the last offer from New York,” meaning Commissioner Selig’s offices on Park Avenue. When you hear baseball people talking about collusion, this sort of thing is what they mean; when the players’ union hears it, they start calling banks inquiring about the maximum amount of cash one account can hold.

As any child knows, the Roadrunner always wins.

Tim Marchman writes about baseball for the New York Sun.



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