Archive for Business

Protective Netting and Moral Hazards

Earlier this month, it was announced that every major-league franchise would be extending protective netting to the ends of the dugouts on each side of the field. For some, the move is probably long overdue. Late last year, for example, a ball off the bat of Todd Frazier hit and severely injured a little girl at Yankee Stadium.  The Cubs and Major League Baseball, meanwhile, were sued last year after a fan was blinded in one eye by an errant foul ball in August at Wrigley Field. By one 2014 estimate, as many as 1,750 people per year are injured by foul balls and broken bats at baseball stadiums every year.

But the law is a tricky thing, and the extension of netting might have an unexpected result — at least insofar as the teams are concerned.

There are many sources of laws. Some are statutes. Some are federal regulations. Some are court decisions. And some law comes from what is called a “Restatement.” A Restatement is basically a book which tells us what the majority rules are in certain areas of law. For our purposes, we’re going to be referring to Chapter 17A of the Restatement (Second) of Torts. (As to why it’s not the “Second Restatement of Torts,” that is a concern beyond the scope of this piece, but it’s mostly because lawyers have an irrepressible urge to make everything unnecessarily convoluted.)

As explained in the Restatement, there exists in the law a doctrine called “assumption of the risk.” In the context of baseball, that basically means that if you sit in an area without protective netting and you know it’s a possibility that a foul ball might come your way, you can’t sue the team for getting injured by that foul ball. As one court put it in a case called Edward C. v. City of Albuquerque, a fan “must exercise ordinary care to protect himself or herself from the inherent risk of being hit by a projectile” — even if that projectile is traveling upwards of 100 mph.

There’s a really excellent write-up on this that you can read here. In short, however, this “baseball rule” represents the majority rule in the United States. If a foul ball comes your way at a ballpark, the law basically says you should have seen it coming. You’ll probably find language on your ticket saying you assume the risk of injury by foul ball, like the Yankees have on theirs.

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Rob Manfred Might Have Just Made a Mistake

Editor’s Note: as Ben Lindbergh’s recent piece at The Ringer illustrates, reasonable people can disagree on the proper methodology and calculus for determining the players’ share of baseball revenue. What follows is a view based on one such interpretation.

Before he was commissioner of baseball, before he was even in baseball, Rob Manfred was a lawyer. A Harvard-trained labor lawyer, to be precise, who had a successful stint at the elite law firm of Morgan, Lewis & Bockius. In fact, he’s still a registered lawyer, with an active New York law license.

Yesterday, Commissioner Manfred held a press conference that might have made Labor Lawyer Manfred cringe.

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How Miami Could Still Get Its Money from Jeffrey Loria

Jeffrey Loria found multiple avenues by which to torment the people of Miami.
(Photo: Jared)

In 2009, the City of Miami and County of Miami-Dade agreed to pay for 75% of a new stadium for Jeffrey Loria’s Miami Marlins. The projected stadium cost was $645 million, so Miami and Miami-Dade — or, more technically, Miami and Miami-Dade taxpayers — agreed to cover up to $480 million of stadium-building costs, largely from from hotel taxes. (According to some reports, Miami and Miami-Dade ended up paying about $347 million.) Miami and Miami-Dade also agreed not to receive any of the money from the stadium at all. No money from ticket sales, no money for concessions or naming rights. All Miami and Miami-Dade got in return was a guarantee that, if Jeffrey Loria sold the team, they would get a percentage of the net sale proceeds.

In October 2017, Jeffrey Loria did sell the Miami Marlins — for $1.2 billion. Under the terms of that stadium deal, Miami and Miami-Dade are entitled to 5% of the net sale proceeds. So good news for Miami and Miami-Dade, right? Well, not this time: Loria has told them he actually lost money on the sale of the team. So despite that gaudy list price, Miami and Miami-Dade stand to get nothing at all.

On the surface, Loria’s claim seems pretty implausible. After all, he bought the then-Florida Marlins in 2002 for $158 million, $38 million of which was a loan from Major League Baseball. Even after accounting for paying back the loan, that’s still a difference of over a billion dollars. Remember, though, that according to the stadium deal, Miami and Miami Dade agreed to receive 5% of the net proceeds (i.e. profits), not gross proceeds (i.e. the sale price), in the event of a sale.

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The Last Time Scott Boras Screwed Up

It’s possible Scott Boras has misread the market. It wouldn’t be the first time.
(Photo: Cathy T)

As has been documented in some depth this offseason, the new collective bargaining agreement is bringing about consequences that might not have been fully understood — by the players, at least — at the time both sides were celebrating labor peace.

These latest developments weren’t entirely unexpected, however. Consider, for example, some previous statements by Scott Boras on the matter.

“The integrity of the game is at hand here,” Boras said. “Clubs are refusing to employ premium free agents for their true market value because of an artificial, collectively bargained process that does not help the game or the fans’ perception of the game. These players earned their free agency and played at very high levels to get it.

“Like any players, they want to play baseball. But they’re also looking at the long-term aspect of their careers. This system has placed them not in free agency, but it’s placed them in a jail.”

“The system they’ve been dealt has basically prevented them from free agency,” Boras said.

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How the Nunez Lawsuit Could Be Trouble for ACES

This represents the first post by new contributor Sheryl Ring. An attorney in the Chicago area, Ring will cover legal matters for FanGraphs. We’re excited to have her!

Until this week, Juan Carlos Nunez was most famous for having made a website for a fake company selling a fake product, in an attempt to convince the world that Melky Cabrera’s flunked drug test in 2012 wasn’t really Melky’s fault. Since those revelations, Nunez has been barred from baseball permanently and also spent a few months in prison for his involvement with Biogenesis. You would have been forgiven for thinking it would be the last you’d hear of Juan Carlos Nunez.

But if baseball is done with Nunez, it seems as though Nunez isn’t quite done with baseball. This week, Nunez filed a 30-page lawsuit against his former employer, Athletes’ Careers Enhanced and Secured, Inc. (ACES, for short), demanding $3 million in damages. ACES is one of the largest and most well known baseball agencies.  According to MLBTradeRumors’ Agency Database, ACES is the current representation for stars like Charlie Blackmon, Carlos Carrasco, and Dustin Pedroia among more than 50 other notable major leaguers. And in 2012, ACES represented Cabrera, as well. You might also have heard of ACES’ two most high-profile names, Sam and Seth Levinson, who are also named as defendants in Nunez’s lawsuit. Sam is the President of ACES; Seth is its CEO.

Nunez contends in the Complaint that the Levinsons knew about Nunez arranging for players to receive performance enhancing drugs like HGH from Anthony Bosch and Biogenesis and actually instructed Nunez to distribute those PEDs to players. Nunez says that better performance meant better numbers and bigger paychecks for players — and bigger commissions for the Levinsons and ACES. According to the Complaint, the Levinsons wanted Nunez to make Biogenesis a selling point in his pitch to get new players to sign with ACES. Nunez even namechecks a couple of stars in his Complaint, alleging that he personally, with the Levinsons’ knowledge and approval, arranged for Nelson Cruz to receive HGH in the early 2012 to help him recover from an infection. And Nunez also says that the whole fake-website debacle was the Levinsons’ idea. As you can imagine, there is a lot to unpack here.

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One Thing the Players Could Do Right Now

Jose Altuve, who’ll make just $6.0 million in 2018, would have been a free agent this offseason.
(Photo: Keith Allison)

The players are mad right now. They are mad at owners for not spending and they are mad at union leadership for not anticipating the lack of spending this winter. The owners are also mad — or at least pretending to be — because the players aren’t signing the contracts that the owners want them to sign. Finally, the fans are mad. Mad at the owners for not spending, at the players for not signing, and at writers like me for not writing more about baseball.

What we all really need are actual games. We won’t have that for a while, of course — although the wait for a new collective bargaining agreement between players and owners will continue even beyond this season. Because the players have to wait years for that shot, there isn’t a whole lot they can do right now. Maybe that’s why they are voicing their frustrations to the press. A spring-training boycott, such as was rumored recently, is unlikely to get them very far. Disbanding the union is a rather drastic step for the moment.

However, there is one thing players could do right now that would help them in the future — namely, stop signing contract extensions before reaching free agency.

This year’s hypothetically amazing free-agent class is missing. Jose Altuve, Paul Goldschmidt, and Mike Trout all signed team-friendly contract extensions earlier in their careers. The same thing was true last year when Madison Bumgarner, Freddie Freeman, Buster Posey, Chris Sale, and Giancarlo Stanton would have all been able to offer their services to any of the 30 teams.

The year before that, it was Wade Davis and Andrew McCutchen in a free-agent class that was already very good. It might seem counterintuitive to propose that players should be trying to get to free agency without extracting larger guarantees from their teams when the problem right now is that teams are not spending in free agency, but getting more, higher quality players to free agency would help the players immensely.

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How the Union Could Win Over the Public

This offseason, clearly, has been defined both by inactivity and an attempt to understand it. As free agents sit home just days before pitchers and catchers are scheduled to report, baseball and its fans have engaged in a conversation about economics and worth, value and spending. For some, inherent to that conversation is a sense that players ought to be content with what they have, that front offices presented with aging sluggers and hurlers have their hands tied. Voices as estimable as Bill James have endeavored to distance ball players from those who do so-called “real work.” Others have posited that owners are just being smart, and that really, don’t grown men playing a game make too much compared to the rest of us already? They aren’t teachers or firefighters, after all.

Players and analysts often seem surprised by this reaction. How can normal folks side with billionaires over millionaires? The incredulity is understandable: when moved to attribute avarice to strangers, it seems as if those with billions would make for more compelling targets. We get worked up over it, furious at the dearth of solidarity, fearful for what it might mean for other, less public struggles that involve our friends and neighbors.

But I wonder if we haven’t made a mistake. We’ve assumed that the sides are clear. But I think most fans don’t see millionaires pitted against billionaires; I think most fans don’t see the owners much at all.

Players stretch out over green fields. They thump home runs. They give us little bits of themselves to take with us. But players also leave. They give themselves to new people, people who aren’t our folks, who live in different places. They do that to us, or that’s how it can feel. The fan’s relationship with a player must necessarily be flexible. Players are a source of great fun and joy, but also embodiments of frustration. Fans weave those feelings, those experiences, together into a fabric in which we can cloak ourselves, a name across our backs, but one which is also liable to be pulled taut and ripped apart when we perceive conflict with the name on the front.

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Is the Slowest Offseason Ever Just a Blip?

If you’ve been wondering just how slow this offseason has been, Travis Sawchik has the answer for you: it is the slowest ever. Writing about the glacial pace of the market, Sawchik addressed both the short-term problem — that too many players need to find jobs — and hinted at possible longer-term issues caused by the current collective bargaining agreement, as well.

Whether the current issues will persist in subsequent years is a good question. Next winter, when Bryce Harper signs for $400 million or something, ownership’s reluctance to spend on the current free-agent class might seem like a distant memory. It is possible that a few of next offseason’s signings, however, will simply paper over issues that are likely to endure for the next half-decade.

One of the prominent theories regarding this slow winter has been that teams are saving up for a run at free agency next winter. That might help explain why, even after all of the current free agents find homes, total league-wide payroll in 2018 is likely to be comparable to 2017’s mark. The theory is that teams could be avoiding major commitments this year to save up for a bonanza next year. Perhaps that’s hypothesis will bear fruit. In order to make up for next offseason to compensate for this winter’s relative lack of activity, two conditions need to be met. First, next year’s crop of free agents will need to be composed of much better players and, second, teams will have to spend well beyond current levels.

Let’s start with the players involved. Harper and Manny Machado headline next year’s free-agent class. There’s really nobody close to those two this year. With each set to turn just 26 years old in 2019, both Harper and Machado seem likely to double the highest guarantee of any player this winter. After that pair, we find Charlie Blackmon, Josh Donaldson, Clayton Kershaw (who has an opt-out), and Dallas Keuchel. Blackmon and Donaldson are a little bit older than their free-agent peers, but both have been excellent in recent seasons.

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A Possible Path Forward for the MLBPA

Over the last couple weeks, I have taken a look at the unenviable position in which the Major League Baseball Players Association currently finds itself. Although the glacial pace of free-agent signings this offseason has helped to highlight the extent to which the sport’s existing economic model increasingly favors ownership, the union is relatively powerless to change its trajectory.

Indeed, because there is currently not much of value that the players can offer the owners in collective bargaining, the union has comparatively little leverage over the owners, and thus presently would appear to have relatively little hope of substantially improving its position in the next round of CBA negotiations in 2021 (although much can, of course, change between now and then).

That does not necessarily mean the union’s position is hopeless; however, securing the sort of modifications to the game’s economic structure that will be necessary to substantially improve the players’ financial position may require the MLBPA to engage in some outside-the-box thinking, at least as compared to its recent operating procedure. And as Buster Olney recently observed, it’s never too early for the union to develop a long-term strategy ahead of the 2021 CBA negotiations.

So what can the union do? Realistically, because the owners are unlikely to voluntarily agree to substantially better the players’ financial position, the MLBPA will probably have to adopt a more adversarial negotiating posture in 2021 than it has in recent years if it wishes to substantially change the current economic structure of the sport. That would mean that players should be ready to head into the 2021 CBA talks anticipating a work stoppage, potentially a rather lengthy one.

And it also means that the union should at least consider preparing to do what for many would have long been  unthinkable: disband the MLBPA. While certainly a drastic step, dissolving the union could help provide the players with additional leverage of the sort needed to secure some real concessions from ownership, concessions of the sort that could meaningfully improve the players’ financial position.

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MLB Payroll Might Decrease for First Time in Long Time

I probably don’t need to rehash here the stuff we’ve been writing all winter instead of writing about free-agent signings. We all know the market has been remarkably slow. We all know the theories behind the slowness. Most of those theories are probably correct to some extent.

What’s curious to me — and what prompted this article — is that, even after all of the free agents sign, there is a very real possibility that total payroll might actually decrease from a year ago. That’s pretty rare and the implications much worse than I had anticipated.

Near the beginning of the offseason, I took a pretty simple look at how much teams might be willing to spend in free agency. To get those numbers, I took Opening Day payrolls from last season and added 5% to every team — that is, roughly the observed rate of annual inflation of the game over the last few decades. With those numbers, I looked at current team commitments, including arbitration estimates, to get a sense of how much room every team had to spend.

This graph was created with payroll numbers from Cot’s Contracts:

Three months later, that graph is a bit outdated. The market has been slow, yes, but teams have nevertheless made some moves affecting payroll.

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