Archive for Business

Jose Reyes Has Been Honored for His Off-Field Behavior

Known primarily for his work as the former executive director of the MLBPA, Marvin Miller was an NYU-educated economist by training. His efforts as union head eventually led to the elimination of the reserve clause and start of free agency for MLB players. It was Miller who negotiated the players’ very first collective bargaining agreement, brought arbitration to professional sports, and did all of this despite contending with anti-semitism from the team owners on the other side of the bargaining table and a disability leaving him with limited use of his right arm. Miller was called by Hank Aaron “as important to the history of baseball as Jackie Robinson.”

In light of Miller’s relevance to the livelihoods of its members, it’s not surprising that the MLBPA makes some effort not only to preserve his legacy but also to honor those who continue it. To that end, the union gives an award every year for off-field service and community leadership. The Marvin Miller Man of the Year Award, started in 1997 and rebooted in 2000, is considered “one of baseball’s top honors[.]” The award is based on popular vote by the players, with the recipient being the teammate whom the voters “most respect based on his leadership on the field and in the community.” Each team has its own top vote-getter honored by the MLBPA.

In 2017, the list of top vote-getters contained an impressive collection of players notable not just for their exploits on the field, but for their charity work off of it, as well.

Among [2017]’s nominees are players involved in providing clean water and other necessities to poverty-stricken villages in remote parts of the world, supporting the needs of servicemen and women and their families, building schools, ensuring clothing and meals for inner-city poor,  raising funds for research and respite to cancer victims and their families,  rescuing abandoned and mistreated animals,  and sending truckloads of emergency supplies to victims of natural disasters.

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The Yankees Have a Lot of Payroll to Use

The Yankees’ 2018 campaign came to a disappointing end on Tuesday. After a 100-win regular season that, under normal circumstances, would have won them the division, they were forced to face the A’s in the American League’s Wild Card game. And while they managed to get past Oakland, New York ran into trouble against a Boston club that produced 108 victories, losing the final two games due, in part, to rookie manager Aaron Boone’s reluctance to utilize his bullpen.

Now the focus for the Yankees moves to 2019, when the team will be forced to compete not only with the Red Sox but also the lofty standards set by the club’s 2018 season.

In a sense, 2018 was a transition year for the New York. On the one hand, yes, they began the season by trading for the National League MVP and ended it with 100 wins. On the other, though, rookies — most notably Miguel Andujar and Gleyber Torres — accounted for 1,528 of the club’s plate appearances, the highest total for the franchise since 1969, when Bobby Murcer became a full-time starter. The club’s 5.7 WAR from rookie position players is the third-highest total in the past 30 years behind only last season (due solely to Aaron Judge) and 1989 (when Alvaro Espinoza, Bob Geren, and Roberto Kelly were rookies).

As part of their “transition,” the team finally reduced their payroll by a sufficient amount to avoid the competitive-balance tax and reset the penalties associated with it. From 2014 to -17, the Yankees spend an average of $256 million per year in payroll and penalties combined, per Cot’s Contracts. This season, they are likely to end up around $195 million. The Yankees, in other words, just cut payroll by $60 million. And not only that: because they drew 300,000 more fans than last season and also face a more modest revenue-sharing burden under the new CBA, New York likely ended up with $100 million more in 2018 than previous seasons. In light of that, it’s unsurprising to find that the organization is reportedly planning to buy back the YES Network from Disney when the latter sells it off to acquire part of FOX’s assets. The Yankees are awash in cash, and they shouldn’t have any limitations in free-agent spending this offseason.

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The Law of Tanking, Part One

Early this year, Dallas Mavericks owner and perpetually frustrated baseball-team-owner-of-the-future Mark Cuban, during a team dinner, said this:

“I’m probably not supposed to say this, but, like, I just had dinner with a bunch of our guys the other night, and here we are, you know, we weren’t competing for the playoffs. I was like, ‘Look, losing is our best option. [Commissioner] Adam [Silver] would hate hearing that, but I at least sat down and I explained it to them. And I explained what our plans were going to be this summer, that we’re not going to tank again. This was, like, a year-and-a-half tanking, and that was too brutal for me. But being transparent, I think that’s the key to being kind of a players owner and having stability.”

The National Basketball Association was, shall we say, peeved at Cuban, fining him $600,000. Why? Because of the implication that the Mavericks were intentionally losing games.

“Yes, it’s not what you want to hear as commissioner,” Silver told reporters at a news conference following a league meeting. “I will say that Mark has a long track record of being provocative, and… I think he acknowledged it was a poor choice of words.

“When we looked at what was actually happening on the floor, which is most important to me, there was no indication whatsoever that his players were intentionally losing games. And so we were satisfied with that, and again, and we moved on.”

Despite the resolution of that particular incident, tanking continues. In fact, the league’s fine of Cuban more or less confirmed that, while intentionally losing games is forbidden, intentionally losing seasons is acceptable — as long as no one talks about it. And while, for years, we talked about tanking as a uniquely NBA problem, that’s not the case anymore. In Major League Baseball, the tank is on.

That raises some interesting questions: under the MLB rules, is tanking legal? Is tanking legal under the law? And if it isn’t, what’s the redress? Believe it or not, these are not at all simple questions. And so we’ll start by asking a simpler question — namely, what is tanking, anyway? Royals Review gives this definition, which seems good for our purposes.

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A Viable Path for Vlad Jr. to Fight Service-Time Manipulation

Yes, this is yet another piece addressing the problem of service-time manipulation, an issue which has been discussed at some length both in these pages and others. In 2018, Ronald AcunaPeter AlonsoVladimir Guerrero Jr.Eloy Jimenez, Gleyber Torres, and even Byron Buxton have all spent extra time in the minor leagues this year, in whole or part to gain their teams an extra year of contractual control.

The MLBPA has weighed in against the practice, but with grievances — like the one filed by Kris Bryant in his rookie year — essentially having stalled out, there doesn’t seem to be a resolution on the horizon. Because minor leaguers (that is, players not on a major-league 40-man roster) aren’t members of the union, the issue of service-time manipulation hasn’t necessarily represented a priority.

Here’s the Blue Jays’ 40-man roster. Vladimir Guerrero Jr. isn’t on it. He almost certainly will be next year. As of right now, though, he isn’t — which means he also isn’t a member of the Major League Baseball Players’ Association. Somewhat surprisingly, there’s a way that might actually represent an advantage for him. Specifically, it might give him the opening he needs to challenge the practice of service-time manipulation in court… and win.*

*For our purposes, let’s assume that Toronto is subject to American law. As you’ll see, the argument below can be applied really to any minor leaguer. We’re just using Vlad as an example.

Few teams admit to manipulating service time. It is not surprising, therefore, to find that the Blue Jays have also been reluctant to invoke service time when justifying the absence of Vlad Jr. from the major-league roster. Here is how Blue Jays president Mark Shapiro explained it back in July on SiriusXM Fantasy Sports Radio:

We want to make sure from the teenage perspective, leadership perspective, defensive perspective, routines, nutrition, all the little things, that we have this guy with as good a foundation as possible.

Most of the traits invoked here are sufficiently dependent on the opinion of baseball professionals that the prospect of performing any kind of analysis on it, from the outside, is basically impossible. Leadership and routine: both are surely required, in some volume, to flourish in the majors. The people most well positioned to evaluate those qualities are all probably employed by the Blue Jays, however. To that degree, all one can do is take Shapiro at his word, even if those words seem quite convenient for Toronto’s bottom line.

Shapiro mentions another “perspective,” however, that is less frequently invoked by front-office personnel and which also seems more suited to some kind of objective assessment — namely, nutrition. Nor is this the only occasion on which it has been cited by Toronto as one of the reasons for leaving Vlad Jr.’s potent bat in the minors. So let’s consider nutrition for a moment.

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Michael Schwimer on Francisco Mejia and the Future for Big League Advance

Back in April, I wrote about the lawsuit former Indians uberprospect and current Padres backstop Francisco Mejia had filed against Big League Advance. As I wrote earlier this week, that case is now over. Michael Schwimer, the CEO of Big League Advance, who was good enough to talk to me after my initial post on the case, spent some time this week answering my questions about how the case ended. Once again, Schwimer was forthcoming about his company, the Mejia suit, and the future for himself and his business.

I first asked Schwimer what happened at the end of the case. Schwimer told me that Mejia dismissed his case voluntarily, without providing a specific reason. That said, Schwimer suspects “peer pressure [on Mejia] from players” might have had something to do with it. “[We got] overwhelming support from minor-league players,” Schwimer said regarding the suit, adding that BLA clients were largely supportive of the company through the litigation. Schwimer also corrected one assumption I’d made in my previous article — that no discovery had been performed. BLA, at least, had responded to document requests propounded by Mejia’s attorneys. Schwimer thought that response had something to do with Mejia’s decision to dismiss his case, as well. “We had proof to back up literally everything,” Schwimer told me.

Among Mejia’s allegations was that BLA purportedly hired a lawyer for him — and paid that attorney to advise him — solely with a view to including language in the contract that he’d had the benefit of counsel. But Schwimer told me that BLA had correspondence with Mejia’s private attorneys refuting the claim. “We had the emails with Francisco’s lawyer, where [the lawyer] redlined the contract for Francisco’s benefit,” Schwimer said. “He reduced the endorsement from 6% to 2.5%, and made other changes that helped Mejia.”

As I noted in my postmortem on the case following its dismissal, apologies in lawsuits are incredibly rare, and I was curious to know how this one came about. “We did ask him to apologize, no doubt,” Schwimer said. In this case, the apology was part of a settlement, but not of Mejia’s claim. Instead, Schwimer explained that Mejia voluntarily dismissed his claim and settled BLA’s counterclaim. The apology was part of that settlement.

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How LeBron James’ Tattoos Could Affect Baseball

Although FanGraphs is very much a baseball site, we’ve occasionally paid homage to arguably the greatest basketball player of all time, Lebron James. (My favorite was this piece by the inimitable Jeff Sullivan trying to design a 23-WAR baseball player.) Every so often, LeBron does something which forces us to ask questions — questions that might also be relevant to baseball — and then we have to cover it. Something like that is happening now, in a lawsuit about tattoos and video games.

LeBron has some awesome ink. It’s a part of his brand, and so back in 2015, those tattoos were included in the computerized depiction of LeBron created for the NBA2K video game. The game also included tattoos on the bodies of Eric Bledsoe, Kobe Bryant, DeAndre Jordan, and Kenyon Martin (among others). Ordinarily that wouldn’t have been a big deal, except that it led to a lawsuit being filed by Solid Oak Sketches, LLC, against the video-game makers, for copyright infringement. Solid Oak Sketches has an exclusive licensing agreement with the tattoo artists, which means that Solid Oak owns the exclusive right to market, sell, and otherwise control the copyrights to the tattoos in question. In the summary judgment briefing in Solid Oak’s case, LeBron provided an affidavit which saidinter alia, this:

In the fifteen years since I’ve been playing professional basketball, this case is the first time that anyone has suggested to me that I can’t license my likeness without getting the permission of the tattooists who inked my tattoos. No tattooist has ever told me I needed their permission to be shown with my tattoos, even when it was clear I was a public basketball player.

You can already recognize how this might have some relevance to major leaguers. Javier Baez, Matt Kemp, Jose Ramirez, Ryan Roberts, and Gary Sanchez (among many others) have all been known, at one time or another, for their tattoos. If a baseball video game includes them in its depictions of the players, is that copyright infringement? Is showing them on a nationally televised baseball game copyright infringement?

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The Battle Between Payroll and Parity

Over the All-Star break, MLB Commissioner Rob Manfred addressed the Oakland A’s, their quest for a new ballpark, and their remarkably low payroll. With regard to the last of those items, Manfred exhibited little concern, suggesting there was almost no correlation between a club’s capacity to spend money and its ability to win games. John Shea reproduced and retransmitted the following comments, care of Manfred, at the San Francisco Chronicle.

“I categorically reject the notion that payroll should be the measure of whether somebody is trying to win in our game today. I reject that not because I prefer low payrolls to high payrolls. I reject that because I know that the correlation between payroll and winning in baseball is extraordinarily weak.

“You do not guarantee yourself wins by having a high payroll, and as the Oakland A’s have showed, you can win with a low payroll. So I really reject the premise of that question. Those are the economic facts.

“Falling into this notion that payroll is a measure of whether an owner is trying to win is literally sophistry.”

I’ve got good news and bad news for the Commissioner. The good news is that, in six out of the last seven individual seasons, the correlation between wins and payroll hasn’t been very strong, as the graph below suggests.

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How an Agent with Multiple Players Avoids Conflict of Interest

Last week, I wrote about fiduciary relationships in the context of Scott Boras and Jayson Werth, citing the seminal case of Detroit Lions v. Argovitz as a model to better understand an agent’s responsibilities to his client. (If you didn’t read that piece, you should, because it’s the prerequisite for everything which follows.)

Anyway, a number of commenters asked me to look at a slightly different configuration of the sports-agent fiduciary problem: what happens when an agent potentially has a conflict of interest which results from representing more than one player?

Before we answer, a few caveats. First, we are not analyzing actual situations here. This is not a guide on how to avoid disciplinary action by your state’s bar or your league’s player union. Second, this is a bird’s-eye view from about 50,000 feet, which is to say that we are oversimplifying things greatly. There is a lot more to it than what you see here, but submitting 20,000 words to my editor on conflicts of interest in fiduciary relationships (which is surprisingly possible) would likely draw his ire. Third, this is a broad overview based on American law. This is actually an international issue, which means that Canada and Australia, for example, have different rules. Finally, please don’t start a sports agency based on what you see here.

Now, moving on. There’s a couple of different ways to analyze the question posed above. On the surface, it may seem that having a multiple clients is not, in and of itself, a conflict of interest. And while that’s frequently the case, remember that a fiduciary owes a duty of loyalty to the beneficiary — to the exclusion of everyone else. As attorney Robert Kutcher explains,

Whenever one party places trust and confidence in a second person with that second person’s knowledge, it is possible that a fiduciary relationship is created. Such a relationship imposes on the fiduciary the duty to act in the best interest of the person who has placed his or her trust and confidence in the fiduciary. As a result, the fiduciary may not simply deal with that party at arm’s length, guided only by the morals of the marketplace.

It’s also possible to go to the other extreme. Since sports agents are fiduciaries, you could also argue that taking on more than one client is an inherent conflict of interest, because every minute dedicated to one player’s case is a minute not dedicated to another’s, to whom a fiduciary duty is owed. But that can’t be right either, because Scott Boras, for instance, has lots of clients. Most agents have multiple clients.

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Jayson Werth, Scott Boras, and Fiduciary Relationships

Newly retired outfielder Jayson Werth was honored by the Phillies in early August for his contributions to the 2008 World Champions. He made news that weekend for comments that derided “super nerds” as “killing the game.” (It’s worth noting, of course, that Werth was a sabermetric darling back in the day, standing out for his plate discipline.) Of more interest to me, however, was this statement he made on the Howard Eskin podcast:

“I had offers in November, and I was advised by my former agent to wait; ill-advised, I guess.”

***

“Some guys were surprised to hear from me – they didn’t know that I wanted to play. Which was surprising, because I wanted to play. I let my agent know I wanted to play. And they said they either hadn’t heard from him, hadn’t heard from me, just didn’t know that I was available. So that’s one of the reasons why I’m no longer with that agent.”

That raises eyebrows for two reasons. First, because Werth is essentially accusing his agent of a breach of contract, and potentially a breach of fiduciary duty as well. (Keep that term in mind – it’ll be important later.) And second, because the agent in question is Scott Boras, who has been recognized by Forbes as the industry’s most powerful and who, thanks to Eric Hosmer, has now negotiated no fewer than 15 deals of $100 million or more. Accusing Scott Boras of not doing his job is a bit like accusing Clarence Darrow of malpractice: it gets your attention.

Now, Boras, for his part, denies any wrongdoing. His company, the Boras Corporation, gave the Washington Post’s Chelsea Janes this statement:

Unfortunately, it appears someone has misled Jayson. We contacted all 30 teams numerous times during the offseason on his behalf, and we have phone logs, emails, and other records to back it up. We received no offers for Jayson in November, or otherwise. We are always prepared to support our work against inaccuracies spread by third parties. We understand the frustration and disappointment players can face and wish Jayson all the best.

What’s perhaps more interesting is this excerpt from Janes’ story (emphasis mine):

The Boras Corporation sends out a list of its free agents to every team at the start of free agency each November. Werth’s name was on that list. Boras Corp. provided that list for verification, as well as date-stamped phone logs that documented dozens of phone calls and emails made to executives on Werth’s behalf. Boras keeps detailed records of every offer and conversation, documentation that protects them against allegations of malpractice — and any litigation that could accompany them.

The reference to litigation isn’t accidental; I’d even wager that it was provided to Janes by the Boras Corporation itself. Boras is a lawyer and, believe it or not, lawyers are very deliberate in how and when they raise the spectre of litigation. This was a shot across Werth’s bow — a warning, if you will, not to pursue the matter further.

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How the Mariners’ Request for Public Funding Is Different

Back in May, the Mariners agreed to a lease deal that would keep them in Safeco Field for another 25 years. At the time, I wrote that the Mariners appeared to be bucking a trend by foregoing public money for a new stadium in favor of staying where they were.

Then, last week, things seemed to change.

Predictably, this was not well received.

https://twitter.com/StelliniTweets/status/1022286443694182402

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