Could Players Collude With Each Other?

Over the course of yet another slow offseason, we’ve talked about labor relations and the free agent freezeout. But what we haven’t talked about is the opposite scenario.

So let’s take a look at answering this question: can players (and their agents) legally collude with each other? Teams colluding is somewhat straightforward: clubs make a collective decision to refuse to employ a player, or to offer a player more than a certain amount. We don’t have to go too far back in history to see what that looks like; the NFL, for instance, recently paid almost $80 million to settle claims that they did just that against quarterback Colin Kaepernick. For a baseball example, one need only look to the collusion cases of the 1980s, which ultimately resulted in ownership paying players a $280 million settlement; more recently, Barry Bonds filed (and lost) a grievance for collusion after the 2007 season.

Collusion by players wouldn’t be as simple. Players could, I suppose, all agree to not sign with one or more teams, but that would be inherently self-defeating if it restricted their own markets. More interesting would be if the players decided to coordinate on salary demands.

So let’s say that Manny Machado and Bryce Harper get frustrated at the slow-moving free agent market and tell their agents, Dan Lozano and Scott Boras, to coordinate their negotiations and agree that neither will sign for less than $300 million. Would that be collusion?

The preeminent legal definition of collusion is from Darren Heitner and Jillian Postal, who wrote a particularly excellent note on the subject for Harvard Law School’s Journal of Sports and Entertainment Law.

Collusion at its core is collective action that restricts competition. Under federal law, particularly the Sherman Anti-Trust Act (the “Sherman Act”), collusion is prohibited; however, because of labor exemptions, what constitutes collusive, prohibited behavior in specific sports leagues varies based on the league’s negotiated collective bargaining agreement (“CBA”).

Now, in case you were wondering, the word “collusion” doesn’t appear in the Major League Rules, and it doesn’t appear in the Collective Bargaining Agreement either. However, the Collective Bargaining Agreement does say in Article XX – governing the Reserve System – that rights under the CBA are individual, not collective.

The utilization or non-utilization of rights under Article XIX(A)(2) and Article XX is an individual matter to be determined solely by each Player and each Club for his or its own benefit. Players shall not act in concert with other Players and Clubs shall not act in concert with other Clubs.

That’s the language that bars collusion. As Marc Edelman explained for Forbes:

Although collusion under Baseball’s collective bargaining agreement is not identical to collusion under U.S. antitrust laws, the language and case precedence track similarly. Under antitrust law, mere parallel behavior among competitors is not enough to trigger a violation. But, parallel behavior along with a plus factor is sufficient.

That’s just a fancy way of saying that the mere fact that everyone is acting in the same way isn’t enough on its own to trigger a violation of the CBA’s collusion language. That’s why the current talk of collusion based on teams possessing similar player valuations, like the recent comments from reliever Brad Brach, is probably misguided; unless the valuations were based on a universal metric or algorithm all teams share, it’s probably insufficient to constitute collusive action.

So what does constitute collusion? Unfortunately, the CBA never actually specifies the necessary evidentiary showing. Per Heitner and Postal, “The Basic Agreement does not provide what burden needs to be met in order to prevail in this type of grievance.”

Nevertheless, we know that for players to collude in violation of Article XX(E), they’d have to not only have the same salary demands – which would be parallel behavior – but also coordinate their salary demands with each other. Now, to do that, they’d probably use their agents – and while agents aren’t mentioned in Article XX’s prohibition on collusion, they are, well, agents. Legally, under something called agency law, the authorized actions of an agent are considered, legally speaking, the actions of the principal. So if Manny Machado and Bryce Harper tell Lozano and Boras to coordinate their negotiations, the players aren’t exempt from violating Article XX(E) simply because their agents are the ones doing the coordinating.

Despite that, Major League Baseball can’t actually enforce those collusion rules against Machado and Harper or their agents. That’s because of a small oversight in the CBA. Again, from Heitner and Postal:

Article XX(E) prohibits concerted action from both Clubs and players, but the Basic Agreement fails to specify any redress if players violate the provision. The remaining sections of Article XX(E) outline the damages players can collect if they show a violation of Section E(1). Sections E(2) and E(3) provide that in addition to awarding attorney’s fees and costs, an arbitrator can award an aggrieved player treble damages, calculated from lost baseball income if the injury was the product of two or more clubs.106 Further, if five (5) or more clubs are shown to have violated Section E(1), the MLB Players Association (“MLBPA”) is entitled to reopen the Basic Agreement for renegotiation.

In other words, the CBA says that players can’t collide, but provides no punishment if they do so. That means that even if players did collude, MLB probably couldn’t do anything about it.

So why don’t players and their agents collude all the time? That’s actually a question we’ve answered already, back when we discussed agents and conflicts of interest. Remember, the MLBPA has some pretty strict rules governing agents and conflicts of interest:

§5(B)(12) – Actual or Potential Conflicts of Interest – No Player Agent, Expert Agent Advisor or Applicant shall engage in any conduct which, in the MLBPA’s reasonable judgment, may create an actual or potential conflict of interest with the effective representation of players, or the appearance of such a conflict, provided that the simultaneous representation of two or more players on any one Club shall not, standing alone, constitute a per se violation of this provision.

Lozano and Boras coordinating their negotiations would absolutely be a violation of that provision. That’s because coordination of negotiations would mean that agents are doing something other than trying to extract the best deal possible for their own clients. It might not be actionable collusion, but it might be something worse for the agents: breach of fiduciary duty, resulting in the loss of their agency certifications. And that’s why players and their representatives don’t collude – in addition to potentially getting worse deals, if they tried, their agents would likely lose their jobs.