Speculating on the Cardinals’ Potential Punishment

In the aftermath of yesterday’s shocking news that the FBI is investigating the St. Louis Cardinals for allegedly illegally accessing the Houston Astros’ computer network without authorization, many fans have begun to speculate as to what sort of penalty the Cardinals might face from Major League Baseball. MLB has already suggested that some form of punishment is forthcoming, issuing the following statement yesterday in response to the New York Times’ initial report:

Major League Baseball has been aware of and has fully cooperated with the federal investigation into the illegal breach of the Astros’ baseball operations database. Once the investigative process has been completed by federal law enforcement officials, we will evaluate the next steps and will make decisions promptly.

In particular, as others have noted, MLB’s reference to the incident as an “illegal breach” – as opposed to an “alleged” illegal breach – is especially noteworthy. MLB isn’t denying that employees of one of its teams may have illegally accessed the Astros’ computer network, nor is the league holding off judgment on the veracity of the reports until the federal investigation is complete. Instead, the league office is explicitly acknowledging that an illegal breach has occurred.

So the Cardinals are almost certainly facing some form of MLB-imposed punishment on top of any potential criminal charges the government may pursue. The question now is just what type of punishment MLB and Commissioner Manfred will seek to impose.

Given the unprecedented nature of the incident, initial speculation has ranged anywhere from a steep fine or the loss of draft picks to a potential postseason ban for the Cardinals. However, while Commissioner Manfred certainly has broad authority to govern the sport under his “best interests of baseball” powers, his authority – as NFL Commissioner Roger Goodell has learned in recent years – is not absolute. Instead, MLB’s league constitution and collective bargaining agreement both impose some real constraints on the commissioner’s ability to punish the Cardinals.

Postseason Ban

One suggestion in the aftermath of the hacking scandal has been that MLB should ban the Cardinals from the playoffs for one or more years. It appears unlikely that Commissioner Manfred would have the authority to institute such a penalty, however. Not only is such a power not assigned to the office of the commissioner under the MLB Constitution, but it would also run contrary to the terms of MLB’s CBA.

Specifically, Article V, Section A of the CBA states:

Following completion of each championship season, ten Clubs shall qualify for Post-Season play: the three Division Champions in each League and the two other Clubs in each League with the highest percentage of wins in the championship season (Wild Card Clubs).

Thus, the eligibility of teams to appear in the playoffs is not a matter left simply to MLB’s discretion. Instead, the formula for playoff qualification is clearly laid out in the CBA.

This means that if MLB were to seek to impose a playoff ban on the Cardinals, the Major League Baseball Players Association would have to sign off on the punishment as well. And while we are certainly in uncharted territory here, it is hard to see the players’ union signing off on any such prohibition for several reasons.

As an initial matter, the Cardinals’ players have a financial stake in qualifying for the playoffs. As Wendy Thurm has previously explained, the CBA guarantees players on playoff teams a certain share of their franchise’s postseason revenue. Consequently, the MLBPA almost certainly would not agree to any postseason ban without MLB agreeing to compensate the Cardinals’ players for any potential lost playoff revenue they would have been in line to receive.

But even if MLB were to reimburse the Cardinals’ players, however, the union would still be unlikely to sign off on a plan that would deny some of its members an opportunity they had earned to compete for a championship. So given the restrictions imposed by the CBA, it appears quite unlikely that MLB would be able to impose a postseason ban on the Cardinals.

Loss of Draft Picks

Alternatively, MLB could potentially try to strip the Cardinals of future picks in the amateur draft. Unlike a postseason ban, Article II, Section 3(f) of the MLB Constitution specifically permits the commissioner to take away draft picks from a team that has engaged in conduct detrimental to baseball. Nevertheless, it is somewhat unclear whether MLB would actually have the power to unilaterally strip the Cardinals of its draft picks.

As with a postseason ban, the MLBPA could potentially argue that it must sign off on the Cardinals’ loss of any draft picks. Because the union has specifically agreed to the draft structure, and included rules directly relating to free agent compensatory draft picks in the CBA, the MLBPA could contend that it has a voice in the matter. Indeed, to the extent that any loss of draft picks affected the size of the Cardinals’ domestic amateur signing bonus pool, the union could assert that it has a direct vested interest in the punishment, since the penalty would reduce the amount of money flowing to potential future union members.

Whether or not a court or arbitrator would agree with the MLBPA on the issue is uncertain. While the NFL has relatively frequently stripped its teams of draft picks, this would appear to be the first time that an MLB commissioner has exercised his authority under the league constitution to do the same.

In fact, to the extent there is any prior precedent on the issue, it does not favor MLB. Back in 1976, Commissioner Bowie Kuhn tried to strip the Atlanta Braves of a draft pick for tampering with free agent Gary Matthews, only to have a court overturn the penalty because the commissioner had not yet been granted such a power under the league constitution. Now that the owners have officially given this power to the commissioner, however, it is unclear how a court or arbitrator would respond.

Of course, it is also possible that the MLBPA would not object to the Cardinals losing some future draft picks, especially if the punishment did not affect the amount of money that the team could spend on its remaining picks. At the same time, though, allowing the franchise to retain its full bonus pool would certainly reduce some of the sting of the punishment. But if MLB did try to reduce the Cardinals’ bonus pool in addition to stripping the team of its draft picks, then the union might very well contest the penalty.

All in all, then, it is uncertain whether Commissioner Manfred would actually be able to take away any of the Cardinals’ future draft picks should he choose to go that route.

Edit: As some commenters have noted, one possible compromise here would be for MLB to strip St. Louis of several draft picks, with any of the team’s lost bonus pool money being reallocated and split among the other 29 teams. This would likely address most of the MLBPA’s potential concerns. Ultimately, though, it would still require some negotiations between MLB and the union; Commissioner Manfred could not unilaterally impose such a penalty on his own.

Suspension of the Employees Involved

Another potential penalty arising out of the hacking scandal would be for MLB to suspend any Cardinal employee involved in the incident from working in professional baseball, on either a temporary or permanent basis; I think it’s fair to assume the individual(s) will be fired by the Cardinals, but MLB could restrict another team from hiring them as well. Along these lines, Article II, Section 3(c) of the MLB Constitution grants the commissioner the power to suspend or remove any employee of an MLB team who has engaged in conduct that was not in the best interest of baseball.

Assuming that no Cardinals players were involved in the hacking – although what a bombshell that would be! – these suspensions would not implicate the CBA, and therefore not require the signoff of the MLBPA.

If MLB were to suspend some of the Cardinals’ employees from baseball, it is always possible that the affected individuals could sue the league for some sort of unlawful collusion. Ordinarily, an agreement by all of the competitors in an industry not to hire a particular employee would violate the nation’s antitrust laws. MLB, however, has an antitrust exemption, so any such case would likely have slim odds of success.

Therefore, it is quite likely that any Cardinal employee involved in the hacking – and especially those in the lower-levels of the organization – could be facing a suspension from baseball.

Monetary Fine

Finally, perhaps the most likely penalty for the Cardinals is some sort of monetary fine. Once again, however, the MLB Constitution imposes a significant limitation on Commissioner Manfred’s ability to punish the Cardinals in this regard. Under Article II, Section 3(f) of the league constitution, the commissioner cannot fine an MLB team more than $2 million for any single offense.

Of course, should it turn out that Cardinals employees accessed the Astros’ computers on more than one occasion, then MLB could assert that each separate incident should trigger a separate $2 million fine. Alternatively, it is always possible that the rest of the MLB clubs would be willing to make an exception to the normal rule in this case due to the severity of the allegations.

But otherwise, unless the MLB Constitution has been amended in recent years to allow the commissioner to impose a much higher fine on one of the league’s franchises, it appears unlikely that MLB will be able to assess the Cardinals a truly significant monetary penalty – something on the order of tens of millions of dollars – in this case.

Nathaniel Grow is an Associate Professor of Business Law and Ethics and the Yormark Family Director of the Sports Industry Workshop at Indiana University's Kelley School of Business. He is the author of Baseball on Trial: The Origin of Baseball's Antitrust Exemption, as well as a number of sports-related law review articles. You can follow him on Twitter @NathanielGrow. The views expressed are solely those of the author and do not express the views or opinions of Indiana University.

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Forrest Gumption
8 years ago

Clearly the punishment must consist of one or all of the following:

1. Strip them of all their titles since inception.

2. Have them forfeit all games this season and ban them from competition for the next 5 seasons.

3. Throw David Eckstein in prison for the rest of his life.

David Eckstein
8 years ago

But there are hundreds of unsolved hackings in MLB!

8 years ago
Reply to  David Eckstein

You just don’t know when to keep your mouth shut, do ya Ecksy boy?

Forrest Gumption
8 years ago
Reply to  David Eckstein

Zip it boy, or we will get David Freese to join you in there.

Pirates Hurdles
8 years ago

I feel it is entirely reasonable to force the Cards to play in the AFC East this fall, while the Patriots join the NL Central next spring.

Forrest Gumption
8 years ago

Tom Brady was drafted by the Expos, I’m sure he’d probably be good at baseball too.

8 years ago

Pretty hard to deflate baseball though.

8 years ago

Gee, I thought that being drafted by the Expos was often a sign that someone wasn’t all that good at baseball.

8 years ago

Montreal Expo draft picks/amateur free agents: Andre Dawson, Vladimir Guerrero, Andres Galarraga, Larry Walker, Gary Carter, Brandon Phillips, Randy Johnson, Ian Desmond, Grady Sizemore, Marquis Grissom, Delino DeShields, Steve Rogers, Tom Brady (wrong sport, but still…), Cliff Floyd, Rondell White, Charles Johnson, Pete Incaviglia, Norm Charlton, Terry Francona, Tim Wallach, Bill Gullickson, Condredge Holloway (wrong sport, but still….), Milton Bradley (focussing on the talent here), John Vander Wal, Javi Vazquez, Jose Vidro, Phil Garner

8 years ago

Then what happens if the Cardinals play the Cardinals?

8 years ago

The Houston Chronicle is reporting that what was hacked was posted online in July, 2014 when the event occurred. Depending on intent, there may be no actual ‘crime’ beyond civil remedies.

8 years ago

It is clearly illegal, regardless of the ultimate intent.