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Wednesday, November 14, 2007
What Constitutes Collusion?
The free agent "meat market" officially began at midnight on Monday. Sean Gregory has an interesting piece in today's edition of Time Magazine on the announcement made by the MLBPA late last week that it is investigating possible collusive activity during the general managers' meetings (A-Rod's Salary: Watching for Collusion). Gregory explains the impetus for the union's concern:
So what constitutes collusion? Gregory interviewed me for the story, and he and I spoke about this issue at length. The prohibition on collusion regarding free agents arises from the collective bargaining agreement, which simply provides: "The utilization or non-utilization of rights under this Article...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."
For one, during baseball's general managers' meetings in Orlando last week, Theo Epstein of the Boston Red Sox and Larry Beinfast of Florida Marlins introduced a new element to the gathering. The GMs assembled in one room and each stated what their off-season priorities were, and who might be available in trades. To the execs, it was an efficient way to horse-trade information that they typically would share in various time-consuming, one-on-one conversations. Some teams spoke in general terms, others got a little more specific, Major League Baseball insists it was not a conspiracy meeting.
I think when you have all of the general managers together in one location in meetings at the same time in which the highest paid and most sought after free agent is available in the market, there are bound to be concerns regarding collusion. To establish a collusion claim, however, it would require fairly strong evidence that two or more teams were discussing in specific terms how much they would be willing to spend on a particular player or players generally. Discussions regarding team philosophies, priorities and overall objectives do not rise to the level of collusion. But there is somewhat of a thin line between information that teams can and cannot discuss, and it can also turn on which particular teams are having the discussions. Suppose one team says to another, "we're not in the market for what A-Rod wants". If the Pirates say it to the Devil Rays, it really isn't too concerning because neither team is in the market for A-Rod. The analysis obviously changes if the Yankees say it to the Red Sox.
In the collusion case from the mid 1980s that resulted in a $280M settlement in favor of the players, the arbitrator noted evidence that, during off-season management meetings, clubs were warned to exercise self-discipline in making operation decisions and to resist temptations to give in to unreasonable demands of players. Clubs were also warned that rash moves to add free agents in hopes of a pennant resulted in negative financial results for clubs. Also, club representatives stated their intent to avoid long-term contracts in response to a poll conducted by the commissioner, and the commissioner repeatedly expressed concerns regarding the financial commitment made by the clubs under "dumb" long-term contracts.
The arbitrator's decision establishes two important points about collusion. First, collusion doesn't require a "common agreement" among the clubs to suppress player salaries. The arbitration panel found that "the distillation of the message of these meetings" resulted in a situation by which the "right of the clubs to participate in the free agency provisions of the [CBA] no longer remained an individual matter to be determined solely for the benefit of each club." Second, the case demonstrates the important distinction between teams discussing in general terms their philosophies, priorities and overall objectives vs. more specific discussions regarding financial matters pertaining to the signing of free agents.
But what about when general managers make specific statements in the press regarding their intentions of not signing particular free agents? As Gregory puts it, was Schuerholz "sending his colleagues a not-so-subtle signal to stick it to A-Rod?" In other words, can the media be used as a vehicle to engage in collusion? We know that collusion can fall short of an agreement to suppress salaries. Where is the line drawn between permissible team discussions and illegal collusion?