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November 26, 2011 / Nat Anacostia

I’m no lawyer, but something about the new CBA…

I’m no lawyer, but  something about the new CBA (collective bargaining agreement) seems like it really shouldn’t be legal.

Like I said, I don’t know what the law actually says, so I’m just going by my intuition.

Let me try to explain my concern using an example from another industry. Let’s suppose all the U.S. airlines got together and unilaterally decided they wouldn’t pay any of their pilots more than $100 per hour. I’m pretty sure that would be illegal, though I admit I don’t know which specific law it violates–maybe it’s labor law or antitrust, but I’m pretty sure that companies can’t do that.

On the other, if the airlines got together and bargained with the pilots union and the outcome of the negotiation was an agreement that says no pilot would be paid more than $100 per hour, that seems like it should be legal.* That is, because representatives of the pilots are at the negotiating table and the pilots’ union gives its assent, we would recognize it as a valid agreement. The key idea is that it’s  not unilateral, and the pilots have a say in what the limits on wages are going to be.

* I’m aware that in practice in the United States, each airline generally negotiates a separate agreement, and that some airlines are not unionized. But in some industries, union agreements are made collectively with multiple employers, so the basic point remains.

Next suppose the airlines and the pilots get together and they decide that not only should the limit on pilots’ pay be $100 per hour, but also that the flight attendants pay should be no more than $25 per hour and the baggage handlers should be limited to $10 per hour. Furthermore, assume that no flight attendants or baggage handlers were present at the bargaining table. Would this agreement be legal? It seems to me that it wouldn’t be, for the same reasons that the unilateral limit agreement by the airlines wouldn’t have been. The fact that the pilots may have agreed to it would seem to be irrelevant if we’re talking about the pay of flight attendants and baggage handlers.

Now isn’t the CBA essentially the same thing? The teams and the Major League Baseball Players’ Association get together and not only agree on the rules under which MLB players’ salaries will be set, but also on the rules and limits governing the pay and bonuses of U.S. and international minor leaguers. The new rules for the amateur draft are expected essentially to function like a hard slotting system, with very little flexibility to pay more than the recommended amount for each draft slot. Furthermore, the minor leaguers are not represented at the bargaining table–the Players’ Association membership is limited to the 1,200 players who appear on the major league teams’ 40-man rosters. Like I said, I’m not lawyer, but it’s hard for me to believe that such an agreement could be legal.

Now maybe baseball gets away with this because of its antitrust exemption. To tell the truth, I’m not sure what the antitrust exemption does for baseball. In most respects, it seems to operate about the same as the other major professional sports that don’t claim such an exemption—maybe it’s its operations with the minor leagues that are protected by the exemption.

Or maybe MLB just figures that no one is going to challenge them in the courts. Who would? Certainly not some 17-year Dominican kid who sees baseball as his only ticket out of poverty. Probably not the 19-to-22 year-old draft-eligible American kid who dreams of major league glory either. None of them would want to rock the boat. And even though most minor league players are terribly exploited, they aren’t the type of workers who are likely to organize a union. So maybe the CBA is illegal, but MLB has decided that it can get away with it because no one will challenge it.

How much difference will the CBA really make? The reactions are all over the map. Brien at It’s About the Money describes it as

“a truly terrible deal, basically the worst case scenario and then some.  It’s a horrible deal for amateur players, and will certainly push a large amount of them to college, and a fairly substantial number of young athletes to other sports altogether.”

At the other extreme is Tom Boswell of The Washington Post (have you noticed how he’s seeming more and more like a PR flak for the Nationals and MLB lately?), who writes that the CBA

“is so monumentally symbolic for the sport, and such a shock to our cynical systems, that millions of fans, accustomed to 35 years of labor warfare or steroid disgrace, may suffer from the same delighted whiplash. We hardly know how to cope with optimism in such unaccustomed quantities.”

For a more balanced discussion, we can read Rob Neyer of Baseball Nation:

” I think it’s far too early for say exactly what effect the new rules about amateurs will have on competitive balance and quality of play, generally.

My guess, though? Whether positive or negative, the overall impact will be small enough that it’s difficult to measure.”

My view is similar. Looking specifically at the Nationals’ last couple of drafts, what players were we able to sign that we probably wouldn’t have signed with the new rules? My guess is that there were really only two—A.J. Cole in 2010 and Matt Purke this year—who wouldn’t have signed without extra money.  Yes, the Nats have signed a lot of other players over slot—Stephen Strasburg, Bryce Harper, Sammy Solis, Robbie Ray, Anthony Rendon, Alex Meyer, and Brian Goodwin—but my sense is that if the new rules had been in effect, most of those guys would have gone ahead and signed and taken less money. So, while there’s some effect on the team, it’s mixed (the team loses out on a couple of prospects, but also saves quite a bit of money). Furthermore, because the new rules create hard expectations about bonuses for each draft slot, disasters like the failure to sign Aaron Crow in 2008 become much less likely.

The other thing to think about with the new rules is that, like other restrictions on mutually beneficial contracts, there will be efforts to evade the restrictions that will lead to unintended consequences. We can sort of guess what they might be. Will teams start buying cars and condos for their prized prospects? Will the kid (or the kid’s parents) get cushy off-season “jobs” with partners of the team? We can look at some of the shenanigans that go in the NCAA and get a sense of what happens when an external authority tries to prohibit payments for talent.

So I don’t like the new CBA limits on amateur and international contracts—they basically are intended to transfer income from relatively poor minor leaguers to rich owners and MLB players—but I think they will be evaded and have a relatively small effect on the talent available to baseball as a whole or to the Nationals, specifically, as a team.

Other parts of the agreement are also a mixed bag. There will be more interleague play (probably inevitable) and another pair of wild card teams. Contrary to some suggestions, it will not reduce the probability of a wild card team winning the World Series—yes, the probability of any individual wild card team winning will be only half as large, but there will be twice as many wild card teams competing, so the probability of one of them winning the championship won’t be perceptibly different. There will be expanded drug testing and a ban on smokeless tobacco, which I count as pluses. But on the whole, the changes seem fairly modest and unlikely to upset the fortunes of the rich and powerful who run the game.

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5 Comments

  1. jorgath / Nov 28 2011 10:59 am

    It seems to me that it IS legal…barely. See, technically, MLB and the MLBPA aren’t dictating what Minor Leaguers can be paid. They’re dictating what Minor Leaguers can be paid by Major League teams to play for Minor League teams that voluntarily affiliate with those Major League teams. There ARE other Minor League teams out there (not many, granted) and if you want to go to them, they theoretically could pay you more than these limits. I say theoretically because most of them aren’t profitable enough to do so.

    Your analogy of the pilots and flight attendants is incorrect. It’d be better to say that Delta and the pilots union for Delta pilots are dictating how much a pilot for a regional airline can be paid if that regional wants to fly under the colors of Delta Express. Which wouldn’t happen because they have the same union, but…

    • Nat Anacostia / Nov 28 2011 10:47 pm

      jorgath – Thanks for the interesting comment. I’m not sure about the Delta Express analogy, though. My understanding is that a minor league player’s employer is the Major League team, and that the Major League team then leases them to the minor league franchise through a player development contract. At least that’s how I interpret the following statement that appears on the Minor League Baseball website: “Players in affiliated leagues sign a contract with a Major League Baseball organization. Subsequently, they are assigned to one of that organization’s Minor League Baseball affiliates.”

      As I said in my post, I really don’t know whether this arrangement is legal or not, so I’d be interested in learning more. But regardless of whether or not it’s legal, it really doesn’t seem fair to the minor league players.

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