Monday, January 21, 2013

Minor League Clawbacks

Recently, I had the good fortune of having an article published by the Saint Louis University Law Journal. The article, entitled "Deterring Opportunism Through Clawbacks: Lessons for Executive Compensation from Minor League Baseball," compares the clawbacks found in standard MiLB contracts with clawbacks in executive compensation contracts. 

So, what the heck is a clawback? Well, it's basically some verbiage in a contract that allows for money already given to a person to be taken back--or "clawed" back--if a certain event occurs. 

What the heck do clawbacks have to do with minor league baseball? As the article details on page 200 (no, the article isn't 200 pages--it begins on page 185 of the issue and goes for 30 pages), the Commissioner's office introduced "recommended" clawback language for minor league contracts in 2006. By 2007, almost all teams had adopted the language. 

The language involved signing bonuses. MLB teams had been burned in recent years by a few draftees who had taken large signing bonuses and simply walked away from the game after a year or two in the minors. For instance, Ryan Jaroncyk signed with the Mets in 1995 for $850,000, played two years in the minors, and retired from the game at the age of twenty. The Mets never recovered a dime of the bonus. 

The article details other examples: Grant Desme, who retired to become a priest; Justin Hoyman, who pocketed a $725,000 before retiring after two years in the minors; Quan Cosby, who left the minors to play football; and Tom Wilhelmsen, who retired from the game after "a lot of beer and grass." 

Most of the clawback provisions adopted by teams were identical. If a player retired prior to the expiration of his standard seven-year contract, the provision allowed the team to claw back a portion of the signing bonus. They mostly followed the same basic formula: if a player retired after a single season, the team could demand the return of 6/7 of the signing bonus; if a player retired after two seasons, the team could the return of 5/7 of the signing bonus; and so on until the end of the contract. 

I argue in my article that the clawbacks effectively deter opportunistic behavior. As the above examples demonstrate, occasionally players desire to leave their contracts very early in their careers. Jaroncyk provides an example of a player who probably never even intended to put forth a good faith effort to make it to the majors. Others intend to put forth such an effort, but minor league baseball can take a toll on a young athlete. Long bus rides, the absence of your family, the inevitable struggles and failures, and the exhaustion of playing every day can make one desire to run back home to your high school girlfriend and be a rodeo clown. 

The clawback provisions prevent players such as Jaroncyk from gaming the system. And they prevent other homesick players from leaving the game prior to giving it full consideration, which might ultimately help both the team and the player. Thus, they are an effective tool from a contractual standpoint. 

Now, this is a blog that advocates for the rights of minor league players. And one important thing about clawbacks needs to be brought to attention here: the mechanism in which these provisions were adopted was unfair.

MLB teams unilaterally included these provisions in their standard minor league contracts. While a few of the top players drafted each year may in fact have the leverage to negotiate such provisions out of their contracts, most minor leaguers do not possess such leverage. After all, the Rule 4 draft exists in order to reduce players' leverage. Players can only negotiate with a single team, and they only have one or two opportunities to do so. For those drafted after the first few rounds, the contract nearly becomes a take-it-or-leave-it instrument, such is the state of their relative bargaining power.

Thus, the unilateral inclusion of the terms was unfair, even if the provisions are both legal and useful from a contractual standpoint. This again highlights the need for a minor league union. Such a union could effectively re-balance the relative bargaining power between owners and minor leaguers. Instead of unilateral implementation, the terms of such clawback provisions could be discussed between both parties to ensure that their inclusion does not become too draconian for the player. 

As I write about separately in a forthcoming article in the Harvard Journal of Sports and Entertainment Law, the big leaguers' union (the MLBPA) has a poor recent history of standing up for minor leaguers. In fact, they've recently traded away some bargaining chips with negative implications for minor leaguers in order to secure higher wages and other benefits for big leaguers. Yet in this instance, the MLBPA did the right thing. 

In the last round of bargaining, the MLBPA brought up the length of the clawback provisions. After discussions, MLB and the MLBPA agreed that clawback provisions may continue to be included in minor league contracts, but the length of the provisions must vary according to the signing bonus. For instance, longer clawback provisions may be included for bonuses above $1,000,000 than for smaller signing bonuses. In fact, for signing bonuses under $250,000, the clawback may only extend through the first three years of the standard seven-year contract. 

This makes sense. The larger bonuses should be the chief concern of the teams. Teams shouldn't be in the business of forcing a fifth-year senior college signee into staying until the end of his contract just because he doesn't want to pay back a portion of the $2500 signing bonus that he no longer has. 

In the end, then, this is a double lesson. It's a lesson in how, without a union representing them, owners can do just about whatever the heck they want with minor league contracts. And it's also a lesson in how a union can effectively re-balance the mismatched bargaining power and ensure that players are properly represented. Once this occurs, both sides often benefit. 

Now about those minor league salaries . . .

Friday, January 18, 2013

Baseball Players Can Have Imaginary Girlfriends Too

He was 23. He was a professional baseball player. He was a cool, good looking guy. He could've gotten almost any girl.

Instead, he had an imaginary, online girlfriend.

A few years back, while still kicking around the minors, a buddy from another team told me a story. Although a terrific story, I'd forgotten about it until the tide of Twitterverse nearly swept me out to sea with a tall-Te'o tale. From this Te'o swell, it all came rushing back to me. I went back to my journal from that year (yes, I'm that big of a nerd), and this is what I read.

The player met a girl online. The pictures showed a gorgeous girl with a smokin' body. He began chatting with her regularly. Before long, they were talking on the phone.

A few weeks later, he began asking her to come to a game. She kept declining. Finally, she said she would come. She never showed.

He called her after the game. "I got tied up at work," she said.

A couple weeks later, the player had an off day. He attempted to visit her in the City. She was going to meet him when he got off the train. He got off the train. He waited. And waited. And waited. He called. And called. And called.

Finally, she answered: "My grandma is sick. I can't meet you."

He became obsessed with this girl. Pictures were texted to him. He texted pictures back. They talked on the phone for an hour each night.

A month later, he talked her into coming to another game. She never showed. Again, she couldn't escape work.

He kept talking to her each night. His friends on the team--already suspicious--began asking him questions. He told them not to worry about it.

He began distancing himself from these teammates. He had been one of the cool guys. He went out with teammates, played cards, and played video games. Now he just talked on the phone every night.

The offseason came, and most teammates thought the "relationship" would end. But spring training arrived, and there the player was, talking to the girl each night.

By the time I heard the story, a year had passed. The two had never met, but they talked to each other every night. She was still his girlfriend. And he had no other girlfriends and wasn't looking. He wasn't happy, but he couldn't escape.

What does this mean? Even the best of us occasionally have trouble separating the real from the surreal. Some have more difficulty than others.

Take a person susceptible to this and remove them from their family--their support group. Put them in a dream world, in which they're either chasing a boyhood dream in the minor leagues or living a dream by playing college football at the highest level. Fans ask for autographs. Kids yell their name.
The separation between real and unreal becomes blurry.

Suddenly they meet a girl online. They go down the path, as many have done, and they like the path initially. But it begins to spin out of control. They become suspicious no doubt. But they've already gone down the path, and they're too embarrassed to fix things. And they like talking to this person.

So they keep following the path, to nowhere . . .

Wednesday, January 9, 2013

Their Own Hall of Shame

Many people have written a lot more about the Hall of Fame voting than I will write today. But for the most part, the expansiveness of the literature has merely muddled the dialogue. The goal of this short post is to simplify and clarify this discussion.

The first step towards such a clarification is to realize that there are really two different discussions. The question of whether certain individuals deserve to be in the Hall differs from whether certain individuals should be in the Hall. This proposition, at first glance, seems counterintuitive. But it will become clearer as we explore this further.

Do Bonds and others deserve to be in the Hall?

Bonds, Clemens, Sosa and the other known cheaters do not deserve to be in the Hall.

Getting to this point first involves a decision on whether they actually cheated. Many philosophers have argued that their behavior did not constitute cheating for a couple of reasons. First, they argue that the high level of steroid usage during their playing days diminished any unfair advantage. The lack of enforcement in the era and the high usage supports this argument. After all, advantages disappear whenever a substance is widely available. Second, some argue that there is no clear link between steroid usage and performance. Some statistical support exists for this argument, but physics and medical studies greatly contradict this argument. In short, I dismiss this argument.

As I write more thoroughly in a forthcoming law review article, this positivistic stance is unsatisfying. There must be a moral component to the approach towards cheating in baseball, and this moral component should be reflected in Hall of Fame voting. Yes, usage was rampant. Yes, the rules were not enforced. But this still involved a moral choice. Players knew that their behavior was wrong, and yet they chose to behave in such a manner anyways. And they were rewarded handsomely for this immoral choice.

Since this is a blog on life in the minors, imagine that you are a Triple-A baseball player. We'll say you are an outfielder. You have similar skills to another outfielder in the organization. You choose not to use steroids; your teammate chooses to use steroids. Your teammate suddenly hits more homeruns, steals more bases, and covers more ground in the outfield. The team promotes your teammate while you continue to languish in the minors. Your teammate makes millions of dollars, maybe makes two All-Star teams, and enjoys pension benefits for his lifetime. You go home after a couple more years in the minors and struggle to find a job to feed your family.

This was the basic moral decision that thousands of ballplayers made. The players who chose to take steroids made an immoral choice. They benefited greatly from that immoral choice over the course of their careers, and they continue to benefit from that choice.

These cheaters should not be recognized any further for their tainted greatness. They should not win any more awards. The greatest of them should not be in the Hall of Fame.

Should Bonds and the others be in the Hall?

This is a separate and more difficult question to answer. While the cheaters do not deserve to be in the Hall, it is almost impossible to separate the cheaters from the non-cheaters. Where is the line drawn? On positive tests alone? On connections to performance enhancing drugs? All of these standards have their problems.

The era was so tainted with suspicion that it is difficult to label any player. Almost any standard will result in a plethora of false positives and false negatives. Thus, it's difficult to find any workable standard.

It might be best to look at history. Again, as I discuss thoroughly in my forthcoming law review article, organized baseball has a rich history of cheating. Previous pitchers who openly doctored baseballs have been admitted into the Hall. For instance, Gaylord Perry wrote an autobiography called "Me and the Spitter," and yet writers inducted him into the Hall. He achieved his greatness through known cheating. Even though his cheating involved an external manipulation in the form of ball doctoring instead of an internal manipulation in the form of body morphication, his achievements were similarly tainted. And yet he, and other traditional cheaters, have been admitted.

History thus supports the admission of these players into the Hall, even though they don't truly deserve such admission. Moreover, the lack of a workable standard supports such an admission.


At the end of the day, baseball writers must make a moral choice. Those that tell them to "get off their high horse" are simply wrong. Cheating is a moral issue. The players made a moral choice when they decided to use performance enhancers. The baseball writers must assess the effects of this moral choice when making their decisions.

Are the baseball writers then judging the players? Yes, in a way they are. Would many of the baseball writers have made the same choice as the cheating players had they been players? Undeniably so. But that does not make their current decision hypocritical, as it is a hypothetical discussion. One must instead deal with realities. The baseball writers are the ones to make the choice, and it must be a moral one.

Again, Bonds and the others do not deserve to be in the Hall. Even though this would be a retroactive reaction, deterrence supports such a retroactive reaction. At a basic level, it differs only slightly from stripping Tour de France titles from a certain cyclist.

For this reason, I would be more than fine with these players not being in the Hall. But because of the history of admitting other cheaters, and because of the lack of a workable standard, these players should probably still be admitted.

Maybe we'll give them a separate wing in the Hall, where they may forever congregate in a Hall of Shame.