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 . . .

10 comments:

Anonymous said...

Currently, there are neonatal lupus, which may not seek treatment.
Sounds juicy, right? Para aquellos que quieran
leer la teora, simple.
Feel free to visit my web blog : lupus doctor Yellow Jacket

Anonymous said...

[url=http://securerucasino.ru][img]http://securerucasino.ru/ia.php?q=1[/img][img]http://securerucasino.ru/ia.php?q=2[/img][img]http://securerucasino.ru/ia.php?q=3[/img][/url]



http://bestplaceget3797.myfreehosting.ru/skachat-kazino-na-nokia-n73.html Игровые автоматы елена играть бесплатно скачать казино бесплатно для телефона Извержения вулканов видео [url=http://bestplaceopa0194.hostingsiteforfree.com/igry-vulkan-bezplatno.html]Игры вулкан безплатно[/url] http://bestplaceopa0194.hostingsiteforfree.com/pochemu-onlayn-kazino-ne-prinimaut-sms-platezhi-iz-ukrainy.html секреты рулетки технология онлайн скачать хак для казино samp-rp Как взломать игровой автомат на компе [url=http://bestplacehjx7606.boxhost.me/skachat-kazino-chempion.html]скачать казино чемпион[/url] http://bestplaceopa0194.hostingsiteforfree.com/vulkany-vulkanichiskie-i-bolshoy-vulkan-v-mire.html Всемирный чат рулетка Казино клуб клубничка Игровые барабанные автоматы онлайн [url=http://bestplacermc2353.binhoster.com/gruppa-kazino-1992g.html]Группа казино 1992г[/url] http://bestplacehjx7606.boxhost.me/oboi-kazino-rabochiy-stol.html Игровые автоматы игры в мобилу Онлайн игровой автомат без регистрации играть бесплатно смотреть фильм ограбление казино онлайн бесплатно 2012 [url=http://bestplaceopa0194.hostingsiteforfree.com/forum-ruletka.html]форум рулетка[/url]
[url=http://www.blogger.com/comment.g?blogID=9636475&postID=110985724965505768&page=1&token=1362350859271] эмуляторы игровых автоматов скачать торрент[/url]
http://bestplacehjx7606.boxhost.me/skachat-kardoniyskuu-ruletku.html [url=http://bestplacermc2353.binhoster.com/igrovye-avtomaty-zhuki-igrat-besplatno-777.html]Игровые автоматы жуки играть бесплатно 777[/url] Игровые автоматы бешенные обезьянки

http:/www.liveinternet.ru/users/fultuwurla197311z5v/post264885501/
http:/www.liveinternet.ru/users/bassoundhalffoot19827fz0f/post264905292/
http:/www.liveinternet.ru/users/skyndebtslumcon1975xwats/post264898630/
http:/www.liveinternet.ru/users/fultuwurla197311z5v/post264940725/
http:/www.liveinternet.ru/users/bassoundhalffoot19827fz0f/post264900375/

[url=http:/www.liveinternet.ru/users/bassoundhalffoot19827fz0f/post264901648/]рулетка американский чат[/url] [url=http:/www.liveinternet.ru/users/folracortie1979maou/post264886945/]Бесплатные игры на игровых автоматах[/url]
[url=http:/www.liveinternet.ru/users/blanodgoabubb1975he0s/post264933803/]Игровые автоматы гейминаторы бесплатно онлайн[/url]

Anonymous said...

http://twitter.com/PyIU8xOm2H скачать бесплатно игры на компьютер и без регистрации архивом 100 игровых автоматов [url=http://twitter.com/leonid_pa_46494] создать сайт казино [/url] Играть в бесплатные игры игровые автоматы Видео чат рулетка mamoleptino321 http://twitter.com/tXHtmJZBRk Как можно выигрывать на автоматах в игровых салонах [url=http://twitter.com/bogdan_ko_08719] Прогноз извержения вулканов [/url] Как положить деньги на игру gta samp Веп камера казино
http://twitter.com/K5CgXDTAf2 Игры казино онлайн кз [url=http://twitter.com/sasha_po_845024] Игровые автоматы играть бесплатно bananas go bahamas [/url] реально ли заработать в интернет казино скайп рулетка видеочат


[url=http://www.12news.uz/news/2012/11/14/%d0%bf%d0%be%d1%81%d0%be%d0%bb%d1%8c%d1%81%d1%82%d0%b2%d0%be-%d0%b3%d0%b5%d1%80%d0%bc%d0%b0%d0%bd%d0%b8%d0%b8-%d0%be%d1%80%d0%b3%d0%b0%d0%bd%d0%b8%d0%b7%d1%83%d0%b5%d1%82-%d1%80%d1%8f%d0%b4-%d0%bc/#comment-4646]Проги для рулетки онлайн казино[/url]
http://www.motorolaindia.in/2012/07/10/motorola-razr-and-maxx-user-receiving-ics-updates/#comment-105026
http://www.click-conversion.com/2011/05/17/lady-gaga-first-twitter-user-with-more-than-10-million-twitter-followers/#comment-131766

Anonymous said...

Get your facts straight before writing false accusations.

Anonymous said...

Once these records are actually verified with the lender, you can get your approval inside an hour. So, make sure you search the best lender who's ready to provide you low interest levels on used auto financing loan without the hidden conditions and terms [url=http://paydayloanlendersapproval.co.uk]payday loans[/url] it is that loan that warrants fast approval with no distressing requirement of different requirements and other qualifications. This applies in the event of tenure period or interest rate or other regulations and rules. Read the little print in order that your not shocked at the later date online payday loans generally, the finance providers don't want to entertain the credit application that folks with unhealthy credit status send in their mind. Suffice it to convey, the song is all about a great, outdated hangover; but this song is indeed busy with spices that I wouldn't like to see it using a hangover. In order to make sure that the total volume of the credit is repaid promptly, the borrower will most often have set monthly installments http://paydayloanlendersapproval.co.uk therefore, it will be a wise move to only purchase a car that you simply know you'll be able to afford.

Anonymous said...

Getting loans have grown to be as fundamental as purchasing some thing from a store. If the money provider finds all mentioned information accurate then he approves your desirable funds and yes it is sanctioned right into your bank account across the clock [url=http://onlinepaydayloans-4u.co.uk/]payday loans online[/url] countrywide group assist people to get business financing loans and other financial. This history doesn't must be super long but you will need to own one. Ed Lester has not been added to the SLC payroll when given a two-year contract in January 2011, BBC Newsnight said pay day loans uk en pid siit ennustuksesta, koska haluaisin tytnkin : hn on kuitenkin vakuuttunut, ett ennustus pit paikkansa, koska se on kaikilla muillakin -paitsi yhdell- pitnyt. It is usually believed that loan application takes at the very least a day to receive the green light. There also have been innumerable cases of harassment of shoppers by lending agencies http://onlinepaydayloans-4u.co.uk/ the process to pay back these refinancing options is very all to easy to.

Anonymous said...

Hello there I am so thrilled I found your site, I really found you by accident, while I was looking on Google for
something else, Anyhow I am here now and would just
like to say thank you for a marvelous post and a all round entertaining blog
(I also love the theme/design), I don't have time to browse it all at the moment but I have saved it and also added your RSS feeds, so when I have time I will be back to read much more, Please do keep up the awesome job.

My blog need money for bills

Anonymous said...

pet insurance Your financial resources are also very essential upon purchasing a health insurance, check first if you have the budget and that you can pay for this. According to the American Pet Products association, there are 72.9 million households who own pets.

Morgan smith said...

This applies in the event of tenure period or interest rate or other regulations and rules.
101 Insurance

jim smith said...

This applies in the event of tenure period or interest rate or other regulations and rules.
Hollywood FL Transmission