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Free Agent Advice Form

Monday, November 22, 2004

ESPN.com has posted a scanned form of a 'Free Agent Advice Form' that a team can request from the Office of the Commissioner of Baseball. Below, I am recreating the form as best I can because the original is not text, and because I wish to comment on it.

I find this form to be incredible, not the form of course, but the fact that the Office of the Commissioner of Baseball has set up a forum for teams to ask how much they should pay a player. Yes, I read the form and all of the text is legalese. The real point of this form is for the OCB to 'recommend' salary ranges to the teams.

In most industries, I believe this would be bordering on illegal. However, baseball happens to be the proud owner of an anti-trust exemption, and is free to act like a monopoly.

This type of document probably exists in other industries, but it would be filled out by an independent consultant. To me, this is similar to the NYSE or NASD putting out a memo declaring they think XYZ stock should be trading at $X dollars. In my opinion, the very fact that the Commissioner's office is the binding force between owners makes this memo inappropriate. Furthermore, there is a reason that the exchanges don't recommend prices, its because it can't be done reliably by an involved party.

The logical counter-argument is that the memo is simply facilitating communication of salary data and injury history to interested parties. This is fine with me, because the players union makes a practice of making all player's contracts public. The union did this originally because players would negotiate with their GM saying something like "I'm just as good as Bob, so I should get paid what Bob gets paid."

According to John Helyar in "Lords of the Realm" (maybe the best baseball book ever... a great gift for Christmas ), the GM would then wait a day, call the player back and tell him that Bob made $40,000 and so the player should be happy with the $45,000 he was being offered. Of course, Bob was making $80,000, but the lack of verifiable salary ranges were doing two things: creating inefficient markets, and slowing the growth of salaries.

After making all the salary information public, the players association was able to let players know what they were really worth, and this contributed to the rapid increase in player salaries.

So why is it wrong for the Commissioners office to do the same thing as the players union? Its not. The problem with the form is that the Commissioners office apparently decides who the player is comparable to. It is the Commissioners office deciding which are the other free agents who should be setting the market, and it is the Commissioners office writing a number on a piece of paper telling the owners what they think the player is worth. In the good old days, the Commissioners office was supposed to be an independent office with the bests of interests of baseball in its protection.

These are decisions that need to be made by the teams. I think the OCB should simply have a dossier on each player that teams can request. That way if the Cubs think J.D. Drew's past salary, health, and role are important in deciding their offer to Carlos Beltran, they make that decision, not someone in the Commissioners office.

In my opinion, the free agent advice forms are more than just advice... its loaded advice... and it leads down the road to an ugly word...

Collusion.

Posted by Byron at November 22, 2004 11:42 PM | | |

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