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Monday, September 22, 2008

bargaining in the shadow of conflict

Quick update to an earlier post on the conflict between the Pittsburgh Pirates (of Major League Baseball) and their first round pick in this year's amateur draft, Pedro Alvarez. Quick recap: the parties had agreed orally sometime around midnight of August 15 -- the deadline for such an agreement to occur -- to a contract, but Alvarez and his agent refused to finalize the deal, claiming that the agreement occurred after midnight. The Players Union grieved the issue of MLB's unilaterally extending the deadline, which appears to have happened in this case, and one day of what was expected to be a long hearing that would extend into the fall took place earlier this month.

The parties to the contract have settled, and may have thereby led to the end of this grievance process. The terms are not radically different from the original agreement: the total money package is greater ($6.3 million), giving Alvarez (and therefore his agent Scott Boras as well) the highest bonus of this year's draft; but it stretches the payment of that bonus out further, to the benefit of the Pirates.  Alvarez has signed a major league contract (the original was not a major league contract), which will speed up the timeline after which Alvarez can become a free agent and can seek arbitration for his salary under the c0llective bargaining agreement; but the expectation is that Alvarez will make the major league team quickly anyway, and if he doesn't, the restructured contract gives the Pirates some protection to retain his services at a relatively low salary in the contract's fifth year. (See the linked article for more details.)

In sum, a good teaching moment: an oral contract, standard within the industry, that may have been voidable because the conditions of its agreement were subject to dispute; then the parties come to a new agreement that in the end is much like their original agreement but it allows each party to save face. Speaking on behalf of Pirate fans everywhere: please, Pedro, be what everyone says you can be and save us from more seasons of misery.

Posted by Mark Fenster on September 22, 2008 at 09:37 AM in Current Affairs | Permalink


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Just an FYI, but after interest and inflation, Alvarez is getting $5.67 million (less than the $6 million minor league he originally signed).

Posted by: Philip Bennett | Sep 23, 2008 12:52:34 PM

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