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Monday, September 08, 2008

losers, and the losers who prey on them

I'm cursed with being a fan of what is now officially the most pathetic team in major sports -- it's sixteen years and counting of losing seasons for the Pittsburgh Pirates. Since being brainwashed by the guy who ran my little league team in New York City, I have variably enjoyed and endured the team's remarkable success in the 1970s, drug scandals in the 1980s, heartbreak in the early '90s (for which I've been mocked!), and irrelevance ever since. Beautiful ballpark, awful team. We did have the incomparable Roberto Clemente, the memory of whom makes lots of hard times bearable and whose visage on a Cheerios box stares down at me each breakfast. But even Roberto can't help me with this.

But now there's a law angle to my pathetic misery, and one that, if tweaked and simplified, could make a sweet contracts or labor law exam question. It's the story of a hapless franchise, a powerful sports agent, and a midnight deadline. Read all about it after the jump.

After finally firing a fantastically incompetent general manager, the Pirates have shifted their resources from mediocre, over-priced free agents to the amateur draft and scouting and player development in Latin America -- the best way for a small market team to compete. So this year we (I hope you don't mind if slip into the third-person plural sometimes) drafted the best player available in the draft, a third baseman named Pedro Alvarez who had just finished his junior year at Vanderbilt, and hailed originally from the Washington Heights neighborhood in NYC. Great kid, fabulous talent. The only catch: Alvarez is represented by Scott Boras, proud graduate of the McGeorge Law School and world reknowned for being the hardest of the hardball negotiators among sports agents. Alvarez and the Pirates -- and, of course, Boras -- are now in a dispute regarding whether they agreed to a contract on or about the night of August 15.

To simplify this sad story: As is Boras's MO, Boras delayed negotiations with the club until the very last minute before the signing deadline -- midnight on August 15. Sometime between 11:58 PM and after midnight, Alvarez agreed to a $6 million signing bonus, a figure that, it turns out, was not the highest bonus of this past signing season. As I understand it, there's no question that Alvarez verbally committed; nor is there any question that the verbal nature of the commitment was sufficient under Major League Baseball (MLB) practice, so long as the contract is ultimately confirmed by the MLB office and signed by the parties. What is contested, however, is whether Alvarez verbally committed before or after midnight, whether the Pirates were granted an extension by MLB to continue negotiating after midnight, and more importantly whether MLB could authorize extensions past midnight, something they've apparently done with one or two other teams this year and last (notably, to enable negotiations with other Boras clients). Soon after verbally committing, Alvarez contested the legality of his commitment and has refused to sign the contract to which he verbally committed, on the grounds (presumably) that the agreement was void for occurring after the deadline.

The MLB Players Union has now grieved the issue of MLB's practice of granting signing extensions beyond midnight -- a grievance that clearly will affect Alvarez and the other player for whom an extension may or may not have been granted this year, Eric Hosmer. Hosmer is another Boras client who was drafted by the KC Royals, and who actually signed his contract. He was already playing for a Royals minor league affiliate when the grievance was filed; MLB has now rescinded approval of his contract (thereby keeping him from playing in the minor leagues) while the grievance is awaiting adjudication by an arbitrator. The arbitration is scheduled for September 10.

A preliminary legal issue is the aribtrator's jurisdiction. Draftees are not yet eligible for union membership; accordingly, does an arbitrator limited to settling disputes between the league and its players have the authority to consider this question? There are also reports that some fairly significant facts are in dispute. Apparently, there are records of two phone calls between Boras and the Pirates, one placed at 11:58 and another after midnight. Some conspiracy theorists among Pirate fans -- who, in case you haven't already figured it out, detest Boras -- think Boras purposely disconnected the earlier phone call so that any agreement Alvarez agreed to would take place after midnight so Alvarez could later disavow it. The theory presumes that Alvarez flinched at the last minute and agreed to the Pirates' offer against Boras's advice-- in this narrative, he's a good kid, his dad drives a cab in NYC, and he just wanted a good chunk of money and to start his career. It's also unclear whether Hosmer actually agreed after the deadline; but apparently another Boras client, Julio Borbon, who signed with the Rangers last year after the draft, also agreed to a contract after the deadline. Neither Borbon, Boras, or the players' union challenged that agreement.

Equally interesting are issues with Boras's representation. There's no question that Boras is the preeminent agent in maximizing draftees' contractual value. When an amateur player signs with Scott Boras, he sends a signal to teams that he wants to get paid and is willing to risk the reputational hit that being represented by an extremely hardball negotiator frequently gets. But it's unclear what Boras hopes to achieve here. If the union wins and the arbitrator invalidates Alvarez's contract, Alvarez presumably couldn't squeeze the Pirates for more money because, of course, the signing deadline has passed. Alvarez can't return to play at Vanderbilt. Returning to the draft next year after sitting out the year -- perhaps playing in an independent league, as J.D. Drew (another Boras client) did after refusing to sign for the Phillies a decade ago -- risks not getting the $6 million he would have gotten this year, but also losing a year's interest on the bonus, a year salary and development.

The sad part, though, is watching how Pirates' fans have turned on the kid. All of the franchise's hopes, after all those losing seasons, were invested in Pedro Alvarez. He could turn things around -- after all, a similar issue arose after another Pittsburgh franchise, the Penguins, drafted another highly touted draft pick. That was Mario Lemieux, a future hall of famer who ultimately signed with the Penguins, spent his entire career in Pittsburgh, leading the time to unparalleled success. I don't think anyone begrudges the kid getting paid. It's both the disappointment of watching this spectacle and the idea that this is merely a "technicality" -- a strategic legal trick that an agent appears to be using to squeeze additional leverage and get out of a deal to which the player agreed -- that could lead to another dozen years of losing baseball.

Sources: Dejan Kovacevic of the Pittsburgh Post-Gazette has provided the best day-to-day coverage of this, as have the best Pirate blogs. Baseball Prospectus, as ever, has supposedly offered the most knowledgeable and thoughtful coverage, but it's behind a pay wall, and since the Pirates have been so awful for so long, I've invested more time in my NBA fetish and so dropped my subscription....

Posted by Mark Fenster on September 8, 2008 at 11:22 PM in Employment and Labor Law | Permalink


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I can't see an arbitrator nullifying a mutually agreed upon contract merely based on timing issues. I think both Boras and the Pirates are looking at MLB-imposed fines if they did indeed sign after the MLB imposed deadline. But I don't think the terms of the contract, which again were agreed upon by both sides, are subject to cancellation.

Posted by: Marc Katz | Sep 12, 2008 2:39:11 PM

I was lazy with the link to one of the Pittsburgh Post-Gazette's horrid columnists. I suppose one can't reach any conclusions about general fan sentiment, but the comments on the Pirate blogs, and especially on Dejan Kovacevic's blog (he's the P-G's Pirate beat reporter, and he's as great as the paper's columnists are bad) run quite strongly in the direction of outrage and bitter hatred, first at Boras and then as the thing went on at Alvarez himself. That said, I agree that Pedro could pretty easily turn things around, especially with the bar of Pirate success being set so low at the moment. He will face some resistance at the beginning though. And to be clear, I want to see him in the black and gold.

Speaking of which, according to Wikipedia, the Lions won the NFC Central in 1993 and last made the playoffs in 1999. Now it's true that making the playoffs in the NFL is easier than in the MLB, but both those accomplishments make the Pirates look, well, more pathetic by comparison.

Posted by: Mark Fenster | Sep 10, 2008 12:39:38 PM

As a fellow Pirates fan, I take exception to the "Pirates' fans have turned on the kid" line in your story. Your link is to an editorial piece written by someone who's sole purpose is to fan flames and create controversy. This in no way reflects the general attitude of Pirates fans who although disappointed that Alvarez hasn't signed the agreement, mostly blame Boras and Coonelly for the mess.

Bottom line, if Pedro signs the contract and approaches his vast potential, all will be forgiven in short order.

Posted by: Paul Balouris | Sep 10, 2008 12:07:35 PM

I got nothing on the contracts issue, but I would nomiinate the football team I root for, the Detroit Lions, as the most pathetic team in the major sports.

Posted by: Joseph Slater | Sep 9, 2008 10:04:54 PM

David: Why would it be the "best thing" for Hosmer to reenter the draft. It might be a better thing for Alvarez, though there are lots of uncertainties; the Pirates' offer that he accepted was in the ballpark of market value, and it's unclear whether he'd get drafted that high and get an offer that high if he sat out the year. (He might; he might not.)

Good point on the compensation pick, something I left out in the original post, which was too long as it was. What David's referring to is the rule that if a team fails to sign a first or second round draftee they get a compensation pick at or near (I'm not sure the precise rule) the spot where they had drafted the unsigned player. The Pirates picked second this year; if they lose Alvarez, they'll pick third next year.

Posted by: Mark Fenster | Sep 9, 2008 3:07:21 PM

There is no question that what Boras did is a joke. I have no idea when Alvarez "Agreed" to the contract (Only Alvarez knows the truth). The reality is he should NEVER put on a Bucs uniform (The fans will roast him alive). The best thing for all concerned, is that he and Hosmer (If he signed the contract AFTER Alvarez), is to go back into the draft, and the Pirates get a compensation pick. This would be fair.

Posted by: David Brown | Sep 9, 2008 11:45:52 AM

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