August 6, 2012

Bizball

Get Off the Idea of Contraction in Major League Baseball

by Maury Brown

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For those that haven’t followed baseball’s history outside the diamond, White Sox owner Jerry Reinsdorf could well be defined as one of baseball’s hardliners. While neither he nor Bud Selig would admit it, the two were greatly responsible for driving former commissioner Fay Vincent, Selig’s predecessor, out of office.

Reinsdorf has been a hardliner on other issues as well. He’s a key sounding board on labor issues and has often chimed in on paring the league down via contraction. Whether this was in 2002 when the league owned the Montreal Expos or now, when the difficulty of new stadium construction comes along, Reinsdorf has hit on the “C” word.

When the White Sox owner was speaking on a panel regarding baseball in Israel late last month, he chimed in, again: "I don't see any baseball expansion right now," he said. "If it were up to me, I would contract two teams. But I certainly don't think expansion is on the horizon."

When asked what two teams, Reinsdorf declined to answer. "I have a habit of getting myself into trouble," he said. While Reinsdorf didn’t mention the clubs, the A’s and Rays have long sought new stadiums, and like the Expos and the Twins, both have had trouble getting them. Of course, the Twins eventually did get a beautiful, new ballpark, as did the Expos, albeit after relocating to Washington, D.C.

As a bit of historical context, when the league was looking to contract the Expos, they needed an American League club to come along for the ride, and the late Twins owner Carl Pohlad came to the rescue. The Twins had been searching for a new stadium to get out of the Metrodome for years, and Pohlad had had enough. The problem was that, in 1995, Pohlad and his financing firm loaned the then Selig-owned Brewers $3 million while Selig was acting commissioner. The loan was something that was in violation of a league rule that states that no club can loan money to another; a club (the Twins) looking to shut its doors after loaning money to a club owned by the commissioner made for, well… a conflict of interest.

But Reinsdorf jumped into the contraction fray then, as he has done now. ''We're not doing Carl a favor,'' Reinsdorf said at the time. ''If the Twins are one of the teams and Carl lets us contract him, he'd be doing us a favor.'' The problem then is the same as it is now: contraction is, for all intents and purposes, an impossibility in Major League Baseball. The Twins and Expos weren’t contracted. The league did not downsize to 28 clubs. There are just too many reasons that it can’t happen.

Even if there were compelling reasons to downsize the league, there are too many legal issues to contend with. Besides, contraction now means dissolving two American League clubs at the same time that MLB is moving the Astros into the AL for 2013. If the A’s or Rays were an NL team you could consider the move, but contraction now would mean realignment after doing realignment, and that alone makes no sense.

It goes further. The MLBPA, the cities that host the clubs, the regional sports networks, and the radio stations that broadcast games would all sue the league and the clubs that were willing to go down the contraction path. For the MLBPA, their argument would be that it would force players on active rosters onto the unemployment line (not to mention that all the affiliated farms systems would shut down, putting far more players out of work). That’s a hard case to make when the league has been growing revenues (last year the figure was $7 billion, and one should expect that number to easily rise again this year). Firing employees (and yes, in this case the players are “employees”) in an industry in the midst of growth in a dour economy throws red flags all over the place. For the cities, they would cite breakage of their leases, putting employees out of work (in this case, everyone from vendors to front office personnel), and removing a civic treasure, even if attendance has been abysmal.

While those are issues that were voiced in 2002, there was very real action by a regional sports network to stop contraction of the Twins. In December of 2001, the then Fox Sports Net Minnesota filed suit against the Twins to prevent them from contracting (see Fox Sports Net Minnesota, LLC v. Minnesota Twins Partnership). While the matter of contraction was not front and center, the issue then was the thorny issue of moving or dissolving a club in the midst of a broadcast agreement. As the suit reads:

A constant theme during the Twins’ legislative lobbying campaign at the Minnesota Legislature in late 1997 was its not-so-veiled threat that the Twins would leave Minnesota for a non-Minnesota market.  In early October 1997, Carl R. Pohlad (who, upon information and belief, is a shareholder in two of the Twins' general partners, and is commonly referred to as the Twins' owner), announced that he had signed a letter of intent to sell the Twins to Donald C.Beaver, a North Carolina businessman, and other investors of North Carolina Major League Baseball, L.L.C.  That sale was contingent on the Minnesota Legislature’s refusal to authorize by November 30, 1997, public funding for a new baseball stadium.  On November 14, 1997, the Minneapolis Star Tribune reported that the letter of intent with Beaver permitted the Twins to back out of the proposed sale by paying a “breakup fee” of $100,000.

Within days of the announcement of the proposed sale, a delegation from Minnesota, including then-Governor Arne H. Carlson and key legislators, traveled to Milwaukee, WI to confer with MLB’s then-Acting Commissioner Allan “Bud” Selig.  Selig told the delegation that if a publically-funded stadium was not authorized and built, the other MLB team owners would approve the Twins’ move from Minnesota.

As would be the case now, if contraction were attempted before the end of the network contract for the A’s, CSN California, 95.7 FM The Game, and KIQI AM 1010 could sue. For the Rays, it would be Sun Sports for television and WDAE 620 and WAMA 1550 for radio.

As one watching the proceedings in Tampa Bay have noted, the lease to get out of Tropicana Field isn’t exactly the easiest. Many say it’s “iron clad,” but the real issue is that the lease doesn’t expire until 2027. While it’s easier to buy out the lease the closer it gets to the expiration date, city officials would undoubtedly look to block any attempt at contraction.

No, what Jerry Reinsdorf is doing is tilting at windmills. Anyone that tells you that contraction is a viable option in MLB is kidding themselves for not only the reasons outlined but also for reasons that are contractually bound within the latest labor agreement between the players and the league. On page 65 of the latest labor agreement, we find the following:

Future Contraction

The Office of the Commissioner and/or the Clubs shall not undertake any centralized effort to reduce the number of Major League Clubs effective for a season covered by this Agreement; provided, however, that nothing in this Article XV(H) shall preclude the owner or owners of an individual Club from taking action (e.g., bankruptcy) that would result in the elimination of such Club. (See Attachment 8.)

Attachment 8 is a letter from Rob Manfred, MLB’s Executive Vice President, Economics & League Affairs to Michael Weiner the Executive Director of the MLB Players Association (see page 175):

Dear Michael:

The Players Association has consistently maintained that a centralized effort by the Office of the Commissioner and/or the Clubs to reduce the number of Major League Clubs is a mandatory subject of bargaining under the National Labor Relations Act (“NLRA”). The Clubs, on the other hand, have consistently taken the position that such action is a permissive subject of bargaining under the NLRA. Without resolving this difference of opinion, the Parties have reached certain agreements on this topic during the negotiations over a successor Basic Agreement. Those agreements are reflected in Article XV(H) (Future Contraction) of the new Basic Agreement. The Parties agree, by this letter, that their agreement on this topic and the bargaining that preceded it shall not be used by either party as evidence that the topic is or is not a mandatory subject of bargaining in any subsequent litigation, including any grievance or NLRB proceeding.

Very truly yours,

Robert D. Manfred, Jr

All told, short of bankruptcy (and even then contraction is a far-flung matter), contraction can’t even be broached as a matter between the league and players. This provision was within the last labor agreement, and one might surmise that it will be in the next agreement when this one expires in 2016.

None of this is going to stop talk of contraction, though. All this overwhelming evidence to the contrary won’t be looked at. Only scare tactics to try and get a new stadium for clubs languishing in what the league sees as outdated facilities will. While there are serious questions around attendance, baseball is simply in no position to undertake contraction. Let’s move on, shall we?

Maury Brown is an author of Baseball Prospectus. 
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