March 22, 2010

Future Shock

Why Players Can't Be Owners

by Kevin Goldstein

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Author's Note: The piece was written on Saturday, more than 24 hours before Mauer signed his eight-year extension with the Twins. Nonetheless, it remains a fun bit of research, and at some point in the next 12-24 months, the article will still apply, with a quick search-and-replace of "Pujols" for "Mauer" and "Cardinals" for "Twins."

My favorite part of this job is talking. Every day, be it via the phone, instant message, text messages, or even Skype, for those stationed internationally, I'm talking baseball with people who are seeing baseball, and I still feel like I'm learning something new every day. What I learned last week, though, required a little research.

I was on the phone with a team official, and after going through the actual work stuff (players he'd seen in spring, some 2010 draft notes), we just started talking, casually and off the record, about general baseball news, and Joe Mauer's potential contract extension with the Twins came up. We both agreed that Minnesota might not have the pure resources monetarily to match potential offers from big spenders like the Yankees, Mets, and Red Sox, so staying with the Twins was really more a personal choice of Mauer's than anything else.

"What if the Twins got a little creative, though?" asked the official.

"What do you have in mind?" I asked.

"I don't know, offer him $18 million a year and three percent of the team," he said.

That was followed by a long pause. "Can you even do that?" I asked. "Honestly," said the official, starting to laugh, "I have no idea."

Luckily, that's where rules come in, and for whatever reason, as people know from my coverage of the Pedro Alvarez draft debacle, I like going through rules and talking to lawyers. The first thing to look at is Schedule A of the current collective bargaining agreement, the "Uniform Player's Contract." This is the building block for any player's deal, and all contracts are subject to the rules therein. Rule 4(c) makes things fairly clear regarding this matter.

Interest in Club

4.(c) The Player represents that he does not, directly or indirectly, own stock or have any financial interest in the ownership or earnings of any Major League Club, except as hereinafter expressly set forth, and covenants that he will not hereafter, while connected with any Major League Club, acquire or hold any such stock or interest except in accordance with Major League Rule 20(e). 

Fairly cut and dry really. A player can't have interest in a team. But what about the exception at the end regarding Major League Rule 20(e)? This is where things get difficult. The official, public major-league rules really only cover the game itself, but unfortunately, the game's inner-working rules are not made public. Luckily, another team official, who was interested in the hypothetical situation once I shared it with him, came through in the clutch.

Rule 20(e). WITHIN CLUB. No manager or player on a Club shall, directly or indirectly, own stock or any other proprietary interest or have any financial interest in the Club by which the manager or player is employed except under an agreement approved by the Commissioner, which agreement shall provide for the immediate sale (and the terms there of) of such stock or other proprietary interest or financial interest in the event of the manager or player's transfer (if a player or playing manager) to or joining another Club. A manager or player having any such interest in the Club by which the manager or player is employed shall be ineligible to play for or manage any other Club in that League while, in the opinion of the Commissioner, such interest is retained by or for the manager or player, directly or indirectly.

According to our historical expert, Steven Goldman, these rules were originated in the late 1920s, all because of Hall of Famer Rogers Hornsby. As a player manager with the Cardinals, Hornsby was given some shares in the organization. At a point later in the contract, Hornsby had worn out his welcome with the Cardinals and was traded to the Giants. At that point, Commissioner Kenesaw Mountain Landis stepped it and forced Hornsby to divest himself from the Cardinals, as playing for one team while owning interest in another was a clear conflict of interest. Hornsby quickly agreed to sell his interest back to the Cardinals, but St. Louis offered him well below the actual value of the shares while insisting it was cash poor. The situation then forced all of the National League to contribute in buying out Hornsby, and in reaction to that less than ideal situation, these rules were born.

 Still, Rule 20(e) provides a significant amount of gray area here. Players can't own an interest in the team, unless they get special approval from the Commissioner, while also requiring the deal to have mechanics in place where the player's ownership is sold should he play for another team. Even in the case of Mauer, this would be a highly unlikely scenario, but nonetheless it was a fun trip through the rulebooks.  

Kevin Goldstein is an author of Baseball Prospectus. 
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