Dexter Fowler, Casey Close, Collusion and the Value of Information

Dexter Fowler was reportedly an Oriole before deciding to re-sign with the Cubs. (via screenshot)

Dexter Fowler was reportedly an Oriole before deciding to re-sign with the Cubs. (via screenshot)

Back in February, everybody thought Dexter Fowler was going to sign with the Baltimore Orioles on a nifty three-year, $35 million contract. But then, on Feb. 25 at Cubs training camp in Mesa, Ariz., Fowler made a surprise entrance. The presumed new Orioles center fielder instead shocked the baseball world and returned to the Cubs.

Fowler, it turned out, was the latest of many players to have an agreed-upon deal with the Orioles fall apart at the last minute. Issues with a physical held up a deal with Yovani Gallardo this past offseason, eventually resulting in Gallardo taking a shorter, less lucrative deal with Baltimore. The Orioles pulled an offer to Nick Markakis after a shoulder MRI in the 2014 offseason. They revised an offer of a major league deal for Tyler Colvin down to a minor league deal in the winter of 2014 after physicals revealed a back issue and did the same with Jair Jurrjens the year prior. They withdrew a two-year, $14 million offer to Grant Balfour after his physical in the 2013 offseaosn.

And this isn’t just a recent issue. Jeromy Burnitz backed out of a two-year, $12 million contract with the Birds in 1998 after his agent discovered contract language regarding the physical examination that gave the Orioles too much latitude to back out of the deal. He took a one-year, $6.7 million contract in Pittsburgh instead. Peter Angelos voided the contract of Xavier Hernandez in 1999 after a physical discovered a partially torn rotator cuff, after which Hernandez filed a grievance and won $1.75 million in a settlement. And after Baltimore agreed to a three-year, $21 million contract with Aaron Sele in 2000, an Orioles physical produced questions about Sele’s labrum, which led Angelos to reduce the length of the contract offer to two years. Sele wound up signing with Seattle instead, on a two-year, $15 million contract.

You likely have noticed a pattern by now, specifically that almost every player mentioned here has exited his interaction with the Orioles with a substantial reduction in contract value. Fowler was no exception; he was left to settle for a one-year, $8 million deal with the Cubs, including a $5 million buyout on a $9 million mutual option for 2017. Fowler and his agent Casey Close were understandably furious and sent out this statement regarding the debacle:

In my 25 years in this business, never before have I witnessed such irresponsible behavior on so many fronts. Both the Orioles front office and members of the media were so busy recklessly spreading rumors that they forgot or simply chose not to concern themselves with the truth. The Orioles’ willful disregard of collectively bargained rules governing free agency and the media’s eager complicity in helping the Orioles violate those rules are reprehensible. Dexter Fowler never reached agreement with the Orioles and did not come close to signing with the club; any suggestion otherwise is only a continuation of an already disturbing trend.”

The premature reporting of contract agreements has become so commonplace that it’s hard to imagine the hot stove season without the practice. But when the details of contract negotiations are leaked, players are almost always the losers. In some cases, the market clears while the player is held in contract limbo, as happened with Ryan Madson in 2012. He went from $44 million guaranteed from Philadelphia to signing a one-year, $8.5 million deal with Cincinnati. It would be his last big contract; he blew out his elbow before the season even started. In other situations, the stigma of questions with the physical tanks the player’s market value. Those details could become known only through leaks from team sources, as happened with Balfour, who saw his years and total contract value roughly halved after the Orioles flinched at his physical results.

Close’s anger also is rooted in the deep history of ownership’s bad-faith actions in free agent negotiations. Collusion, in my experience, tends to evoke the image of owners banding together and refusing to make major offers, whether league-wide as they did in the mid-1980s, or with a single player, as many have alleged happened with Barry Bonds in the 2007-08 offseason. But there are other ways to collude in a market, and one of them is to create a monopoly of information.

That’s exactly what major league owners did in 1987, when they were accused of collusion for the third time by the Major League Baseball Players Association. That offseason, owners created an “information bank” containing all contract offers made by any team to any free agent. The point of this information bank supposedly was to keep teams fiscally responsible. Even though there was no specific agreement not to sign free agents, MLB was found in violation of Article XVIII of the collective bargaining agreement, a bar against “concerted action.”

George Nicolau, the grievance arbitrator who heard the 1987 case, wrote the following in his opinion:

(The) information bank converted the free agency process into a secret buyers’ auction, to which the sellers of services — the players — had not agreed and the existence of which they were not aware…. (It) is evident that many clubs used the bank to report offers to free agents and to track just how far they would have to go with particular players.”

Nicolau awarded the players $65 million in lost salaries for the 1988 season. Note that the highest major league salary in 1988 was Ozzie Smith’s $2.34 million deal with the Cardinals. After accounting for the fact that collusion awards carried treble damages per the CBA, Nicolau concluded that the information bank cost players over $21 million — nearly enough to pay for the league’s most expensive contract 10 times over.

A Hardball Times Update
Goodbye for now.

In an open market without information on bids and preferences from around the league, teams are not only forced to bid based on how much they value the player, but also have to bid defensively against what they think rival teams might be willing to pay. Creating an information bank of player valuations removes the possibility of a bidding war. Teams have been half-jokingly accused of “bidding against themselves” in attempts to thwart off competing bids in recent years — Robinson Cano’s contract with the Mariners a prime example. Instead, with an information bank, the offers in the database set a ceiling on the market for a player.

Now, teams don’t even need to do the work of creating or maintaining an information bank. Every time a team source leaks a contract offer to a reporter, who then posts it to Twitter or a rumors blog, another piece of that same kind of information bank is gained by anybody with access to the internet. When injury information is added to the equation, it only creates a more sensitive situation for the player, particularly when the medical information is disputed as it was with Balfour, Hernandez, Sele and others.

This issue has come up multiple times over the course of the current collective bargaining agreement, which began in 2012 and will run out at the end of the current season. In 2012, Ken Rosenthal of Fox Sports reported on multiple public statements that were close to crossing the line, including a “high-ranking” Rangers official telling USA Today his club didn’t plan to offer Josh Hamilton a contract longer than three years, Tony La Russa telling ESPN any contract over six years in length is “scary and dangerous,” and Tigers GM Dave Dombrowski telling reporters Detroit would not be offering contracts to departing free agents Jose Valverde and Delmon Young.

Similar accusations surfaced again in 2014, according to another report from Rosenthal. Rob Manfred, then baseball’s chief operating officer, specifically addressed the issue of public comments from team sources to media outlets, as he said, “We have had conversations with the union about public comments concerning free agents. We have a mutual interest in assuring that there is no excessive commentary.” Both stories cite the addition of “anti-collusion” rules to the latest CBA, which state that team officials cannot communicate economic terms discussed by players and clubs through the media.

So when Close railed against the Orioles and the media, this was not just the bitterness of an agent and his client watching money slip away. The players and the union fought for specific rules against the tactic that was deployed against his client. They fought for these rules because this kind of sharing of information, whether done in secret or done through the media, has caused substantial damage to players’ earning power in the past. And it doesn’t particularly matter whether team officials are creating these leaks with the intent of damaging a player’s market value; the impact is the same.

I don’t think it’s realistic to expect reporters to refrain from reporting tips they get from team employees. Reporters have to do their jobs, after all. But Close, Fowler and others caught in similar situations still have plenty of reason to hold the media’s role in disregard. Every time a team official breaks the details of a contract negotiation before things are official — particularly before a physical is conducted, as the Orioles have become so fond of doing — that official is committing a violation of the collective bargaining agreement. Is that not a newsworthy story?

The economic realities of baseball reporting ensure this angle will never be covered. Beat writers aren’t paid to be muckrakers. Any reporter who blew the whistle on leaks would soon be without any sources at all. Reporting on leaks and rumors accounts for the bulk of the industry’s production in the hot stove season. What Close referred to as the “media’s eager complicity” in spreading these rumors may be an understatement.

Marvin Miller, the legendary executive director of the MLBPA, wrote in his autobiography, A Whole Different Ball Game, about the approach of Peter Ueberroth, baseball’s commissioner in the late 1980s, toward corruption:

Ueberroth had a straightforward approach: ‘This is a business. I’m a businessman. You hired me to help improve profits, and I’m telling you how.’ He advised them against ‘spending themselves into the ground’ and offered such helpful suggestions as ‘It’s not smart to sign long-term contracts.’ As George Steinbrenner said, ‘Peter Ueberroth…got us together on numerous occasions — always with four lawyers in the room to guard against anything that might be construed as collusion — and made us tell each other how stupid we’d been in the past.’ In other words, he taught them how to collude without saying ‘collusion.’ (He was, however, unable to teach them how not to get caught.)”

So Manfred can say, “We have a mutual interest in assuring that there is no excessive commentary,” and it is technically true. The owners’ interest is in adhering to the collective bargaining agreement and avoiding another payout like that $65 million 1987 settlement (which might require an extra zero at the end in today’s market). But it is clear to me the stakes are not equal here. Teams have little reason to believe their sources ever will be exposed. Bringing a collusion case against MLB is unrealistic unless the evidence is airtight. And reports from anonymous team sources form the bedrock of baseball journalism.

Unfortunately for Fowler, Close and the players and agents who will inevitably find themselves in a similar situation in the future, these things are unlikely to change anytime soon unless the MLBPA or the baseball media discover a rebellious streak and start fighting against this behavior. Until the stakes are even — until team owners and executives actually have to worry about the repercussions from violating a rule they agreed to in collective bargaining — there’s no reason to expect teams won’t continue to leak with impunity.

References & Resources

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87 Cards
6 years ago

Great evidence and analysis….Baltimore’s actions and their effects on the wage market add an another connotation to the idiom “A little birdie told me….”

Rob S
6 years ago
Reply to  87 Cards

I came to read some good Orioles bashing since I hate the team. But this is grade “F” material here as other posters have pointed out. The cited examples regarding physicals don’t even match Fowler’s case and conveniently leaves out the numerous examples of agents colluding with reporters, the most recent example being Samardzija’s agent lying about a $100 million offer two weeks before signing with the Giants for $90 million.

Close’s “statement” seemed rather odd at the time since it sounded like vague complaints but nothing concrete. And the article has NOTHING to suggest there is anything concrete. A piece of garbage like this article is actually making me re-think my hatred of the Orioles.

6 years ago

Interesting points. Teams should be held accountable for CBA violations but at the same time agents use the media too to create bidding wars or make their player clients appear in higher demand than they may actually be. The MLB offseason maintains fan interest longer than any other major sport because major transactions take place pretty much throughout the offseason since there’s no salary cap and both sides benefit from the fans rabid interest in Hot Stove rumors. I think fixing the QO system will have a much more significant impact on future FA players like Dexter Fowler than trying to clamp down on team leaks could ever do.

6 years ago

Very fine piece. I have to take exception with one point – I don’t agree that it is “unfair” to the player to have, say, Dave Dombroski say he isn’t going to be bringing back two players. If these players aren’t in the teams plans, who cares if the team says that. If they have a market with other teams, then it has zero impact. If they don’t, then why should teams bid against a team who isn’t interested? For years, players have had their salaries artificially raised by bidding against teams such as the Dodgers, Yankees, and Red Sox when, after the player inked his deal, revealed that they had no interest in the player to begin with. A team bidding against itself is just as bad, if not worse, than a team releasing information.

6 years ago

The one thought I had in all of this is that in several cases, the leaked information regarded physicals. Perhaps the players union and the owners should agree to have physicals done by a third party and the results made available to all teams (assuming it is a free agent). Granted this might hurt the value of some players, but honestly, if a player really has physical issues that could shorten his career, and he knows it, ethically he should be required to disclose that information before signing a contract that has 6 or 7 zeroes in it. Likewise, a third party physical would assure that any information discovered was not simply “found” by a team doctor when a team suddenly gets cold feet about spending fifty million on a player.

6 years ago
Reply to  MarylandBill

No, good physicals give a team an advantage. In each case, except Sele’s first year, these decisions have helped the Os avoid damaged goods. This advantage has given one of the leagues best records the past 4 years. Why would they give up this advantage?

6 years ago

your piece does not address when agents utilize the media to create leverage for their client. Some agents are notorious for (possibly) fictitiously putting stories out in the media about multiple contract offers/teams interested in their clients service. Casey Close is “biting the hand that feeds him” on some level.

Mike Michaels
6 years ago

Off by about ten years on the Burnitz deal. It was 2006, not 1998.

Strangely, Orioles have been largely right with their physicals.

6 years ago

If Close was so upset with the Orioles, why did he have his client take a contract (which is basically a 1yr/13mil or 2yr/17mil) when the qualifying offer for $15.8 was still on the table? Part of the reason Close spoke out was to deflect blame because he cost his client some money.

6 years ago
Reply to  Jeff

Because it wasn’t still on the table? There is a deadline to accept it.

6 years ago

Great read. Linking the current twitter/rotoworld insta-news environment with the information bank owners maintained in the late 80’s is a fascinating parallel.

The conflict of interest for a reporter that would have to whistle-blow on his sources in order to expose nefarious intent / any kind of misconduct on the part of the team is considerable. This is potentially exacerbated further by the beat writer model where the relationship between the team and beat reporter is closer than ever before.

I wonder if this kind of phenomenon is impacting other businesses in a similar fashion. Surely the fact that all public statements are now mine-able data via the internet has changed the supply and demand dynamics of information in many sectors.

6 years ago

The example of Fowler and Close is actually a very bad example of what you are claiming in the rest of the article. The statement that Close’s comments were made partially because of “bitterness of an agent and his client watching money slip away” simply cannot be justified. The Orioles allegedly offered more money than Fowler eventually signed for with the Cubs. In that case, there are two scenarios possible:

1. The Orioles never offered that contract to Fowler, but someone claimed they did. If this was true, then why would the Orioles ever leak that statement? Why claim you have an agreement, with detailed information, when you are not even close? Moreover, how does this scenario hurt Close and Fowler? The Orioles offer was more than he signed for with the Cubs. Would an Orioles offer not drive up his price, rather than reducing it?

2. The Orioles were close with an agreement with Fowler, but he decided to sign with the Cubs at the last minute. In this case, Fowler deliberately chose to accept less money for a better shot at the World Series, and another shot at free agency next year. This is the story that everyone involved except for Close seems to agree on. But why would Close be so bitter? There could be two reasons. He could be mad at Fowler instead of the Orioles for costing him money, but he cannot make himself look like the greedy money-grubber he is, so he attacks the Orioles instead. This seems a bit petty. The other reason could be that he is protecting Fowler from bad press. If Fowler backed out at the last minute, this is a bad look. If, however, Close can make it seem like they were never close, than Fowler just made a risky but defensible business decision.

In neither case can you claim that Close is bitter over losing money for his client, because nothing that the Orioles did actually cost him money.

is what mostly I gather about the Fowler story, the Orioles genuinely believed that he was going to sign for them, for a contract that was more than he signed for with the Cubs. Fowler did not fail his physical, he just got an offer from the Cubs and decided he had a better chance of winning the World Series with them.

6 years ago
Reply to  CKT

That last paragraph was supposed to be cut out, so please ignore it.

6 years ago
Reply to  CKT

After making the attractive offer to Fowler, the orioles them modified it by deducting an amount intended to cover the loss of the high round draft pick they would lose by signing him.

Shoehorn Narrative
6 years ago

Orioles sure had no reason to be concerned about Gallardo’s shoulder.

6 years ago

Same with Markakis and Balfour. No reason why they failed their physical other than the O’s being cheap, that’s for sure.

6 years ago

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