The union acts

I just received a press release from the Ballplayer’s Union that touches on a financial angle I’ve often thought about: revenue sharing and the obligation of teams receiving a share of payroll tax to spend it on ballplayer salaries. This obligation was part of the Collective Bargaining Agreement that put revenue sharing in place, and it was the “quid pro quo” given to the Union in the negotiations.

It has seemed to me that this clause gives an inflationary push to mediocre players. The Royals, to pick on one of the more extreme examples, receive a share of the payroll tax, so they have to participate in the free agent market in order to justify the tax—even if they’re not in a position to really gain anything from the market. However, only players like Jason Kendall are apparently willing to play in Kansas City. The net effect is a better salary for the Jason Kendalls of the world.

I’ve been told that this clause hasn’t really been a factor, because it hasn’t been enforced. Until now. The Union has apparently been concerned about the teeny amount of money the Marlins spend on free agents, so they’ve used the clause to bring some leverage to the situation. Here’s what the press release says:

In response to our concerns that revenue sharing proceeds have not been used as required, the Marlins have assured the Union and the Commissioner’s Office that they plan to use such proceeds to increase player payroll annually as they move toward the opening of their new ballpark. Today’s agreement, which covers the period 2010 through 2012, calls for ongoing communication among the Marlins, the Commissioner’s Office and the Union as the Marlins proceed with that plan. It also permits, after consultation among all parties, adjustments in the Marlins’ plan to respond to unforeseen developments, and calls for arbitral intervention if disagreements arise. We greatly appreciate the willingness of the Commissioner’s Office and the Marlins to engage with us and ensure that all terms of the Basic Agreement are met.

If I’m reading this correctly, if the Union feels that the Marlins are not spending enough on player salaries, they get to take the team to binding arbitration.

The bottom line? That little clause actually does have some teeth, which partially explains some of the bizarro free agent signings you see by small-market teams.

Dave Studeman was called a "national treasure" by Rob Neyer. Seriously. Follow his sporadic tweets @dastudes.
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13 years ago

Dave, I have read the statement and I see nothing there that says there are concerns that some teams, and the Marlins in particular, aren’t spending enough money specifically on free agents.  The reference is to payroll in general.

Oh, and by the way, the Royals weren’t even in the bottom ten in baseball in total 2009 payroll.

Dave Studeman
13 years ago

The only significant way to boost payroll is through free agency, unless you want to pay arbitration-eligible players more than you’d have to otherwise.

Thanks for the note on the Royals. That proves my point.  The Royals *should* be in the bottom ten in payroll, given their market and their performance.  You can argue that this clause has had some impact on the fact that they’ve overpaid for performance.

13 years ago

Actually, the phrase that stuck out to me was “…plan to use such proceeds to increase player payroll annually as they move toward the opening of their new ballpark.”

It seems that this is the lament of every team no matter what market size.  Without a new (taxpayer funded) ballpark, the sky will fall.  With a new playground, all will be right with the world.

matt w
13 years ago

Dave, are you sure that this overpaying by small-market teams has to do with revenue sharing? Anecdotally, the Pirates gave Derrick Bell $9.75M/2 years and Terry Mulholland $2+M before revenue sharing existed (unless I’m confused about when it started)—they wanted to sign recognizable names to please the fans, and also the GM was incompetent. Who’s to say that something similar isn’t at play with the Kendall signing?

At the very least, I’d like to see some analysis of free agent signings before and after revenue sharing in order to think that this clause was a factor.

Dave Studeman
13 years ago

No, I’m not sure of anything.  I’m just saying that this clause strikes me as inflationary, particularly for mediocre players with small market teams. Why else would the union have negotiated it?

13 years ago

I find it doubtful that a team like the Royals overpays its FAs because of this clause, when it is only now being enforced. Maybe, going forward with the knowledge that the union actually plans on acting on this clause (or at least threatening action), we could expect FA overpays by small-market teams who benefit from revenue sharing.

Let’s not forget that Dayton Moore is a functioning retarded person.

13 years ago

Dave, Florida’s assurance to “increase player payroll annually” could lead to a decision to not trade the J Johnson, Nolasco, Uggla, H Ramirez types in mid-season.  It might come down to offering a 4-year deal spanning end arbitration years and the first two free agency years rather than losing a player and being forced to sign Kendall types. 

If a team forecasts a shortage of core players to make a playoff run (like Tampa did) they need to trade the J Johnson types in order to re-load the farm system with an eye to group enough core players to make that run and their assurance might lead them to years of being a costly average team.

Dave Studeman
13 years ago

Good point, MarkF.  Of course, that approach would be inflationary too.

Kevin S.
13 years ago

The irony is Florida “could” have spent more this offseason without adding long-term commitment and significantly upgraded their team.  How many FA 3B better than Emilio Bonifacio signed short, cheap contracts this offseason?  They couldn’t have spent and upgraded CF?  Of course, now it’s too late for them to get impact FA.  That’s what you get for being a tightwad, Loria.