Home Maury Brown Precedent-Setting Deal With Florida Marlins Over Revenue-Sharing Has Broad Implications

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Precedent-Setting Deal With Florida Marlins Over Revenue-Sharing Has Broad Implications PDF Print E-mail
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Written by Maury Brown   
Tuesday, 12 January 2010 22:05

Florida MarlinsFor years now, there have been questions surrounding whether MLB’s collectively bargained revenue-sharing policy has had a loophole in it as wide as centerfield at Minute Maid Park. The loophole in question is based upon Article XXIV(B)(5)(a) of the current Basic Agreement (see the latest Basic Agreement) . That section reads, in part:

A principal objective of the Revenue Sharing Plan is to promote the growth of the Game and the industry on an individual Club and on an aggregate basis. Accordingly, each Club shall use its revenue sharing receipts (from the Base Plan, the Central Fund Component and the Commissioner’s Discretionary Fund) in an effort to improve its performance on the field.

It is the end of this provision that has been where questions as to whether some clubs are not taking revenue-sharing dollars and using them as the CBA specifies.

Additionally, XXIV(B)(5)(b) reads:

The Clubs and the Association recognize that the participation of two Clubs is necessary for the production of the on-field competition that the Clubs sell to the public.

While the league does not release the figures, owners of clubs such as the Marlins, Pirates, and Royals have reportedly received revenue-sharing figures that surpass their Major League payroll levels, and thus the question is asked, “Where is the money going?”

The answer has been, “To improving performance on the field,” but, according to these clubs, through player development, not within the spirit of the provision which, to the MLBPA has been, “major league player payroll.”

Each year, the union for the players has said that they are monitoring these clubs that seemed to be skirling precariously close to what might be construed as pocketing revenue-sharing funds, and each year, the league has said that the MLBPA has every right to act on anything that seems out of line with the provision. That’s because the union can request receipts from the Administrator of the program, and file a grievance if they feel the numbers don’t jive with what the revenue-sharing program outlines in Article XXIV(B)(5)(a) above. And, each year, the MLBPA has not filed such a grievance,

And while the MLBPA did not file a grievance today over the revenue-sharing provision, they came about as close as they have, yet. In a joint statement from MLB, the MLBPA, and the Florida Marlins, the following was announced:

In recent years, the Union has had concerns that certain Clubs have not lived up to this requirement, and has consulted regularly with the Commissioner’s Office about those concerns. The Florida Marlins are one of a number of Clubs that have been discussed.

Adding to the statement, MLBPA Executive Director Michael Weiner added:

“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.”

After extensive discussions, the three parties are pleased to announce that they have reached an agreement regarding the Florida Marlins’ continued compliance with Article XXIV(B)(5)(a) of the Basic Agreement.

Beyond the Marlins: Timing; the Pirates, Royals, Rays, and Others; And Labor Negotiations

Today’s news was seen as a public flogging of the Marlins. The MLBPA clearly had information that would have allowed them to file a grievance that, it appears, they would have won. Otherwise, why would MLB and the Marlins buckle?

But, what should be looked at closely are a number of pieces in a far broader context:

Sending A Message to Others - While the MLBPA has the right to continue to look closely at the manner in which revenue-sharing is spent, don’t expect them to immediately chase after the Pirates or the Royals, or the Rays... any other clubs that could be on their radar at any given time. That’s because the precedent-setting agreement that singles out the Marlins should echo in those other markets. The MLBPA has been talking of doing something, and now they have. The message is clear: we’re more than watching, we’re willing to act. Beware.

Going after the Marlins Was Also About “When” – Go back and read what Michael Weiner said. “[The Marlins] plan to use such proceeds to increase player payroll annually as they move toward the opening of their new ballpark.” The opening of the new ballpark by the Marlins in 2012 gives them new revenues from which to work from, so in some senses, while slapping them on the wrist, the MLBPA simply asked that they spend above what they have been doing while playing in the same home of the Miami Dolphins. That deal has the Marlins not collecting all revenue sources that they would otherwise be doing in their own ballpark. By reaching the deal, the Marlins won’t scream as loud as they would have if they weren’t going into their own stadium. The MLBPA surely took this into account.

Going after the Marlins Was Also About “When” (the Labor Side) – The timing of Marlins agreement also has a great deal to do with upcoming labor negotiations. With the current Basic Agreement expiring in 2011, the MLBPA had to pick their spot to move on the Marlins. Doing so much later would have been seen as a negotiating tactic for the upcoming rounds of collective bargaining.

Reaching An Agreement Is a Good Sign (Labor Peace) – It’s very early on, but by the MLBPA and MLB willing to strong-arm the Marlins, the signs point to calm waters on the labor front. If MLB (with the Marlins pushing) had wanted to make a labor statement, they could have dug their heels in, and told the MLBPA, “Go file your grievance.” They didn’t, which shows that the relationship between MLB and the MLBPA continues to move forward past the labor strife that occurred prior to the 2002 CBA.

An Agreement Allows the Marlins to Save Face (sort of) - Make no mistake, Jeffery Loria and the Marlins can’t be happy campers today. It appears they got caught with their hands in the cookie jar, and the MLBPA finally decided to reach out and smack it. But, with the parties agreeing to a “self-policing” deal, the Marlins get to publically stick to their guns and say they did nothing wrong. As Marlins President David Samson said in the statement, “Throughout the discussions, the Marlins maintained that there had been no violation of the Basic Agreement at any time.” As mentioned, if the league was willing to go down the road of a forced agreement with the Marlins, then “maintaining innocence” doesn’t mean that the MLBPA didn’t find money hidden under a rock. Ultimately, by not losing in a grievance hearing, Commissioner Selig isn’t put in the uncomfortable position of having to deal with this nasty little section of the CBA, as it pertains to revenue-sharing violations: Consistent with his authority under the Major League Constitution, the Commissioner may impose penalties on any Club that violates this obligation

Could the Marlins Be a Scapegoat? – More than one today has asked, “Do you think the Marlins were targeted because the league wasn’t going to go toe-to-toe with Pirates president Frank Coonelly?” Maybe. As mentioned, there is the timing of the new Marlins stadium coming online, the exceptionally low levels of player payroll in the past, and… well, more than a few in the industry have said that they don’t really rate Loria very highly; he’s not well liked. Prior to working for the Pirates, Coonelly was Senior Vice President and General Counsel of Labor in the Office of the Commissioner of Baseball where he negotiated and administered collective bargaining agreements with the MLBPA. As reported earlier (see The Pirates: Improving the Team, or Just Their Bottom Line?), one might look at the Pirates as being a potentially more egregious violator of the revenue-sharing clause that the Marlins are being held to. The Marlins low player payroll, the timing of the new stadium, and yes… the MLBPA seeing something in the Marlins’ revenue-sharing report that every team is required to file that requests revenue-sharing, stands out. Even so, if there would have been a slight change in circumstances, it could have been the Pirates, rather than the Marlins, who got their wrists slapped on Tuesday.

Chalk Up a Big Win for Michael Weiner – The MLBPA has to feel good, not only because they got the Marlins to increase player payroll, but because it’s the first labor victory for Michael Weiner after being approved as the new Exec. Director in December. Now, will MLB use the agreement as a bargaining chip in the future…?

How Much Will the Marlins Raise Payroll? – This is the biggest question tied to Tuesday’s announcement. There’s little knowing how much using “such proceeds to increase player payroll annually as they move toward the opening of their new ballpark” is. The end of year payroll for the Marlins in 2009 was $37,532,482. The league has guarded revenue-sharing figures closely in recent years. But, here’s what is known… Based upon revenue-sharing figures that were published in 2002-’03, as well as 2005, there is the following. The difference figure shows how much the Marlins needed to cover for a given year before one game is played that garnered any local revenues (includes gate, local/regional television deals, concessions, etc). As displayed, the player payroll figures were higher then than last season, and most assuredly, revenue-sharing for the Marlins is higher. The combination is, at least in large part, the reason the MLBPA acted on the club.

Florida Marlins Rev-Sharing - Payroll

Year

Rev-Sharing

EOY Payroll

Diff

2002

$20,946,573

$40,822,536

$19,875,963

2003

$21,030,000

$63,281,152

$42,251,152

2005

$31,000,000

$56,273,212

$25,273,212

 

See complete revenue-sharing figures for all 30 clubs for 2002-’03 and 2005


Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He is available for hire or freelance. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.

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