Attorneys in the Outfield

Jorge Arias

 

There are few stronger influences in the American way of life than those driven by the sport of baseball. Engrained in the aspirations of kids from every outskirt of society, since its inception baseball has shaped the culture and economic outcomes of communities across America. It began cementing itself into the social fabric of the Dominican Republic in the 1870s, when Cubans introduced the sport in the country.[1] In the beginning of the twentieth century, in the midst of a military deployment to help legitimize the appointment of President Juan Jimenez, American Marines would play in matches against Dominicans, paving the way for a common ground of integration.[2] Today Major League Baseball (“MLB”) spends more than $1 billion dollars in salaries for players from the Caribbean and Latin America and distributes more than $100 million dollars towards the operation of baseball academies in the Dominican Republic.[3]

Dominican players experienced first-hand the effects of the evolution of the league. The salaries of players were significantly impacted by the introduction of the free agency system, as salaries increased by 37% in 1977, which was the first year the rules of the free agency system were in full effect.[4] In 1984, the Dominican baseball player Jimy Kelly at 13 years old became the youngest person ever signed to a professional MLB contract.[5] His signing sparked a league-wide uproar over the public policy concerns of the transaction. This pressured MLB to institute Rule 3, which effectively prohibited MLB clubs from signing players until they turned 17.[6] Although the norm created material safeguards, future hall of famers Juan Marichal and Pedro Martinez would still go on to sign for $500 and $6,500 with the Giants and Dodgers, respectively.[7] The impact of local Dominican scouts, known as Buscones, in the development of players grew over time as they came to oversee baseball academies and act as middlemen in contract negotiation with MLB clubs. In 1990, most Dominican players signed by MLB teams received bonuses between $2,000 and $5,000. While Buscones materialized their role in the negotiation process (taking as much as 33% of a player’s contractual earnings), signing bonuses for Dominican players grew to an average of $131,000 in 2011.[8] This positive market development was largely tainted by the myopic ends of many Buscones, as MLB discovered several instances of performance enhancing substances use and fraudulent player age reporting in the market for Dominican players.[9] These dangerous and unjust practices continue today, and MLB continues to balance the development of international players with increasing risks of the player exploitation.[10]

Dominicans presently represent around 11% of all players in MLB,[11] an organization that produces over 10 billion dollars in total annual revenues.[12] It is estimated that MLB has invested more than $75 million in the Dominican Republic, causing a significant increase in the nation’s total employment.[13] Every year more players fulfill their dream of securing a contract with a MLB club in order to help lift their families out of poverty. In 2013, Robinson Cano signed a ten-year deal with the Seattle Mariners for $240 million dollars, and in 2021 the San Diego Padres closed a historic $340 million dollar agreement across 14 years with Fernando Tatis Jr. Despite the positive effects baseball has driven in the nation’s market conditions, over 97% of Dominican baseball players never end up signing professional contracts.[14] As the government of the Dominican Republic only spends ~2.3 percent of its annual gross domestic product on education (122^nd out of 132 nations analyzed by the OECD), many of these players proceed to enter underdeveloped labor markets without essential skills or adequate literacy levels.[15] Several MLB clubs, including the San Diego Padres, Cleveland Indians, and NY Mets, have recognized the severity of the situation and taken on the initiative of providing its players with access to a better education by investing millions of dollars in facilities with classrooms, providing transportation to schools, and developing a curriculum of crucial classes. A more collective effort between MLB clubs will likely be required to enable significant progress in the educational outcomes of players. Adam Wasch has advocated the MLB to establish a Code of Conduct Pledge, whereby MLB clubs would promise to maintain certain educational standards for international players.[16]

The inequitable discrepancy in economic outcomes experienced by Dominicans illustrate an imperative need for additional player support. Key changes could be achieved through legal mechanisms.  In 1965, MLB executed Rule 4, which established the eligibility of US and Canadian residents to participate in the league’s annual draft. This created a system of disparate rights, as all players drafted gain the protections reserved for members of the MLB Players Association Union, while international players fall outside of the MLBPA jurisdiction and are not automatically granted these rights upon signing professional contracts.[17] Rule 4 was originally enacted with the purpose of promoting a greater degree of competition between big and small market clubs, but its passage has also distorted the incentives in making investments towards international player development, exacerbating the pressures of international recruitment and possibly causing a reduction in the number of African Americans players in MLB.[18] Several legal solutions have been proposed to address this dichotomy in recruitment practices and player rights. These include substituting the current draft process with a global draft, whereby international players would be afforded stronger protections, however, the MLBPA and MLB have yet to reach a full compromise on how the global draft would be implemented. In addition, the draft has been characterized as an unreasonable restraint on trade, as some teams are naturally unable to compete for the services of the best prospects in the early stages of their career. This has opened the door for a potential antitrust challenge, but the main judicial obstacle with this approach lies with the exemption awarded to Major League Baseball by the Supreme Court in Federal Baseball Club v. National League, whereby the court declared that baseball does not constitute interstate commerce.[19]

This post seeks to enrich the debate for reform in the market for Dominican baseball players by introducing a potential source for progress: mandating counsel representation for the closing of all MLB contracts. Restatement (Second) of Contracts, section 178(1) states that “a promise … is unenforceable on grounds of public policy if … interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms.”[20] The Restatement clarifies that the justified expectations of parties shall be considered when determining if a contract is void on the basis of protecting public policy values. In Henningsen v. Bloomfield Motors, Inc., the court invalidated liability terms as the negotiation process was characterized by a significant disbalance in bargaining power.[21] Many contracts between MLB clubs and Dominican players could similarly be invalidated if it were proven that the latter lacked the representation of counsel during the negotiation process, as currently tends to be the case. Since the right to fair representation has been a public policy aim of many industries in the United States, promoting this value at the international stage would align the legal protections available to Dominican players with those sought to be preserved by American public policy. Furthermore, the higher transaction costs associated with this approach may be outweighed by the increase in player welfare that could result under this more equitable contracting process.

Baseball has paved the way for millions of dollars in new annual economic activity in the Dominican Republic. The sport continues to be a flagship of national pride and hope for countless children. However, there is a strong need to enhance the safeguards of player’s rights during their training and contracting process. Leveraging our public policy doctrines and requiring the involvement of counsel for all international deal closings can lead to a higher standard of recruitment and increase in the welfare of players.

 

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[1] What Countries Play Baseball 2021, https://worldpopulationreview.com/country-rankings/what-countries-play-baseball, (last visited Nov. 25, 2021).

[2] Andrew Mitchel, The Dominican Republic and the United States: A Baseball History, https://origins.osu.edu/article/dominican-republic-and-united-states-baseball-history, (last visited Nov. 25, 2021).

[3] Rob Ruck, Baseball’s Recruitment Abuses, https://www.americasquarterly.org/fulltextarticle/baseballs-recruitment-abuses, (last visited Nov. 25, 2021).

[4] Kahn, L. M. (2000). The Sport Business As a Labor Market Laboratory. Journal of Economic Perspectives, 14(3), 75-94.

[5] Ruck, supra note 3.

[6] Id.

[7] Tom Verducci, The Power of Pedro: How Hall of Famer Martinez mastered pitching, https://www.si.com/mlb/2015/07/23/pedro-martinez-hall-of-fame-boston-red-sox-tom-verducci, (last visited Nov. 25, 2021).

[8] Ruck, supra note 3.

[9] Michael S. Schmidt, Baseball Emissary to Review Troubled Dominican Pipeline, www.nytimes.com/2010/03/11/sports/baseball/11dominican.html, (last visited Nov. 25, 2021).

[10] Emily B. Ottenson, The Social Cost of Baseball: Addressing the Effects of Major League Baseball Recruitment in Latin America and the Caribbean, 13 WASH. U. GLOBAL STUD. L. REV. 767 (2014), https://openscholarship.wustl.edu/law_globalstudies/vol13/iss4/8.

[11] Record 110 players from Dominican Republic on MLB Opening Day rosters, www.espn.com/mlb/story/_/id/29531510/record-109-players-dominican-republic-mlb-opening-day-rosters, (last visited Nov. 25, 2021).

[12] Maury Brown, MLB Sees Record $10.7 Billion In Revenues For 2019, www.forbes.com/sites/maurybrown/2019/12/21/mlb-sees-record-107-billion-in-revenues-for-2019/?sh=776801ac5d78, (last visited Nov. 25, 2021).

[13] Wasch, Adam G., Children Left Behind: The Effect of Major League Baseball on Education in the Dominican Republic (Fall 2009). University of Texas Review of Entertainment & Sports Law, Vol.

[14] Id.

[15] Id.

[16] Id.

[17] Ottenson, supra note 10.

[18] Id.

[19] Federal Baseball Club v. National League, 259 U.S. 200 (1922).

[20] David A. Friedman, Bringing Order to Contracts Against Public Policy, 39 Fla. St. U. L. Rev. (2012)

[21] Henningsen v. Bloomfield Motors, Inc. - 161 A.2d 69 (N.J. 1960).