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August 28, 2008

Future Shock

And in This Corner...

by Kevin Goldstein

It really was the statement heard 'round the world, as from the time of its release until the end of the day, my phone has been burning in non-stop discussions with teams, agents, players, and other members of the media all looking to talk about the Pedro Alvarez situation. The statement issued by the Pirates is very strong in tone, and tells us quite a bit in only 575 words. We all know that Pittsburgh team president Frank Coonelly has a close relationship with the commissioner's office, and the document almost sounds as if it came straight from New York. Let's take a word by word look at it, and talk about what is actually known, what is merely rumored, and what may eventually happen.

At the Pirates' request, the Office of the Commissioner today placed Pedro Alvarez on Major League Baseball's Restricted List. The Pirates were forced to request that Pedro be placed on the Restricted List because we were informed by his agent, Scott Boras, that Pedro will not sign the contract to which he agreed on August 15. Boras further informed us that Pedro will not report to the Club unless we renegotiate his contract and agree to pay him more than the $6 million signing bonus to which he agreed.

The first sentence simply describes a legal maneuver meant to protect the Pirates' best interests. It's important to note here that Pedro Alvarez has not signed a contract. That's not unique. As we get to the final hours of the deadline, teams are in one place, agents in another, and players are often in a third. All a team has to do is to notify the Commissioner's Office that the terms to a deal have been reached. This is an important point that we'll get back to later on, when we attempt to figure out what Scott Boras is trying to achieve. Having Alvarez put on the restricted list is the way that the Pirates make a claim to their control of the player; it prevents anyone else from talking to him, and also gives them a legal leg to stand on should the Alvarez camp try going the independent-ball route. This is also the first of several mentions that Boras wants to renegotiate the deal, and it's one of the main sticking points here. If one follows the letter of the rule, Alvarez has either signed and is a Pirate, or he hasn't signed and the deadline has passed, which now forces him to wait a year to re-enter the draft. But that's not what Boras is looking for—he's looking for a renegotiation, and believe it or not, these aren't totally uncharted waters.

The Major League Rules provide that a player who refuses to sign a Uniform Player Contract to which he has agreed and report to the signing Club shall, upon a report of the signing Club, be placed on the Restricted List until he signs a contract reflecting the terms to which he has agreed. Such a player may not sign a contract with or play for any other Club. While demanding that we renegotiate his contract and pay Pedro more than the $6 million signing bonus to which Pedro agreed, Mr. Boras has contended that the contract we reached with Pedro was consummated after the August 15 deadline. This claim was not raised on the evening of the 15^th when we informed Mr. Boras that Major League Baseball had confirmed that the contract was submitted in a timely fashion. Mr. Boras asserted this claim several days later, after all of the draft signings had become publicized.

Note the term "timely fashion"—how it avoids saying anything about the midnight deadline. We'll come back to that one as well after we really set this candle to burning.

The Pirates are confident that the contract reached with Pedro Alvarez was agreed to and submitted to Major League Baseball in a timely fashion and properly accepted by Major League Baseball. In fact, the contract between the Kansas City Royals and Eric Hosmer, another Boras client, was submitted to the Office of the Commissioner after our contract with Pedro was submitted. Mr. Boras is apparently satisfied with the $6 million bonus that he secured for Mr. Hosmer and has not challenged the validity of that contract. Mr. Boras has been informed that if he pursues a claim that our contract with Pedro was not timely he puts Eric Hosmer's contract with Kansas City in jeopardy.

Wow. This is a huge power play for so early in the process. This is sitting down at the World Series of Poker and going all-in on your first hand before the flop. Hosmer is suddenly hit by shrapnel—at risk of becoming collateral damage in a war that went from skirmish to blitzkrieg in about three seconds flat (or more literally, twelve days). Also a Scott Boras client, Hosmer got his six million and is already playing, going 3-for-6 with a pair of doubles in his first two games for Idaho Falls in the Pioneer League. But once again, we see the term "timely fashion." Not the midnight deadline, simply a timely fashion. According to multiple sources, Hosmer did not come to terms with the Royals until after the midnight deadline. He turned down $5.5 million just minutes before, and agreed to the $6 million offer after midnight. With the deadline approaching, the Royals seemingly contacted major league baseball and asked for some kind of window in which they could finish negotiations, and that request was granted. In multiple discussions with industry insiders, nobody that I spoke with had ever been through such a process themselves, but they universally believed that baseball would likely allow such a thing in some cases, since an extension window would be in the best interests of both sides in the negotiation.

This creates a number of open questions. First, is the deadline real or not? Hosmer and the Royals clearly received an extension, and there have been industry rumors concerning an extension for the Nationals and Aaron Crow as well—an extension that did not result in a deal. Not insisting that the deadline really means The Deadline only further breaks this broken process. The second question involves whether or not the Pirates were also granted an extension to complete negotiations with Alvarez. If they did, they could be in a bit of a pickle, as either the deadline was the deadline and Alvarez is unsigned because he came in late, or he's signed a deal for which Boras has found another loophole.