Dear Commissioner Manfred,

Right off the bat: I’m not asking for you to act with respect to the Diamondbacks’ trade of Touki Toussaint with Bronson Arroyo to the Braves for Philip Gosselin. I understand that your office has already approved it, and its impact is not great. Nonetheless, it’s not often that we perform the exercise of asking whether we’d do things differently if we were starting from scratch, and with that trade as an illustration, I think it makes sense that we take the opportunity to do that now with respect to a process set up almost 40 years ago under the “best interests” clause of the Major League Baseball constitution.

The Approval Process

After the Finley v. Kuhn litigation that decided that the Commissioner of baseball could wield the “best interests” clause to stop the sale of players, Commissioner Bowie Kuhn created a kind of standing order for teams to follow in understanding when he would like to review a trade under that microscope. A trade that provided for at least $400,000 to change hands would be submitted to the Commissioner’s Office for approval. As far as I understand, it was never actually included in the MLB constitution, its rules or its collective bargaining agreements with the Players Association. Commissioner Selig updated the figure to $1,000,000 about twenty years ago, but teams still are not required to abide by it. Essentially, teams that made a trade without going over the limit could expect that it would never be reversed under Commissioner Kuhn’s interpretation of the “best interests” clause. Teams that made a trade over that limit without approval from the Commissioner would do so at their own peril.

That process absolutely made sense when it was initiated, and it rested on two very reasonable assumptions: 1) that selling players could be bad for the game in at least some instances; and 2) that selling players could only be accomplished by trading players for cash. The basis of that first assumption has not changed, and I tend to think that it’s still true — it’s still possible, in at least some instances, that the sale of players could be bad for the game. The basis of the second assumption absolutely has changed, however. I believe when the process was first instituted, it was unlikely or unusual for players’ contracts to constitute liabilities — players were mostly making far less than they were worth to owners.

That certainly is not true now. Whereas requests for approval under this process were rare under Kuhn, they are commonplace now. In the wake of Finley v. Kuhn, the problem Commissioner Kuhn sought to avoid was of owners damaging the integrity of the game by fielding a team that really could not compete at the major league level. The sale of players at that time was a matter of choosing between keeping players and getting money. Now, it is frequently a choice between keeping nothing and getting players and money; in the game’s recent history, Commissioner approval is required under this process most often when money is being included to offset obligations under a player contract. Now, the money typically goes with the traded player, and is not traded for the player.

As things stand, then, the review process pretty much only flags trades that probably are not a concern to the best interests of the game. That has been true now for some time. What’s new is that we now know that the review process does not flag the very transactions it was designed to address.

A Change is Needed

The fact that the process doesn’t work as designed is reason enough to ask whether a change is appropriate. The reason I write to you, however, is that we’ve learned something new that suggests that either now or in the near future, a change may be necessary.

I think Commissioner Kuhn blocked the sales of Vida Blue, Joe Rudi, and Rollie Fingers because it would have meant something was taken out of baseball. The problem was the Athletics, and not the Yankees or Red Sox. Putting money into baseball is not bad for baseball; Yoan Moncada may have signed for much more than baseball’s rules hoped to permit, but no team was made worse by that signing. If anything, that signing is a testament to the fact that MLB can attract the very best players in the world — and that is certainly in the best interests of baseball.

And this is where the Diamondbacks’ situation comes in. Dave Stewart made some comments yesterday that suggest that he doesn’t understand some basic economic concepts, but I struggle to believe that’s true. A GM saying out loud that he didn’t test the market before selling a prospect, that he thought the prospect’s market value was the amount of his signing bonus from over a year prior, that just doesn’t make any sense. As a former agent, Dave Stewart absolutely must understand that what Toussaint received as a signing bonus would likely have been much higher had he had the ability to negotiate with thirty teams instead of one.

I just have trouble believing that, and we will soon find out if the Diamondbacks’ owners believe it. Either Stewart lacks some basic understanding that seems highly relevant for his position, or this is all window dressing for something a little more alarming. If it’s the first thing, Managing Partner Ken Kendrick will soon take action — you can’t have the success he’s had in the business world without understanding the importance of dynamics Stewart omitted from the thought process he laid out. If it’s the second thing, nothing will happen at all — and that would mean that Stewart is covering for Kendrick, who may be readying to sell the team.

Commissioner Manfred, it really doesn’t matter whether my read on this is correct or not; what matters is that it now appears to be possible. The process mandating approval for deals that move $400,000 or more was designed to prevent one owner from helping another to extract something important out of baseball. I suggest that with the sale of prospects now possible through a purchasing of liabilities, it’s now possible for the same thing to happen for a single team — when a team’s current owner may be extracting something out of baseball from a future version of the same team owned by someone else.

The Potential for More Serious Problems

I do believe the Diamondbacks are in good hands, so let’s use a more extreme hypothetical. Let’s say a team — call them “the Merlins” — wanted to remove a whole bunch of contracts off of its balance sheet, contracts that called for player salaries that were over what the market would be likely to pay. If the Merlins attempted to trade those contracts for prospects, they would have to send money in the deal to the other team. If the Merlins attempted to trade those contracts without sending money to the other team, there’s a way to do that: by sending prospects along with the contracts.

Of those two Merlins scenarios, it’s pretty clear that the one most likely to be against the best interests of baseball would be the latter. And yet the current approval process would require your approval only for the former. It is currently possible for a team owner to rid itself of large contract liabilities by trading prospects, and the current process that requires your approval for deals involving over $1 million would not be invoked.

Whether that’s a bad thing is up to you to decide. I think it probably is; if a team owner is motivated to sell, there’s at least a chance that it’s because the owner needs money. There’s at least a chance that the same owner needs money sooner rather than later, or is likely to have difficulty making payroll. Say a sale is on the horizon, and the public knows it, but the owner hasn’t actually stated that publicly. If a prospect-for-liability sale is completed, the appearance may be that the owner is stripping down the team in a manner that happens to be very difficult to reverse even if the team is sold soon thereafter.

Such a scenario would not be in the best interests of baseball, in my opinion. The fact that there is a process in the first place for money trades is a strong indication that taking money out of the sport is not in its interests. The potential to shake the public’s confidence in the sport’s integrity is, I believe, the exact purpose for which Commissioner Keneshaw Mountain Landis insisted the best interests clause be instituted. That potential alone is enough to set up a new process, one that would at least give you the opportunity to review the trade.

It’s not that this would ever be common, and I’m not sure it’s likely to happen at all. Teams are good policemen for themselves, because what is good for baseball is almost always what is good for team owners. It’s good for baseball when all teams are trying to win games, and a team owner is completely within his rights to prioritize wins in some seasons over others. We can trust that in most trades, it really is only that question of priorities. The process was never about protecting team owners from themselves, however. And in cases in which an owner may be poised to sell the team, the interests of baseball and team owners may begin to diverge.

Let’s also be clear: although freeing up money in one trade with a prospect can look better if examined in conjunction with another transaction, that justification will always be available even though it will not always be warranted. I once had a discussion with the head of a school within a university, who explained why fundraising was so difficult; if someone made a large donation to his school, the university would simply move funding away from it to compensate, spreading the money around elsewhere. The problem is the same. Which money would actually be the money that had been freed up? A team could always point to something. All that means is that while “financial flexibility” may be sufficient justification for a trade, it can never be a reliable proof.

A Question of Implementation

A more difficult question is one of implementation, and I do not think any replacement for the current $1 million threshold could be as simple as what it is replacing. Money is easy to recognize, and right now, the process has the look and feel of a formal rule and can be followed just as easily. How can we define a prospect-for-liability trade that you might wish to review? That’s not so simple. One of the more common kinds of trade is of a veteran for prospects, from a team with a losing record to a contender. A new process shouldn’t trigger a review of that kind of trade.

We also cannot define when a prospect is being traded in exchange for an assumption of liability, because there is no definition of prospect. We can’t limit this to when minor leaguers are only moving in one direction in the trade, because that would be overinclusive, but also because it would  be underinclusive — it would not catch situations in which a “non-prospect” was included just to avoid review, a scenario like the one when the Diamondbacks sold David Holmberg for an assumption of liability to Heath Bell, a trade in which Justin Choate was included as a placeholder to make the trade permissible.

Another problem is that there can be no definition for when a player contract is a liability. One quick but underinclusive definition of “dead money” would be money owed to a player on the disabled list. That is already formally required, anyway; teams must get approval from your office in order to trade a player on the disabled list, such as this recent trade of Bronson Arroyo and Phil Gosselin. Not all liability contracts are for disabled list players, and that extends to prospect-for-liability trades, as I think the Holmberg trade illustrates. I’m not sure there can ever be a reliable definition.

Maybe the trade of a prospect in exchange for an assumption of liability will always be difficult to define. The lack of an elegant solution, however, does not mean that there isn’t a solution. Being an informal, standing interpretation of the best interests clause and how the Commissioner’s Office is likely to interpret it, you can simply change that. You can tell teams: if the trade you wish to make is something I’m likely to consider the sale of a prospect, or if you aren’t sure, submit it to me to approval. You could say that if they do not seek approval for a move that you wished to review, that doesn’t mean you won’t review it — it just means that you will review it after the transaction is complete. Just as was the case when the original rule was designed, if a team did not get approval in advance, it would proceed to its own peril.

I do hope that you strongly consider articulating a change in policy on your review of trades that may affect the best interests of baseball. Perhaps you already have, among team owners. And I want to say again — while I do think a pattern suggests a sale may be on the horizon for the Diamondbacks, this is not about that team. This is about the potential that is clearly there for unreviewed trades that are not in the best interests of baseball. The current process is overinclusive by design. Nothing harmful to the sport has happened here with the Toussaint trade, but it has put us all on notice that the current process is also demonstrably underinclusive. A process that is both overinclusive and underinclusive meets the definition of insufficiency, and it is time to consider whether it should be replaced.

Very Truly Yours,

Ryan P. Morrison

22 Responses to An Open Letter to Commissioner Manfred on Selling Teams and Selling Prospects

  1. Anonymous says:

    Well, I get where you are coming from, but this is a new management team, so why punish and/or hamstring the new team. You may not like the moves, they are trying to compete, now and in the future. Don’t see even With that last marlin sell off how a commissioner could stop it, a team from making moves, this isn’t fantasy leagues.

    • Ryan P. Morrison says:

      So, I think you may have misunderstood a few things.
      1. Commissioner can definitely stop trades, that’s what Finley v. Kuhn was about. At the moment, any trade that has less than $1M changing hands has a kind of pre-approval.
      2. I think the point of this was just to say that that procedure has to change if it is to prevent the things it was originally designed to prevent. That’s all. I don’t really care a whole lot, other than I find those kinds of thought exercises interesting.
      3. I have no idea what you mean about a new management team and not hamstringing them. There’s nothing in here about punishing anyone, but if you’re referring to the very recent moves, isn’t the current management team responsible for them? Plus this is about ownership, not GMs, right? Kind of hard to respond to that part of your comment.

      4. The whole point is that it’s possible for a team to NOT try to compete in the future. I agree and said above, teams can be trusted to police themselves the vast majority of the time, because we can trust that they’re trying to win, and really it doesn’t matter whether teams prioritize wins in one season over another. That’s probably a good thing. But in the case of an impending sale, the owner is unlikely to care very much about whether the team can win a few extra games 7 years in the future, right? As in, he’s unlikely to care about whether his team can sign a few extra 16 year old prospects, right? So the same argument doesn’t hold.

      There is nothing extreme in the above, man. This is a very narrow point. It’s just very clear that the standing interpretation of the best interests clause needs to be tweaked.

  2. Ben says:

    I appreciate the underlying analysis/sentiment of this post. I had come to terms but w/ Touki trade, but this makes me think of the Dbacks front office more cynically. Likely trying to field a decent, possibly WC team next year and cash-out.

  3. anom says:

    bradley, blair shipley chafin martinez reed sherfy corbin ray anderson de la rosa ….all the draft picks this year. the clean up of the roster. this was not an uncompetitive move.

    • Ryan P. Morrison says:

      The Toussaint trade, you mean? Kind of a random thing to comment here. This is about a loophole in the current best interests trade review procedure.

      If your point is that the D-backs were justified in selling their only high ceiling Low A pitching prospect for pennies without negotiating with any other teams because they have a bunch of young pitchers, I really don’t even know where to start.

  4. Anonymous says:

    The Tigers were then owned by John Fetzer, the most influential American League owner. When Fetzer talked, everyone listened, Kuhn included. Had the deal with Detroit gone through, it seems likely, in retrospect, that Kuhn would not have challenged Fetzer. Neither the Red Sox nor Yankees, at that time, had much, if any, political clout.

    The belief, substantiated during the trial, was that Kuhn acted at the request of Walter O`Malley, then the owner of the Los Angeles Dodgers and baseball`s unquestioned leading power broker.

    O`Malley`s reasoning was simple: He didn`t want any players to be aware of their market value before the impending free agency that went into effect for the first time after the 1976 season. Finley had six players eligible for free agency, including Fingers and Rudi, and realized he would receive no compensation if he didn`t trade or sell them before the trading deadline.

    Rudi signed with the California Angels for $2.09 million for five years;

    Gene Tenace with the San Diego Padres for $1.815 million for five years;

    Fingers with San Diego for $1.5 million for six years; Sal Bando with the Milwaukee Brewers for $1.4 million for five years; Don Baylor with California for $1.02 million for six years; and Campy Campaneris with the Texas Rangers for $950,000 for five years.

    the internet is amazing thing

    • Ryan P. Morrison says:

      Really cool stories! And yes, the internet is amazing!

      Ultimately, all that matters now is what happened after the 7th Circuit decision that upheld Kuhn’s use of the best interests clause: he set up that $400,000 threshold, with the understanding that teams could expect trades with amounts of money under that to have kind of an a priori approval from the Commissioner.

      Whether the best interests clause should be used that way is a matter of opinion, I think, and reasonable minds can differ on that. The point in the piece above is that using a dollar threshold no longer works as designed.

  5. Anonymous says:

    The Toussaint trade, you mean? Kind of a random thing to comment here. This is about a loophole in the current best interests trade review procedure.

    If your point is that the D-backs were justified in selling their only high ceiling Low A pitching prospect for pennies without negotiating with any other teams because they have a bunch of young pitchers, I really don’t even know where

    of course they are justified. The new management team is in charge now. The only argument worth having is whether they are wise moves or could they of done better.

    • Ryan P. Morrison says:

      You say something;
      I say, “are you just saying that they were justified in doing it?”
      You say, “of course they were justified.”

      What exactly are you doing?

      There is a small chance that the team is acting as if the distant future isn’t just worth less than the present, but worthless. That seems to be a very different thing to worry about than whether they were wise moves, or whether they were done well.

      I’m kind of willing to talk about whatever you’d like to talk about, but I’d like to know what it is we’re talking about first, maybe?

      • Anonymous says:

        What a Tiger game. My take is, they offloaded Toki because they needed to save money, and open a roster spot to get a tor possibly. Yes it was to offload Arryo’s contract. You guys are arguing anti competitive. What’s anti competive was having those other guys on the roster, and their cost. Ideal no, possibly even stupid. History will judge, but commissioner can’t rule on stupidity.

        Look Owings is not a major league hitter right now, let alone a middle infielder. Hill is another move, that might cost us another prospect, and cash. So there’s your stop gap Gosselin, Swanson maybe rushed, and hopefully was worth the number 1 pick. Drury’s right there too. Yoan not the 95 we were told stupid. The smart offloading Cahill, Trumbo, Ross, Montero. Toki’s been the biggest loss so far. You guys are calling this move Marlin sell off like. Not even close. They’ve offloaded, the players 80 percent of us agree they needed move. Amazing they have been able to offload these guys to be honest, with only the loss of Toki so far to be honest.

        Do I question the Yoan move. Yeah. wish the commissioner would of stepped in on that one. lol.

        • Ryan P. Morrison says:

          I don’t think anyone is arguing that the D-backs are making anti-competitive moves. Bad? Yes. Dumb? Insofar as they haven’t been the best way to accomplish the goal they want to accomplish, absolutely. I don’t agree with the Toussaint trade, at all, for a wide variety of reasons, many of which overlap with the Lopez signing. And it’s definitely making me uncomfortable that they’re cashing things out that they can’t use within the next few years, seemingly just because they can’t use them within the next few years.

          Anticompetitive, no, they are not trying to lose on purpose, and neither of us have intended to say that. This piece that we’re both commenting on came up not because the Toussaint trade tells us they’re destroying the future on purpose, but because it’s an illustration for the fact that a team COULD move up their timetable just to fetch a better price for the team — and in that instance, suddenly the only watchdog may be the Commissioner.

  6. Anonymous says:

    The point in the piece above is that using a dollar threshold no longer works as designed.

    That and, the fact the whole thing was predicated on a false premise as well.

    • Ryan P. Morrison says:

      It might be easier if you explained a bit more, but since I’m not sure exactly what you meant:

      1. No, you don’t get to decide that an additional topic in the piece above was a thing that I specifically didn’t discuss because it wasn’t relevant enough to the point I set out to make: that the review process no longer works the way it did when first instituted, and that for it to work the way it did when first instituted, a change is necessary.

      2. I’m not sure why a point about whether the threshold/process was instituted under false pretenses (you did mean pretenses, right?) has anything to do with whether the process itself needs to be changed in order to address the things it was first designed to address. It can’t, really.

      3. If you are arguing that Kuhn’s exercise of the best interests clause was really about keeping salaries low, I don’t think you needed any research for that, and I’m pretty sure we all just kind of assumed that. But the “best interests” clause is about what is good for MLB, which is owned by the owners. So what is good for the owners is good for baseball on at least some level, right?

      4. I’m not sure you’ve met your burden that the best interests clause should never have resulted in Commissioner review of trades, if that is your point. If it is your point, and I’m not agreeing or disagreeing, I still see that as separate from a discussion on whether the review process works as designed or intended.

      • Anonymous says:

        My take is the case became a narrative, not to get caught in the lie. save face, basically, and developed a bs outcome of i ts own. That’s the legal system at it worst and it way to prevalent, and waste of time and money. How many times the ruling since its introduction has it been used is the tell. The Detroit owner was pissed because he got reneged, and O’malley didn’t want the players to know their true worth. throw in Finely wasn’t one of them, and was extremely successful. There you go.

        • Ryan P. Morrison says:

          I think it’s been used several times since then, but it often turns into a negotiation involving the Commissioner’s Office that we’re not privy to. This isn’t the same thing, but just to help illustrate, it’s possible that the D-backs tried to get this through with a NP in return, and Manfred balked. It’s possible that a second player on the DL was included just to help make the Commissioner happy. Not likely, but possible. We saw the proposed A-Rod deals get tweaked over time in reference to the Red Sox and Yankees, and I’m guessing there was negotiation there.

          In other words, I hear what you’re saying, but I think the measure is also preventative, so how often it’s been used won’t tell us everything.

          My take is, it doesn’t really matter whether it was a lie. The way the process would have worked in 1980 wouldn’t work now. My take is, let’s not live under the fiction that it now does the job it was supposed to do then, and that it was better equipped to do then. If it is supposed to do now what it was supposed to do then, a change is needed.

          Maybe the thing that it was trying to stop is just the sale of players, because absolutely, the more players are sold, the worse it is for the owners. If a marketplace for 1+ year prospects developed, what’s to say the MLBPA couldn’t challenge the draft slotting system, armed with a ton of evidence about market value?

          To the extent your point is that the best interests clause and $400k+ process wasn’t about what what was good for baseball overall, but what was good for the owners, I think you’re probably right. I don’t really care, though, and nothing in the above piece depends on a reading of that, which is why there isn’t one. For the very narrow purposes of evaluating the current process for review of player sales, it doesn’t matter why. It just matters that there is one, and it’s trying to catch sales, but doesn’t catch them anymore.

  7. Anonymous says:

    false pretenses (you did mean pretenses, right?) premise works as well.

    • Ryan P. Morrison says:

      Yes, premise worked as well. That was not me taking a cut at you — that was me asking which one you meant, since they mean different things and would have meant different things in that context.

  8. Anonymous says:

    and another thing they called jake up with less than 50 abs in the minors. generally the young slump for 15-30 games. his swing was long coming back because he wasnt challenged even in the practice games, and didnt spend enough time in the minors. two weeks minimum next time for young guys that havent completly figured things out next time. that said pads really started jamming, since he’s back so he gets back to being shorter to the ball, we will see how he adjusts.

  9. Anonymous says:

    fudge yeah. get an ace.

  10. Anonymous says:

    I would think 80 percent of the lack hr’s and doubles in san diego san fran and la are due to thick cool air from 7-10 pm. days games different story.

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