Sunday, September 23, 2007

Multi-millions aren't enough anymore

There has been some buzz in the sports world lately stemming from a recent article for New York Magazine. It has been speculated that Alex Rodriguez's agent could possibly negotiate a deal for Arod to opt out of his contract with the Yankees at the end of the year and go to the Cubs (who are up for sale and have yet to announce new owners). A part of the deal could be partial ownership of the Cubs. While all of this is speculation through sources, it opens up a number of ethical questions and if there is any truth to the sources quite a few people could lose big and face disciplinary action, including both Rodriguez's agent and the Cubs' potential owners.

The biggest issue, however, is the possibility that a player could obtain partial ownership of a team as part of a playing contract. While it has been done in the past, the conflict of interest it creates would not and could not benefit the sport. No player should own any part of the team they play for, regardless of the size of their share. While it is customary for a company to offer profit sharing to its employees, the scale of possible team ownership by a multi million dollar player doesn't compare. A team's profits aren't necessarily directly related to winning and losing. There is team sponsorship, advertising, merchandising, ticket sales and a host of other things that an individual player has no effect on. Awarding partial ownership to an active player is a distraction to both that player as well as the rest of the team.

It also would allow teams to get over budgeting and salary issues by substituting partial ownership for actual salary, the value of which fluctuates over time. While you can put constraints on teams who are thinking of offering contracts like this, it's hard to draw the line at dollar amounts or percentages. Major League Baseball needs to start looking into putting regulations into place to cover this situation. As contracts continue to grow into the multi-millions, teams, players, and agents will be looking to capitalize on the team's assets as well as use those assets to get ahead in the bargaining process.

[Update: It seems that the Collective Bargaining Agreement contains language that would prevent players from owning stake in a team. Darren Rovell educates.]