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Why players can't own a piece of the team

Mar 22, 2010, 2:15 PM EDT

Employee owenrship.gifI’ve always known that players can’t hold equity stakes in their teams due to the Basic Agreement (see paragraph 4(c) on p. 213 of this massive document), but I never knew why.

Today, however, Kevin Goldstein of Baseball Prospectus explains. Once upon a time Rogers Hornsby got a cut of the Cardinals, was traded to the Giants, and quickly found his ownership stake to be a conflict of interest. And it got worst when he went to divest, as the Cardinals tried to lowball him, leading to everyone in the National League having to chip in to buy him off.  As a result of all of that, the rule was passed and has been incorporated into player contracts and/or the Basic Agreement ever since.

The only exception: players can take a stake in the team with special approval of the Commissioner.  Goldstein speculates whether or a team could give a chunk of the team to a player with language built in to deal with any Hornsby-esque conflicts of interest and have it approved by Selig. He dismisses it almost immediately, however, which is probably sensible given that it’s not likely to ever happen.

The only thing I’d add is the notion of maybe offering a player a chunk of a team — or at least the option to buy a chunk of the team — that doesn’t vest until retirement.  I kind of doubt that would ever happen, though, because it would require something akin to financial transparency for baseball teams and they really, really hate that.

  1. Porky Lopez in Colorado - Mar 22, 2010 at 2:52 PM

    So, does this mean they could buy equity stakes in all the other teams they don’t play for? And reinvest and divest as their fortunes and jerseys change?
    Captcha phrase of the day ‘conjugal tent’!

  2. Ken - Mar 22, 2010 at 3:08 PM

    The language of the clause is such that it prohibits direct or indirect ownership of any equity or debt stake, even if one of the MLB baseball clubs became a publicly-owned company. Does the MILB players agreement contain similar language regarding minor league professional clubs or independent teams? I only know of retired players with equity stakes in MILB (e.g., Cal Ripken and the Aberdeen IronBirds), but can imagine former MLB players on the comeback buying in to a team.
    Does the NBA player agreement preclude professional basketball players from owning equity stakes? The Boston Celtics, for example, were a listed company back in the 1980s-1990s before being taken private again.

  3. Morgan W - Mar 22, 2010 at 3:27 PM

    Why is this still even being discussed?
    Imagine if the Giants started doing things like this in the mid 90’s? Bonds would own a decent chunk of the team by now and everyone involved in upper management would of shot themselves by now.
    As with women, if your’e exploring other avenues to finance the lifestyle….you cant afford her. If the team needs to do this, they can’t afford him either.

  4. Evan - Mar 22, 2010 at 3:59 PM

    I think there is too much potential for a conflict of interest to arise even if you had a player’s ownership vest later on.
    What if the player had a lot gains/income elsewhere that might tempt him to dog it, retire and lower the value of his ballclub in order to realize a loss.
    What if the player buried himself in debt and his creditors came a knocking?
    Despite having ownership that vested at a later date, what if said player was guaranteed to hold a majority stake based on his investment. Wouldn’t that make him the pseudo owner (in the eyes of the employees) even if he didn’t actually have the rights.
    What player would be crazy enough to invest in something this illiquid with so many of his ownership rights deferred? Said player would probably be better off opening a restaurant or Sports Bar 😉

  5. BC - Mar 22, 2010 at 4:05 PM

    So you can do this in hockey but not baseball? Witness Mario Lemieux.

  6. Real Vikings fans wouldn't cheer for Favre - Mar 22, 2010 at 7:08 PM

    I remember when A-Rod temporarily left the Yankees there was rumors that the Cubs offered him a piece of the team.

  7. Old Gator - Mar 22, 2010 at 10:23 PM

    At my age, a piece of team is probably the best I could hope for.
    On the other hand, why not permit players to buy shares of portfolios of mixed MLB stock, wherein their ownership would be diluted to interest in all of the teams? It’s tough to see the blowback from owning “MLB” as opposed to any particular franchise.
    An IPO for MLB per se might even endow the collected owners with the liquidity they need to build their own goddamned stadiums, and get the bloodsucking bastards off of our backs in the process.

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