A-Rod To Own Some Of The Cubs? Not Likely
CNBC Sports Business Reporter
It was a great sports weekend, but it was the article by Deadspin's Will Leitch in New York Magazinethat caught my attention. It got massive play yesterday because it included that Alex Rodriguez’ agent Scott Boras was negotiating with the leading candidate, presumably John Canning Jr., to buy the Cubs from The Tribune Co . And part of the negotiations, the story said, was to give his client a stake in the team.
First of all, while Canning is the leading candidate, I’m betting the sale isn’t approved by February. So aside from the fact that baseball wouldn’t let this type of negotiation happen, I believe Boras would be wasting his time by talking to anyone but The Tribune Company for the services of Alex Rodriguez. (I’ll explain later why this means that the Cubs likely won’t get A-Rod.)
The bigger part of the story is the ownership angle. It’s against the rules. This from Page 213 of the Collective Bargaining Agreement under “Interest in Club.”
“4c. The player represents that he does not, directly or indirectly, own stock or have any financial interest in the ownership or earnings of any Major League Club, except as hereinafter expressly set forth, and covenants that he will not hereafter, while connected with any Major League Club, acquire or hold any such stock or interest.”
That means that not only can a player not get a percentage of the team while he’s playing, but he can’t agree as part of his contract to get a piece of the team in deferred compensation either. The reasoning behind this is pretty simple. Giving a stake in a team is not a fair unit of currency because it's subjective.
Not only that, teams have proven to be growing assets. If the stake were deferred until the player was no longer playing, that stake would likely be worth more than when the player agreed to the deal. That’s unlike deferred compensation in dollars where, due to inflation, the value of the deal likely decreases over time.
This would of course concern the union if players were getting percentages in teams instead of being paid their market value in cash. It would comparing players on a salary basis harder and would mess up arbitration.
This doesn't mean that teams in the past haven't tried to work the player as owner angle. Mario Lemieux became the owner of the Pittsburgh Penguins when they went into bankruptcy because he was the largest creditor. It wasn't originally in his contract to get a piece of the team, but in lieu of the deferred compensation that was owed him, he took the equity.
Here's a look at other attempts at making players owners:
*Wilt Chamberlain said that he was promised a stake in the Philadelphia 76ers in the 60s, but 76ers owner Ike Richman died before that agreement could be put in writing.
*In 1976, Bobby Orr reportedly would have received 18.5 percent ownership in the Boston Bruins had he stayed with the team. He wasn't informed that this was the case and went to the Chicago Blackhawks instead.
*In 1998, in John Elway's last year for the Broncos, team owner Pat Bowlen offered that Elway's deferred compensation be funneled into giving him a 10 percent interest in the team instead. Elway chose not to exercise that option. Because of failing to disclose this information, as well as a deferred compensation deal with Terrell Davis, the Broncos were fined $968,000 and a lost its third round draft pick in the 2002 draft.
*In 2000, Michael Jordan bought a piece of the Washington Wizards and the Washington Capitals. In order to play in the NBA the following year, he was forced to sell his share in the teams.
Now to the part about A-Rod signing with the Cubs. The Tribune Co. has already loaded a ton of debt on to the team thanks to the signings of Alfonso Soriano, Derrek Lee and, most recently, Carlos Zambrano. To sign A-Rod before a sale is done would be idiotic. Major League Baseball wants to get this thing done by the end of the year, but all signs--the usual delay combined with the fabulous property that is--points to the sale happening earlier next year. That means that the new owner wouldn't be in position to make the financial commitment to A-Rod in the offseason.
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