[MUSIC] Our next guest is perhaps best known for representing both K-Rod and A-Rod, Jay Reisinger, another good friend, colleague. He's going to talk to us about the collective bargaining agreement and how it affects the evolution of a professional baseball player's career from the time of the draft through and including arbitration eligibility and into his free agency years. Jay is an expert in this area. I couldn't think of a better person who can guide a person like Clint Frazier through this evolution. Importantly, he's going to tell us about his successes, and sometimes his failures in representing both professional athletes, baseball players at the arbitration level. But perhaps even more importantly at that crisis level where someone like A-Rod in the biogenesis context, Andy Pettitte in the congressional hearing, Sammy Sosa in the congressional hearing. How do you manage that brand, how do you recover reputationally from an allegation of performance enhancing drug violations. And I think you're going to find Jay is an appropriate guide for any professional athlete, who has these kids of crisis conditions. He's an expert in the field and I'm glad he agreed to join us for this very important evolution of the professional baseball player through the CBA years into his crisis years and beyond. Welcome back, we have with us today Jay Reisinger. We're going to talk today about the evolution of the professional athlete's career in the minor and major league baseball context. Jay, welcome, thanks for being with us today. >> Thanks for having me. >> Absolutely, you have as much as experience as anybody I know in the field. We've already interviewed Clint Frazier, who was a top high school player in the country last year. Just take us through what his career trajectory looks like, per the CBA as a minor leaguer through and including his early service years and when a player like Clint might become eligible for free agency. >> Okay, a player like Clint Frasier, as a high school draftee, can expect to spend at least four or five years in the minor leagues prior to being called up to the major league club. The progression would go, as he progresses through the minor leagues, he will eventually have to be added to the 40 man roster of a major league team, which then gives him rights under the collective bargaining agreement. Upon being called up to the major leagues, what will trigger is something called service time. And service time is the amount of days that a player actually spends in the major leagues or on the 25 man roster for a major league club. And once a player's placed on the 25 man roster, he is, [COUGH] assigned to the major league club and he begins to accrue service time. And once you begin to improve service time, it triggers a number of different dates, but most specifically it triggers salary arbitration rights and free agency rights. Once a player has achieved at least three years of major league service, he becomes salary arbitration eligible, which means a club can no longer renew him or pay him what the major league minimum is, and currently its $510,000, that's the major league minimum. The first three years of a players career, the club can essentially choose to pay the player what they want, so long as it is in excess of the major league minimum, but- >> So, not to interrupt, not to interrupt, but somebody like Mike Trout, somebody like a superstar in his first, second or third year. Team is going to want to grab him and sign him through his arbitration years generally speaking. >> Well that's correct and that's what happened in the case of Mike Trout. If you remember from last year there was a number of stories written about how the Angels renewed Mike Trout at a little over $500,000 and there were some public outcry, how could the best player, or one of the best players in baseball be paid $500,000. And it's because he lacked rights under the collective bargaining agreement to present his case in salary arbitration or free agency. >> What's a super two Jay? A super two? We've heard that term thrown around quite a lot. >> Sure, the general rule in salary arbitration is once you've achieved three years of major league service, you are salary arbitration eligible. However, under a provision in the collective bargaining agreement, if you are within the top 10% of the second year players you can become eligible as a second year player. And so usually that means somewhere around the neighborhood of 2 years and 130 days of major league service. And that rule really is put in place to prevent a team who has a player on the major league roster for the full three years from sending him to the minors for, let's say, the last week of September, so they can achieve salary arbitration eligibility. >> Now you've had a lot of experience in salary arbitration. We're talking to one of the experts. But in preparing for this you talked about one of your experiences that was not so happy on the other side when you had A-Rod and the Angels arbitration. >> Yeah, I represented Francisco Rodriguez, [CROSSTALK] also known as A Rod, in his salary arbitration case against the Angels. What was somewhat unique about that case was the Angels had told us, prior to the exchange of numbers, there was a date in January In which we exchange numbers with the club. And you don't know what the club's number's going to be and they don't know what your number is going to be. But the last offer to K Rod prior to exchanging numbers was $1 million less than what the Angels actually filed him at, so Even though we went to hearing and lost, he made a million dollars more than he would have had he settled on the day of exchange. >> I meant to say K-Rod, you've also worked with A-Rod, we're going to get to A-Rod. But stay with this for us, if you would please. So now we have an arbitration eligible, Clint Frazier, he's either a Super 2 or he's done his three years. How does the arbitration process, when you've worked in these arbitration proceedings what has really been the go, no go such as you can share with our audience. Who wins, who loses, it's single offer so one side or the other side is selected. It's not like they can be and split the difference. The arbitrator has to pick one side or the other as I understand it. >> That's correct. You know, it's a very interesting process. It actually begins as early as December, when the clubs make the decision whether to tender a player a contract or not. And so you see actually a lot of activity in December, where a club will come to a player and say, look we think that you're worth $2 million in salary arbitration but we don't think you're worth that much in free agency. So we want to do what's called a pre-tender deal with you, which means we'll pay you a little bit less than your value in salary arbitration but we're not going to non-tender you or make you a free agent, we'll keep you with the club. So the tender date's very important. That occurs in December. Then in January, usually the third week in January, we have the exchange of numbers, and that is a blind exchange. So I am exchanging with a club a number that they don't know and I don't know the club's number. And so later in the afternoon after we've blindly followed these numbers you find out where you stand. And you create what's called a midpoint. And that usually is the starting point for negotiations after the filing of numbers. If you can't resolve the case, the hearings then begin usually in the first week in February. >> And the arbitrator then, just to repeat, you have the hearing, you go through the process, it's either your number or the team's number if you go the distance, correct? >> That is correct, and that process was engineered and agreed upon by Major League Baseball, and the Players' Association really to drive settlement, because in an either-or arbitration, there's no splitting the baby, so both sides are taking significant risk monetarily when they go to hearing. >> Okay, now most recently, again if you can talk about it, you're involved with the Josh Tomlin arbitration as I Recall, and, of course, being a Cleveland Indians fan, what do you think, as you reflect on it, were the no, no goes there? >> [COUGH] Well, in the case of Josh Tomlin, it was relatively simple. We had a philosophical difference of opinion, as to the players value, and that's what the process is really for, when you have a philosophical difference >> And Josh Tommen's case presented some unique challenges in that he was hurt for almost the entire platform season, he only had one relief appearance in his platform season which made the case a little bit difficult but we thought our filling number reflected it. Unfortunately the arbitrators didn't feel the same way. >> Now as you've represented, let's take them through the arbitration eligible years, let's take them through and including free agency. Let's talk about the guaranteed nature of these contracts. You read about a Clayton Kershaw, you read about a Tanaka, I mean we're talking guaranteed hundreds of millions of dollars. Does that emanate also from the CBA? It's different from the NFL where their contracts are not so guaranteed. >> Sure. In [COUGH] major league baseball, contracts can be guaranteed or non guaranteed. For example, a salary arbitration contract such as Josh Tarman's this year, even in his salary arbitration lost. His contract was not guaranteed. Okay so and when a player's salary is salary arbitration eligible, clubs don't necessarily have to guarantee that money. Once you get the free agency then you have to get into guarantees. But you can negotiate a guarantee for salary arbitration eligible player when you negotiate the contract. When it goes to actual arbitration it is a non-guaranteed contract. But all multi-year contracts Are guaranteed. So if you signed a two year deal, a three year deal, a Clayton deal, that money is guaranteed pursuant to the collective bargaining agreement. It is much different than it is in football. >> And let's just go back to it's a smart team anymore. When they spot a first or second year person, like a Carlos Santana here in Cleveland, is it smart on the team side to ask you to be a proxy for a team, to say look I want to grab him before he becomes arbitration eligible. Is that a trend that you see across all the major leagues? >> Sure, and you've seen it a lot this year. Clubs are looking to lock in players at what their values are today. Because the way the market is going, the values of players always increase and they're going to continue to increase. And so if you can lock up a player at today's value, you are giving the team a great bargain and some players are willing to give up some extra money in order to gain the security at a younger age. So teams are identifying superstar players earlier, they're making significant offers to them earlier. You've seen players like Evan Longoria, and Jonathon Singleton most recently. Jonathon Singleton hadn't played a day in the Major Leagues and signed a five year contract. >> Now how is that different from what we're seeing in the NBA, Jay, where take less than you can or you could otherwise get to stay in Miami Mister LeBron James? What about the cap? Is there some sort of hard cap or luxury tax that the team has to pay because over the cap that's the interim effect that we're seeing in the NBA apparently. >> Sorry. And that is far different than baseball. In baseball, they do have a luxury tax when your payroll exceeds certain thresholds. But the tax really is not prohibited to teams like the New York Yankees in other large market games, The Red Sox. So the luxury, tax well it acts as somewhat of a buffer on salaries with respect to those high market teams or big market teams. You don't see players really signing for less than their value to stick with teams in Major League Baseball the way you do in the NBA or even sometimes the NFL. >> And does that come from the media money and these major markets Jay? Really that are New Yorker, the Dodgers sold for over $2 billion and it's the media money that gives them because their territory is so expansive. >> Yes what you have in baseball is kind of hybrid. It's different than hockey it's different than basketball and it's certainly different than the NFL with the respect to media rights. Local media rights are a big bonanza in major league baseball. So you see a lot of teams owning their own networks for example the Yankees own the Yes network. And those are becoming incredibly profitable. Even teams like the Pittsburgh Pirates and the Cleveland Indians have strong local media deals and in addition to that, they also have some pretty good national deals that are only getting bigger. You seen an increase in the past year of about $30 million more in national TV money. Are coming to each club. >> And is that really an artifact of the territorial anti-trust exemption that MLB enjoys, going all the way back to Flood v. Kuhn. >> In large part it does. In large part it does. What baseball has done, I think to the benefit of players and teams, is they do have a relatively strong revenue sharing Process which is somewhat different than a lot of the other leagues. So in addition to the local TV money, and the national TV money, the smaller markets also receive a significant amount of revenue sharing money. To try to even the playing field. >> And under the now CBA, suppose the team just wants to take that money and run, what is the floor that they must meet? Must they spend a certain amount at least or else they get penalized? >> Well, you have to spend a certain amount of your revenue sharing money. And your national TV money and if you don't the MLB PA is going to come knocking on your door. We've seen it there is no hard floor just like there's not hard cap as far as what a teams payroll should be. But if a team is not investing its revenue sharing money in the big league club. So, I'm not developing minor league academies or Dominican academies. But they're not putting it on the Major League field. The Major League Baseball Players' Association will take action, and they've done it in the past with the Florida Marlins. [MUSIC]
