THE BOOK--Playing The Percentages In Baseball

Tuesday, February 22, 2011

Andrew Miller’s Poison Pill

A poison pill is a defensive tactic used by corporations to prevent hostile takeovers.  Some poison pills effectively make it impossible for a company to be bought.

It seems to me, Andrew Miller’s contract falls into this category, that if some other team tries to acquire him through waivers, a clause gets triggered on his contract.  I have a hard time seeing that as not a poison pill, though I’ll be happy to defer to the experts among you.

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You will remember we talked about Tim Wakefield’s perpetual renewal clause.  Or, more accurately, if you read the standard player contract, a player has to apply for free agency and that the default is a perpetual renewal.  That is, you would think the default is that a player is granted free agency after fulfilling his contract.  But, no, the standard player contract requires the player to file for free agency, or his contract renews.  Basically, Wakefield promised to never apply for free agency.

In return for that, the Redsox gave him.... well, technically speaking, nothing.  And I presume this is why one of Weiner’s first actions was to get the contract redone because in order to sign a contract where you give up something, you have to get something back.  You can’t just say “here, take me”.

Now, in reality, perhaps the free market would have offered Wakefield 3MM$ for a one year deal, and he’d have to go back to the market each year, and maybe he’d get 5MM$ and maybe he’d get 2MM$.  And the Redsox COULD have said that his contract was 3MM$ and that in return for giving up free agency, they will give him 1MM$.  Or something like that.  Now, presumably had Wakefield only given up free agency for his next contract, that would have been fine (a standard team option clause).  The problem was that it was in perpetuity.  That is, it was the reserve clause with no out for the player.

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You can also think of no-trade clauses as a sort of poison pill.  When a player says “no trade clause”, what he’s really saying is “I’ll accept a trade, if you give me a 10MM$ bonus”.  The only difference is that the bonus is not specified until the acquisition occurs.  The player for example could simply say “200MM$”, thereby blocking any potential for a trade.  Or, he could say “20MM$” which would severely limit where he could go.

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Anyway, back to Miller: even if it works out better for him, the purpose of the CBA is that “the needs of the many outweigh the needs of the one”.  It’s a given that some players are going to be hurt individually, so that the group overall benefits.

From Weiner’s perspective, it’s how much a player can control where else he can play, and if the player is giving up something for nothing (and the potential impact on future deals).  That maybe in this isolated case, because of Miller’s situation, it makes sense.  But for other players, it would be damaging to the union.