Demystifying the MLB Constitution (Part 2)

In Demystifying the MLB Constitution (Part 1), I broke down the role of the Commissioner and the Executive Council as outlined in the MLB Constitution. When it comes to how decisions are made, those are the two functions within MLB that are at the highest levels of the business.

Part 2 continues on within this key governing document of Major League Baseball. For fans of the A’s, Marlins, Twins or Expos, as well as those locations where relocation or expansion is a consideration, the section on territories will be of interest.

Arbitration

If there are any disputes or controversies between the clubs, or between club(s) and any of MLB’s entities, and if the resolution isn’t expressed elsewhere in the Constitution, the Major League Rules, the Basic Agreement with the MLBPA, or the collective bargaining agreement with the Major League Umpires, the Commissioner serves as the sole arbitrator. (Article VI Sec.1)

Clubs and Major League entities are not permitted to engage in any form of litigation between each other, but must resolve differences pursuant to provisions within the Constitution. (Article VI Sec.2)

To keep everyone in line with this protocol, “The form of player’s contract to be used by the Major League Clubs, and all contracts between Major League Clubs and their officers and employees, shall contain a clause by which the parties agree to submit to the jurisdiction of the Commissioner, and to accept the Commissioner’s decisions rendering in accordance with [the] Constitution.” (Article VI Sec.3)

Clubs

The Constitution outlines what the clubs are within the current League, by division, AL and NL. Any expansion, contraction, realignment or changes in divisions (change from the present form of three-division play) must be governed by the voting provisions in Article V, Section 2(b) of the Constitution.

Believe it or not, a club can voluntarily terminate and withdraw from the League. There’s a catch; it requires a three-quarter approval by all the Major League Clubs. It must be in written format to the Commissioner, “subject to terms and conditions as the Commissioner may require,” “making full payment of all Baseball indebtedness, and offering to adding to the Commissioner or the Commissioner’s designee all of the withdrawing Club’s rights, privileges and property rights under any other Baseball-related agreement.”

A club can be involuntarily terminated, as well. Call this the “Expos Clause.”

MLB can terminate the rights, privileges and property rights of a club with approval by three-fourths of all the clubs “if the Club in question shall do or suffer any of the following:”

  • Disband the team

  • Disband its business organization or cease its business
  • Allow gambling of any kind upon the grounds or any building owned or controlled by it
  • Offer, agree, conspire or attempt to lose any game participated in by the club; or fail to suspend immediately any player, employee or officer who shall be proven guilty of offering, agreeing, conspiring or attempting to lose any such game of or being interested in any pool or wager on any game in which the club participates.
  • Fail to pay any indebtedness owning to baseball within thirty days after receiving written notice from the Commissioner of default of such payment
  • Fail to maintain a ballpark suitable for playing of home Major League Baseball games
  • Make an assignment for the benefit of its creditors or file voluntary petition in bankruptcy.

Territories

This is an especially key area of the Constitution at this time. The impacts of club territory have had implications as recently as last year, and could do so in the near future.

Here are the key examples that have relevance:

  • New York Mets: City of New York; Nassau, Suffolk, Rockland and Westchester counties in New York; Bergen, Hudson, Essex and Union counties in New Jersey; and that portion of Fairfield county in Connecticut located south of Interstate 84 and west of Route 58; provided, however, that this territory shall be shared with the New York Yankees franchise in the American League;

  • New York Yankees: City of New York; Nassau, Suffolk, Rockland and Westchester counties in New York; Bergen, Hudson, Essex and Union counties in New Jersey; and that portion of Fairfield county in Connecticut located south of Interstate 84 and west of Route 58; provided, however, that this territory shall be shared with the New York Mets franchise in the National League;
  • San Francisco Giants: City of San Francisco; and San Francisco, San Mateo, Santa Cruz, Monterey and Marin counties in California; provided, however, that with respect to all Major League Clubs, Santa Clara county in California shall also be included
  • Oakland Athletics: Alameda and Contra Costa counties in California
  • Baltimore Orioles: City of Baltimore; and Baltimore, Anne Arundel, Howard, Carroll and Hartford counties in Maryland
  • Washington Nationals: District of Columbia; and Arlington, Fairfax and Prince William counties, and all independent cities bordering such counties, in Virginia, subject to completion of the territorial draft process pursuant to the Professional Baseball Agreement
  • Seattle Mariners: King County in Washington.

Detect the pattern?

All of these clubs have a relationship to relocation or expansion. In the instance of the New York clubs, consideration of relocation or expansion into Northern New Jersey is impacted. In the case of the A’s, relocation to San Jose is impacted. In the case of the Orioles, it was clear by the territories provided in relationship of one club’s ballpark location to another, that they didn’t have a case in relocating the Expos to DC. And, in the case of the Seattle Mariners, the conversation of a team, through relocation or expansion to Portland should be acceptable.

I say “should” as television territory is something completely different; that was the key for Angelos and the Orioles and could be key to the Mariners and Portland.

I threw in the Nationals’ territory for a couple of reasons. For one, this shows a new territory that was not defined prior to the relocation of the Expos. This impacts the landscape in Virginia. When television territory is placed into the discussion with the newly created MASN Regional Sports Network (RSN), a large swath of the eastern seaboard is now covered. This would seem to have large impact on a jurisdiction such as Norfolk that was in play during the Expos relocation derby, but may now be out of play with this new territory.

Conduct of Championship Season and Postseason

Article IX breaks down what is called the “championship season.” To the layperson, this is what is normally called the “season” as it relates to Major League Baseball.

Breaking this section down:

  • No exhibition games during the championship season is permitted without prior approval of the Commissioner;

  • All the games shall be played under the Official Baseball Rules.
  • No ballpark dimensions or size shall change in the middle of the season
  • The clubs will provide the necessary services of players, and if selected as host club, the park, facilities, and equipment needed for playing the All-Star Game during each baseball season. The date and location of the All-Star Game shall be determined by the Executive Council.

Major League Central Fund

A key piece of the Constitution breaks down the Central Fund. It defines a key revenue stream for the clubs, as it defines the rules for Major League Broadcasts, National and International Broadcasts, and copyright royalties.

The Commissioner, with prior advice and consent of the Executive Council, has the exclusive rights to sell on the clubs behalf, “in any and/or all territories worldwide, exclusive or non-exclusive television and radio or other video and radio or other video or audio media rights (including Internet and other online technology and live or taped) to the World Series, League Championship Series, Division Series, All-Star Games, regular season championship games, spring training games and exhibition games”, and that no broadcasts of this nature outside of the 50 U.S. States and Canada, where Canadian clubs exist, can sold otherwise than by the Commissioner. The Commissioner, as an approved agent of the clubs, collects and deposits the sale of these broadcasts or royalties into the Major League Central Fund, and payments are made to each of the clubs in equal portions.

Payments out of the Central Fund, which are charged equally to each club, by the Commissioner include:

  • Payments of such contributions to the MLB Players Benefit Plan

  • In October of each year there shall be an amount paid to the Commissioner which shall be sufficient for the following purposes:
    • Cover clerical, administrative and operational expenses of the Commissioner’s Office and the Executive Council.

    • Provide, as of the close of each fiscal year, a reserve fund for the Commissioner’s Office of at least $10,000,000 or such amount approved by the Executive Council (such a reserve fund to be the excess of all assets over all liabilities)

The Commissioner, “from time to time” can invest any balance of the Central Fund on hand in variety of defined investment options, that have been approved in advance by the Major League Audit and Budget Committee.

Upon termination of the Major League Central Fund any and all remaining funds are distributed equally amongst the clubs.

The Central Fund continues in perpetuity unless three-fourths of the Major League clubs submit written notice on or before June 30 of any year of their intention to terminate the Major League Central Fund. The fund terminates on the 31st day of December of the year following the year in which notice was given.

Conclusion of this series

You have to admit, this isn’t light reading. Going over the details of the mystical document, however, opens up a window into why MLB does what MLB does on occasion.

Is it any wonder that fans in Oakland scratch their heads when the idea of moving the A’s further away from where the Giants play in San Francisco is said to not be a consideration? The MLB Constitution is why, and comes part and parcel with MLB as a monopoly.

It should be noted that this document has changed since its original inception. One example is that the role of National and American League Presidents are now nothing more than figurehead roles. Since Selig took over, the powers of the Commissioner have increased, in many cases, dramatically.

What will be interesting is to see what, if any, changes are in store for this veiled document when it expires at the end of 2006. Will the role of the Commissioner be granted more powers? May the gods of baseball help us all.

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