Exclusive – An Analysis of What the Deal Between MLB and the Cuban Baseball Federation Means to the Sport

Exclusive – An Analysis of What the Deal Between MLB and the Cuban Baseball Federation Means to the Sport

By Jordan Kobritz

Major League Baseball (MLB) and the players’ union (MLBPA) have reached an agreement with the Cuban Baseball Federation (FCB) that would legalize the transfer of baseball players from the Caribbean island to MLB.

The three-year deal would create a posting system similar to the agreements MLB has with Nippon (Japan) Professional Baseball, the Korea Baseball Organization, and the Chinese (Taiwan) Professional Baseball League.  The deal requires the FCB to release a player with at least six years of service time in Cuba or who is at least 25 years old if they want to sign with an MLB team.

In exchange, the FCB would receive a fee from MLB equal to 25 percent of a player’s signing bonus if he signs a Minor League contract and a payment of 15-25 percent based on a graduated scale of the signing bonus if the player signs a Major League contract.  The payment system mirrors MLB’s arrangements with Japan, Korea and Taiwan, with one exception.  Instead of paying the fee to the player’s former team, the payment goes to the FCB, which has agreed to use it for baseball development purposes in Cuba.

In all the agreements with baseball governing bodies in other countries, players under 25 are subject to a MLB team’s international signing bonus pool, which serves to limit the amount of the bonus.  Players 25 and over are deemed to be international free agents under the Collective Bargaining Agreement with no limits on the amount of signing bonuses.

Cuban players would automatically qualify for a work visa in this country, have the right to bring family members with them, and could return to Cuba at will.  In addition, players could play in the Cuban National League in the off-season and represent their country in international tournaments with the permission of their MLB team.  MLB and the players’ union still have work to do on the details of the pending agreement, including the specifics of posting players and how and when scouts will be permitted to evaluate them.

Other highlights of the agreement include a provision to resolve disputes between MLB and the FCB through neutral arbitration before the International Chamber of Commerce.  FCB Players may also elect to be represented by a registered player agent when negotiating a contract with an MLB Club.

The purpose of the agreement, according to statements issued by MLB Commissioner Rob Manfred and MLBPA Executive Director Tony Clark, is to end the human trafficking of Cuban players to the United States.  A number of Cuban players have deserted their country only to embark on dangerous journeys at the mercy of smugglers and drug lords looking to earn hefty fees.  Stories of their harrowing escapades in the media and court cases have led to backlash against MLB and cries to reform the system.  However, MLB stands to benefit as well from a more orderly process of obtaining talent from Cuba, in addition to a vastly cheaper one.

Despite the positive tone of the announcement, the U.S. government must approve the deal, which is no sure thing.  The United States maintains a trade embargo with Cuba, which has been strengthened in certain respects under the Trump administration. At least three governmental bodies oversee interactions with Cuba: the Departments of State and Treasury and the National Security Council, all of which may weigh in during the approval process.

MLB believes the proposed arrangement is permitted under provisions of a general license it received from the Treasury Department’s Office of Foreign Assets Control (OFAC) in 2016.  Furthermore, U.S. law requires payments be made only to independent entities in Cuba, not to the Cuban government, similar to International Olympic Committee (IOC) rules.  The IOC has determined that the FCB is independent of the central government.

However, the Trump administration and a number of Cuban-American Congressmen immediately criticized the arrangement.  Should OFAC revoke MLB’s license, it would signal a major shift in policy that could affect many other companies currently doing business in Cuba, including Jet Blue, American Airlines, Delta Airlines and Western Union, among others.  If the agreement be scuttled, Cuban players who choose to defect would most likely continue to be smuggled out of the country.

The hope is after the grumbling and threats subside, the deal will be approved, paving the way for an agreement three years in the making that would improve the lives of Cuban players, their families and the baseball playing youth in Cuba.

Jordan Kobritz is a non-practicing attorney and CPA, former Minor League Baseball team owner and current investor in MiLB teams.  He is a Professor in the Sport Management Department at SUNY Cortland and maintains the blog, sportsbeyondthelines.com.  The opinions contained in this column are those of the author.  Jordan can be reached by email at jordan.kobritz@cortland.edu