New York Yankees third baseman Alex Rodriguez is no stranger to controversy.  A-Rod, although never positive on a drug test, has admitted to past steroid use and is now being investigated by Major League Baseball for obtaining performance enhancing drugs from Biogenesis.  Milwaukee outfielder Ryan Braun already accepted a 65 game suspension, presumably from his dealings with Biogenesis and its owner Anthony Bosch, and according to reports, several other players will accept 50 or so game suspensions later today or tomorrow.

A-Rod’s case makes for a good study on case analysis and settlement.  Reports indicate that MLB wants to make an example of A-Rod  by giving him a lifetime ban because he allegedly lied to MLB investigators.  A lifetime ban from the game would invalidate his current highest-in-baseball contract with $90 million remaining after this season.  A-Rod always has a right of appeal to an arbitrator or Baseball Commissioner Bud Selig depending on which rule MLB issues the suspension (though the latter is less likely given that MLB issued the suspension in the fist place).  The punishment, absent a deal, is reported to be handed down tomorrow.

So what is each side looking at?  A-Rod has a few choices:

  • Let MLB issue whatever sort of suspension it chooses then appeal.  The appeal could go either way or simply be reduced and an arbitrated ruling is not appealable in Court (with limited exceptions).  So if it is a lifetime ban, A-Rod risks never playing again and losing millions in salary.
  • Cut a deal with MLB, negotiations for which are apparently underway.  Reports say the negotiated deal would be a suspension for the balance of this season and all of next season.  This would cost him about $36 million in salary (his salary declines in the later years of the contract).  He would then try to make a comeback after nearly 2 years off — adding in his injury time — and at the age of 39 when most players are in decline.  But he would still collect the remaining money on his contract, or at least try to.  A-Rod would have some certainty.
  • He could take an injury retirement today before any punishment is handed down.  Presumably, MLB cannot suspend a retired player or invalidate such a contract after the fact.  If they tried, he could appeal or sue.  Reports indicate that A-Rod’s rehab from two hip surgeries have left him a shell of a player.  The Yankees would allegedly be happy that his controversy is gone and most of the balance of the contract would be covered by insurance — and they lose a diminished player earning a high salary.  A-Rod would miss out on a chance for greater glory in the all-time home run standings where he is currently in 5th place, along with millions in potential performance bonuses under his contract.

MLB also has a few choices as well:

  • Issue the lifetime ban and let the appeals process play out.  That could take a long time and it is not clear whether A-Rod could play during the appeal. If baseball loses the appeal, its ability to suspend players without any positive drug test is severely hampered.  On the other hand, if so many players are willing to accept 50 game bans without a positive test, Anthony Bosch’s credibility and Biogenesis’ records (the proofs against the players) must be very good.
  • Cut a deal.  This is probably the best outcome for baseball since it guarantees certainty and meets the interests in suspending all these players (namely game integrity and its perception).

In a mediation, these would be the types of things discussed privately with both sides and we would work towards a deal that works for everyone.  Ultimately the decision is up to A-Rod and MLB, as it is in their direct negotiations.  Most people are risk adverse — they don’t like taking risks.  And most people like certainty.  It will be interesting to see how this plays out.

If you’re in a dispute and can not work things out, mediation is a good way to try and gain a resolution.  Contact me to find out more.