SBS Legal Specialist Blames MLB Insurance Policy for Shorter Player Contract Offers

Keith Dobkowski presents research blaming new disability insurance policy for shorter baseball free agent contracts

November 12th, 2003 (Oakland, CA) ­ Some sports experts contend that the bad economy was the reason for the first decrease in the average baseball free agent contract size in the 21st Century. But Keith Dobkowski, Sports Legal Specialist for Sports Business Simulations, Inc., has another view.

In his SBS Working Paper called "Disability Insurance 3, Baseball 1," Dobkowski contends that the new baseball disability insurance policy, allowing insurers to place a two-to-three-year limit on insurance coverage adopted earlier this year, will cause an even greater difference in payroll between teams, at a time when the new Major League Baseball (MLB) Collective Bargaining Agreement was created, in part, to reduce such disparities.

"The new policy will lead to more player strikes," Dobkowski argues - work stoppages that will alienate fans just as baseball is beginning to attract them again.²

To make his case, Dobkowski presents data to support his conclusion. He illustrates that the average length of a free agent contract signed between the 2000-01 off-season and the 2002-03 off-season dropped from 2.666 years, to just 1.781 years in length. The most dramatic decrease occurred in the period between the 2001-02 and 2002-03 off-seasons when the average length of new agreements fell from an average of 2.482 years to 1.781.

Dobkowski's findings support his assertion that 50 percent of players received shorter contract offers in the last free agent signing period because of the new disability insurance controls. Dobkowski uses Houston Astros' second baseman Jeff Kent as a prime example.

In 2002, Kent signed a two-year, $18.2 million dollar contract with the National League Central Division¹s second place team. Dobkowski, after comparing Kent¹s record and contract with MLB players in his age, experience, and statistical area, concludes that the former SF Giant was underpaid. Dobkowski points to the new insurance restrictions as the reason: "Kent, who is coming off six consecutive 100-runs-batted-in seasons, a National League Most Valuable Player Award in 2000, and a personal best in homeruns with 36 in 2002, has a contract less than comparable players because of this new policy."

The SBS Legal Specialist offers the insurance policy and salary cap design of the National Baseball Association as a potential model for MLB.

Dobkowski's SBS working paper is available at the Sports Business Simulations' web site at www.sportsbusinesssims.com. Go to the "SBS Working Papers" Section.

About Sports Business Simulations

Oakland-based Sports Business Simulations produces online simulations of sports organizations for the classroom and for sports fantasy, presents, discusses, analyzes, and reports on sports business policies, activities, and trends, and promotes up-and-coming athletes, with an emphasis on women¹s sports. SBS was founded on January 24, 2003, by Zenophon Abraham, who serves as Chairman and CEO and Prof. Daniel Rascher who serves as Vice Chairman and Chief Marketing Officer.

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