Why are baseball teams allowed to trade cash for players?

Question

I was just curious how this is possible. what is to stop a team owner from pocketing millions of dollars personally in exchange for running a major pro sports team into the ground. When a player is traded for cash, are there rules for if that money has to be reinvested into the team or can it be used for non team purposes by the owner?

Answer 1

There are no rules about what can be done with the money within the team; if the team isn't solely owned by one person (and I don't think any are), they would not be able to just take the money out of the team. However, that's business law, not MLB rules.

The Commissioner must approve any trade where the money exchanged is over a certain amount - I don't recall what the number is, but I think it's around $1M. That rule is in effect so that owners won't do exactly what you suggest - i.e., gut the teams for their own personal enrichment. The most notable use of the rule was in 1976, when then-Commissioner Bowie Kuhn stopped A's owner Charlie Finley from selling several of his players (Joe Rudi, Vida Blue, and Rollie Fingers).

Answer 2

Contracts can be bought and sold and it's been that way since Babe Ruth was sold to the Yankees in 1920.

Back in the 70's Charlie Finley tried to do what you suggested, though, with his Oakland As. He was disgusted with the new free-agency and the resulting high player salaries and tried selling contracts of his players to teams like the Yankees and getting nobody in return.

The commissioner intervened and stopped some of the trades, "in the best interests of baseball".

Answer 3

The commissioner of baseball has the authority to void deals that he judges not to be in the best interests of baseball. The only famous deal I'm aware of that involved a star player being traded for a large sum of cash in liew of players was The Red Sox sale of Babe Ruth to the Yankees.

Answer 4

Deals with more than $1 million cash component must be approved by the commissioner. Such are not really very common, as money is rather easy to come by, and talent is not. When there's cash involved, it is usually intended as a salary offset for the player obtained if he has a rather large contract.

Answer 5

Players a assessed a dollar value based on skills, time in the league, potential and current performance level. This is why they can be traded for money like Babe Ruth was way back in the day.

Answer 6

So the owner can buy another player with it.

Answer 7

I don't know all the details...