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Circumventing MLB's Waiver Rules

By Rick Karcher, Michael McCann, Geoffrey Rapp, Greg Skidmore, and Howard Wasserman

As several media outlets are reporting, the Boston Red Sox included an unusual provision in their recent contract with left handed pitcher Andrew Miller (pictured), in an apparent, creative attempt to circumvent Major League Baseball's complex waiver rules. Specifically, the Red Sox signed Miller to a minor league deal for 2011, with a $3 million club option for the 2012 season. However, the contract stipulates that the $3 million option will immediately vest should Miller be claimed on waivers by another team.

Because Miller signed a minor league contract, the Red Sox can assign him to one of their minor league affiliates to begin the season (most likely their AAA team in Pawtucket). However, if Boston recalls Miller to the majors at some point this year, the Red Sox can only reassign him to the minor leagues if Miller first clears waivers, giving the other 29 MLB teams the chance to claim him for their own major league roster. By giving Miller a relatively expensive vesting option in the event that he is claimed on waivers, the Red Sox appear to hope that other clubs will be deterred from claiming Miller should he end up on the waiver wire.

While Miller's contract may not violate the letter of the MLB rules, it does appear to violate at least the spirit of the waiver system. MLB's waiver process serves two general purposes: first, the rules are intended to protect minor league players by providing them with an opportunity to play for another major league team should their current franchise fail to offer them a major league roster spot; second, the waiver system also helps to enhance competitive balance across the league by preventing major league teams from stockpiling young talent in their minor league systems.

Moreover, Miller's contract appears to be inconsistent with the second purpose of the waiver system, as the Red Sox have created a disincentive for other teams to claim Miller off waivers, increasing the chances that Boston will maintain control over a player that they cannot presently use, but one who another team might need for the 2011 season.

Accordingly, I suspect that MLB will consider revising its rules in order to close this loophole in the future.

Full post as published by Sports Law Blog on February 22, 2011 (boomark / email).