Baseball Diplomacy? An Opportunity For Re-Engagement With Cuba, Biden Administration May Be Open To Revised MLB Agreement
/1 April 2021 is “Opening Day” for Major League Baseball (MLB). With a new starting pitcher on The White House political mound, might there be an opportunity for the Biden Administration to revisit a 2018 proposal from New York, New York-based Major League Baseball (2019 revenues US$10.7 billion) which was publicly denounced and disapproved by the Trump Administration?
The Honorable Joseph R. Biden Jr., President of the United States, has been invited to throw the ceremonial first pitch on 1 April 2021 at the home opener of the Washington Nationals (NL East) versus New York Mets (NL East). He will likely accept that invitation. President Biden is a known fan of the Philadelphia Phillies (NL East).
Then Joe Biden attended Archmere Academy in Claymont, Delaware, where he was an outfielder (reportedly batting in the latter half of the lineup) on the high school baseball team.
On 19 December 2018, MLB reported an agreement with Republic of Cuba-based Federacion Cubana de Beisbol (FCB). Terms of the agreement include payments to FCB. LINK To Document
Members of the United States Congress, the most notable being The Honorable Marco Rubio (R- Florida), a member of the United States Senate, and officials of the Trump Administration expressed displeasure with the agreement.
The Trump Administration denied authorization for the agreement because of payments to the FCB which the Trump Administration believed would ultimately benefit the government of the Republic of Cuba. LINK OFAC Letter To MLB. There were then and remain now options to revise the agreement and resubmit as a license application to the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington DC.
MLB should not as it did in 2018 retain a consultant, outside counsel or lobbyist to engage with the Biden Administration. Doing so would be counterproductive as MLB can make its case in a license application to the OFAC. Why create a triangle when a straight line is more efficient. The direct approach is preferred. The application will certainly be subject to an inter-agency review process including departments and agencies to determine if issuance of an OFAC license is “consistent with United States policy” so the decision will not be immediate.
Options Include:
First. MLB believed the agreement was permitted under OFAC general license provisions implemented during the Obama Administration. Those who opposed the agreement believed the agreement was not permissible within the OFAC general license guidelines; and, even if it was permitted during the Obama Administration, such an agreement should not be permitted during the Trump Administration as the agreement was “not consistent with United States policy.” MLB should reformat the agreement and seek a two-year (which is normal) license from the OFAC.
Second. The MLB agreement was for two years (ending on 31 October 2021). The annual release fee payments to FCB have been speculated to be from US$2 million to US$25 million to US$50 million to US$100 million. The lower value estimates seem reasonable. Instead of MLB making payment to FCB in currency, FCB would provide MLB with a shopping list of equipment equal to the value of the payments due. This may satisfy those who opposed the agreement- because the government of the Republic of Cuba would not have access to currency. By using the purchasing power of MLB, the FCB would be receiving the lowest pricing for equipment- thus maximizing the value of every payment. Members of the United States Congress and Biden Administration could be supportive of an agreement that provides benefits to United States sporting “Made in the USA” equipment-focused companies.
From The original MLB agreement: “The Release Fee owed to the FCB by the MLB Club that signs an FCB Player is calculated using the same formula embodied in MLB's agreements with the NPB, KBO, and CPBL (i.e., between 15% and 20% of the total guaranteed value for Major League contracts, and 25% of the signing bonus for Minor League contracts). In addition, Supplemental Release Fees may be owed if a contract with an FCB Player contains bonuses, escalators, or options that are later triggered. The Release Fee (and any Supplemental Release Fee) paid by the MLB Club is in addition to the compensation agreed to by the MLB Club to the FCB Player in the player's contract, which will be paid by the MLB Club directly to the FCB Player.”
One important benefit of using product as payment rather than currency as payment is avoiding the use of a third-country financial institution for MLB to send payments to FCB; currently there are not operational direct correspondent banking agreements which would permit direct electronic transfers from the United States to the Republic of Cuba or from the Republic of Cuba to the United States. Thus, third-country financial institutions receive fees for every transaction. Members of the United States Congress and Biden Administration should oppose third-countries unnecessarily benefiting from bilateral commercial transactions involving the United States.
Third. MLB would agree to publish real-time data as to when a payment is made to FCB, the value of payment, and what products have been purchased with the payments.
LINKS To Previous Posts:
OFAC Responds To Major League Baseball Proposal For Players From Cuba
New OFAC Regulation Benefits MLB Players; Performers & Teachers Too
MLB Might Consider Three Options To Obtain Support For Agreement With Cuba
Another Obama (Ben Rhodes) Administration Legacy Decision Harms Major League Baseball
Some Parallels Between President Obama's Baseball and President Nixon's Ping Pong
