“The Cuban Baseball Federation (FCB) on Tuesday ratified its intention to recover the rapprochement with the Major League Baseball (MLB) in order to establish a stable and depoliticized relationship.”

On 19 December 2018, New York, New York-based Major League Baseball (MLB; 2021 revenue approximately US$4 billion) reported an agreement with Republic of Cuba-based Federacion Cubana de Beisbol (FCB). Terms of the agreement included 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.

Prensa Latina
Havana, Republic of Cuba
12 April 2022

Cuba is willing to pave the way to resume deal with MLB

Havana, Apr 12 (Prensa Latina) The Cuban Baseball Federation (FCB) on Tuesday ratified its intention to recover the rapprochement with the Major League Baseball (MLB) in order to establish a stable and depoliticized relationship. We aspire to have a respectful, ethical and professional treatment, which had as maximum expression the signing of the FCB-MLB Agreement in December 2018, an agreement that was disqualified by the government of former President Donald Trump, FCB President Juan Reynaldo Perez noted. At a press conference at the Latin American stadium, in Havana, Perez acknowledged that resuming the pact will mean an effective tool against illegal emigration, human trafficking and other risks for baseball players and their families. He recalled that the Trump administration frustrated the first steps of the FCB to give more life to the agreement, such as the definition of a list of eligible talents by the different franchises, in addition to closing the doors to its observers in an attempt to verify the quality of Cuban athletes. The official confirmed that the annulment demonstrated the politicization of sports from US territory, always under the influence of Cuban detractors. Despite this situation, Cuba is willing to resume negotiations and defends the respectful relationship with the players born and trained in its land, but who play, without its representation, in the US and world circuits. In that line, Perez, who is also the national baseball commissioner, said that those who comply with the provisions of the current immigration policy can rejoin the sports system and aspire to represent the nation at international tournaments.

teleSUR
Havana, Republic of Cuba
12 April 2022

Such a relationship will allow "the natural flow of Cuban players to and from that circuit," Cuban Baseball Federation President Perez said. On Tuesday, the Cuban Baseball Federation (FCB) President Reynaldo Perez indicated that his country aspires to develop a "stable and non-politicized" relationship with the U.S. Major League Baseball (MLB). Such a relationship will allow "the natural flow of Cuban players to and from that circuit," Perez said after taking office on Monday. This official considered that the 2018 MLB-FCB agreement, which was annulled by former President Donald Trump, prompted a respectful, ethical, and professional exchange between both organizations. "The agreement annulment demonstrated the U.S. government's politicization of sports and put our players in a vulnerable position by forcing them to risk their lives and incur debts to emigrate," Perez stated.

They are at your front door now @MLB the ball is in your court, as they say. The Cuban Professional Baseball Association wants to play in the World Baseball Classic. How can the best in the world be unable to play. #mlb #wbc #cuba ⚾ pic.twitter.com/WQkYV3hJQu — Eddie Oropesa Jr. ⚾ (@OropesaBaseball) April 9, 2022

Although baseball is considered a "cultural heritage" in Cuba, professional athletes experience a crisis due to the lack of infrastructure and implements. The outlet Trabajadores pointed out that 635 baseball players have left the country over the last six years, in many cases without official permits. "Our Federation defends a respectful relationship with Cuban players working in other leagues. Those who comply with migration provisions have rejoined the National Series and the Cuba team in some cases," Perez explained. He also mentioned that Cuban players in the MLB who meet the established requirements will be able to join national and foreign tournaments on behalf of Cuba without setbacks and that the FCB is ready to resume negotiations for the re-implementation of the 2018 agreement.

Links To Related Analyses

Baseball Diplomacy? An Opportunity For Re-Engagement With Cuba, Biden Administration May Be Open To Revised MLB Agreement January 27, 2021

MLB Might Consider Three Options To Obtain Support For Agreement With Cuba January 11, 2019

MLB Commissioner Plays Golf With President Trump; Renewed Life For Cuba Agreement? Second-Base For Lobbyist? November 02, 2019

Cuba Lobbyist Works? President Trump To Participate In Oval Office Meeting With MLB To Discuss "Human Trafficking" June 10, 2019

OFAC Responds To Major League Baseball Proposal For Players From Cuba April 09, 2019

Another Obama (Ben Rhodes) Administration Legacy Decision Harms Major League Baseball December 20, 2018

New OFAC Regulation Benefits MLB Players; Performers & Teachers Too March 16, 2016

Some Parallels Between President Obama's Baseball and President Nixon's Ping Pong February 29, 2016