May 25, 2020

Foul Balls and Red Cards: How Baseball and Soccer’s Different Approaches to Cheating Illustrate the Power of Organizational Response

This spring, two major sports teams were caught cheating. Both are consistent championship contenders in recent years.

In the United States, hardly any sports fan could have missed the report released by Major League Baseball concluding that the Houston Astros used cameras to steal signs from opposing pitchers, allowing Astros hitters to know what pitches were coming. The Astros exploited this scheme to win the World Series in 2017, reach the American League Championship in 2018, and reach the World Series again in 2019.[1]

Very soon after the MLB’s report exposed the Astros’ cheating scheme, European soccer’s[2] governing body, the Union of European Football Associations (UEFA) found that one of the UK’s top teams, Manchester City, had violated UEFA’s financial regulations in acquiring its top players.

In both cases, the team’s cheating threatened the integrity of the whole sport. In both cases, the integrity of the sport is critical to the business model of the respective leagues. If fans begin to think one side has been allowed an unfair advantage, they will quickly lose faith in the competitive nature of the sport. Fans would then, slowly but surely, lose interest in spending money to support their teams.

For those reasons, in both cases, the governing leagues needed to respond quickly and decisively to reassure fans that the games are fair and to restore the integrity of their respective organizations. Where soccer succeeded in doing so, baseball has failed.

The highest prize in European soccer is the UEFA Champions League trophy. The Champions League is a season-long competition where the best club teams from countries from Ireland to Russia, from Poland to Portugal play in an international tournament of the champions of the various national systems (Manchester City, for example, is one of the most dominant teams in the English Premier League) . It is an honor just to make the Champions League tournament and, when a team wins that tournament, it stakes its claim as the best team in Europe.

Among other violations, the UEFA’s investigation of Manchester City found that the team’s owner, a billionaire from the United Arab Emirates, funneled his own money to companies who had signed sponsorship agreements with the team, which enabled the team owner to evade limits on spending his own money on the team. The punishment, announced in February, is a two-year ban from playing in the Champions League . No trophies, no mid-week competitions on the world’s biggest stage for soccer clubs, no ticket sales, television rights, or website clicks for updates. Done. Two years. You cheated, you’re out of the Big Dance.

By contrast, Major League Baseball fined the Astros $5 million, took away four future  draft picks, and suspended two of the team’s coaches. Notably, Houston was permitted to keep its 2017 World Series title, it 2018 and 2019 American League pennants, and is free to compete in the 2020 postseason.

Fans are dissatisfied, commentators and former players are appalled. Perhaps more importantly, the penalty constitutes a weak punishment and an even weaker deterrent. As one commentator wryly asked, “what owner wouldn’t pay five million bucks for a World Series trophy?” Some current players, outraged at the underwhelming punishment, are planning to deliver their own justice. The line in Vegas for the number of times that a Houston Astros batter will be intentionally hit by a pitch this coming season is at 83.5, just over one “plunk” for every away game that the Astros will play this season.

Worst of all, baseball will not get past this scandal because it did not face up to it with clear eyes and a strong hand. The league’s feeble response leaves fans and players thinking that the league is incapable of deterring cheating. The very integrity of the game remains in question. That foundational fault may get worse, since baseball has arrived at a challenging crossroads entirely independent of the Astros cheating scandal: gambling.

This year will be see first full baseball season in which sports betting is legal in multiple major MLB team markets. Some baseball owners have already stated their intention to have in-seat wagering at the stadiums, so you can place prop bets on the next pitch. Setting aside the externalities of sports gambling, in the long run, without a firm MLB policing on-field cheating, how will fans and gamblers alike trust that the sport isn’t rigged?

Imagine if Major League Baseball had swiftly and simply said the Houston Astros are banned from the playoffs for two years.

Boom. Done.

It would be a harsh punishment. Players would beg to be traded, Astros fans would feel less compelled to show up, and the TV and advertising money would crash for a couple of years – but only a couple of years.

Then the punishment would be done and the game could move on. No other players in the league would feel the need to hurl a ball at 95 mph toward an Astro batter, they would know that justice had been served. Similarly, other teams considering crossing that fine line from using to abusing technology would be deterred from cheating. No team would want to risk a ban from the playoffs. Fans could trust that the teams were following the rules (more or less, as has always been the baseball tradition), the sport could heal, and the game could be played again.

We predict that the UEFA’s approach will help lead to a healing of Manchester City’s wounds to European soccer, whereas MLB’s response has merely magnified the Astros’ threat to baseball.

In MLB’s missed opportunity is a lesson for all organizations: sometimes it feels too harsh to punish wrongdoers inside an organization. But when the organization’s very integrity is threatened by the cheating, the cheaters have to be dealt with.

When the walls of your house have rotten boards, you need to find the rot and cut it away, not paint it over. Cutting out the rot is difficult and sometimes painful. But it may be just the thing that keeps your house standing.

FOOTNOTES

[1] In 2018 Houston lost the ALCS to Boston, currently under investigation for a similar cheating scheme. In 2019, Houston lost the World Series to the Washington Nationals, who employed counter-espionage measures to signal their pitches in code because there was already rampant speculation about Houston’s nefarious activity.
[2] We understand that the term “football” is used by much of the rest of the English-speaking world to describe the game we call “Soccer” (“soc” taken from the term “Association Football”), but we are publishing in the United States and our style guides demand we remain consistent, regardless of the cringes this may induce from our European readers.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.

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About this Author

Reid Whitten, partner, Sheppard Mullin Law Firm
Partner

Reid Whitten works with clients around the world to plan, prepare, and succeed in global business transactions.

In the areas of U.S. and international sanctions, export and defense export controls, and anti-corruption regulations, he supports clients in detecting and deterring potential compliance issues as well as conducting and defending investigations and enforcements. Mr. Whitten also advises on anti-dumping, anti-money laundering, and anti-boycott regulations.

Mr. Whitten is a thought leader on cross-border business regulations. He teaches a seminar on The Law of...

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J. Scott Maberry, Lawyer, Sheppard Mullin, International Trade, Trade Practice
Partner

Mr. Maberry is an International Trade partner in the Government Contracts, Investigations & International Trade Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Mr. Maberry's expertise includes counseling and litigation in export controls, the Foreign Corrupt Practices Act (FCPA), anti-terrorism, economic sanctions, anti-boycott controls, and Customs.  He also represents clients in negotiations and dispute resolution under the World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and other multilateral and bilateral agreements.

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