Major League Baseball (MLB) has concluded its investigation into allegations that the Houston Astros engaged in a multi-year scheme to steal signs and signals from opposing teams. MLB issued a Statement of the Commissioner (MLB Report) detailing the investigation protocol, findings, disciplinary actions taken and conclusions. The entire sordid affair provides every compliance practitioner with multiple lessons to be learned that they can use in every corporate compliance program. Over the next few blogs, I will be exploring the MLB Report in detail, how it demonstrates that culture must be on the forefront of every Chief Compliance Officer (CCO) and corporation, what it means for the compliance community and how the MLB Report informs enforcement of anti-corruption laws such as the Foreign Corrupt Practices Act (FCPA).
The Background
In November, a former Houston Astros pitcher, Mike Fiers, gave an interview to The Athletic which detailed publicly for the first time the electronic sign stealing scheme that the Houston Astros employed in 2017 during their historic World Series run. MLB Commissioner Rob Manfred ordered the MLB Department of Investigations (“DOI”) to conduct an investigation. The investigation covered the period from 2016 through to the present and involved the MLB interviewing 68 witnesses, including 23 current and former Astros players. MLB reviewed tens of thousands of emails, slack communications, text messages, video clips, and photographs. The MLB report noted, “The Astros fully cooperated with the investigation, producing all requested electronic communications and making all requested employees available for interviews”. Additionally, “certain Astros employees provided their cellular telephones to be imaged and searched.” Finally, Commissioner Manfred allowed the Astros to present evidence and make arguments as a part of the investigative and enforcement process. Equally important, the investigation was completed in less than two months.
The Cheating Scheme
Sign stealing has a long and honored history in baseball. However, one of the unwritten rules of baseball is that you can only use the human element to steal signs. This means that a runner at second base, who can see the catcher’s signals to the pitcher can relay them to the batter. That is not a rules violation. However, if any form of technology is used, it becomes verboten and a violation of those pesky unwritten rules of baseball. Technology can be as simple as someone with a set of binoculars in the outfield seeing the catchers signs and relaying them via buzzer to the clubhouse. It can also be as sophisticated as the Astros got in their sign-stealing protocol.
It all started with a technological innovation, designed to improve the game. According to Tom Verducci, writing in SI.com, “In 2014 MLB adopted a challenge-based replay system that put live television monitors close to dugouts.” According to the MLB Report, starting with the 2017 season, “employees in the Astros’ video replay review room began using the live game feed from the center field camera to attempt to decode and transmit opposing teams’ sign sequences (i.e., which sign flashed by the catcher is the actual sign) for use when an Astros runner was on second base. Once the sign sequence was decoded, a player in the video replay review room would act as a “runner” to relay the information to the dugout, and a person in the dugout would notify the players in the dugout or signal the sign sequence to the runner on second base, who in turn would decipher the catcher’s sign and signal to the batter from second base.”
The scheme became more sophisticated as the Astros refined it. Initially, then Bench Manager and now Boston Red Sox Manager Alex Cora would call the reply room and get the signals. That was too cumbersome, so the initial refinement was to text the information to a smart watch worn by a team member on the bench or text the information to a cell phone stored on or near the bench. The next refinement placed an Astros employee immediately adjacent to the dugout and that employee would bang on the top of trashcan lid with a bat or massage gun to communicate the incoming pitch to the batter. According to the MLB Report, “one or two bangs corresponded to certain off-speed pitches, while no bang corresponded to a fastball.” There was also continuous improvement as “witnesses explained that they initially experimented with communicating sign information by clapping, whistling, or yelling, but that they eventually determined that banging a trash can was the preferred method of communication.”
The report made clear that while Astros management (with the exception of Bench Coach Cora) was not actively involved with setting up and using the system, they were all aware of it. Afterall it sat right outside the dugout and there was a live feed present and persistent trashcan banging. Manager AJ Hinch was not found to have been involved with the cheating scheme but he certainly knew about it. Twice he went to the length of taking his own baseball bat to the monitor outside the dugout to disable it. Yet he never told the players or Alex Cora to stop the sign stealing scheme. General Manager (GM) Jeff Luhnow’s role seems to be a bit murkier. The MLB Report stated, “The efforts involving the replay review room staff were mentioned in at least two emails sent to Luhnow, and there is conflicting evidence about conversations with Luhnow on the topic.” (Luhnow has claimed post-termination “I am not a cheater”; more on him in a later blog post.)
Up until September 2017, while all of this was cheating and unethical, there was no formal MLB rule on the topic. All of that changed when the Boston Red Sox, who we will hear about later, “were caught transmitting sign information from their replay review room to individuals in the dugout wearing smart watches.” This led Commissioner Manfred to issue a Memo to “all Clubs reiterating the rules regarding the use of electronic equipment to steal signs, and putting all Clubs on notice that future violations would be taken extremely seriously by my office. I specifically stated in the memorandum that the General Manager and Field Manager of Clubs would be held accountable for any violations of the rules in the future. Thus, all Clubs were put on notice as of September 15, 2017 that any use of electronic equipment to steal signs would be dealt with more severely by my office.”
So after September 15, the sign stealing scheme used by the Astros now violated MLB rules. GM Luhnow apparently did not circulate this Memo internally in Houston. The Astros were barreling towards their first World Series appearance since 2005. What do you think the Astros did next?
Find out tomorrow as we assess the punishment meted out by MLB and the response.
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