Mr. EFL Answer Man Rules

Mr EFL Answer Man: More About Loans

Dear Mr. EFL Answer Man:

We have a question about the following trade (the names have been changed to protect the innocent, assuming we’re innocent):

Mudville  trades to Cooperstown Mighty Casey, Jimmy Blake, and $2 million to help subsidize Casey’s salary.
In return Mudville receives from Cooperstown  its 2018 1st round draft pick, Roy Hobbs, and $2 million per year in 2018, 2019, and 2020.
We got to thinking that this might run afoul of the commissioner.  We think it’s a fair deal that is consistent with the rules.  But here are two concerns:
1.  Will this be seen as a loan?  You lend me $2 million this year, I pay it back next year.  The rules clearly say you can subsidize a traded player, so the money with Casey is no problem.  It’s the money coming the other way that might cause a fuss.
2.  Will a trade be allowed that goes so far into future years?  I don’t think this has been done before.  The rules do say that you can trade away next year’s draft pick, but seems to imply that it can’t be done further away.  Will that principle be applied to money?
While we  thought of this as a way to help Mudville cover the costs of that hoodoo Flynn, we just referred to sending Mudville  $2 million. We were  concerned that the reference to salary subsidy in the rules is only to traded players.
We decide to run this by you rather than just put it out there and see what happens.
— Two Gentlemen of … let’s say Verona.
Dear Gents:
Because you are trading money now for money later, your trade as constituted involves a loan, albeit slightly better disguised than the infamous Starling Marte loan (see below).
You may appeal this ruling to the league if you like.
Here are the rules in question:
  1. EFL-Only Trades: Trading among EFL fantasy teams is encouraged, provided:

(1) No trades for players to be named later. A trade may have multiple steps — players going both ways on one date, and then players going both ways on a later date. No player may go both ways in a multi-step trade. Teams may trade a pick in the next pre-season draft for players delivered immediately.

(2) A team may subsidize the salary of a player it trades away.

(5) Trades may be effective at a later date than when they become binding, but that date must be specified when the trade is announced and must either be on or before September 1, or in the offseason.

 

Here are some comments which you can skip unless you like to read long posts:
1.  The rules permit the subsidy of a traded player’s salary.  The only reason this rule would have to be expressed is if it is generally NOT permitted to subsidize other players’ salaries — just as it isn’t permitted in MLB. So Cooperstown may not subsidize Flynn’s salary. On the other hand, teams may subsidize players going both ways. This is permitted in the rules, even if it has the same effect a loan would have had.
If this sounds to you like a meaningless technicality, you probably would not appreciate Islamic banking systems.
2.  Early in the league’s history traders were careful to describe any cash in the deal as a subsidy of one of the traded player’s salaries. We long ago concluded this wasn’t necessary.  Cash could be part of the deal even when it wasn’t a subsidy for a traded player.  This was one of the earliest cases of our rules developing in common law fashion, as a result of the decision of cases. But cash now may not be traded for cash later, if either of them is not a subsidy for a traded player.  That would be a loan. 
3. Nor may a player now be traded for cash later, nor cash now for a player later.  These would also be loans.
4. On July 8 of this very year, the Commissioner decided another case in common law fashion.  That was the infamous case of the Starling Marte loan. You may recall that the Wolverines and the Cheese agreed to a deal where the Wolverines would increase by $500,000 their subsidy of Marte’s 2018 salary in exchange for a payment next year of $500,000 from Cottage.  The Commissioner voided that clause as a loan, calling it unfair competition.
The Commissioner’s concern was two-fold.  First, loans between teams makes it easy to collude against other teams. The rules explicitly forbid trading  a player for himself so we aren’t tempted to loan each other players.  The principle applies the same to money. 
Second:  MLB doesn’t allow teams to loan players or money.  We shouldn’t give ourselves opportunities not available to MLB owners.
5.  We have had several trades with compensation running more than one year.  We even had one where the subsidy started high and declined each year over the three years of the deal. We limit trading of draft picks to one year to avoid people trading picks many years ahead and then quitting the league or being unable to compete. But otherwise the only limit on how far into the future your deal may run is the length of the contracts being subsidized. Since we have a limit of five years on player contracts (except when the player’s MLB contract runs longer), we are protected against perpetual subsidies.
— Mr. EFL Answer Man