The news is that negotiations between the Boston Red Sox and the Chicago Cubs over what the Cubs will pay the Sox as compensation for nabbing their tarnished boy genius General Manager Theo Epstein are not going smoothly, and no wonder. The situation as it stands is a conflict of interest classic, with no obvious solution. You don’t have to know a thing about baseball to love it: this was designed by the Ethics Gods as an exam question.

Consider:

• Epstein has a year remaining on this five-year contract as Red Sox GM. If the Sox want to, the team could force him to sit out the next year: he can’t work for another baseball team without their permission.

• The Chicago Cubs, desperate for a champion (the team’s 103 year drought is the worst in pro sports) or even a consistent winner, is ready to sign Epstein as its new General Manager and team president. It fired its General Manager over a month ago.

• In such situations in baseball, the team that wants an executive already under contract “trades” for him, just as if he were a player. The Red Sox want a good player, a good minor league prospect of two if not a major leaguer. The Cubs would like to get off cheap, which in baseball means cash only, or “a player to be named later.”

• Cheap is unlikely. Epstein, in his eight years at the helm, won two World Series for a team that had a Cubs-like reputation (though undeserved) before his arrival. And the Cubs are in weak bargaining position, having already all but told its win-starved fans that Savior Theo is coming.

Here’s the problem, or problems. The general manager is the team official that usually negotiates these deals. Epstein, however, is the one being bargained over. He is still the Red Sox GM, but can’t negotiate on their behalf. He will be the Cubs GM, but isn’t until the deal is settled.

That’s nothing, though, compared to this: Ben Cherington, a close Epstein associate on the team and his subordinate, will become the GM if and when Theo leaves. Cherington thus has a personal as well as a professional reason to get the deal settled, because if there’s an impasse, Theo could decide to stick out his contract, meaning that Cherington wouldn’t get the job he covets. On the other hand, he hasn’t been appointed yet.  If Cherington doesn’t drive a hard bargain for the Red Sox, who expect a lot in exchange for letting Epstein go, he might not get his promotion after all, having failed his first big test.

Meanwhile, on the other side, the deal is being negotiated by Epstein’s likely deputies once, or if, he comes over to the North Side. If they accept a deal that Epstein thinks benefitted his former team unreasonably, he might choose to send them packing. If they play hardball too hard, and the negotiations break down, their current superiors might fire them for not getting the job done. Or, in what creates another conflict, the acting GM could get Epstein’s job…if his negotiations fail.

Everyone on all sides of the negotiation has conflicts of interest that would normally require them to be removed from the process. Former Cubs and Orioles president Andy MacPhail told Boston sportswriter Pete Abraham that when he left the Twins for the Cubs in 1994, he negotiated the deal for himself with his Twins successor, Terry Ryan. But in that case, MacPhail was already working for his new team, which Epstein cannot do.

The obvious solution would be to have the team owners negotiate the deal, but that won’t work either. The owners don’t have the necessary knowledge of the talent available and the needs of the respective club.
Can a business transaction involve more unavoidable conflict of interest than this one? I don’t think so.

If there was ever a situation that called for arbitration, this would be seem to be it.

UPDATE (10/14): It appears that Red Sox President Larry Lucchino is handling the negiations. That deals with Cherington’s potential conflict.