Let’s Dig Into the New CBA

Though I wouldn’t have believed it just a few days ago, the big news of the day was not the announcement of the NL MVP Award, which saw Matt Kemp lose out to Ryan Braun. Far more important in the grand scheme of things was the announcement that the players union and MLB came to an agreement on a new five-year collective bargaining agreement, a remarkably peaceful process that looks even better compared to what the NFL and NBA have gone through this year. By the end of the agreement, baseball will have had over twenty years of uninterrupted labor peace, assuming you choose to ignore the acrimonious 2002 talks that averted a crisis at the last minute.

Unfortunately, most of the mainstream news accounts of this are choosing to focus on the inclusion of HGH testing, which is just about the least important facet of the new agreement. Most fans won’t realize the staggering amount of changes that this is going to have on the draft and amateur scouting, not all of them positive, and it’s important for both you and I that these changes are fully understood. I won’t go through the entirety of the new CBA – it’s lengthy, and it’s all right here if you choose to peruse it – so let’s pick the hot items and play our favorite game, “Is It Good, or Is It Stupid?”

There are no longer ranked free agents under the new CBA. Type As, Type Bs and the Elias system are history.

Good. Very good. No longer will we have to worry about our team signing a mediocre veteran (I’m thinking about you, 2009 Orlando Hudson) to a one-year deal and having to wave goodbye to a first round draft pick for the privilege. It helps the players, too, since good-but-not-great role players who somehow became Type As won’t have to see their market value absolutely destroyed by teams who might like to sign them but don’t want to lose the pick. Instead, draft pick compensation will rely on whether teams offer their free agents a one-year deal at a pre-determined price, widely reported to be $12.4m. For top-flight free agents like Albert Pujols and Prince Fielder, making such an offer is a no-brainer; for the majority of the free agent class who would never get such consideration, they will not have draft-pick compensation tied to them. If you sign a player under that offer, you give up your first round pick, unless it’s a top-10 choice, which would be protected.

MLB will announce by March 1 whether playoffs will expand in 2012 or in 2013. Commissioner Bud Selig says he’s hopeful of expanding playoffs next year. The Astros are moving to the American League in 2013 to accomodate a more balanced divisional setup.

We knew this already, but still worth noting. I’m mostly ambivalent to the whole thing.

  • The sides added heavy restrictions on draft spending. Each club has a spending limit for the amateur draft that varies depending on when the club is scheduled to make its first ten selections. Bonuses after the tenth round don’t count, as long as they’re under $100K. Teams will face limits in the $4.5-11.5MM range, according to Jon Heyman of SI.com (on Twitter).
  • Teams that spend more than 5% over-slot on the draft will face a 75% tax. Teams that go over slot by 5-10% face a 75% tax and the loss of a first rounder. Teams that go over slot by 10-15% face a 100% tax and the loss of a first and second rounder. Teams that exceed slot by 15% or more face a 100% tax and the loss of first rounders in the next two drafts. This set of rules will also reduce draft spending significantly, a bonus for owners.
  • There will be no more MLB deals for draft picks.

Stupid. Here’s the part that you’re not going to hear a lot about on SportsCenter, but you should, because it has the potential to completely change the face of the game. The amateur draft (and international signings, which we’ll get to in a minute) is the one area where small-market teams really had the ability to outspend their big-market competitors. For years, MLB has been trying to put in place a hard slotting system, and if this isn’t it, it’s the next closest thing. If you’re a low-income team not close to winning, like for example the Pirates, you’re now being told that no, you can’t give $8m to Gerrit Cole, or $5m to Josh Bell (no, not that one), or six-figure bonuses in rounds that usually see five-figure bonuses in order to buy players away from college. If you do, that basically ends your entire draft right there. For small-market teams unable to compete on the free-agent market, they’re basically getting the equivalent of Jimmy Rollins in the picture at right.

Oh, sure, it’s risky to pay millions to teens. Sometimes it just doesn’t work out, the money goes down the toilet, and that’s life. But when it does? It works out to a level you just can’t replicate on the free market. You think the Dodgers regret that $2.3m bonus they gave to Clayton Kershaw? Ask the Rays how they feel about the $3m bonus they gave to Evan Longoria, and on and on. Millions of dollars to a draft pick might seem like a lot, but when you consider how huge they can pay off while teams are giving out $5m/year to every middling veteran middle infielder they can find, it starts to make a lot more sense fiscally.

And that’s the whole point, of course. The player’s union looks out for the players currently in the union, not the poor Dominican who may or may not pan out. Diverting money away from drafting and putting it back to the major-league payroll can only serve to increase salaries, which is exactly what the union wants and exactly what we’re seeing this offseason. It’s two-faced to say that you must spend, but you can’t spend what you like in the most cost-effective way possible to improve your team, so since teams aren’t simply allowed to sit on their revenue-sharing money and not put it back in the team, this is partially why guys like Clint Barmes end up with $12m.

It gets worse. Less money available to spend on the draft likely means less talent in the pipeline, because two-sport stars or those with strong college commitments will be that much more difficult to buy away to baseball. Even just this afternoon, Red Sox prospect Brandon Jacobs admitted that he would likely have gone to Auburn to play football if the Red Sox weren’t able to meet his asking price, which they probably couldn’t have under the new rules. Does baseball look better when Zach Lee, Bubba Starling, and maybe even a Matt Kemp have chosen to play other sports because they don’t think the money is right in baseball? Just look at the most recent draft, where the lowly Nationals were crowing that they were able to sign all four of their pricy picks – Anthony Rendon, Alex Meyer, Brian Goodwin, & Matt Purke - to join a system that already has Stephen Strasburg and Bryce Harper. Under the new system, that’s highly unlikely to happen since they wouldn’t be able to fit in all four, and that’s not good for the Nationals or for baseball.

But hey, as long as Juan Uribe can get that $21m, right?

  • Low-revenue teams obtain additional draft picks via lottery. The ten clubs with the lowest revenues and the ten clubs in the smallest revenues are eligible to win one of six draft choice that will be added after the first round. Teams’ chances of winning the lottery will depend on their winning percentage in the previous season. 
  • The teams that don’t win additional picks and all other teams that qualify under the revenue sharing plan will be eligible for a second lottery for six more picks after the second round. Again, teams’ chances of winning the lottery will depend on their winning percentage in the previous season. 

In theory, this is great, more picks for lousy teams… until you remember that the draft cap is now in place, so what you really have is “more picks for teams who might not have the cap room to sign them.” Interestingly enough, these lottery picks can be traded, though regular picks still cannot.

  • Each team faces an equal spending limit for 2012-13. Following the 2012-13 year, clubs will face different spending restrictions depending on their winning percentage (teams that win less can spend more). Teams that exceed the spending limit from 2012-13 and 2013-14 face a 75% tax if they exceed the limit by up to 5%. If they exceed the limit by 5-10%, they pay the 75% tax and lose the right to provide more than one player with a bonus worth more than $500K in the next signing period. If they exceed the limit by 10-15%, they face a 100% tax and are prevented from signing any player for $500K or more in the next signing period. If teams exceed the limit by 15% or more, they face a 100% tax and lose the right to spend $250K on any player in the next signing period. 
  • From 2014-15 on penalties will increase if a worldwide draft isn’t in place.
  • Every team will have $2.9MM to spend on international bonuses this offseason, according to Yahoo’s Jeff Passan. Eventually the limits will be in the $1.8-5MM range, according to Passan. Starting in 2013-14, teams will be able to trade money from their spending allowance for international players, according to Passan (all Twitter links). However, teams can only boost their original spending limit by 50% through trades

This section about international players is very similar to the damage done to draft-eligible players above, except possibly even worse. A $2.9m limit on bonuses! As Buster Olney notes, the Rangers spent $17.6m in the last year alone on international signings, with the Reds at $28.6m since 2008. Like the draft, the international arena is the perfect place to gamble on talent, because even at bonus prices that run into the millions, one payoff can often make up for ten busts. And again like the draft, this risks turning off players from poorer countries who see baseball as a way out. You’d think that with such a small spending limit, the top players will eat that up quickly, leaving little for the mid-tier players who might then decide to turn to soccer, basketball, or something else.

On the other hand, McCourt’s Dodgers have fallen so far being in international signing that this could actually help them. 

Blood testing for HGH will not be occur during the season without reasonable suspicion. ESPN’s Buster Olney says (on Twitter) that offseason testing will begin next winter, 2012-2013.
Olney also mentions that players will be tested in Spring Training “to determine energy levels” after testing, then the results will be discarded. The two sides will then determine how to proceed (all Twitter links).

Good. I mean, testing is better than not testing, but ultimately, who cares. People have this idea that you chug some HGH and turn into Pop-eye, and it’s simply not true.

Instant replay will be expanded to include fair/foul plays and “trap” plays, subject to discussions between MLB and the umpires.

Good. Very good! It’s not as far as it needs to be, but it’s progress in the right direction.

The signing deadline for drafted players moves up roughly a month, to mid-July.

Good. This is a small item that makes a lot of sense. For years, we’ve had to live with the sham of knowing players had come to an agreement, yet not allowed to actually sign because MLB didn’t want slot-breaking deals to inflate the market. (Which is so, so stupid.) Alternatively, you’d have agents taking negotiations right up to the deadline in an attempt to create leverage. This allows more of an opportunity for players to hit the field in their first year, and also allows for draftees to be included in the next year’s trading season, avoiding situations like this year’s where everyone knew Drew Pomeranz was headed to Colorado for Ubaldo Jimenez, but no one could say it because it hadn’t been a full year since he signed.

The deadline for teams to tender contracts to arbitration eligible players is now December 2nd.

This pushes up the Dodger decision on James Loney, which makes sense. No need to keep the player or the team hanging any longer than needed.

So while there’s a lot of good things here - in addition to what’s noted, there’s also an increased ban on tobacco, a move towards safer helmets, and mandatory counseling for players arrested for drunk driving – the new restrictions on the amateur draft and international bonuses could have repercussions that affect the game negatively for years to come. Of course, both sides come out proclaiming that they’re winners; the owners get to cut down on the dollars they have to commit towards unknown (to them) young players, and the union gets to have money reallocated to the big-league (and dues-paying) veteran.

Good for them? Maybe. But bad for us, and bad for the young players who didn’t have a voice in this negotiation – and may choose to bypass baseball altogether.