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Today Major League Baseball and the Players’ Association announced a new collective bargaining agreement, which will keep the labor peace through 2016. The new deal changes some important areas of the game in dramatic ways, and the changes – and their impact on the Chicago Cubs – will take some time to digest and process.

The notable and important aspects of the new deal (full press release here):

  • Amateur Draft: There are a number of significant changes to the draft. Although there will not be hard-slotting (i.e., Pick No. X gets no more than $Y, no matter what), the ability to spend freely is gone. The draft now works like this: your team gets a “pool” of money, available to spend on signing bonuses on players in the first 10 rounds. If you go over that “pool” amount by 0 to 5%, you’re taxed 75% on the overage. If you go over by 5% to 10%, you’re taxed 75% on the overage AND you lose a first round pick. If you go over by 10% to 15%, you’re taxed 100% on the overage AND lose a first and second round pick. If you go over by more than 15%, you’re taxed 100% on the overage, and you lose your next two first round picks. Picks after the 10th round are not subject to the “pool,” up to $100k per pick. If you go over $100k to sign one of those kids, that overage does count against your “pool.” Good Lord…
  • The greatest downfall of this new rule is a very reasonable fear that top young athletes, who need their wheels greased to choose professional baseball over another sport, will no longer have that grease. Kevin Goldstein throws out the example of Bubba Starling, who would be playing football at Nebraska if he hadn’t received a largely overslot offer from the Kansas City Royals. That hurts all of baseball – we want the best athletes playing baseball, not other sports.
  • The second greatest downfall is the reduced ability of teams to restock their farm system quickly via the draft, if they are willing to spend to do so. This is not a large/small market issue, mind you – some of the biggest spenders in recent years are small market clubs.
  • Also, the draft signing deadline will move forward from August 15 to somewhere between July 12 and July 18 (depending on the All-Star Game), and there will be no more Major League deals for draft picks.
  • Competitive Balance Lottery: The one draft change that will help smaller market clubs is a really bizarre one – after the first round, an additional six picks will be given out to six of the 10 smallest market teams, by way of a lottery. After the second round, the remaining four teams, and every other team, will be entered into a second lottery for another six picks. The lotteries will have weighted odds based on the previous season’s winning percentage (similar to the NBA draft). These additional picks will be tradable, subject to certain restrictions.
  • International Free Agency: Teams will be limited to a “pool” of money they can spend internationally each year (for 2012-2013, the amount will be the same for each team, and thereafter, the pool will be tiered based on winning percentage from the previous season (i.e., if your team sucked, you’ll have more money to spend internationally)). The international pool is subject to very similar “overage” penalties as the draft. Starting in 2013, teams will be permitted to trade a portion of their international signing pool. Players are considered amateur international players, subject to the pool, if they are 23 or younger (depending on how much professional experience they have in another country’s professional league).
  • Free Agent Compensation: Type A/Type B and all of that business will be scrapped, starting next year. In its place, a team can get compensation for a departing free agent only if it makes a one-year contract offer to that free agent, after the World Series, for an amount of money equal to the average salary of the top 125 player salaries from the previous year. If the player doesn’t take the offer, and leaves, the team will get a compensatory pick at the end of the first round. The signing team will forfeit its first round pick (unless it’s in the first 10 picks, then it will forfeit its next highest pick). Only players who’ve been with their teams for the entire year will be eligible for compensation.
  • Super Two Cut-Off: The cut-off for Super Two status – an extra year of arbitration for players with more than two years of service time but less than three years – will be increased from the top 17% in service time for those players between two and three years service time to the top 22%. The cut-off is typically somewhere around two years and 145 days (if you bring a kid up in mid-May, you’re risking Super Two), so that’ll will probably now be closer to two years and 130 days (that’s a very rough estimate). Starlin Castro was likely to be a Super Two after 2012 anyway, but this all but ensures it.
  • Additional Wild Cards: MLB has punted on the decision about the addition of two more Wild Cards in 2012, instead stating in the agreement that a decision will be reached on or before March 1, 2012. The additional Wild Cards will be in place for the 2013 postseason at the latest.
  • The Astros will move to the AL West in 2013, and interleague play will go on during the entire season starting that year.
  • There will be HGH testing as soon as next year, with suspensions similar to the current steroid suspensions.
  • The competitive balance taxt limit will go up from $178M to $189M in 2014.
  • The ML minimum salary rises from $414k in 2011 to $480k in 2012, with further increases from there.
  • The active roster will increase to 26 (from 25) for certain double-header days.
  • There are limitations on the use of smokeless tobacco.
  • Participation in the All-Star Game, if selected, is mandatory unless you’re hurt or get an excuse slip from the Commissioner’s Office.
  • Instant Replay will be expanded to include fair/foul and “trapped” ball plays, subject to the Office of the Commissioner’s discussions with the World Umpires Association.
  • TWC

    “… and there will be no more Major League deals for draft picks.”

    When was there before?

    “The active roster will increase to 26 (from 25) for certain double-header days.”

    Lame.  It’s called stratergery strategy.

    Anyway, some interesting changes.  Gonna take a few years to work out, I’d expect.

    • http://www.bleachernation.com Brett

      To your first question: many years. Jeff Samardzija got a Major League deal – doesn’t mean you immediately go to the Majors. It just means you go on the 40-man and get a whole lot more money.

      • TWC

        Oh, I totally misunderstood you.  I read that point as “Major League deals for draft picks” = trading draft picks.

        • http://www.bleachernation.com Brett

          Gotcha. The trading of those lottery picks will be very, very interesting. The press release doesn’t say how it will actually play out.

  • JB88

    There is nothing in what you wrote that helps me understand why teams like the Cubs, Yankees, Red Sox, or any big market team would agree to that deal. That is about the worst possible deal that big market teams could have ever imagined.

    • http://www.bleachernation.com Brett

      It’s terrible for small market clubs, too – at least with respect to the draft, international signings, and free agent compensation.

      • JB88

        The only real question I have is what is the slotting figures. If all the teams negotiated a ridiculously high figure, then it shouldn’t be a huge deal, but I’m starting to fear that wasn’t the case either.

      • http://cubbiescrib.com Luke

        On paper, this deal just gutted Pittsburgh’s entire rebuilding strategy. I have no idea what the Pirates are going to do now.

        • http://www.bleachernation.com Brett

          No wonder the Pirates paid Clint Barmes so much money.

        • Deer

          Why? are the pirates going to lose picks now? The pirates have been awful at drafting despite high picks for the last 20 years. Pick the right guys in the first couple rounds and this isn’t a big deal for teams.

          • Tyler

            No, it’s because they over pay to get people so they can pick kids that are going to college but pay them more to skip and go play with them, it is just like the Cubs did this year.

            • Deer

              So, the pirates have been doing this or this was their plan from now on? because if it’s been going on, it’s been a major failure and they should thank bud.

              • Tyler

                They have been doing this for the past couple years

              • http://cubbiescrib.com Luke

                They haven’t been doing it for long enough to really see the results at the major league level quite yet, but they are starting too. The Pirates were definitely a team on the rise… until today. Now I’m not so sure about that.

  • Cliffy

    Having read these bullet points and other sources it seems the best way for the Cubs to rebuild is thru free agency. Am I wrong?

    • http://www.bleachernation.com Brett

      Seems like it got more attractive.

      • TWC

        Just don’t tell die hard.

    • http://cubbiescrib.com Luke

      I wouldn’t say its the best way, but it looks like draft loading is going to be a lot harder.

  • Stinky Pete

    Hate the All Star game rule.  I recall enjoying the ASG when it meant nothing.  Now it seems to be a giant mountain of crap.

  • http://www.bleachernation.com Brett

    One initial reaction: I’m not going to freak out with respect to the draft/international changes and the Cubs until we learn how large (or small) the international money pool is, and whether the recommended slots will be going up. It’s possible – though maybe not likely – that those numbers will be sufficiently large that this change doesn’t hurt as much as we think it will.

    • http://cubbiescrib.com Luke

      The draft slots have to go up somewhat. Jim Callis has 20 teams falling into the worst penalty group in last year’s draft alone. There is no way 20 teams would have agreed to a deal that hammered their draft strategies this badly unless they knew the dollar allowance would be… mostly adequate.

      https://twitter.com/#!/jimcallisBA/status/139050558471413760

      • http://www.bleachernation.com Brett

        I hope that’s right. I read that MLB is trying to have the total spend in amateur dollars match what was spent in 2010, so that suggests the slots will indeed go up a fair bit, but not enough to keep things in line with 2011.

        • http://cubbiescrib.com Luke

          Callis is speculating on twitter that the draft amounts will be between $4.5 million and $11.5 million per team, based on where they draft (apparently). Again, that only covers the first ten rounds, plus bonuses in excess of $100,000 after round ten.

          That’s not too bad, but it looks to me like it could kill teams who do well. On the other hand, some of the lottery-granted bonus picks can be moved via trade. That opens up a ton of possibilities.

  • Cliffy

    QT @Haudricourt: Changes in free agent compensation will make it easier for other clubs to sign free agents without forfeiting draft picks.

  • http://cubbiescrib.com Luke

    Bloody hell. It’s going to take awhile to think through all this.

    First reaction: I absolutely hate the changes to the draft and international free agents, except for the earlier signing date. That was smart. The rest of it… it hurts players and it hurts teams.

    But I want to work through this a bit more before I comment much further. I’m still not sure I’ve wrapped my head around it.

  • CubsFanatic

    I actually like some of these changes. But the first bullet is just stupid. Whoever thought it up needs relieved of his duties…of life.

  • Ari Gold

    Congratulations Bud F***head Selig. You just ruined baseball in all but the largest markets.

  • http://www.bleachernation.com Brett

    Big props to the first person to come up with (either manually, or finding it online) the average of the top 125 salaries from 2011.

  • Ron

    This is Dodd Frank part two.

  • JasonB

    Guess we can watch next year’s Dillon Maples play QB or WR or whatever he was going to play for North Carolina during the 2012 football season.  Awesome…

    • http://cubbiescrib.com Luke

      Not so fast. It depends on the allowed draft budget pre penalties. We don’t have that number yet. If it is something in the $10-$12 million range, not a lot changes for most teams. If it is in the $5 million range, every front office except the White Sox will be extremely unhappy and the scenario you just described will absolutely come true.

      For the record, Maples was a kicker.

      • JasonB

        Fair points and thanks for the clarification on Maples…

      • hardtop

        wait, kids actually go to college to play kicker?  did we really have to offer him anything to get him to sign?  i would of just said “hey pepe luepe, here’s 10 grand, a blond rental,  and a baseball glove, get to work”

        • http://cubbiescrib.com Luke

          I do wonder if Maples determination to play football and baseball at UNC wasn’t more of a bargaining ploy.

          He would have been a walk-on for football, I think, and he is the only person I have ever heard of who really, really wanted to play football for North Carolina. Had it been Georgia, or Arkansas, or Virginia Tech or Texas or any other storied program I might believe it. But are there really little kids who (1) are aware that UNC has a football team and (2) seriously want to put themselves through that? I’m a little skeptical.

          Whatever, it worked. He got his bonus, so hats off to his agent. I’ll have to remember that in my next salary negotiation. “Well, sir, your offer is attractive but I’m really thinking about walking on to kick for the North Carolina football team. It’s sort of a dream of mine. Stop laughing. Maybe you could add an extra zero or two onto your offer? No, no… to the left of the decimal point. Other left.”

  • http://www.bleachernation.com Brett

    Man. Just going over it all again: these are some really dramatic changes. It will take a long time for it to play out, and unintended consequences are always a possibility. I think the way we think about free agency, and the acquisition of amateur players is going to be completely and totally different within two years.

    • Ari Gold

      We have a new market inneficiency. If I’m a GM, I’m going to pay a huge sum of money to the best evaluator of amateur talent. The playing field is now level, so the teams with the best scouting is going to benefit.

      • http://cubbiescrib.com Luke

        Yeah, I’m thinking the same thing. Epstein might be smart to lock up Wilkens now and worry about how he fits into the front office later. People like him are about to get a lot more valuable.

  • Alex

    Reinsdorf is sitting somewhere and popping champagne corks over this. Why should it matter how a team decides their model for building a contending team?

    This hurts teams that depend on a model of drafting and developing players to compete. Just because the White Sox want to overpay for aging and ineffective veterans to compete, the teams use other models to compete shouldn’t be penalized. So if the Pirates want to spend $17 million on their draft class and Reisndorf wants to spend $17 million on Jake Peavy, that should be entirely up to each respective organization.

    John Heyman makes a great point when he said that an overrated draft pick can mean seven or eight million dollars burned, but an overrated free agent acquisition can waste upwards of $125 million. We’re dealing with one right now.

    • http://www.bleachernation.com Brett

      It’s also easy to see why the players supported these changes – more money in their pockets.

      • http://cubbiescrib.com Luke

        In theory. We’ll see if the big draft spenders step up their major league spending by an amount at least equal to the cut they take in draft spending.

        I’m guessing they don’t.

  • http://www.bleachernation.com Brett

    Heyman on MLBN says the draft pool (slots for the first 10 rounds) will be quite high – on par with what was spent by teams on the draft last year. The tax-cap was more about preventing bonuses from taking off in the coming years than reducing spending from where it is presently.

    If that’s true, that’s a bit of a relief. It might mean fewer Dillon Maples, but more Trey McNutts for teams like the Cubs who are willing to put the time and resources into scouting.

    • http://cubbiescrib.com Luke

      We can hope. If they set it around the $10 – $12 million mark the draft won’t look much different. And that will be a good thing.

      I still think most college seniors will be largely left to the 11th round and beyond, and thereby be effectively capped at $100k. They have virtually no leverage on anything now. That could actually lead to more mid-range juniors looking to come out a year early in hopes of beating that $100k ceiling while they still have options.

      • http://www.bleachernation.com Brett

        Would be interesting if we start seeing a whole lof of college juniors signing for $110-120k.

  • mul21

    This is just awful unless the numbers for the total draft pool money are really high. And the international part of it is even more immensely stupid. I hate Bud Selig and his stupid meddling.

  • Cliffy

    Matt Garza’s trade value went up with this agreement. But, can we afford to lose him now without the “other” ways to replace him.

    • http://cubbiescrib.com Luke

      Maybe. On the other hand, top prospects I think also got more valuable since no one team can count on spending limitlessly in the draft to restock a farm system.

  • Cliffy

    QT @Ken_Rosenthal: For those players, signing club will not lose pick. Team that loses player will gain first rounder in slot right before signing team. #MLB.

    Prince Fielder might come into play with these changes for the Cubs.

  • http://cubbiescrib.com Luke

    MLBTradeRumors has the initial international free agent budget set at $2.9 million. That will change according to a number of factors on a per team basis in later seasons. Cespedes is too old to be subject to that cap, so he can still rake in the big bucks.

    But $2.9 may now be the asking price for a certain younger Cuban star, and possibly a certain Korean pitcher as well. I doubt any team will be able to squeeze both in under that budget and still have any room left for the summer signing season.

  • Fishin Phil

    All I can say is ther must have been one helluva a drinking game going on when they came up with that whole agreement.  Maybe now that they are done with this convoluted pile of crap, we should have them work on simplifying the tax code.

     

    Sheesh!

  • http://www.bleachernation.com Brett

    A couple of tweeted thoughts I’ll share here, too:

    Problem with “pool” concept in conjunction with slot recommendations: no kid (or agent) is going to want to sign for under slot. So, the idea that you can still go way over slot on a certain kid if you really want him and stay under your “pool” is a bit bogus unless you plan on signing only a few of your top 10 picks.

    With these changes, you’ve got to believe large market teams will throw more money at free agents. Can’t spend as much on the amateur side, especially when the dollar amount shifts based on winning percentage.

    Yoenis Cespedes is going to get a lot of money, and I hope the Cubs give it to him.

    Guys like Garza and Marmol, who are cost-controlled, just got more valuable. But, then again, so did the prospects for whom the Cubs would trade them. So, maybe the impact is flat.

  • Jonathan

    It seems to me that you pay top dollar to your best draft picks, let the rest go unsigned and fill out the minor league teams with undrafted free agents, and those players who became free agents by not being offered a contract by the team that drafted them. You will have to be very selective in who you sign.

  • Robbo

    Good foresight by Ricketts/Hendry to spend $$$ on the draft this past year before this mess of a CBA was put into place.

  • kernzee

    I was fortunate enough to meet Tom Ricketts back in June , a few days before the draft , and I asked him about possible changes to the draft and he was of the opinion that there would be no major changes . Their aggressiveness was all about a philosophical change , not a closing window of opportunity.

    • http://www.bleachernation.com Brett

      Which makes the changes all the more sucky, eh?

  • Kyle

    This was a cash grab by the owners, plain and simple. Cheap owners can now stay on a competitive footing for amateur talent and pocket the difference, while owners who don’t mind spending money will now just spend more on MLB talent.

    The Cubs’ combined draft and IFA budget last year was something like $20 million, and they were planning on spending at least that next year. The IFA cap alone should free up $4 to $5 million.

  • http://cubbiescrib.com Luke

    Link to the summary pdf. http://mlb.mlb.com/mlb/downloads/2011_CBA.pdf

    It’s still about as clear as mud. There are a lot of changes, and the repercussions keep adding up.

    • http://www.bleachernation.com Brett

      I like my summary better.

      :)

      • http://cubbiescrib.com Luke

        Me too.

  • Spencer

    “Excess of Pool Penalty (Tax on Overage/Draft Picks)
    • 0-5% 75% tax on overage”

    Maybe I’m being especially slow today, but this does not make sense to me. They are taxing on ZERO to 5% over? Doesn’t 0% mean that you didn’t go over your allotted pool? Do they mean .000001% or something like that?

    • JulioZuleta

      Say the cap is $100 and you spend $104, you will be taxed 75% of the 4 dollars you want over for a total of $3. I think the zero just lets them encompass that half a percentage point over someone might go.

    • http://www.bleachernation.com Brett

      It’s a matter of semantics, but from zero implies starting just North of zero. Even if there was a tax on 0%, that tax would be 0%. So, think of it however you’d prefer.

    • http://cubbiescrib.com Luke

      I’m sure the legal language is far more precise than 0-5%. They do mean amounts in excess of the limit, be that amount as small as a single dollar. If you stop at the limit, there are no penalties.

  • die hard

    Was that the Commish searching for the compensation to award the Red Sox?

    • nonesuch

      Ha, good one!

  • Spencer

    Another question:

    “Draft pick Compensation: The Player’s former Club will receive a selection at the end of the first round beginning after the last regularly scheduled selection in the round.”

    BUT:

    “Competitive balance lottery: The ten Clubs with the lowest revenues, and the ten Clubs in the smallest markets, will be entered into a lottery for the six draft selections immediately following the completion of the first round of the draft.

    Which happens first, the compensation picks or the competitive balance picks?

    • http://www.bleachernation.com Brett

      Great question. I’m assuming the actual agreement spells it out better than the press release, which is, on its face, unclear (which comes first, “immediately following” or “after the last pick”?). Thinking about that issue is giving me lawyer flashbacks…

      • Spencer

        Exactly. I am not at all impressed with the language in the press release. Oh, contracts class…

    • http://cubbiescrib.com Luke

      I think the order goes:

      1st round
      Free agent compensation picks
      Competitive Balance Lottery Rd 1 (tradeable picks)
      2nd Round
      Competitive Balance Lottery Rd 2 (tradeable picks)

      But I am by no mean sure of that.

      Also, the draft picks taken from teams who overspend on the draft would be distributed to teams who underspend via a lottery. I think that the winners of the lottery would receive the actual pick not a bonus pick at the end of the first round. So if Yankees over spend and lose their 2012 first rounder, and the White Sox get it, the White Sox would pick in the Yankees slot in round 1. I think.

  • CubSouth

    I think we will be seeing alot more two sport athletes going into the other direction but some of those will still come back to baseball because they know, like the rest of us that only the NFL and NBA (one day soon again) is there big money for the players. The NFL only has an avg lifespan of 3-5 yrs and the NBA is even shorter, with limited roster space, even with the NBDL. I don’t think it will hurt us as much as people may think it will, with the expectancy of players leaving for a more lucrative gig. Let’s face it, baseball has the best of both worlds, a longer, much longer career and also the money will be there if u have the talent to go with it.

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