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.
  • Luke

    From MLB Trade Rumors:
    “The trade market for elite free agents shifts – “Only players who have been with their clubs for the entire season will be subject to compensation,” according to the CBA. In other words, teams won’t be compensated for losing players acquired in midseason trades.”

    That could be big.

  • Spencer

    a. The net transfer value of the Revenue Sharing Plan will be the same as the current plan. Net transfer amounts will continue to grow with revenue and changes in disparity.
    b. The fifteen Clubs in the largest markets will be disqualified from receiving revenue sharing by 2016. The revenue sharing funds that would have been distributed to the disqualified Clubs will be refunded to the payor Clubs, except that payor Clubs that have exceeded the CBT threshold two or more consecutive times will forfeit some or all of their refund.

    This is by far the section that is most negatively going to impact the Cubs.

    • Brett

      How does that change how things are now, with respect to the Cubs?

      (I do see that it means the Cubs won’t be eligible to get a second round lottery pick)

      • Luke

        Thinking as I type here, but I could see this costing the Cubs (and similar teams) a chunk of cash, depending on the details.

        Under the old CBA, every team paid a healthy chunk of their revenue (34% I think) into fund. That fund was then parceled into 30 identical chunks and paid back to the teams. For a low revenue team, they got more out than they put in and were conventionally referred to as receiving revenue sharing money. A team with high revenue, like the Yankees, paid in more than they received, but they did get back at least part of what they put in.

        With that in mind, and assuming the revenue sharing structure stays essential intact, rereading through that section raises some questions. It could… and I emphasis could…mean this:
        The 15 largest markets would still pay into the fund as they have but, but they will be prohibited from receiving more out of the fund than they paid in. Any amount that they should have received based on their revenue is distributed proportionally to the other 29 teams, unless one of those teams is in luxury tax territory for two or more consecutive years in which case that team gives up some or all of that refund.

        That set up could, in effect, cost the Cubs a few million bucks a year if the start surpassing the luxury tax. I can’t imagine the Cubs revenue would fall into the bottom 15, so that aspect won’t matter.

        I am assuming here that the luxury tax setup will stay essentially the same. If I’m wrong in that, then this whole scenario is going to be dead wrong.

        Let me also add that one could read that section to mean that the top 15 revenue teams pay into the fund, and then receive NOTHING out. That would be a crushing blow to the large revenue teams, as it could cost them a third of their revenue. I can’t see a deal that harsh being agreed to, so I doubt that is what the language means. But someone could read it that way, and I can see that creating confusion as well.

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