The new Collective Bargaining Agreement in Major League Baseball is a win in that it will continue the impressive stretch of labor peace through the end of the 2016 season, marking 21 straight years in the league since its eighth and latest work stoppage.
There were a number of changes, including the anticipated move of shifting the Houston Astros to the American League West, creating two 15-team leagues which each house three 5-team divisions, extended wildcards and playoffs, extended use of replay, HGH testing and a (much needed) revamping of the free agent compensation rules, etc. All of these changes seem to definitely fall into the "for the good of the game" category.
But the primary focus of those that want to criticize the changes surround the new spending restrictions on amateur players, both via the June draft and international free agency. While the hard slotting present in other sports wasn't instituted, spending caps--and corresponding penalties for any overages thereof--are being met with skepticism from many. Although most followers of the game would agree that the old system was far from ideal, these changes are not what they had in mind to replace that system it seems.
I recently contacted renowned sports business expert Maury Brown to discuss the pros and cons of the new labor deal on that front to try and nail down what the true dollars and cents of the deal mean to teams.
SeattleClubhouse: Thanks so much for taking the time to talk with me today, Maury, I realize you are very busy right now.
Maury Brown: My pleasure.
SC: Let's start off talking about the draft spending cap, or--as the CBA labels it--the "Signing Bonus Pool". How exactly is this structured as you understand it?
MB: The league was looking for hard-slots--a pre-defined bonus amount for draft signings. Since the union balked at this, the compromise was to allow for the slot figures, but instead of a hard cap, a Luxury Tax was put on the total amount a club would have in aggregate. In other words, whatever your draft picks are, you have an amount for each which is added up. Go over the total, and you are taxed based upon how far over you go. There’s flexibility in this as you can go under-slot in one place, and use the left over to spend over slot elsewhere. There is a catch, however: if you are unable to sign a player, you don’t get to apply that money elsewhere in the slots. You simply lose that money.
SC: So then the prevailing thought right now is that we won't be seeing teams take any mid- to late-round gambles, a la the Pirates and Josh Bell this past draft season, at the risk losing picks or money, correct?
MB: Possibly, Once again, depending upon whether a club goes below slot in higher rounds, the money to go over-slot is available in the lower rounds. In some senses, you might go that direction as the slot amounts are lower and therefore, the Luxury Tax would be less depending upon how far over–slot one goes.
SC: Another part of the draft being eliminated by the new agreement is the option for the club to circumvent any bonus restrictions by dolling out Major League contracts, as the Mariners have done with their last two traditional first round picks, Dustin Ackley and Danny Hultzen. What do you think of that change?
MB: Well, it’s certainly not going to make Scott Boras happy. I’ve not done a comprehensive look, but I’d say that there’s bound to be more than one player that’s signed a ML deal that should have never made The Show, let alone be paid the guaranteed salary. I think it’s good. Let players prove themselves. This is one place where I’m sure veterans--union members--aren’t terribly upset.
SC: Do you believe that the result of these changes will be stronger collegiate programs and even perhaps more players playing four years in college?
MB: It’s certainly possible. I think the other part of it is clubs will have more time to scout these players and do better player development projections.
SC: I have also heard the fear voiced that more multi-sport prep athletes will turn to football or basketball. With new restrictions being placed on all three major leagues over the last six months, did baseball really lose any ground in this area?
MB: I do think it could hurt baseball in that guaranteed money in baseball has been an allure given that development time could take longer. Look, in labor deals, rookies always seem to get hit. But, you’re right… the NFL, MLB, and NBA placed more restrictions around rookie pay, so it’s possible that it’s being overblown.
SC: Although the draft slots have been assigned individual "caps", if you will, that by no means will be what every player will sign for. Do you think that we will see more high draft selections accepting slightly less money in the interest of more flexibility for their team in later rounds?
MB: Well, one could dream. I’d say that most agents are going to push for as much money as they can for their clients.
SC: Having the signing deadline pushed up to mid-July was something that everyone on both sides clearly wanted. Other than allowing more of the top talents to debut in regular season leagues for their new teams, what does this change?
MB: That’s it, mostly. The union knew that many clubs were holding down talent to avoid Super 2 status in salary arbitration. By pushing the date to July and increasing the number of players that will be Super 2 eligible, the league will see more talent being called up.
SC: On to the international market now. The $2.9m ceiling for the 2012-2013 signing period (and ranging between $1.7m-$4.8m going forward, based on winning percentage), how restrictive do you think that will be? Heading into the 2011 class, only three individual international signing bonuses have exceeded that amount, and in 2010, only eight teams spent more than that figure on their total class, led by the Mariners at $6.47m, with the average of the 30 teams being just over $2.5m.
MB: I think you hit the key points. This gets into being restrictive, but only in the extreme sense. The league wants to see cost certainty. The union doesn’t want anything that resembles a hard-cap. The compromises can either be setting thresholds so high that they are the softest of caps, or other mechanisms, such as the Luxury Tax. I’m surprised this kind of thinking isn’t employed more often with other sports leagues.
SC: Of course what these new restrictions point to is that an international draft is on the horizon, and the owners and MLBPA have stated as much. If and when that happens, will it hurt or help lower revenue clubs?
MB: It’s a two-fold topic. Technically, you can say that now without a draft, and with it, some form of restrictions that prevent free-wheeling free agency, it should help low-revenue makers. But, it can get into the same issues we will now see with the amateur draft in North America. If we see the same system now being used with nothing more than different slot figures, I’m not sure it’s as beneficial as it could be.
SC: Really great to talk with you, Maury. A lot of very interesting changes in this CBA and it is great to have someone with your background to help us all understand it a bit better. I appreciate you giving your time and your expertise to the site. Take care.
MB: My pleasure!
For more insight into the CBA and the Business of Baseball, follow Maury on Twitter at @BizballMaury and check out the Biz of Baseball website.
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