Wringing Logic From The CBA

Baseball has a new Collective Bargaining Agreement that ensures 21 years of labor peace, finally brings balanced divisions, exiles the Astros to the American League, and gives us daily interleague play.

Now for the important stuff. This deal brings very significant changes to the amateur draft, the international free agent circuit, and to free agent compensation picks. Some of the changes we can’t fully gauge yet because we simply do not have all the information. Some of the changes sound pretty good. And some of them are a little puzzling.

First of all, here are the details of the new CBA as best I can find them. I strongly encourage you to read over a few different takes, as different sources have different details on different issues. It will take some time for the total picture to become clear. The official MLB.com announcement is here, MLB Trade Rumors have their write up here, Bleacher Nation has a pretty good recap here, and Call To The Pen has their take here. The official summary document can be found here. Jim Callis has done a nice job providing analysis on his twitter feed, as have a number of other sports writers. Again, I strongly encourage you to read over a couple of different takes. There is a lot to take in here.

To put a too brief summary on the changes, in the future baseball will look something like this. All of this is still subject to change, but I’ll update this as details become more clear.

– In order to get a draft pick in compensation for a top tier free agent leaving, a team will have to offer that free agent a one year contract worth the average value of the top 125 contracts in baseball the previous season. I don’t have that dollar amount yet, but I’ve seen speculation that it will start at around $12 million.

– If a team signs a player who has turned down such a qualifying offer, that team will lose their first round draft pick. If their first round pick is in the top 10, that pick is protected and they will instead lose their next highest draft pick.

– If a team loses a free agent after making a qualifying offer, they receive one compensation pick at the end of the first round. They do not, it appears, receive the first round pick of the team who signs the player.

– Players taken in the amateur draft in June will have until mid July to sign with the team that drafted them, not mid-August. This is a fantastic change that all but ensures that the best players will be playing in the short season leagues or in low-A in the year they are taken, potentially speeding up their development. This move was long, long over due.

– There are no more recommended slot amounts for draft picks.

– Each team will have a pool of money they can spend on draft bonuses. Teams who exceed that pool will be subject to obscenely stiff penalties. The penalties escalate based on the percentage amount of the overage.
If a team goes over by 0-5%, the dollar amount of the overage is taxed at 75%.
If a team goes over by 5-10%, the overage is taxed by 75% AND the team loses their first round pick in the next draft.
If a team goes over by 5-10%, the overage is taxed by 100% AND the team loses a first AND a second round pick in the next draft.
If a team goes over by more than 15%, the overage is taxed by 100% AND the team loses their next TWO first round picks.

Let that sink in a bit. If the budget is set at $10 million for 2012, and the Cubs spend $11.6 million on draft bonuses, the Cubs will not have a first round pick again until 2015 at the earliest. Harsh.

I am not sure how badly this will impact the draft because no one knows the size of the budget yet. Some reports are that it will be set at around the same amount spent on a per team basis in 2011. That would be in the $10 – $12 million ballpark. That would not be so bad. On the other hand, you know the White Sox will be begging for a cap of no more than $5 million or so.

– After the first ten rounds of the draft, only bonuses in excess of $100,000 will be subject to the cap.

– Teams that spend more than the limit may see their lost picks be given to teams who spend less than the limit via a lottery.

– No player taken in the June draft can be given a major league contract. That rule alone would have driven down draft bonuses independent of anything else. In short, deals like Samardzija got from the Cubs are no longer possible.

– There will be a bonus round after the first round in which six picks will be awarded to teams who finished in the bottom ten according to either market size or revenue. After the second round, the remaining four teams along with any other team who received revenue sharing payments will be entered into a lottery with odds set in reverse order of winning percentage (like the NBA lottery) for an additional six picks. These bonus-round picks may be allowed to be used in trades under certain conditions. Details are unclear on this point as well. This might be the murkiest area of the CBA; take nothing on this topic as final for a day or two.

– There will be a limit on the amount teams can spend on International Free Agents (IFAs). That does not apply to Cuban players over the age of 23 or Japanese players subject to the posting process. (What about Korean players who are posted? I have no idea yet). For 2012, every team will have the same budget of $2.9 million. After 2012, the budget will be adjusted according to winning percentage. If the Cubs have a terrible year in 2012, they will be allowed to spend more on IFAs after 2012. If the Cubs do well, they will be allowed to spend less. The IFA spending budget CAN BE TRADED to other teams, but no team can acquire more than 50% of its original budget.

– Teams may be allowed to add an 26th man for certain doubleheaders. Basically, this would allow teams to play double headers without having a pitcher pitch on short rest, or forcing the bullpen eat a ton of innings. Good move.

And for now, I’ll stop. There is a lot to digest in this CBA, and I for one am still digesting. We will begin bringing you analysis of this new deal and what it means to the Cubs in the coming days.