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Nov
28
2011

Don’t Shed Tears Over The MLB CBA

 

The new MLB CBA minimizes the chances of another signing like Gerrit Cole’s, but it is not a death sentence for small market teams or amateur baseball players.

On Tuesday, Major League Baseball announced jointly with the Major League Baseball Players Association a new collective bargaining agreement had been reached over three weeks earlier than the expiration date. A time for rejoicing in professional sports amid lengthy lockouts in the NFL and NBA quickly soured into a rebellion among some analysts and fans.

To begin, it is important to note that a collective bargaining agreement is just that, an agreement that is collectively bargained. Each aspect of the agreement is part of a large give and take between the owners and the players. Each side walks away from the table feeling that they have gained in one area and given back in another. Both sides signed off on what they think is best for them for the term of the contract. Pointing fingers at the parties is nonsense since each had an equal voice in the agreement. The owners didn’t screw the players and the players didn’t screw the owners. So please let’s not shed any tears for either side. The sport is consistently growing revenues and both sides will continue to reap the benefits of prosperity for the next five seasons.

The biggest contention among some analysts and fans centers on a new bonus pool system for the amateur draft. There is a similar pool for international signings which is still being worked on so it will not be covered in detail here. Under the new agreement, draft positions will have a dollar figure attached to it for each of the first ten rounds. The sum of the values is the bonus pool for the team to use as they see fit for the draft. The amounts are derived based on the winning percentage from the previous season so that the teams who won less frequently will have the largest pool. The range of the pool begins at $4.5 million up to $11.5 million. There will be tax penalties and possible draft pick losses if a team goes over their allotment. Also, teams will no longer be able to offer major league contracts to drafted players..

There were two immediate reactions to the new draft and international rules. One, small market teams have lost their only advantage over large market teams in both areas. The other is that amateurs will begin to look to other sports as a profession since there are possible restrictions on the top value of the bonuses and no chance of an MLB contract offered during the draft. Neither is absolutely true.

First, we need to clear up that this is not tied to the market size of the team. It is inherently wrong to say small market teams are getting the shaft or that large market teams are being given an advantage. The derivation of the bonus pool for the draft is not based on the size of the market but on the winning percentage of the teams. There is no logic in suggesting all small market teams are losing teams and all large market teams are winning teams.

The Tampa Bay Rays, a small market team, have been very successful over the past few seasons. They would be the most limited because their pool would be significantly lower and resemble that of the New York Yankees or Boston Red Sox because of their similar winning percentages. The disadvantage for small market teams still exists in the area of free agency where revenues dictate the amount teams are able to spend on players. There was little change to the luxury tax limits which is the only area in which a large market team can be reigned in from spending exhorbitantly on free agents.

Analysts point to the massive contracts or bonuses recently issued to players like Washington Nationals’ Stephen Strasburg (4 years/$15 million) and Bryce Harper (5 years/$9.9 million) and the Pittsburgh Pirates’ Gerrit Cole ($8 million signing bonus). Using the new rules, Strasburg and Harper would have been unable to land MLB deals so a substantial bonus would have been given. The Pirates signing of Cole would have taken a significant amount of the Pirates bonus pool allotment. The Pirates subsequently spent another $5 million on their second pick, Josh Bell which would have put them over the reported maximum.

The owners were hoping to reign in the substantial bonuses that agents were insisting on. Remember Strasburg essentially held the Nationals hostage during negotiations after he was drafted. They came to agreement minutes before the deadline. The number that is important here is the total of the signings in rounds one through ten. The first few teams will have anywhere from $10 to $11.5 million to spend on the draft and on down to the winningest team at $4.5 million. There will not be many bonuses approaching double-digit millions any longer because of the penalties associated with going over the pool.

Further it has been suggested that small market teams will no longer be able to use their money in this area without suffering penalties. This is not entirely true. Teams will have to be more shrewd about their picks and players will be well aware of the limits placed on teams. However, it is true that large market teams who win on a regular basis will have the least amount of money to spend now. They can no longer hope that players will fall to them in the draft because they can pay more. The successful large market team’s wallet will not be able to dominant the draft going forward. The tax is one thing, but losing draft picks is another. Even successful large market teams have begun to invest in younger talent over the last few seasons in an effort to build or re-build their minor league system.

The team with the highest winning percentage will have the minimum pool amount to spend. It will only take 15% or $675K more than the $4.5 million pool to invoke the toughest penalty; a 100% tax of the overage and more importantly loss of their first round picks in the next TWO drafts. Having money is nice but to completely eliminate themselves from two successive drafts would seem like a foolish move by a general manager.

Deep pockets will not benefit large market teams to the extent that it could have without controls. Yankees’ general manager Brian Cashman has said numerous times over the last couple seasons that even the Yankees have a budget. It is larger than everyone’s but has a limit. It can be argued that without some restraints it would have become a situation where agents and players would let it be known substantial bonuses and contracts would be necessary in order to sign their player once drafted. Without any restrictive pool or slotting system, the wealthier teams would have begun to extend their dominance into the amateur draft as well as free agency.

There is not much difference with how the international pool will be handled other than the pool seems significantly smaller than what would be required in previous years to sign a player. A task force will be established by the middle of December to further construct the rules so delving into this too deep is premature. The one argument uttered by some is that young boys in the Dominican Republic and other Caribbean/South American countries are going to turn their attention to soccer because of this. We’ve been hearing about the massive soccer takeover in the United States for years now. Folks, it’s not happening. Boys in these areas will still flock to baseball and anything they are offered to play in the United States will be dramatically more than they would ever make working elsewhere.

A similar argument has been made that American athletes, who excel in football and/or basketball in addition to baseball will now choose to play football or basketball because the signing bonuses and contracts are not going to be as generous in baseball. As it stood prior to these changes, multi-sport players probably would have already been swayed to choose the others over baseball if equally talented in each sport. The NFL and NBA already had larger bonuses and contracts to virtually any player drafted in the first round. The largest contracts in baseball were typically for the first few players in the first round and were dwarfed by what is given to players drafted in the first round in the NFL or NBA.

There is no doubt that teams will have to make adjustments to their draft preparations with this new system. The disadvantages for small markets versus large markets have not been enhanced by the bonus pool systems. Teams which lose will have more to spend than teams who win in an effort to garner them talent and help them become winners. Doesn’t this make sense?

Devoted amateur baseball players will pursue their dream as much as they did in the past. The loss of a couple players to football or basketball is not going to signal the end of professional baseball. The players who make it through the new system will be rewarded once they hit the majors. In turn, they will be more than willing to back the same procedures for the next generation of amateur players.

Don’t shed any tears for the small market teams turning generous profits or for the young men who play professional baseball for a living and become millionaires to boot.

Christopher Carelli writes for TheFanManifesto. He can be followed on twitter at @BaseballStance.

The entire FanMan team can be followed on twitter at @TheFanManifesto, or liked on facebook by clicking here.

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