Five More Years of Labor Peace . . . But Not Everyone’s Happy

The owners and players announced the reaching in principle of a new MLB labor deal that, if implemented, will result in five more years of labor peace.

According to Baseball Nation’s Wendy Thurm, the new collective bargaining agreement includes modifications involving: instant replay; the amateur draft; international free agents; minimum salary for first-year players; arbitration eligibility and super-twos; compensation for free agent signings; luxury tax; balanced leagues, interleague throughout the season, and expanded playoffs; testing for human growth hormone (HGH); smokeless tobacco; and the All-Star Game.

Tom Verducci of Sports Illustrated is baffled about the changes made to the amateur draft:

The one piece of this CBA that doesn’t make sense is how the owners swung their hammer at amateur players — specifically, penalizing teams for overspending on draft bonuses according to newly established thresholds. Tamping down the ability of teams to evaluate the value of draft picks is a strike against the heart of competitive balance. This rule doesn’t harm the Red Sox, Yankees and Phillies. It harms teams such as the Pirates, Nationals and Royals, who spent the most money on draft bonuses over the past three years and are better positioned because of it. (The Red Sox, Yankees and Phillies rank 10, 16 and 20 in bonuses over the same period.)

Moreover, the reward for small- and middle-market teams that do well, such as Tampa Bay and Milwaukee, is to be given less money to spend in the draft because they will be drafting later. And if they do exceed a threshold, they can be penalized with the loss of draft picks — the very important currency that helped create parity. And are not some drafts — such as 2005 (perhaps the best ever) — stocked with more great players than others? Of course. So why should spending be treated the same every year?

It makes no sense, and it is why many teams, such as Oakland, Kansas City, Cleveland, Tampa Bay and Pittsburgh, consider this cap on draft spending to be counterproductive.

“These are the very teams the system works for,” agent Scott Boras said. “And now [Selig] has handcuffed them? This is not [coming from] the union. It’s not the major league players. They were told that to get a deal done this was needed. GMs tell me they don’t understand this at all. Why is Bud damning the scouting industry? . . . It makes no sense for parity.”

It’s easy to dismiss Boras’ complaints as self-serving as an agent who has made great sums of money off the draft and wants a free market in place. But Boras always has been sensitive to the scouting community. He also knows the enormous value is at the top of the draft — he doesn’t mind protocols after the first round — and teams and their scouting departments should be establishing the value of those picks, not a one-size-fits all schematic from the commissioner’s office.

The Nationals, for instance, spent $25 million combined on Boras clients Stephen Strasburg (the No. 1 overall pick in 2009) and Bryce Harper (No.1 overall in 2010) “and now their value is 75 to 100 million dollars less than three years later,” the agent said. The days of teams passing on players because of “signability” issues have been replaced with an understanding of the investment return of elite players.

“In the end,” Boras said of the cap on bonus money, “it’s modeled in clay. It has no logic to it.”

In contrast to Verducci’s measured criticism, HardballTalk’s Craig Calcaterra is incensed at both the alterations to the draft and international signings:

Specifically, the tax on amateur draft bonus seems downright punitive. If teams exceed the bonus limit set by Major League Baseball by more than 5%, they get hit with a 75% tax. If they exceed it by between 5 and 10%, they get a 75% tax and they lose a first round pick the next year.  If you’re 10-15% over, it’s a 100% tax and the loss of a first and second round pick. Fifteen percent or higher a  is 100% tax and the loss of two first-round picks.

The only thing not included is first born male children being turned over to a central league fund.

What’s more, the international signings are going to play into this as well, with any international player under the age of 23 being considered on the same basis as a draftee for tax purposes. Overall, there will be “pools” of international signing money available to each team, with better teams being able to pay out lower dollars in international signings than worse teams and, at some point in the future, the ability of teams to trade their international money to other teams if they don’t want to use it.  It’s unclear yet how that will work.

Let’s be really clear about something here: these changes are going to make baseball way less attractive to amateur players.  If you’re an elite two-sport athlete you’d be frankly crazy to try baseball first before giving the NBA or NFL a shot.  It may also serve as a de-incentive for scouts and agents and stuff to look for the next big thing in the Dominican Republic, say.  Even more significantly, this directly impacts the low-revenue teams who rely disproportionately on the draft in order to improve quickly.

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