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On second thought: the new CBA sells amateurs down the river

Nov 22, 2011, 1:28 PM EDT

Selig and Weiner

In the blogging game, speed often rules. Sometimes you can be too fast, however. That happened a few minutes ago when I broke down the new collective bargaining agreement. Within about five minutes of that post going live, a number of details started spilling out about the thing, and a lot of those details are making me way more skeptical of the quality of this deal than I was when I called it “a total success.”

I think the biggest issue is that it is now becoming clear that the caps/taxes involved in tamping down amateur signing bonuses are way more harsh than had been suggested in earlier reports.

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.

Unlike a few minutes ago I’m going to hold an ultimate verdict until I’ve had a chance to think on it some more, but man: it seems like the owners and the MLBPA banded together to stick to it to the amateurs and draftees and international free agents.  And that seems profoundly shortsighted to me.

  1. mrjavascript - Nov 22, 2011 at 1:34 PM

    We saw how unions damaged local and state governments, now we get to watch the union destroy our national past-time.

    • mrjavascript - Nov 22, 2011 at 1:39 PM

      And please don’t down vote this because “I didn’t read the who article” or “don’t have an understanding of what I’m talking about”… MLB got an influx of talent recently since two-sport stars like Bubba Starling, Zach Lee and Josh Bell were able to use letters of commitment as leverage for large bonuses. The main problem here? Amateur players aren’t members of the union…

      • jeffrp - Nov 22, 2011 at 2:08 PM

        You have a half understanding of what you’re talking about. The amateur players are getting screwed because they don’t have union protection, but it’s the owners/Selig doing the screwing.

      • Alex K - Nov 22, 2011 at 2:18 PM

        Um, you don’t know what you’re talking about. The Selig and the owners wanted hard slotting of draft picks. That would have screwed the non union players more. It seems to me the union helped the amateurs out by getting away from hard slotting.

    • paperlions - Nov 22, 2011 at 1:40 PM

      I have seen no such thing.

    • cur68 - Nov 22, 2011 at 1:41 PM

      ‘er, mr j, how do you pin this all on the union? I do believe the owners were part of the process, no? Seems a bit screedish to jump up and down on this union (and all unions) as the ruination of something which takes 2 parties to agree to.

      • mrjavascript - Nov 22, 2011 at 1:45 PM

        Not all owners are against this. Small market teams like the Rays and Pirates and Indians have spent well-above average on the rule 4 draft in recent years (the Pirates shattered bonus records this year.) If I was a Yankees fan I’d be excited today, since their small-market opponent in Tampa Bay now has a harder task at hand in developing talent…

      • cur68 - Nov 22, 2011 at 3:04 PM

        “Not all owners are against this”<- is that a typo or what? That's not what I'm saying at all. I'm asking you why you whole sale blame the unions? It took 2 to tango on this agreement. If its flawed, they both get the blame, union & owners because they agreed to it. Frankly it appears the union might have helped the non-union guys by avoiding hard slotting.

        Sounds to me like you are just blatantly anti-union and will spin it any way you want to make it sound the way you want to believe.

    • purnellmeagrejr - Nov 22, 2011 at 2:01 PM

      Please leave that smelly bag of political garbage at the end of the block; I don’t want it stinking up HBT.

    • churchoftheperpetuallyoutraged - Nov 22, 2011 at 2:14 PM

      That’s funny, I remember reading in my history classes how unions helped protect workers, and at the onset, helped save their lives from penny pinching owners who thought nothing more than to keep people working 15+ hours a day at low wages and no benefits…

      • JBerardi - Nov 22, 2011 at 3:39 PM

        Bah! Ending child labor is nothing in the face of destroying the American auto industry. Which, by the way, had everything to do with unions and nothing at all to do with 40 years of shit cars.

    • djpostl - Nov 22, 2011 at 2:36 PM

      Oh go away 1%. Our local and state governments were pathetic long before unions came around.

    • Old Gator - Nov 22, 2011 at 2:37 PM

      mrjavascript, you are a classic, ignorant, dimwitted kunckle-dragging neoconman whose knowledge of economics and labor history are as skewed as your lack of comprehension of “labor relations” in MLB. Go home and watch Glenn Beck and his brethren rightwing bullshit artists. They won’t tax your witlessness.

      It never fails to amuse me to see the Major League Baseball Player’s Association lumped together with industrial and trade labor unions. Talk about comparing blueberries and watermelons.

    • unclearnie - Nov 22, 2011 at 4:02 PM

      Change your name to mrTEABAGscript

  2. stex52 - Nov 22, 2011 at 1:47 PM

    I’m confused by this one. I understand the players going for it. It is a time-honored tradition in these sports CBA’s for the veterans to throw the rookies under the bus. After all, that’s their competition for the jobs and they would probably do about anything for another year at those big salaries.

    But what is in it for the owners? I would think there are enough small and mid-market teams to kill this on the owners’ side. It sure plays into the hands of the big boys.

    • mattjg - Nov 22, 2011 at 1:57 PM

      I’m with you for the most part. I can see why the Yankees, Phillies and Red Sox are for it. I can also see why a truly cheap small market team (like the Marlins?) would be for it. It really screws over teams like the Royals, Pirates and Rays though that have done a good job of pursuing players in the draft and spending money on them instead of MLB free agents.

      • stex52 - Nov 22, 2011 at 2:12 PM

        Also the stated future policy of the Astros (they keep fantasizing about stealing Friedman away from the Rays). I would hate to see them set back any farther than they are now.

    • Kyle - Nov 22, 2011 at 2:00 PM

      Totally agree. What a bummer.

    • aleskel - Nov 22, 2011 at 2:04 PM

      I actually don’t think the players side would be pushing for this, as no salary caps anytime, anywhere has been a hallmark of the Union’s philosophy forever. I honestly don’t see who stands to gain from this at all.

    • churchoftheperpetuallyoutraged - Nov 22, 2011 at 2:19 PM

      But what is in it for the owners

      Because the owners, just like their brethren in the NBA, can’t stop themselves from offering too much money to bad players. I think it’s been Klaw that’s been tweeting how annoyed some owners are that Gerrit Cole got $8M this year. That’s $8M over the first 6 years of his deal (with probably arbitration raises) or $1.3M per year. That’s less AAV than the Orioles just gave to the Korean pitcher they signed. Or a greater value contract than Clint Barmes’s new deal.

      Also, the players don’t care about this because amateur players aren’t covered by the CBA. They were pretty dumb not getting any concessions for this however.

      • mondogarage - Nov 22, 2011 at 3:40 PM

        “They were pretty dumb not getting any concessions for this however.”

        Bingo, that’s my only problem with this CBA. Looks like the players gave and gave and gave, and got nothing for it more than a higher ML minimum salary (which is not meaningless, however).

      • stex52 - Nov 22, 2011 at 4:23 PM

        Purely a friendly question to show my ignorance. If amateurs are not covered by the CBA (and now that you say that it makes sense), why is this in the CBA at all?

      • churchoftheperpetuallyoutraged - Nov 22, 2011 at 4:29 PM

        Think of it this way, the draft positions and amounts paid for each position are part of the CBA because they are part of MLB. However, the players each year aren’t part of the Union until they are drafted and signed.

        It’s an unfortunate byproduct of today’s society of “I got mine”. Players already have their contracts, why should they worry about future players’ contracts if it doesn’t have any effect on them currently?

  3. spudchukar - Nov 22, 2011 at 2:03 PM

    The impetus for the draft monies changes came from the back door deals rich franchises were making with draft choices. Teams like the Yankees (not exclusively by any means) were alleged to have told draftees to tell less successful but earlier drafting teams that they were unlikely to sign with them because they were going to ask for huge bonuses. They had been promised large signing bonuses if they would play along, thereby being passed by the Pittsburghs of the world, and signing later in the draft by the richer franchises that could afford them.

    Whether or not MLBs changes will succeed in discouraging those practices can be argued, along with the disenfranchising of youngsters entering the draft, as a result, but MLB, for once, had its heart in the right place.

    • uberfatty - Nov 22, 2011 at 2:55 PM

      I don’t agree that only rich teams would do this. Any club that spends big in the draft probably tries to work out deals ahead of time, but has to keep it under wraps since it is against the rules.

      To threaten not signing, it would have to be a HS player as college draftees have very little leverage. The only big name from the 2011 draft that stands out to me directly contradicts your argument (Josh Bell, signed by the Pirates after previously being thought to be unsignable).

      • spudchukar - Nov 22, 2011 at 3:18 PM

        Let me explain more. Suppose the Yanks are high on a particular amateur. They go to him and assure him they will select him later, and pay him above the slotted rate, at least as much as the Pirates. They argue that he will make more money, play for a contending team, receive more endorsements etc., if he indicates to the Pirates that he will not sign for a reasonable figure. The Pirates cannot afford, both literally and figuratively, to miss out on their top draft choice so they select someone they are assured of signing.

        MLB has evidence that this was becoming a problem and tried to remedy it. And just because one player chose either, to not to play along or was not was that highly courted does not prove that the practice was not being implemented.

      • churchoftheperpetuallyoutraged - Nov 22, 2011 at 3:45 PM

        Honest question, but do you have any record of this? I’ve never seen or heard/read that a team drove up a player’s price, but I’ve often seen/read about an agent who was rumored to tell teams player X is looking for price Y so if you can’t meet or beat it, don’t bother drafting him.

      • spudchukar - Nov 22, 2011 at 4:17 PM

        …there IS gambling at Rick’s.

    • b7p19 - Nov 22, 2011 at 4:04 PM

      I completely agree with Spudchukar. The penalties for going over the slot recomendations had to be severe in order to make sure big clubs wouldn’t continue to promise the prospects big money if the refused to sign with small clubs.

      I have watched my Padres take players like Matt Bush simply because players like Stephen Drew told them he wouldn’t sign. Draft slotting (even a soft slotting like this) will help small market teams in the draft. Also, allowing small market teams to use more money in the international market than big clubs helps, so I’m not sure what the outrage is about here. Did I read this wrong?

      Like Craig points out, its the amature players that are hurt by this.

      • churchoftheperpetuallyoutraged - Nov 22, 2011 at 4:33 PM

        The penalties for going over the slot recomendations had to be severe in order to make sure big clubs wouldn’t continue to promise the prospects big money if the refused to sign with small clubs

        Except as mentioned above, the Pirates were the top spending team in the draft last year, and teams like the Royals/Twins/Angels spend far more money in the international market than teams like the Yankees.

        Also, allowing small market teams to use more money in the international market than big clubs helps, so I’m not sure what the outrage is about here

        This is the part I found on the link in the earlier post:
        Clubs will be given a “pool” of money to spend on bonuses for draft choices. The amount of the “pool” for each club has not yet been reported, but is believed to be based on prior amounts spent on the draft. Danny Knobler reports that MLB says the bonus pool for the 2012 draft will be $4.5 million to $11.5 million, depending on how many picks and on where a team picksThere is at least on report, as indicated in our first update to this story, that there is a mix between the bonus limits for spending on international free agent players

        Not sure how smaller market teams are given an advantage. It might be interesting to make it a sliding scale inverse to draft position (#1 team gets most money, #30 gets least) but that doesn’t appear to be the case.

  4. purnellmeagrejr - Nov 22, 2011 at 2:04 PM

    Craig almost invariably writes clear, concise, annoying idiom and fad talk- free” prose. When I got to the phrase “scouts and agents and stuff” it was, like, you know, surprising, you know what I’m saying?

  5. mcsnide - Nov 22, 2011 at 2:04 PM

    Passan is saying overseas signing bonus pool will vary by team between 1.8 mil and 5 mil for a year, with established Cuban and Japanese players not counting against it. Does anyone know what teams typically spend now in Latin FA signings? Those numbers seem quite low to me.

    • aleskel - Nov 22, 2011 at 2:11 PM

      it’s a good question, but it’s hard to answer because the international market (particularly in the DR and Venezuela) is a real Wild West situation. A lot of under-the-table money flying around. You could probably start with the money the teams invest in academies and their announced bonuses, but that’s only a start.

      • mcsnide - Nov 22, 2011 at 2:17 PM

        Right. Ending the abuses of the buscone system is fine by me, but finding an actual authoritative list of what teams are spending on the bonuses themselves is proving more difficult than I would have thought.

        In general, though, these ideas of protecting the owners from their own proclivity to overpay annoy me. If a team want to give 10 Latin kids $600K bonuses in a year, I just don’t see the problem with that. Seems like a cheaper way to build a team than pursuing American FAs.

  6. sdelmonte - Nov 22, 2011 at 2:31 PM

    I think any elite two-sport athlete would have to be crazy to chose the brutality of the NFL over any other sport, no matter how big a bonus the NFL can offer.

    • djpostl - Nov 22, 2011 at 2:38 PM

      Exactly, Average career span ins 3 years. Non-guaranteed contracts etc..who the hell would choose the NFL over MLB, even with these new issues?

      • churchoftheperpetuallyoutraged - Nov 22, 2011 at 3:29 PM

        Except the money in the first round far outweighs what the plays in MLB get. The highest bonus ever received via MLB draft is what, $12M total? JaMarcus Russell signed a contract that guaranteed him $32M in ’07 and he’s already been cut.

      • b7p19 - Nov 22, 2011 at 4:13 PM

        Thats true ‘outraged, but this new CBA has created a slotting system for the NFL as well. I agree with sdelmonte. If I’m equally good at both, I’m picking baseball for the guaranteed contracts.

      • churchoftheperpetuallyoutraged - Nov 22, 2011 at 4:34 PM

        But how far has the NFL changed? Only person I know who posts stuff like this is Maury Brown with Biz of Baseball, is there a football equivalent?

    • stex52 - Nov 22, 2011 at 4:29 PM

      Agreed. I have thought that for years. I don’t think many kids sign up thinking they will fail. But the thought that you will still be able to walk when you are 50 must be an incentive to some.

  7. Old Gator - Nov 22, 2011 at 2:34 PM

    Come on now. If it didn’t screw somebody, it wouldn’t be MLB.

  8. hansob - Nov 22, 2011 at 2:51 PM

    Well that might as well be hard slotting. No team in their right mind is going to give up money and picks to slightly go over slot.

  9. JBerardi - Nov 22, 2011 at 3:50 PM

    In other words, this doesn’t screw over a few teams. This, more than likely, screws over YOUR team.

    • b7p19 - Nov 22, 2011 at 4:14 PM

      But now teams won’t HAVE to go over slot to beat out the teams below them.

      • JBerardi - Nov 22, 2011 at 4:40 PM

        So? Why is that good for anything but team’s bottom lines?

      • b7p19 - Nov 22, 2011 at 5:18 PM

        Two things, and I’m not going say I might not be looking at this wrong:

        Padres would have been able to sign Stephen Drew instead of having to go with Matt Bush. There would be less power for guys like Scott Boras to hand pick a team before the draft.

        Also, I’m basing this on the assumption that teams would be able to use the “bottom line” savings on more players that can help the team. Big assumption, I know.

  10. Dan in Katonah - Nov 22, 2011 at 4:14 PM

    I’ve negotiated CBA’s for and against unions. If a union can get more for their existing membership by screwing over prospective members before they join, they will do so. Here, the MLBPA is complicit with ownership in a short-sighted plan to limit draft/international signing costs. Not sure what the players got from this, but I hope it was worth it given the decreased attractiveness that baseball will present to 2/3 sport athletes who can get greater signing money with basketball and football. Artificial caps on free market are just plain stupid, particularly here where the teams cannot trade picks and draftees. Also, if the Yankees and Indians can only offer the same amount to an international FA, who do you think the player is signing with? At least before a less attractive team on the down-cycle could build its way out with focussed longterm growth. Now, there is a cap on the ability to do so.

    Take away the anti-trust exemption and let the free market rule.

    • serqball - Nov 22, 2011 at 7:29 PM

      Agree with most everything except for the unnecessary political statements. “Artificial caps on the free market…” aren’t always “…just plain stupid,” but they are incredibly short-sighted in this particular case for the reasons you and the post mentioned. Also not sure how you get from your first paragraph all the way to “Take away the anti-trust exemption and let the free market rule.”

      Otherwise, nice insight from someone with actual CBA experience.

      • Dan in Katonah - Nov 23, 2011 at 10:07 AM

        My understanding is that the anti-trust exemption is what allows MLB to put in systems like this that other sports and industries could not. The statement about artificial caps was a generalization and not meant to be political since people like to stray far too much into that sphere on this site. I agree there are times when the free market definitely needs restraints and guides, but helping constrain billionaire owners from being spendthrifts is not one of them.

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