Wednesday, October 25, 2006

Baseball Reaches New 5-Year CBA

{Changes made below regarding arbitration, draft picks, and free agency: 1:44 PM PDT, 10/25/2006}

Major League Baseball (MLB) and the MLB Players Association has reached a record five-year labor accord, the longest labor contract in MLB history, as announced in this press release. It was jointly announced by Commissioner Allan H. (Bud) Selig and MLBPA Executive Director Donald Fehr.

Here are some snippets of the quotes from the announcement:




"This is an historic agreement for Major League Baseball and is emblematic of the spirit of cooperation and trust that now exists between the clubs and players," said Commissioner Selig. "We are in the midst of baseball's Golden Age. More than 76 million fans attended our games this season, setting an attendance record for the third consecutive year, and we produced $5.2 billion in revenue, which more than quadruples our revenue total of 14 years ago. The new Basic Agreement assures labor peace into the next decade and gives us the opportunity to expand the Golden Age and continue to grow the game in all ways unimpeded by internal labor conflicts."



Fehr said: "I share the Commissioner's view that over the last ten years our game has experienced enormous growth. This new agreement will permit that growth to continue uninterrupted. We were able to conclude these new agreements before the expiration of the current contracts because the two parties brought to the table, along with serious concerns, a respect for the positions and needs of the other. As a result, the discussions were workmanlike and pragmatic, and, while difficult on some issues, the talks were conducted in a mutual attempt to get the job done.

"I want to thank all of the Players for their involvement and support during this process, especially those on the negotiating committee, without whom we would not be here today," Fehr continued. "Nearly 100 players participated in negotiating meetings, and many times that number in internal discussions. I would also like to acknowledge the MLBPA staff for its efforts. Finally, on behalf of the players, I would like to express our appreciation to the members of the Commissioner's negotiating team for all of their hard work."

Important Changes For Giants Fans

Revenue Sharing: Marginal tax rates for all teams have been reduced to 31%. Not sure what that means exactly for the Giants: depending on what the actual change is and their future revenues, it could result in more money or it could be less. Unsure what the effect is because the copy of the CBA that I have states that each team puts in 34% of local revenues and then split evenly, whereas the summary I linked to above says that the old plan had it at 40% for high revenue clubs and 48% for low revenue clubs. Either way, a reduced rate should result in the Giants contributing less revenues to the pot via their local revenues, but with shrinking local revenues, as attendence has been slowing dropping, the money left over after taking less could still be less than what they were getting before, depending on how much revenues have dropped. But if the revenues drop very slightly, as it has been in the past, it should result in more money they can keep and thus more money they can spend. This plus the money they 1) stop spending to support the Expos/Nationals and 2) get from the sale of the Expos/Nationals, should result in more money to spend over the next 5 years of this new CBA.

Amateur Draft: Signability will be less of a leverage point as teams unable to sign 1st or 2nd round draft picks will receive the same pick in the subsequent draft as compensation. They did not make clear how this will work exactly, but it most logically would mean giving the same numbered pick the next season, thereby pushing back everyone else 1 pick back. The problem here is that let's say the 3rd pick and the 9th pick don't sign. The team gets the 3rd pick next season, pushing everyone back 1. Now does the 9th pick get the actual 9th pick OR do they get positioned after the previous 8th pick, which now has the 9th pick because of the 3rd pick being given to the other team pushing back everyone. In any case, this hasn't been a problem for the Giants previously, so no benefit here to them.

Period of protection for Rule 5 Draft has been essentially extended 1 year (as long as signed and played in minors that same year as draft). However, in cases like Todd Linden where he signed too late to participate in the minors, his period of protection is unchanged because he played in the minors the year after he signed, negating that extra year.

Draft Choice Compensation: Type C free agents eliminated this year, so the Giants won't get picks for any minor players, though not sure who would fall into that category. In addition, Type B players get a sandwich pick instead of the signing team's actual 1st round draft pick. Also, Type A are now defined as the top 20% of each position (previously 30%), so Type B is now defined as the next 20% (21-40% now, previously 31-50%).

The Giants will get less draft picks but the picks for a Type C is not much more than a Keno ticket for getting a good player. More importantly are the picks they will get for the players they are losing this season, and the change in categories above goes into effect next season, so they could end up with more Type A and B free agents this season than they would have under the new system. In addition, they will not lose any draft pick for any Type B free agent that they sign this season.

Minimum Salaries: Minimal effect on the Giants payroll. Even with possibly a lot of new players from the farm system, whatever extra the team spends on these players because of the minimum, it will still be much less than what they are playing veteran players.

Free agency: All the deadlines for free agents have been eliminated. However, the Giants will still need to offer arbitration to any free agents not signed by Dec. 1st in order to get a draft pick for him. And there is now a tender date of December 12, which I am guessing is the date to tender the contract offer to any of your players who you have agreed to go to arbitration with.

Net-Net, the Giants will get a good number of draft picks for their Type A/B players, which could mean a boat load of draft picks. Players like Schmidt, Bonds, Alou, and Durham are probably Type A's and Kline, Hillenbrand, Feliz and maybe Finley are probably Type B's. I would guess that Bonds, Finley and maybe Alou will not be offered arbitration, as it would be risky to take them on again at their salaries, whereas the others will most likely ignore arbitration and sign on for a longer contract elsewhere, if they don't sign with us, that is. And they can take as long as they want to resign any of their free agents (like Bonds) and not lose the right to resign until May of next year.

7 comments:

  1. Very informative post Martin. I'm curious, how would switching positions (and/or) leagues affect that player's rankings? How does the league decide which position to rank the player amongst, and more importantly, which position he is signed to play?

    Example: Mo' Alou has been an outfielder his entire career. Suppose he signs on with an American League team as a DH. His ranking as a DH has got to be higher than his ranking as an outfielder. How would the league score this transaction: Alou signs as an outfielder, or Alou signs as a DH?

    Not really expecting an answer, but I just thought it'd make for interesting thought.

    ReplyDelete
  2. FYI: I got something wrong that wasn't made clear in summary statement, but apparently Baseball America has read the new agreement (diary in McCovey Chronicles: http://www.mccoveychronicles.com/story/2006/10/25/12557/795). Apparently you still have to offer arbitration to get your draft pick (BIG CHANGE from what I wrote, maybe I'll go in and change the text after all) and the date to offer arbitration has been moved up to Dec. 1st.

    sfgfan, go to this link to get your answer on how the ranking is handled. But basically, it is based on last two years results and position, not by what he signs to be.

    ReplyDelete
  3. Hillenbrand better not be offered arbitration. The biggest paycut is 20% and he was paid $5.8 mill last year. He sucks and throwing away $5 mill on him, hell, he might win will have the Giants rapidly going through their payroll.

    BTW, another huge revenue source is the internet, which I think is expected to be about $10 mill per team next year.

    ReplyDelete
  4. Sorry I didn't word it right. I don't expect Hillenbrand to be offered arbitration, but I think that is a good chance of him signing before the deadline, which would get us a pick automatically, because he is a good hitter, just not a great one.

    ReplyDelete
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