This week in “Last Week in BizBall“, reactions to the new CBA, plus tidbits.
REACTIONS TO THE NEW CBA
LWIB, as expected, MLB and the MLBPA concluded negotiations on a new “basic agreement” (aka CBA) which will govern their relationship for the next 5 seasons. The deal (not yet ratified) is the third consecutive to be struck without a work stoppage and, at its end, will mark 21 consecutive years of labour peace in the industry. Casual fans of MLB will notice an additional two playoff spots, the move of the Astros to the AL, daily interleague play and (possibly) expanded use of instant replay. Keener fans will notice that this next CBA also includes the elimination of “Type A & B” free agents and more “Super Twos”. Fellow geeks are also dissecting changes to revenue sharing, the CBT, debt service regulations and…Maury Brown has a comprehensive list here. If there is any surprise in this next CBA it is in the breadth of change it brings. LWIB the punditry was very busy analysing the extensive changes in this new deal. The aspect of the new CBA garnering the most attention is the fundamental changes to the rules governing the acquisition of amateur players.
I’ve discussed before that the issue of “rookie compensation” has become an increasingly important labour issue in professional sports. LWIB the MLBPA was accused of having “sold out” their future members in return for concessions which benefit their current members. Respected NFL labour pundit (and former Packers executive) Andrew Brandt tweeted, “One common them of new agreements for NFL and MLB: sacrifice the rookies. No voice in the process except by agents.” Michael McCann, sports law professor and analyst for both SI and NBA TV tweeted, “Current players in a league collectively-bargain on behalf of themselves and, more controversially, on behalf of future and past players.” Simply put, this next CBA is intended to reduce the amount of money being spent acquiring amateur players by severely punishing clubs, via taxes and forfeiture of draft picks, for exceeding newly created spending limits in both the Rule 4 draft and international free agent market. Again, simply put, this next CBA benefits existing members of the MLBPA by raising the minimum salary, increasing the number of “Super Twos” and eliminating the forfeiture of draft picks for clubs signing the likes of P Grant Balfour. In fairness to Michael Weiner, he has accomplished what his members wanted. He bargained changes which will immediately benefit them and, most importantly, he did it without a labour stoppage. But, we all know, that in order to get you have to give, and Weiner made concessions on the rules governing the acquisition of amateur players, which was a priority for commissioner Selig. LWIB, the question that most interested me was not why the PA agreed to the changes but rather if they will yield unintended consequences which MLB will eventually regret. Critics of the new CBA argued that it will result in less competitive balance and an overall decline in the quality of athletes, both domestically and in Latin America, entering affiliated professional baseball.
In recent years, some chronically uncompetitive clubs (ie. Pirates, Royals, Nationals) have been the biggest spenders in the Rule 4 draft. These clubs have concluded that investing in the acquisition of amateur talent, rather than veteran free agents, is their best chance at assembling playoff calibre teams. LWIB, many pundits and “unnamed personnel” from small-revenue franchises argued that the Rule 4 “Signing Bonus Pools”, and the penalties for clubs exceeding them, eliminates this option and will result in increasing on-field dominance of large-revenue franchises. Dave Cameron was amongst those making this argument:
These rules are fantastic for big market teams who can maximize the advantage of their revenue streams by spending on Major League talent. These rules are absolutely terrible for teams who cannot afford to build teams by paying the market rate for those same players.
Congratulations, Major League Baseball, you just screwed every team that doesn’t have the capability of running out a $100+ million payroll, and you just made winning a lot more about Major League payroll size than anything else. In the name of cost reduction, you just made it even less likely that teams like Tampa Bay or Oakland will be able to build long term winners. This agreement will set competitive balance back significantly, and now the best hope is that the damage is so obvious that these changes get repealed as quickly as possible.
Keith Law deconstructed the new CBA in a piece titled, New CBA a net loss for baseball. On the subject of the changes to the Rule 4, Law wrote, “This is the part where MLB tells talented young amateur athletes -- who, by the way, aren't union members and had zero voice in these negotiations -- that baseball is a lousy avenue for them to take, at least financially, and they should probably check out other sports. Yet MLB does not realize that it is to their substantial benefit to sign players early, and at relatively higher prices: You get the athletes into your system where football or basketball can't poach them, and you get to develop them yourselves rather than farming out that effort to the NCAA.” On the subject of similar changes forthcoming to the international free agent market, Law wrote, “Major League Baseball would like to inform aspiring athletes from Latin America and Europe that you should go play soccer.” Buster Olney reported that MLB “executives” had expressed the same concerns about the new CBA’s future impacts:
General managers have spent hours and hours in recent years discussing what they believe to be a shrinking base of talent, as college baseball programs here slowly dry up, and there was some shock at the $2.9 million cap on international signings. To put that number in perspective, consider the most dollars spent internationally from 2008 to 2011:
1. Cincinnati Reds: $28.6 million
2. Texas Rangers: $25.1 million (including $17.6 million this year)
3. Seattle Mariners: $18.4 million
4. Red Sox: $17.4 million
5. Toronto Blue Jays: $16.4 million
Some executives believe that the trickle-down effect will be a reduction in the incentive in places outside the U.S. for teenagers to pursue baseball careers.
"Look what happened in Puerto Rico after the draft was instituted there," one executive said. "Baseball has just about disappeared, because they're playing basketball and volleyball and other sports."
Much was written about MLB’s future ability, or inability, to attract so-called “two sport” athletes. In other words, persuading athletes to forego a football scholarship to play baseball. Brian MacPherson provided several recent examples where the Red Sox paid large “over slot” bonuses in mid to late rounds to successfully entice such players. MacPherson wonders if the changes to the draft will result in fewer of these players signing with MLB teams. In a pair of posts (here and here), Rule 4 expert Jim Callis crunched the numbers, comparing MLB’s previous “slot recommendations” with the forthcoming “signing bonus pool” amount (a reported, not official, number) and clubs’ actual prior spending in the draft. If the reported “bonus signing pool” amount proves accurate, it is significantly greater than Selig’s previous “recommended slot totals” and not greatly less than what clubs previously spent. “If the overall bonus pool is approximately $200 million as has been reported, up from MLB's $133 million in slot recommendations in 2011, clubs still can be aggressive but not as much at the top end. I think the end result will be that the top picks in the draft still will sign, though the high-end bonuses will come down a little so teams don't blow most of their cap on one player. The top high school players still will sign, as seven-figure bonuses still will be alluring.” Callis goes on to explain that the penalties associated with exceeding your “bonus pool amount”, will prohibit small-revenue clubs (he cites recent Royals picks as examples) from outspending their large-revenue competitors in the draft’s later rounds.
LWIB we got what we most wanted, a guarantee of another 5 consecutive season of MLB uninterrupted by labour dysfunction. Going forward, it won’t be until at least the expiration of this new CBA that we know if MLB made some major errors in getting there.
- The Padres are poised to be the most recent MLB franchise to cash in on the skyrocketing fees for local TV rights. Evidently they have finalized a new deal with Fox but commissioner Selig is delaying the final approval of it pending the outcome of the Fox/Frank McCourt battle. Read John Maffei (HT Fang’s Bites)
- Mark Purdy makes a convincing argument that a resolution to the A’s to San Jose saga is near. And any stadium-related discussion is incomplete without Neal deMause’s opinions.
- According to Ed Sherman, “The majority of White Sox season-ticket holders will be getting a break next year.” Ed explains that this is what happens when a team disappoints on the field, attendance declines 9% year over year and fans have low expectations for the upcoming season.
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Pete Toms is senior writer for the Business of Sports Network, most notably, The Biz of Baseball. He looks forward to your comments and can be contacted through The Biz of Baseball.
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