Two-Strike Approach: E... (12/01)
the archives are now free.
6 comments have been left for this article. BP Comment Quick Links
| |
|
|
December 1, 2016 Deep, But PlayableCollective Bore-Gaining Agreement
There are going to be a lot of reactions to this CBA, and, given the makeup of the writer base, there’s going to be no shortage of them that have already told you the things I plan on covering, at least in part. We should also note that some things are still being worked out, and thus what has been reported is subject to any changes that come down the pipeline. In the meantime, let’s get some good old fashioned thoughts on the items that have been announced:
Random Stuff
The All-Star Game will no longer decide home field advantage for the playoffs. What will our 85 All-Stars even be playing for, then? (Prima Nocta, maybe)
The A’s are getting phased out… of receiving revenue sharing money. Speculation is that this means they will receive help from the league in getting a new stadium.
The “Performance Factor” portion of revenue sharing has been eliminated. Presumably this is a brutal blow to the recent Viagra Single Pack endorsement that carried through the 2016 playoffs.
The Luxury Tax is Rising
The luxury tax entering 2016 was $189 million, so the bump to $195 million to open 2017 is significant, though it isn’t the largest bump the luxury tax threshold will receive over the five-year agreement. That’s set to occur in the offseason preceding the 2019 season and just so happens to align with an embarrassment of free agent riches, including the likes of Clayton Kershaw (if he opts out), Manny Machado, and Bryce Harper, among others. That particular offseason sees the threshold jump nine million dollars, while the total of the other increases combined (including the bump from $189 million this offseason) is $12 million.
Note that ownership gave themselves room to spend wildly when they were assured that premium talent was available, while providing only minimal increases in other years.
The Cost of the Luxury Tax Is Rising
Tax rates increase from 17.5 percent to 20 percent for first offenders, remain at 30 percent for second offenders and rise from 40 percent to 50 percent for third offenders. There is a new surtax of 12 percent for teams $20 million to $40 million above the threshold, 42.5 percent for first offenders more than $40 million above the threshold and 45 percent for subsequent offenders more than $40 million above.
The Qualifying Offer Is Confusing
Okay, we’re going to go through several tweets here, but let’s take it one at a time because it’s going to get a little hairy. The QO definitely still exists, and whether a team receives a pick for losing a player that has received and declined a Qualifying Offer is dependent on the size of the contract the player who is leaving that team signs. Additionally, the quality of the pick received if all those prerequisites are met is contingent upon market size.
The key takeaway here is that these changes motivate teams not to offer more than the $50 million threshold (if they’re in that general vicinity), as it would benefit their opponent unnecessarily. It’s something of a soft ceiling on mid-tier contracts that provides a way for front offices to have an “upper limit” on their offers without actually colluding on said limit.
Now we get to what happens to the signing team. Rather than eliminate free agent compensation, which penalizes teams that are trying to improve their on-field product in the most expedient way possible, we’ve made it far more complicated than it was. [Extremely Church Lady voice] Well isn’t that special.
Teams that exceed the luxury tax threshold that also sign a player who has received and declined a qualifying offer will forfeit a second round pick, a fifth round pick, and one million dollars in international bonus money (more on that shortly).
Teams that are below the luxury tax and sign a player who has received and declined a qualifying offer will forfeit a third round pick.
This is not so different than the current system which forfeits a first-round pick for those teams outside the first 10 selections of the draft, but rather than discriminate on the basis of success, as it does now, it does so on the basis of payroll (and benefits, by the league’s calculation). This particular basis for penalization is fine as far is it goes, but you’ll note that along with the higher-spending teams being affected, it is also the players (amateurs in particular) who are left out in the cold (and not represented at the bargaining table). Not only do teams lose draft picks, unless clarified otherwise, they will lose those draft pick allotments, which means less money going to drafted players as a whole. This is what’s called a win for owner’s pocketbooks, and no one else.
Draft Pick Compensation
International Spending
If we take the five million dollar figure at face value (it could be higher, granted), that means international spending on amateur talent caps out at $150 million, and that’s if every team maxes out their caps to the cent. In contrast, Baseball America estimated that international amateur spending landed at $200.9 million for the 2015-16 signing period, and that’s before factoring any penalties levied against teams that exceeded their allotments (which the Dodgers did by a cool $45 million or so).
UPDATE: The number isn’t set a $5 million, as large market teams will be capped at $4.75 million internationally, mid-markets will be at $5.25 million, and small markets at $5.75 million, per Jon Heyman of FanRag Sports. This doesn’t appreciably impact the totals aid out above.
In one fell swoop, the players agreed to cap the owner’s spending on international amateurs at three quarters of a recent signing period, and that’s before including the penalties that the owners paid to the league (which, granted, the players saw none of). As with the draft pick compensation, it’s worth noting that the rights of those affected were not represented at the negotiating table, as draft picks and international signees are not union members until they reach the majors. If you include the taxation that owners faced, the players just about halved what owners spent on international amateur talent, and did so at the expense of the most economically disadvantaged talent pool. Bravo.
Oh, the age/service time for international players to be considered professionals (and thus have these caps fail to apply) were raised:
The most recent example here was Lourdes Gurriel, Jr., who waited until his 23rd birthday to sign with a team because it allowed organizations to pursue him unencumbered by the penalties that accompany exceeding your international bonus pool. He got $22 million, but under the new guidelines would have had to wait two additional years, or sign for under five million dollars. This could have an especially big impact on the chances that Shohei Otani and other Japanese stars make their way over to MLB sooner rather than later, if they do not receive an exception, and it appears that, via J.J. Cooper of Baseball America, they will not.
So What Did The Players Get?
If you want to be lenient, a few players were likely slightly positively affected by the shift from the loss of first-round picks to the loss of third or second and fifth-round picks, but the net impact of that figures to be fairly minimal, and somewhat mitigated by the fact that fewer teams will receive draft picks (and the accompanying allotments) from their QO’d players, if the players signs a contract under $50 million.
They also netted a small increase in the minimum salary, which will jump from $507,500 to $535,000, and eventually reach $550,000 before two years of possible cost of living increases. Additionally, bonus pools for the Rule IV draft seem likely to swell a tad, as the dropoff between the allotments between the first and second rounds has been “lessened.” It is unclear how much this might change draft spending and figures to be fairly minimal.
This is, by and large, an extension of the previous CBA, which drastically benefitted ownership, and, to a lesser extent, also benefitted the players. It’s worth noting that large market owners have consistently been able to accommodate the wants and needs of the smaller market owners at the expense of the players. What is a pin prick to the Yankees, Dodgers, and Red Sox of the world is significantly more than that to the pool of players who are affected. Of course the small market teams care less about who the concession comes from, than that they receive it in the first place. It’s a neat little trick.
Labor peace is a laudable goal, and you’ll see a lot about the unprecedented achievement of MLB and the MLBPA in extending theirs to 26 years by the end of this agreement. It’s an understandable plaudit on many levels, but it’s worth noting that MLB’s union didn’t get to be the most powerful in sports through labor peace, and it’s worth noting that this agreement is a win for everyone as long as you don’t compare it to what it could have been.
Craig Goldstein is an author of Baseball Prospectus. Follow @cdgoldstein
|
I think you are seriously undervaluing the benefit to the players caused by the change in the Qualifying offer system. It will make it much more likely that teams in the 11-20 range, say the Rockies this year, would be willing to sign a player receiving a Qualifying Offer, which in turn drives up the contract value for those types of players. The $5 million cap on international signing is a boon to MLB players, because it will allow teams to spend more on North American draft picks.
I could be, no doubt. MLB teams aggressively paid for guys who cost them their first round picks prior to the pool allotments, because they knew they could make it up with overslot deals later. I would contend that the money associated with slots is more important than the picks themselves, and for teams over the luxury tax, they're costing themselves in the neighborhood of $2M by losing a 2nd and 5th, plus a million in international. For teams under the luxury tax, it's closer to $800k, which will likely cause some more action, certainly.
I think the notion that the money that would be spent on international amateurs and the money that will be spent on MLB free agents comes from the same spot is questionable at best, and that the majority of money not spent on international amateurs will go to the pockets of ownership, which is what ownership wants and why they wanted hard caps.
It It kind of helps in that it builds in some protection for players seeking long term contracts who then find out no team is interested in giving them one. Now instead of slinking back to their original team they can shop around for a short term contract elsewhere - which wasn't typically an option before. But that's not much for the players to be getting in the new CBA.
I'm guessing the MLB players are thinking that the new international limits will shifts money from international free agents to them.
That's a good point! Thanks for raising it.
Taking away the requirement to "slink back" to the original team reduces the original team's bargaining power by a fair bit. I think the system completely changes the system for older players that may be worth the qualifying offer under the old system for one year, but could only secure a 2-3 year contract in any event because of age. Before, the QO completely killed the market for the player. Now, it isn't even that good an opening gambit.
Well, it reduces every team's bargaining power, in that respect, which is surely why the players pursued it. I'm a bit skeptical that it will open things up a ton, since only a moderate few were affected in this way, but it will certainly be a boon to those who were.