CBA Details: Luxury Tax, Draft, HGH, Replay

Baseball players and owners announced today that they’ve agreed to terms on a five-year collective bargaining agreement that assures MLB of two decades of labor peace. MLB.com offers a detailed look at the CBA. Here are some highlights: 

Draft Pick Compensation:

  • There are no longer ranked free agents under the new CBA. Type As, Type Bs and the Elias system are history.
  • "Only players who have been with their clubs for the entire season will be subject to compensation," according to the CBA.
  • Free agents will cost compensatory draft picks if their former clubs offer guaranteed one-year deals with an average salary that matches or exceeds the average salary of the 125 highest-paid players from the previous season. The offer "must be made at the end of the five-day free agent “quiet period,” and the player will have seven days to accept," according to the CBA.
  • Teams that sign players who have been offered these lucrative one-year salaries will surrender their first round draft choice. However, teams with top-ten picks will give up their second-highest pick instead.
  • Here are the details on changes for Type A free agents this offseason. 
  • Going forward, It appears possible that teams will still obtain two picks for losing free agents after offering arbitration. The signing team forfeits one of its top selections and the club obtains a selection at the end of the first round.

Postseason:

  • MLB will announce by March 1 whether playoffs will expand in 2012 or in 2013. Commissioner Bud Selig says he's hopeful of expanding playoffs next year.
  • The Astros are moving to the American League in 2013 to accomodate a more balanced divisional setup.

Amateur Draft Spending Limitations:

  • The sides added heavy restrictions on draft spending. Each club has a spending limit for the amateur draft that varies depending on when the club is scheduled to make its first ten selections. Bonuses after the tenth round don't count, as long as they're under $100K. Teams will face limits in the $4.5-11.5MM range, according to Jon Heyman of SI.com (on Twitter).
  • Teams that spend more than 5% over-slot on the draft will face a 75% tax. Teams that go over slot by 5-10% face a 75% tax and the loss of a first rounder. Teams that go over slot by 10-15% face a 100% tax and the loss of a first and second rounder. Teams that exceed slot by 15% or more face a 100% tax and the loss of first rounders in the next two drafts. This set of rules will also reduce draft spending significantly, a bonus for owners.
  • There will be no more MLB deals for draft picks.
  • The draft signing deadline moves to the July 12-18 range from August 15th (the precise date will depend on the date of the All-Star Game).
  • Proceeds from the tax will go to clubs that did not over-spend via revenue sharing. Forfeited picks go to clubs "through a lottery in which a club’s odds of winning will be based on its prior season’s winning percentage and its prior season’s revenue," according to the CBA.

Competitive Balance Lottery 

  • Low-revenue teams obtain additional draft picks via lottery. The ten clubs with the lowest revenues and the ten clubs in the smallest revenues are eligible to win one of six draft choice that will be added after the first round. Teams’ chances of winning the lottery will depend on their winning percentage in the previous season. 
  • The teams that don’t win additional picks and all other teams that qualify under the revenue sharing plan will be eligible for a second lottery for six more picks after the second round. Again, teams’ chances of winning the lottery will depend on their winning percentage in the previous season. 
  • “Picks awarded in the competitive balance lottery may be assigned by a club, subject to certain restrictions,” the CBA explains. Teams can trade these draft choices.

International Spending:

  • Each team faces an equal spending limit for 2012-13. Following the 2012-13 year, clubs will face different spending restrictions depending on their winning percentage (teams that win less can spend more). Teams that exceed the spending limit from 2012-13 and 2013-14 face a 75% tax if they exceed the limit by up to 5%. If they exceed the limit by 5-10%, they pay the 75% tax and lose the right to provide more than one player with a bonus worth more than $500K in the next signing period. If they exceed the limit by 10-15%, they face a 100% tax and are prevented from signing any player for $500K or more in the next signing period. If teams exceed the limit by 15% or more, they face a 100% tax and lose the right to spend $250K on any player in the next signing period. 
  • From 2014-15 on penalties will increase if a worldwide draft isn't in place.
  • Every team will have $2.9MM to spend on international bonuses this offseason, according to Yahoo's Jeff Passan. Eventually the limits will be in the $1.8-5MM range, according to Passan. Starting in 2013-14, teams will be able to trade money from their spending allowance for international players, according to Passan (all Twitter links). However, teams can only boost their original spending limit by 50% through trades. 
  • Cubans under 23 years old with less than three years of professional experience will be considered amateurs and count against international spending limits, according to Passan (on Twitter). 26-year-old Yoenis Cespedes won't be subject to these limits.
  • The international signing limits won't affect the posting system for players from Japan, according to Knobler (on Twitter).

Arbitration

  • The cutoff for super two players will rise from the top 17% of players with 2-3 years service time to the top 22%. "All players tied at the 22% cutoff will be eligible for arbitration," according to the CBA. Michael Weiner said this was a key point for the players.
  • The deadline for teams to tender contracts to arbitration eligible players is now December 2nd.

Drug Testing:

  • Blood testing for HGH will not be occur during the season without reasonable suspicion. ESPN's Buster Olney says (on Twitter) that offseason testing will begin next winter, 2012-2013.
  • Olney also mentions that players will be tested in Spring Training "to determine energy levels" after testing, then the results will be discarded. The two sides will then determine how to proceed (all Twitter links).

Revenue Sharing & Luxury Tax:

  • By 2016 the top 15 markets will be ineligible for revenue sharing.
  • Teams that surpass the luxury tax threshold of $178MM will be taxed 42% in 2012 and 50% in 2013.

Other:

  • Players on minor league contracts who don't make their teams' Opening Day rosters and aren't released five days before Opening Day obtain a $100K retention bonus and the right to opt out on June 1.
  • MLB rosters will expand to 26 for some doubleheaders.
  • Instant replay will be expanded to include fair/foul plays and "trap" plays, subject to discussions between MLB and the umpires.
  • The minimum salary will increase to $480K in 2012.


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