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Collective Bargaining Agreement Rumors
Team spending restrictions could be an issue in negotiations for MLB’s next Collective Bargaining Agreement, Gordon Wittenmyer of the Chicago Sun-Times writes. Specifically, the debt structure of the Ricketts family’s heavily financed purchase of the Cubs in 2009 required the team to tie baseball spending to revenues, limiting its ability to spend. Other clubs face similar restrictions.
“Cubs aside, larger picture, any time there are contractual obligations or language that affect the way a team functions, against the backdrop of the decisions that they are going to be making, against whatever restrictions are in place, we enter that equation,” says MLBPA head Tony Clark. “Rest assured, we’re interested enough to be involved in the conversation.”
MLB’s current CBA expires after the 2016 season. Wittenmyer suggests that the union’s main issue with team banking restrictions is that teams might use them as excuses not to spend.
The Cubs have operated with dramatically limited payrolls in recent years, with their Opening Day payroll falling from a high of about $144MM in 2010 to about $93MM last season (via Cot’s Contracts). Obviously, the team’s splashier 2014-15 offseason, highlighted by their signing of Jon Lester, will produce a higher payroll in 2015 (and Wittenmyer notes that the team did hold over money budgeted for 2014 to spend this winter). But team president of baseball operations Theo Epstein has emphasized that the team’s lower recent payrolls were not purely a function of the fact that the team had been rebuilding.
“We’re not withholding dollars from this year’s team. We are spending every dollar that we have on this baseball team,” Epstein said in 2013 (via David Kaplan of CSNChicago.com), when the Cubs had an Opening Day payroll about about $107MM. “We maxed out our payroll last year and we maxed out our payroll this year.”
Teams wishing to make one-year qualifying players to pending free agents will have to be willing to pay them $15.3MM, the Associated Press reports (via Sportsnet.ca; h/t to Ben Nicholson-Smith). That represents an 8.5% increase over least year’s $14.1MM price tag.
The qualifying offer value is arrived at by averaging the salaries of MLB’s 125 highest-paid players. Teams may extend qualifying offers to eligible free agents-to-be within five days after the end of the World Series. Players have seven days to weigh the offer. When a player rejects the offer, his former team becomes eligible to receive an additional “sandwich” round pick in the next amateur draft, while a new signing team must forfeit their highest non-protected pick. (No draft pick movement occurs if a player re-signs with his original team.)
In order for a player to be eligible to receive a qualifying offer, the CBA states that he must have spent the entire regular season on that team’s roster. For example, Brandon McCarthy is ineligible to receive a qualifying offer after beginning the season with the Diamondbacks and being traded to the Yankees. Click here for more details on how the qualifying offer system works.
Every player made a qualifying offer to date has declined it. In the 2012-13 offseason, the first year that the QO system was in effect, nine players were made a qualifying offer and seven ultimately signed with different clubs. Last year, thirteen players turned down qualifying offers and ten went to new clubs in free agency.
As MLBTR’s Tim Dierkes explained before the 2013 season, avoiding the qualifying offer can have a major impact on a free agent’s earning capacity. That became all the more clear during the latest round of free agency, when both Stephen Drew and Kendrys Morales declined qualifying offers but were unable to find multi-year offers to their liking. The pair of veterans ultimately waited months into the season before signing, settling for one-year deals before struggling badly over the rest of the year.
The value of this year's one-year qualifying offer for free agents will be $14.1MM, according to Joel Sherman of the New York Post (on Twitter). That sum represents an $800K increase from last year's $13.3MM mark.
Major League Baseball's latest collective bargaining agreement did away with the old Elias Rankings and Type-A/Type-B free agent system in lieu of the qualifying offer system. Simply put, teams who wish to receive draft pick compensation for the loss of a free agent to another team must first make a qualifying one-year offer that is worth the average salary of MLB's 125 highest-paid players. Only after the free agent rejects that offer is his former team eligible to receive a compensatory first-round pick.
Unlike the the old system, the team losing their free agent does not receive the signing team's pick as compensation. A team that signs a free agent after he has rejected a qualifying offer simply loses its first- or second-round pick. (The first 10 picks of the draft are protected**, so teams with a Top 10 selection would instead forfeit a second-rounder.) That free agent's former team would then receive a pick at the end of the first round.
In order for a player to be eligible to receive a qualifying offer, the CBA states that he must have spent the entire regular season on that team's roster. For example, Matt Garza is ineligible to receive a qualifying offer after beginning the season with the Cubs and being traded to the Rangers.
Last year, just nine free agents received qualifying offers, and none of the nine accepted them. This year, the Mariners have already said that they will extend a qualifying offer to Kendrys Morales, and agent Scott Boras has said they will reject the offer. Rangers GM Jon Daniels also said that he expects to make a qualifying offer to impending free agent Nelson Cruz.
As we saw last offseason with Kyle Lohse, rejecting a qualifying offer can seriously dampen interest in a free agent. Many expected that Lohse would be able to find a four- or even five-year deal following a brilliant run with the Cardinals, but we instead heard a common refrain: teams weren't willing to part with their top draft selection in order to sign him. Ultimately, the Brewers inked Lohse to a three-year, $33MM contract late in Spring Training.
MLBTR's Tim Dierkes recently conducted a poll asking MLBTR readers which players would receive qualifying offers following the regular season. Not surprisingly, Robinson Cano led the way as the most likely to receive an offer. Jacoby Ellsbury, Shin-Soo Choo, Brian McCann and Hunter Pence were the next five on the list, although Pence can obviously be removed from the equation, as he signed a five-year extension with the Giants shortly after the poll was conducted.
**Note: In the 2014 Draft, the first 11 picks will be protected instead of the first 10, as the Blue Jays will receive the 11th pick as compensation for failure to sign 2013 first-rounder Phil Bickford.
The beginning of each season typically brings up many debates regarding service time for top prospects, and this season has been no exception. The Twins and Red Sox were among the teams to ignore service time qualms and take top prospects north. Aaron Hicks and Jackie Bradley Jr. have both struggled tremendously at the Major League level, and both could eventually see themselves sent down to the minor leagues to sort out their issues at the plate.
Should that occur, Hicks and Bradley will both need to spend 20 or more days in the minor leagues in order to delay their free agency by a season. This may seem to contradict a post last week in which we noted that Wil Myers now has been in the minors long enough to delay his free agency by one season. There's a distinction, though.
Because Hicks and Bradley were on their team's 40-man roster to open the season, sending them to the minor leagues would qualify as an optional assignment. Per baseball's collective bargaining agreement, players on optional assignments need to accrue 20 or more days of service time in order to delay free agency by one season.
Myers is not currently on Tampa Bay's 40-man roster, meaning he need only spend 12 days in the Minor Leagues to finish the season with 171 days of service time. That would leave him one shy of 172 days — the mark that is officially used to determine "one year" of service in Major League Baseball's CBA.
But what about players who were on the 40-man roster prior to the season and are called up after April 12? Oswaldo Arcia of the Twins, who made his Major League debut tonight, is one such case. Arcia opened the season at Triple-A Rochester but was already on the Twins' 40-man roster. As a result, his initial assignment to Triple-A was considered an optional assignment. Like Hicks, Bradley and other prospects who broke camp with their teams like the Padres' Jedd Gyorko, Arcia would require 20 days in the minor leagues for the Twins to get another year of service.
Baseball’s most prominent agent says the integrity of the sport has been damaged by its collective bargaining agreement. MLB’s top labor executive says the system works, even though one prominent player remains jobless. Within a telling piece at USA Today, Bob Nightengale reports that agent Scott Boras and MLB executive VP Rob Manfred are at odds over the current CBA.
Boras argues that the basic agreement encourages teams to finish with poor records. The clubs that finish with the worst records are able to spend more freely on amateur players.
"The integrity of the game has been compromised,'' Boras told Nightengale. "What baseball has done, it has created a dynamic where draft dollars are affecting the Major Leaguers. Teams are constructing clubs to be non-competitive, like Houston and Miami, so they can position themselves where they can get more draft dollars. Clubs are trying to finish last to create more draft dollars. And this dramatically affects the Wild Card and Major League standings.''
Kyle Lohse, the top unsigned free agent, has suggested in recent months that the new draft pick compensation rules have limited his leverage (latest Lohse rumors here). His agent agrees. Boras argues that draft dollars are "the latest currency" for MLB general managers.
“And the best way to earn draft dollars is to sabotage your Major League team and finish last,'' he said.
In the past teams didn’t mind surrendering a first round draft pick to sign a prominent player, Boras said. The clubs could simply spend over-slot on players in later rounds, a practice that is no longer permitted in the same way.
“Now, you've taken away the structure of the scouting and developing,” Boras said. “They have stolen our youth. They have kidnapped our children in this system.''
Manfred explained that the agreement won’t be changed to accommodate one player.
"It is important to focus on all the changes to the system of draft choice compensation,'' Manfred told Nightengale. "A large number of players were freed from the burden of compensation completely, and those players undoubtedly received better contracts as a result. We have not heard anyone raising questions as to whether the system is working for those players.”
Manfred points out that with the exception of Lohse the nine players who declined qualifying offers obtained substantial contracts.
"The fact that one Scott Boras client has not signed does not convince me that the system is broken,'' Manfred said.
Agent Larry Reynolds represents B.J. Upton, another player who hit free agency after declining his former team’s qualifying offer. Reynolds told Nightengale it would be “misleading” to suggest that draft pick compensation is the lone variable that determines a free agent’s value.
TUESDAY: MLB is willing to make "significant concessions" to the MLBPA in order to implement a worldwide draft, sources tell ESPN.com’s Buster Olney (Twitter links). The players could obtain an increase in minimum salary, have a lower service time threshold for arbitration eligibility and more, Olney writes.
MONDAY, 1:26pm: Rob Manfred, MLB's executive VP, said there's a chance of a deal by June 1st, Liz Mullen of the Sports Business Journal reports (on Twitter). The most likely outcomes are a single global draft or the current draft plus a second draft for international players, Mullen reports.
10:37am: Major League Baseball could have a worldwide draft in place sooner, rather than later. MLB and the MLB Players Association are pushing to strike a deal for a worldwide draft by June 1st, Eric Fisher of the Sports Business Journal reports (Twitter links).
If the sides don’t reach a deal then expanded international spending restrictions will take effect. The possibility of increased international spending restrictions exists to encourage talks about a worldwide draft.
Amateur players from the U.S., Canada and Puerto Rico are now eligible for baseball’s Rule 4 draft, which takes place each June. Instituted in 1965, the draft does not apply to international players. Instead, amateur players from countries such as Venezuela and the Dominican Republic negotiate bonuses with teams.
Baseball’s most recent collective bargaining agreement introduced major rule changes designed to restrict international spending. For example, teams had $2.9MM to spend for the 2012-13 signing period. Though MLB and the MLBPA announced the five-year Basic Agreement just over a year ago, the sides acknowledged from the beginning that talks for a worldwide draft could take place before the expiration of the CBA.
Commissioner Bud Selig has consistently expressed public support for the worldwide draft. The implementation of a worldwide draft has the potential to limit expenses for the owners without presenting a direct threat to the earning potential of MLBPA members.
In 2008, Kyle Lohse waited until March to sign and landed in the place he'd call home for five seasons — St. Louis. Spring Training is underway again, and Lohse again remains unsigned. However, unlike 2008 when he had a career 4.82 ERA, Lohse is coming off a 3.11 ERA over his past 399 1/3 innings. ESPN's Buster Olney talked to a longtime MLB evaluator who says in addition to draft pick compensation, AL teams are wary of Lohse's poor AL track record. The evaluator also added that teams shy away former Cardinals pitchers, as they often struggle to find success elsewhere (Twitter links).
More from around the Majors…
- Phillies ace Cliff Lee told Jayson Stark of ESPN that he was "baffled" by the way the Rangers treated Michael Young in his final years with the team. Lee called Young the "perfect teammate" and the "heart and soul" of the Rangers team. "…in my opinion, you want guys like Michael Young around," said Lee, who was reunited with his former teammate after the Phillies traded for him this winter.
- Both Ryan Howard and Jimmy Rollins have offered strong praise for Phillies prospect Domonic Brown this Spring, writes David Murphy of the Philadelphia Daily News. Murphy opines that both players feel this is the time to finally give Brown a chance to be an everyday Major Leaguer.
- Michael Weiner, the exeutive director of the MLB Players Union, spoke with reporters (including Shi Davidi of Sportsnet.ca) about drug testing and the possibility of more severe punishment for players who have been discovered to have multiple offenses in the past. Weiner discusses the fine line between representing players who are subject to discipline and attempting to enforce a clean game. Weiner also says that after Spring Training, there will be discussions about whether or not the new qualifying offer system is working as intended, given the damage to Lohse's market.
- Former Twins, Rangers and Astros minor leaguer Mark Hamburger has been suspended for 50 games after testing positive on two instances for recreational drug use, according to Baseball America's Matt Eddy. Hamburger, a free agent after being released by Houston earlier this month, would have to serve out his suspension upon signing with a new team.
MLBPA executive director Michael Weiner addressed reporters at Mets camp today, discussing draft pick compensation and the Mets’ franchise player. Here are some details (all Twitter links)…
- Weiner said he expects to discuss draft pick compensation with MLB before the current collective bargaining agreement expires, Andy Martino of the New York Daily News reports. It sounds as though the MLBPA would like to consider changes to the system that affected the leverage ofplayers such as Michael Bourn and Kyle Lohse. "The compensation affected those guys fairly dramatically this year, and we would like to try to address that,” Weiner said.
- Weiner said he hopes the Mets spend more, as chairman & CEO Fred Wilpon has said they will (via Mike Puma of the New York Post). "I think everybody would like to see the Mets as a competitive team, and it's going to require a higher payroll,” Weiner said.
- David Wright knew that he would have been a highly coveted free agent if he didn’t sign with the Mets long-term, Weiner said (via Anthony DiComo of MLB.com). "David understood that if he went out to market he’d probably make more money, and perhaps substantially more money," Weiner said. Wright signed an eight-year, $138MM extension with the Mets in December.
- Adam Rubin of ESPNNewYork.com notes that MLBPA exec Bobby Bonilla collects more money from the Mets than any of their current outfielders. Bonilla, who spent parts of five seasons with the Mets, still collects deferred payments from the club.
Though MLB and the MLBPA finalized baseball’s current collective bargaining agreement during the 2011-12 offseason, some elements of the CBA didn’t take effect until this winter. This means the 2012-13 offseason has been the first full winter under the sport’s new CBA. So far, it’s turning out better than many anticipated, according to Ken Rosenthal of FOX Sports. Here are some details from Rosenthal:
- The CBA has led to uncharacteristic caution from the Yankees while creating incentives for many other teams to spend. The agreement’s market-disqualification program encourages large market teams such as the Blue Jays, Braves and Nationals to spend. As Rosenthal explains, those teams are seeing their revenue sharing proceeds diminish. This change encourages the clubs to spend and generate revenue with on-field success.
- The MLBPA would love to eliminate draft pick compensation, as Rosenthal notes. However, the new CBA reduced the number of players linked to compensation. And those connected to draft picks such as Michael Bourn, Nick Swisher and Rafael Soriano are signing lucrative deals.
- MLBTR's Tim Dierkes recently examined the effect the qualifying offer had on teams and free agents. Check out Tim's post for the thoughts of MLB execs and agents on the new system.
- Indians front office executives encouraged ownership to spend on Bourn, explaining that it could be a while before a similarly appealing opportunity emerged.
- Many executives consider the recently-imposed amateur spending limits counter-productive, Rosenthal reports.
- MLB has “no intention” of changing the rule that protects the top ten selections in the draft (Twitter links). The Mets were considering challenging the rule and arguing that they should have a protected 11th overall selection after finishing with one of the ten worst records in baseball. The language in the CBA on the matter is clear in MLB’s view.
Two of the biggest MLB stories to emerge recently are the Justin Upton trade and the Mets’ interest in Michael Bourn. Ken Rosenthal of FOX Sports weighed in on both subjects in recent columns. Here are some highlights:
- The Tigers like shortstop prospect Nick Ahmed and wanted him as part of a package for Rick Porcello, Rosenthal reports. Those talks would have made yesterday’s trade with the Braves a three-team deal. However, Arizona GM Kevin Towers suggested to the media yesterday that he’s comfortable with his starting pitching depth after acquiring Randall Delgado from the Braves.
- The Mets would have the support of the MLBPA if they continue lobbying for the right to surrender a second round pick instead of a first rounder should they sign a free agent linked to draft pick compensation. But sympathy for the Mets would only go so far just one offseason after the completion of baseball’s collective bargaining agreement. MLB wouldn’t want to establish a precedent and would likely fight a grievance by the MLBPA, Rosenthal reports.
- Scott Boras, Bourn’s agent, is a factor in this as well, Rosenthal reports. MLB isn’t inclined to do Boras any favors such as making an exception for Bourn.