Looking into MLB’s New Labor Deal

A first analysis of the impact of some of the changes in the new agreement between players and owners that runs through 2013.

Observers all across the game actually applauded what was behind the love-fest exhibited by MLB Commissioner Bud Selig and Players Association Executive Director Donald Fehr prior to the World Series Game Three Tuesday night.

Agreement on a new five-year labor accord between players and ownership still has to be ratified by the rank-and-file, but that is expected to be a mere formality.

For those who enjoy the game, an assurance that the two groups of multi-multi millionaires can actually find a way to share the wealth short of a work stoppage sadly is unique enough that it must be celebrated.

While actual copies of the new Collective Bargaining Agreement (CBA) have not yet been made public, I have put together this article highlighting some of the key changes from press releases, augmented by information directly provided by MLB representatives, Baseball America and individuals involved in the player arbitration process.

While this is accurate to the best of my knowledge, I will update it and note changes if needed as more details become public.

The date
The end date of the current 2003-2006 agreement is this December 19 and the new agreement terminates on December 11, 2011. What was unclear was the overlap between the two. It turns out that some elements of the new agreement will take effect before December, while others will be phased in. I will call out the specifics as known.

The draft
A major change is that clubs that fail to sign any of their first three rounds of picks will receive compensation. Teams will be awarded the same pick in the following year’s draft if the round one or two player does not sign and the club will receive a sandwich pick between the third and fourth rounds if the third rounder from the previous draft did not come to terms.

Rule 5 eligibility
Organizations have been provided an extra year of protection before their players can be exposed to the Rule 5 draft if not added to the 40-man roster. Before, it was three (or four years, depending on the birth date of the player). Now, it will be four (or five) years.

As with all teams, this has a direct impact on the Cardinals.

For example, I was a bit surprised when I noticed that all four of the Cardinals’ pitching prospects selected to compete in the prestigious Arizona Fall League currently underway were going to be eligible for the Rule 5 draft this December and could potentially be lost.

Maybe the Cardinals officials who shrugged off my question/concern already knew what was cooking. The good news is that no matter how impressive they are in Arizona, Dennis Dove, Eric Haberer, Mike Parisi and Stuart Pomeranz are now assured of remaining Cardinals property in 2007.

Draft-and-follow
For draft picks other than college seniors, the signing deadline is now August 15. This means the previous draft-and-follow process has been eliminated.

Draft-and-follow enabled clubs to maintain exclusive rights to a drafted player up until one week prior to the next year’s draft, if that player attended junior college. However, the club lost those rights as soon as a drafted high schooler attended a four-year college or a drafted college player returned to school and attended his first class.

Draft and follow was often employed to enable an emerging player to gain another year of experience but still allow the drafting team the option to attempt to sign him before he would be eligible to re-enter the draft the following June.

Now, that is gone. Starting in 2007, clubs will have about 2-1/2 months from the June draft until August 15 to either sign the player or lose him.

This seems to make a lot of sense from a simplicity perspective, but the Cardinals did use the old process, nabbing players like Tyler Johnson, Blake Hawksworth and Blake King as draft and follows in recent years.

Player ranking
Based on a comparison of players statistics over the past two seasons, players have been ranked by position (or groupings of comparable positions) each Fall as one of four Types – A, B, C or no compensation. They have been designated in this manner since the settlement of the 1981 strike. The intent is to ensure the former team is compensated for losing key players.

That will continue, but with changes. First, the lines will change starting this year, then again in 2007.

Players	Pre-2006	2006	2007-2013
Type A	Top 30%	Top 30%	Top 20%
Type B	31-50%	31-50%	21-40%
Type C	51-60%	eliminated	eliminated
No compensation	61-100%	51-100%	41-100%

As noted in the table above, the total Type A and B populations will be decreasing, meaning fewer compensation picks.

Draft choice compensation
Again, the purpose of the above ranking is to determine the specific compensation for free agents who sign with another team.

The major changes are the elimination of compensation for the former Type C players and the change of Type B compensation. Previously, when a Type B was signed, a pick was taken from the signing club. Starting in 2006, just a sandwich pick is provided instead. (Note: Sandwich picks are added between rounds as extra picks, not taken away from the signing club.)

	Pre-2006	2006-2013
Type A	First-round pick from the signing club or (if in first half of draft) a second-round pick from the signing club instead plus a sandwich pick at end of first round	Same
Type B	First-round pick from the signing club or (if in first half of draft), a second-round pick instead	Sandwich pick only (between first and second rounds)
Type C	Sandwich pick after second round	Eliminated
Others	No compensation	No compensation

As an example, one year ago, infielder Abraham Nunez was a Type C player. When he signed with the Phillies, the Cardinals were awarded a sandwich pick between the second and third rounds that became first baseman Mark Hamilton from Tulane. In 2006 under the new agreement, the Cardinals would have received no compensation for losing Nunez.

Arbitration dates
Starting in 2006, the new dates are December 1 for clubs to offer arbitration and December 7 for players to accept.

For six-year and over free agents
If arbitration is not offered or is offered but not accepted, then the two sides can still negotiate. And, in that case, the player can negotiate with the other 29 teams, too.

As before, if the player wants to stay and forego his right to free agency, he could accept the offer of arbitration. If the player declined, the team would then secure compensation if the player signed elsewhere.

Previously, if the club did not offer by December 7, then they lost negotiation rights with the player until May 1. That has been eliminated.

Before, if the player was offered but rejected arbitration, he had to sign with his old team by January 8 or wait until May 1 or later. That restriction was also removed.

Last December, just 26 of the 147 potential free agents were even offered arbitration. Only a handful of them actually accept arbitration each year because it would take them off the free-agent market. And even if the player does accept, the two sides invariably work out a deal ahead of time. In fact, the last time a free agent actually went to an arbitration hearing was 15 years ago, in 1991.

For Super Two up to six-year players
No change other than the dates noted above.

Remember, these players range from just under three years of experience to just under six and are not yet eligible for free agency. They typically take the offer of arbitration while continuing to negotiate with their current team, knowing that the worst that can happen is that they would have to accept a one-year contract following a March arbitration hearing.

It rarely gets that far. Last year, there were 100 arbitration cases filed. All but 44 settled before figures were exchanged in January. Only one of these 44 was eligible for free agency (Travis Lee). Six cases went to hearings with the clubs winning four. The others either signed a single year or a multi-year deal that covered some or all of their arbitration-eligible years.

An extreme example of this is the contract Albert Pujols signed in February, 2004 in his first year of arbitration eligibility. The $100 million deal runs through 2010, with a club option for 2011. Had they not come to terms, the alternative would have been an arbitrator decision for a one-year deal for either $7 million (Cardinals offer) or $10.5 million (Pujols request) that would have covered the 2004 season only.

Tender date
The date by which clubs must tender new contracts to players is December 12.

The group of non-tendered players augments the remaining free agents in the marketplace relatively late in the signing season. For example, David Eckstein joined the Cardinals this way after the Angels did not offer him a contract for the 2005 season.

Looking ahead
Within a week or two, the Elias Bureau’s player rankings for this year will be published. At that time, I will run a subscriber-only article looking at the impact for the Cardinals’ ten impending free agents, along with a forecast of the resolution of their contracts.

This has all the makings of a most interesting off-season as all parties become familiar with the ins and outs of the terms of the new CBA.



Brian Walton can be reached via email at [e-mail].

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