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Collective Bargaining Agreement

Explaining Qualifying Offers

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For the first time since baseball’s collective bargaining agreement was finalized, teams, agents and players will navigate a new system for determining free agent compensation: qualifying offers. The offers are due today, so there’s no better time for a refreshed primer. Here’s a look at draft pick compensation under the sport’s new CBA:

  • Type A and Type B designations have been eliminated. Instead, teams will have to make players a qualifying offer to be eligible for draft pick compensation. 
  • The value of the qualifying offer, which is determined annually by averaging the top 125 player salaries from the previous year, will be worth $13.3MM this offseason. All qualifying offers are for the same duration (one year) and the same amount ($13.3MM for 2012-13). 
  • Teams have until five days after the World Series to make qualifying offers. At that point the players have seven days to accept.
  • Once a team makes a qualifying offer, the player has two choices: he can accept the one-year deal or decline in search of other offers. If he declines the offer and signs elsewhere, his new team will have to surrender a top draft pick (the selection doesn't go to the player's former team). 
  • Teams that sign free agents who turned down qualifying offers will surrender their first round picks. However, the forfeited picks don't go to other MLB teams. Instead, the first round simply becomes condensed.
  • The first ten selections in the draft are protected. Teams with protected picks will surrender their second-highest selections. The Astros, Cubs, Rockies, Twins, Indians, Marlins, Red Sox, Royals and Blue Jays have protected first round picks this offseason. The Pirates' ninth overall selection (compensation for failing to sign their 2012 first rounder) is also protected.
  • The player’s former team will receive its compensatory selection at the end of the first round. Teams now obtain one compensatory selection, instead of two.
  • If teams don’t make a qualifying offer, the player can sign uninhibited.
  • Only players who have been with their clubs for the entire season will be eligible for compensation. So Zack Greinke and Shane Victorino definitely aren’t getting offers.
  • Check out Tim Dierkes’ preview of which players will get qualifying offers from earlier in the week.

Qualifying Offers Will Be Worth $13.3MM

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OCTOBER 20: It has been determined that qualifying offers need to be worth $13.3MM this offseason, reports Jon Heyman of CBSSports.com (on Twitter).

AUGUST 1: Qualifying offers for free agents will be in the $13.3-$13.4MM range, ESPN.com's Buster Olney reports (on Twitter). The value of the qualifying offers is based on the salaries of the 125 best-paid MLB players, and had been expected to fall in the $12.5MM range.

Teams must make free agents qualifying offers to be eligible for draft pick compensation. Teams obtain one supplementary round draft pick if a player turns down a qualifying offer to sign elsewhere. I explained qualifying offers in detail earlier this year.

Mike Axisa contributed to this post.

Curtis Granderson Previews MLBPA Offseason

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Curtis Granderson capped off the 2012 season with a two-home run effort at Yankee Stadium yesterday, as New York beat Boston 14-2 and clinched the American League East title. His season isn’t over yet — the Yankees will play in the Division Series starting this weekend — but for most of his peers in the MLB Players Association it’s time to look ahead ahead to the offseason. Granderson, a prominent member of MLBPA's Executive Board, expects this winter to unfold more quietly than last it did a year ago, when the players and owners negotiated a new collective bargaining agreement.

Curtis Granderson - Yankees (PW)

“All the main things that needed to be discussed happened last year,” Granderson told MLBTR this past weekend. “There won’t be any big, major holdups — just a few things to try to iron out that could start this year that may not finish up for the next couple of years. It’ll just be a lot of discussion.”

The talks will have a different tone this offseason. Though baseball’s players and owners negotiated their current CBA without any of the public bickering that has accompanied recent labor discussions in the NFL, NBA and NHL, tense moments are bound to occur while determining the financial structure of a $7 billion industry. Now that major issues such as the luxury tax, the amateur draft and revenue sharing have been resolved through 2016, the MLBPA can focus on other details.

“Obviously there are always issues each year that arise and different things from new helmet regulations, pace of game, different things with performance enhancing drug issues that we’ve had this year, scheduling with another team going to the American League, Interleague Play starting in the first week of the season,” Granderson said. “So just little things like that, but nothing major.”

Granderson, one of two association representatives for the MLBPA (Jeremy Guthrie of the Royals is the other), will keep in contact with his fellow players via phone calls and text messages over the course of the coming offseason. When a major issue emerges, the MLBPA attempts to reach as many players as possible.

“We have ways of getting in touch with everybody,” Granderson said. “Pretty quickly now, especially with everybody having a cell phone no matter where they happen to be in the world.”

When he’s not communicating with other MLB players, Granderson stays informed on labor unrest in other sports. Former MLBPA Executive Director Don Fehr represents NHL players in the current lockout, and Granderson, who worked a bit with Fehr in the past, has monitored talks with an outsider’s perspective.

“I’m still a fan,” he said. “I like watching those games and whenever they get the chance to go back out there, hopefully everybody’s taken care of.”

For now baseball players don't have major labor concerns of their own, which means fewer distractions for Granderson as the Yankees prepare for another postseason run.

Photo courtesy of US Presswire.

Bottom Nine Teams Obtain Protected Picks

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For MLB teams to obtain a protected first round draft pick in 2013, they will have to finish this year with one of the nine worst records in baseball. Though the top ten draft choices are protected under the sport’s new collective bargaining agreement, one of those selections will go to the Pirates, who did not sign their 2012 first round pick, Mark Appel. This means the nine teams with the worst records in baseball will have protected first round selections in 2013, MLB confirmed to MLBTR.

MLB determines the order of its amateur draft by upending the order of the previous year’s standings. As MLBTR’s Reverse Standings page shows, the Astros, Cubs, Rockies, Twins, Indians, Marlins, Blue Jays, Red Sox and Royals would obtain protected draft picks if the season ended today. The Mets, Marlins and Padres could obtain protected draft picks depending on the results of the season’s final week.

Teams must forfeit a draft pick to sign a free agent who declined a qualifying offer from his former club. If a team's first round pick is protected, the team will forfeit its next highest selection.

“A Club that signs one Qualified Free Agent who is subject to compensation shall forfeit its highest available selection in the next Rule 4 Draft,” the CBA reads. “Notwithstanding the above, a Club shall not be required to forfeit a selection in the top ten of the first round.”

Top first round selections are especially valuable under baseball’s CBA. Not only does a top-ten draft choice provide teams with a wider selection of players, it assures them of a protected pick, regardless of what happens in free agency. 

While the top ten selections cannot be forfeited as draft pick compensation, picks from 11 on are vulnerable. This year finishing with the tenth-worst record in MLB won't be enough to obtain a protected pick.

Anthopoulos Talks Prospects, CBA, Payroll

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General manager Alex Anthopoulos reviewed the Blue Jays’ on-field progress and discussed a variety of off-field issues in an extended interview with Drew Fairservice of the Score. Here are some highlights from their conversation:

  • It’s becoming more difficult for teams to get good trade value for players with one or two remaining years of team control, Anthopoulos said. “Now it is starting to shift a little bit, it is three years of control or four years of control,” he said. Players just one year away from free agency don’t have as much trade value now, according to the GM.
  • The Blue Jays entered the season with a payroll in the $80MM range and Anthopoulos described it as “a solid payroll to have” (Toronto’s Opening Day payroll was $83.7MM according to Cot's Baseball Contracts and $75.5MM according to USA Today). He repeated that the team can increase payroll, but noted that “it isn’t going to go up for the sake of going up.”
  • Draft pick compensation has become less of a consideration for the Blue Jays given the franchise’s minor league depth and recent changes to baseball’s collective bargaining agreement. “Now we are more interested in guys who will be around for a while and have some swing-and-miss stuff,” Anthopoulos said of potential relief acquisitions.
  • There’s no formula for extensions, Anthopoulos said. “It always comes down to price.” The Blue Jays discussed a possible extension for Edwin Encarnacion last offseason and ultimately signed him this summer.
  • Part of the reason the Blue Jays generally avoid long-term contracts is the unpredictable nature of baseball. “Players change, things change,” Anthopoulos told Fairservice. “Players get hurt and you tend to forget six or seven years is an awfully long time.” The GM added that it sometimes makes sense to wait a little longer before locking a player up, even if it means paying a bit more.
  • Anthopoulos knows he wasn’t “hired to react to the whims and the emotions” of a 162-game schedule, but it doesn’t mean he enjoys being calculated all of the time. “To be honest with you, I get sick of having to be so guarded,” he said. “It is exhausting. I know it is important to stay consistent but it is exhausting.”

Levine Talks Payroll, Girardi, Rivera, Ichiro

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Yankees president Randy Levine addressed the team’s age, injuries, leadership and prospective free agents in a comprehensive interview with Barry Bloom of MLB.com. Here are some more highlights from his interview with Bloom:

  • The Yankees aim to avoid the $189MM luxury tax threshold by 2014, Levine confirmed. “There are tremendous financial incentives to do it,” he said. “In addition to not paying the tax, there are tens of millions of dollars in revenue sharing rebates that will come back to teams like the Yankees if they stay under the threshold.” 
  • The Yankees must get younger to continue competing, Levine said. Baseball’s new collective bargaining agreement places additional importance on player development and changes to the CBA could also lead to a “very different free-agent market,” Levine said.
  • Joe Girardi and his staff have done a “good job,” Levine said. He declined to discuss Girardi’s long-term future with the team, saying only that discussions would take place at the appropriate time.
  • Levine expressed confidence in general manager Brian Cashman and the team’s other front office executives. “I think everybody is great.”
  • The Yankees are doing “very, very well” from a business standpoint, Levine said. He made it clear that the Steinbrenner family has no intention of selling the club, but said the Dodgers’ sale price of $2 billion “gives us something to smile about.”
  • The Yankees would “love to have” Mariano Rivera come back in 2013, Levine said. “If he wants to come back, we'll welcome him back.”
  • The Yankees want Rafael Soriano in New York and believe he has done a tremendous job. The closer is expected to opt out of his contract with the Yankees after the season and elect free agency.
  • The Yankees will talk to Andy Pettitte this offseason if the left-hander is interested in returning for another year.
  • Ichiro Suzuki “has done a good job” in New York, Levine said. As of now, however, the team is focused on 2012, not Ichiro’s next contract.
  • Levine acknowledged that he’s concerned about injuries, saying the frequency of disabled list stints is “troubling.”

Competitive Balance Lottery Takes Place Today

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Baseball’s first Competitive Balance Lottery takes place today, when small-market and low-revenue teams will have the chance to win extra selections in next year’s amateur draft. The ten smallest-market teams and ten lowest-revenue teams will have the chance to win extra selections in 2013, Jonathan Mayo of MLB.com reports. 

There’s overlap between small-market teams and low-revenue teams, so there are 13 clubs involved in the first-round lottery: the Diamondbacks, Orioles, Indians, Royals, Athletics, Pirates, Padres, Rays, Reds, Rockies, Marlins, Brewers and Cardinals. The first six selections will be made between the first and second rounds of next year’s draft. A second group of six picks will be available to the teams from the first group that didn’t get an early pick, plus the Tigers. The second group of selections will be made after the second round of the draft. 

MLB teams can trade the draft picks they obtain in the Competitive Balance Lottery. The picks, which can only be traded once, cannot be sold or traded during the offseason. In theory, the draft picks could be involved in some of this summer’s deadline deals. 

The lottery takes place today at 12:30pm CDT/1:30pm EDT in New York and the winners will be announced 75 minutes later. A team’s chances of winning depend on its winning percentage from the previous season.

The New Draft Pick Compensation System

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There’s been a lot of talk about the diminished trade value of prospective free agents under baseball’s new collective bargaining agreement, and rightfully so. Teams can no longer obtain draft pick compensation for players acquired midseason. Naturally, that affects the trade value of players on the cusp of free agency like Zack Greinke, Cole Hamels and Carlos Quentin. 

Zack Greinke - Brewers (PW)

There’s a second change to keep in mind as the trade deadline approaches, MLBTR has confirmed. Teams that keep their players now obtain one compensatory draft pick for losing a top free agent, whereas they previously obtained two selections. If a team loses a player who turned down a qualifying offer to sign elsewhere, the player's original team will obtain a single compensatory selection between the first and second rounds of the draft (the qualifying offers, which are based on the average salary of baseball’s 125 best-paid players, are expected to be worth $12.5MM or so).

Meanwhile, the team that signs the free agent will lose a first round selection (though the top ten picks are protected). However, that lost first round pick no longer goes to the player’s former team. Instead, the pick disappears and the first round becomes condensed.

For example, if the Brewers trade Greinke, his new team won’t be eligible for draft pick compensation. If the Brewers hold onto Greinke and make him a qualifying offer after the season only to see him sign elsewhere, Milwaukee will obtain a selection between the first and second rounds of the 2013 draft. The team that signs Greinke would lose its first round selection, but that selection would no longer go to the Brewers under the sport’s new rules.

Fewer players now bring in draft picks and those that do translate into one selection, rather than two. The changes will lead to to a drop in compensatory draft picks and an entirely new trade deadline dynamic.

Photo courtesy of US Presswire.

Quick Hits: Yankees, Orioles, Selig

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Here are some links to read before the Home Run Derby begins, starting with last year's derby winner…

  • The Yankees have had internal discussions about a long-term contract for Robinson Cano, Jack Curry of the YES Network writes. GM Brian Cashman acknowledges that the team has considered trying to lock the second baseman up to an extension. "Oh, yeah. But we haven't done it yet," Cashman said.
  • Roch Kubatko of MASNsports.com suggests the Orioles should seek upgrades aggressively without parting with elite prospects Dylan Bundy and Manny Machado. Executive VP of baseball operations Dan Duquette is working to add starting pitching between now and the end of July and names like Zack Greinke and Wandy Rodriguez have emerged as possibilities.
  • Commissioner Bud Selig told reporters he's "very satisfied" with baseball’s new collective bargaining agreement so far, Eric Fisher of the Sports Business Journal tweets.

GMs Look Ahead To Trade Deadline

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Several general managers predict diminished trade activity this summer, when teams navigate baseball’s new collective bargaining agreement for the first time, Ken Rosenthal of FOX Sports reports. Additional playoff berths mean more teams than ever are in contention and modified rules mean team can no longer obtain draft pick compensation for players acquired midseason. 

The Brewers and Diamondbacks have struggled through the season’s first two months and might have become sellers in other years, but neither team is inclined to make its players available yet. Diamondbacks GM Kevin Towers knows his team faces a light schedule in the coming weeks and with Matt Kemp on the disabled list in Los Angeles, the Diamondbacks could strike. Similarly Brewers president of baseball operations Doug Melvin remains optimistic about his team’s chances of re-entering the race.

One GM says Zack Greinke, Josh Hamilton and Cole Hamels are the only prospective free agents assured of receiving one-year qualifying offers from their respective clubs after the season. More than three free agents will obtain these offers, but most players aren’t worth $12-3MM on a one-year deal, so teams will be pressured to make trades if they aim to convert players on the brink of free agency into long-term assets. As Rosenthal notes, GMs predict a quiet trade deadline annually, but lots of trades happen every year.

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