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Collective Bargaining Agreement

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.

Qualifying Offers For Free Agents

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A few months from now, when the season ends and players file for free agency, teams, agents and players will navigate a new system for determining free agent compensation. Here’s a brief primer on compensation under the sport’s new collective bargaining agreement:

  • 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 qualifying offer, which will be determined by averaging the top 125 player salaries from the previous year, is expected to fall in the $12-13MM range for the coming offseason. All qualifying offers are for the same duration (one year) and the same amount ($12-13MM). 
  • Teams will have until five days after the World Series to make qualifying offers and the players will 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 it 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 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.

Quick Hits: Draft, Sizemore, Royals, CBA, Greinke

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Some links from around MLB…

  • ESPN's Keith Law posted a list of the top 100 prospects in this year's amateur draft. High school outfielder Byron Buxton and high school shortstop Carlos Correa top the list.
  • "I love this game and I don't see myself calling it quits anytime soon," said Indians outfielder Grady Sizemore to MLB.com's Jordan Bastian (Twitter link). Sizemore is currently on the DL with a back issue, the latest problem in a long line of injuries in recent years.
  • Royals owner David Glass says he hasn't spoken to anyone about selling his team despite rumors to the contrary, according to Bob Dutton of the Kansas City Star. "I've not talked to anyone, nor has any of my family talked to anyone," he said.
  • Ben Badler of Baseball America explains how teams and player representatives are working to side-step the international spending restrictions imposed under baseball’s new collective bargaining agreement. MLB is aware of the loopholes and would object more strongly to some than others.
  • Recent extensions talks haven’t taken place for Zack Greinke, Cole Hamels or Tim Lincecum, Jon Heyman of CBSSports.com tweets. Greinke and Hamels are eligible for free agency this offseason, while Lincecum is under team control through 2013.
  • Ken Rosenthal of FOX Sports points out that Edinson Volquez of the Padres looks like a trade candidate (Twitter link). However, six of the right-hander’s seven starts have been at Petco Park, a generally forgiving environment for pitchers.\

Mike Axisa contributed to this post.

Carlos Villanueva Explains Role With MLBPA

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There’s not much overlap between the skills that earned Carlos Villanueva a spot in the Major Leagues and the skills that enabled him to represent his fellow-players in negotiations for baseball’s current collective bargaining agreement. Patience and attention to detail are prerequisites for any MLB player interested in representing his peers at the bargaining table. An Ivy League education is not.

Carlos Villanueva - Blue Jays (PW)

“We have guys there who are very highly educated and we have guys like me that signed out of high school from the Dominican,” Villanueva told me in a recent interview. “So you just have to have an understanding about the rules and what everything means for the players’ association and go from there.”

Villanueva, an alternate representative on the executive board of the MLB Players Association, flew between Miami and New York several times per week this past offseason when baseball’s owners and players completed the sport’s collective bargaining agreement. Following a season of constant travel, most players elect to slow down, but Villanueva chose to participate in negotiations, even though it meant more time on the road. His interest in MLB labor relations emerged in Milwaukee, when former Brewers teammates Craig Counsell and Dave Bush, two prominent advocates for players, suggested Villanueva become involved.

"I think he is intelligent and thoughtful about the game," Counsell told me via email. "He really cares about baseball in his country and I think he realized that the Latin players need to play a role in the decision making at the union, which I strongly believed. Labor relations get more complicated every year and I just think Carlos is the perfect guy to offer his voice and have a good grasp on all the issues facing every type of player."

The message stuck with Villanueva, a speaker of Spanish and English. He can communicate with the vast majority of players in their native language, and he's interested in labor relations. It's not a combination he wanted to ignore.

“I just took it upon myself since I had a little more interest, I could understand a little more and there’s really not that big of a barrier for me,” the right-hander said. “So I thought if I have the tools to do it, I feel like I would be letting the guys down if I was not there.”

The rest of the MLBPA’s executive board consists entirely of American-born players: Bush, Jeremy Guthrie, Curtis Granderson, Chris Capuano, Aaron Heilman, Ross Ohlendorf and Kevin Slowey. Counsell, now a member of the Brewers' front office, says other players should be glad to have Villanueva on their side.

"He is going to have an important role moving forward with the changing landscape in Latin America," Counsell said. "I'm proud of him for taking an active role; the players will benefit from having his voice in the room."

Villanueva, 28, says his willingness to travel and listen enabled him to effectively represent the interest of his bosses — the players. It doesn’t hurt to have Princeton graduates like Ohlendorf on side, but those who focus on pedigree are missing the point.

“You have to be interested in just a lot of sitting, listening and back and forth,” Villanueva said. “A lot of guys don’t have the patience for that. I like the back and forth, I like the negotiation and I like the paperwork. I like all of that stuff, knowing that I can make a difference in our world and in not only Latin America but the whole MLBPA.”

To a layperson, dividing up $7 billion in revenue between 30 owners and 750 players sounds like a great problem to have. But the negotiations aren’t always pretty, even in an era defined by labor peace and with experienced professionals Michael Weiner and Rob Manfred leading the way. Villanueva was present for negotiations and he says the tenor of the talks varies from day to day.

“It’s a little bit of everything. It’s more professional than anything. Some days it gets a little confrontational. Some days it’s just boring,” he said “Very boring. 

“They drag on. They drag and drag, but in the end we gave up some and we got some and I think it was a good deal for both sides.”

The relationship between players and owners was considerably more turbulent from the 1960s to the 1990s. Now that the sides are approaching 20 years of labor peace, it can be tempting for outsiders to assume negotiations are a formality and peaceful agreements are inevitable. But the possibility of a work stoppage exists, even today.

“It could have gone to that point this year, too,” Villanueva said. “But we worked hard for that not to happen. The MLB side didn’t want to stop, we didn’t want to strike. We know what issues cause strikes and this year we just wanted a fair deal for both sides. They didn’t go after anything ridiculous. They didn’t go after a salary cap. We were reasonable and I think we went at it the right way.”

When the current agreement expires five years from now, Villanueva hopes to be around, not only as a Major League pitcher, but as an advocate for his peers in the U.S. and in Latin America. 

Photo courtesy of US Presswire.

Frasor Approves Of CBA Changes

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Blue Jays reliever Jason Frasor won’t miss baseball’s free agent ranking system the next time he’s eligible for free agency. The sport’s new collective bargaining agreement eliminates Type A and Type B designations and assures non-elite free agents that they won’t be tied to draft pick compensation. 

“I think this is the right way,” Frasor told me yesterday. “You have middle relievers who are Type A? I mean who’s going to give up a first round pick for someone who’s going to pitch the seventh inning? So I think this is more fair.”

Under baseball’s previous collective bargaining agreement, teams had to surrender top draft picks for signing Type A free agents who had turned down offers of arbitration. Knowing that turning down an offer of arbitration would make them unappealing to potential suitors, middle relievers often accepted their teams’ offers. 

Frasor was eligible for free agency following the 2010 season, but he pitched well enough to obtain a Type A ranking. He ultimately accepted the Blue Jays’ offer of arbitration instead of testing free agency with limited market value. Though Frasor was happy to return to Toronto, Type A status led to free agency lite for similarly-positioned relievers. Potential buyers wanted to keep their draft picks, so their interest in ranked middle relievers was often tepid. Frasor took note when he heard that baseball’s current collective bargaining agreement includes some significant adjustments.

“My reaction was it was two years too late,” he said. “If that Type A and Type B stuff wasn’t there, I’m not sure how it would have played out [two winters ago], but it could have changed how I went about doing that.”

Frasor, 34, is on track to hit free agency this offseason. Unless the Blue Jays make him a qualifying offer of $12.5MM or so — an extremely remote possibility — his performance will determine his free agent value. And for relievers such as Frasor it’s a welcome change.

Quick Hits: Reyes, Napoli, Miller

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Jared Hughes of the Pirates and Zach Putnam of the Rockies made history today as the 26th players on their teams' respective rosters for this afternoon's double-header. This was the first time teams carried extra players, now a possibility for select double-headers under the sport's new collective bargaining agreement. I believe the change makes sense for ownership, which reduces injury risk by adding depth, and players, who obtain additional service time and pay. On to today's links…

  • Jose Reyes says the Mets should keep David Wright in place long-term, Kevin Kernan of the New York Post reports. “That’s good if they can bring David back, he’s a symbol of the game,’’ Reyes said.
  • Dan Szymborski of ESPN and Baseball Think Factory takes his readers on a tour of the worst trades in recent history. The Bartolo Colon trade and the Mark Teixeira trade top the list, but the Vernon Wells–Mike Napoli swap also makes an appearance.
  • Marvin Miller, the 95-year-old former leader of the MLB players association, says player salaries are reasonable when compared to the earnings of some CEOs, the Associated Press reports (via ESPN.com). Miller describes the current dynamic between owners and players as a win-win situation. "It is an amazing story how under those circumstances, there can be both management and labor really winning," Miller said.

No More Personal Service Deals & Milestone Bonuses

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Major League Baseball and the MLB Players Association have agreed to put an end to personal service deals and milestone bonus clauses, ESPN.com's Jayson Stark reports. Existing contracts with these deals or bonuses won’t be affected by the changes, which were agreed to this month.

Albert Pujols and Ryan Zimmerman recently signed long-term contracts which include personal services provisions and Alex Rodriguez has milestone bonuses associated with his contract. However, MLB and the union say these bonuses violate baseball’s collective bargaining agreement. The sides have agreed that the CBA doesn’t allow players to agree to deals that include obligations beyond their playing careers.

MLB is trying to prevent teams from finding loopholes that enable them to evade the luxury tax, Stark reports. Personal service deals and milestone bonuses aren’t considered guaranteed money and therefore don’t count against the luxury tax.

Dolan On Indians, Hernandez, Sizemore, Free Agents

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Indians CEO Paul Dolan recently spoke to Terry Pluto of the Cleveland Plain Dealer about a number of topics concerning business both on and off the field…

  • Dolan wasn't "shocked" to hear about Roberto Hernandez (a.k.a. Fausto Carmona) living under a false identity, saying that the team had heard an unsubstantiated rumor about the situation last year.
  • Grady Sizemore will miss at least one month of the regular season after undergoing minor back surgery, but Dolan doesn't regret re-signing the outfielder.  "It's disappointing that he got hurt again," Dolan said.  "But we thought it was worth the risk because no one else on the [free agent] market had even close to Grady's upside for that price."
  • Though recent long-term signings like Sizemore, Travis Hafner and Jake Westbrook have suffered injuries, Dolan said he is still open to signing players to such deals, though not without some caution.  "If Chris [Antonetti] and Mark [Shapiro] comes to us with a long-term deal they want to make, we will seriously consider it. They have not done that [lately]," Dolan said.  "We will remain open, but in totality, how successful have those kind of deals been? More often than not, they have been failures."
  • Dolan disputed a recent Forbes article that claimed the Indians made a $30MM profit in 2011, arguing that while the club "made a little bit" of profit, that money went back into the team.  Dolan said the MLB Players Association cited the Indians as a franchise that was properly using the league's revenue sharing system.
  • Dolan was surprised when GM Chris Antonetti approached him about the Ubaldo Jimenez deal last summer.  "Like most fans, I'm used to us trading for prospects — not trading some of our best prospects," Dolan said.  "I was happy to see us take that approach and try to win."
  • It doesn't concern Dolan that the Indians don't have any players under contract past 2013, as the CEO notes that the team has control over many of its young stars like Carlos Santana and Jason Kipnis for years to come.
  • Dolan didn't address rumors that the team was looking to sell cable network Sports Time Ohio, but said, "We are always looking to add revenue on the TV side of things."
  • It doesn't sound as if Dolan was totally satisfied with baseball's new collective bargaining agreement.  "We achieved labor peace," said Dolan. "But we didn't address the fundamental problems [such as a lack of a salary cap]."
  • Dolan said that there have been no "serious buyers" interested in purchasing the team during his ownership stint.  He would possibly have interest in a minority investor, should such an interested investor come forward.
  • The Tigers' signing of Prince Fielder dwarfed the Tribe's modest payroll increase of $50MM to $70MM.  "I understand that makes us look bad," Dolan said. "I don't understand the foundation of what they are doing … OK, in the short term, I do understand it, but long term …"  The Tigers' desire to win now makes them "operate much different than most franchises.  Even the teams in major markets tend to operate as we do — they spend what they take in and don't go way above that."
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