Saturday, December 03, 2011

A Lazy Sunday with the New CBA

A Note From Paul:
As you may have noticed, the posting has become a bit more sporadic around these parts as my “big step back” has certainly afforded me some nice decompression time, even if it hasn’t completely removed me from the equation. Since this site started in 2005, it has always provided me the cathartic outlet to write about the Indians and, while this has never been the most…um, interactive site on these Interwebs, this has been a labor of love to foster an intelligent place to read and dissect the Indians and since I think that I’ve accomplished that to some degree, it is not something that I’m willing to simply fade away.

Truthfully, this desire to keep the site active is tied to the fact that I think that this place provides an alternative to the website for the only newspaper in a one-paper town posting “stories” that simply link to an out-of-touch and irrelevant writer like Ingraham or (worse) post a reader comment as a “story” with a headline as groundbreaking as “Indians Still Need to Get Better – Comment of the Day” to stir the pot of discontent or attempt still dictate public opinion in a town with a major inferiority complex by appealing to the lowest common denominator.

At this point, I’m proud that the amount of RSS “followers” that subscribe to the site dwarfs the numbers that similar sites (and even mainstream media members) boast and the Twitter followers (as infrequently as I’m on Twitter) show that there is interest in continuing to visit this place more frequently than once every couple of weeks. With that in mind, I’m going to start to fold in some regular contributors to the site and the obvious first addition is Al Ciammaichella, who has filled in for me in the past on Lazy Sundays and who has written extensively on the Indians’ farm system. Al’s writing is insightful and entertaining and I think that he’s a welcome addition to the full-time cycle of stories that will continue to post here. The posting still doesn’t figure to be nearly as regimented or as regular as it has been (so hit up the RSS feed or follow on Twitter), but in this age of instant information and 140-character “analysis”, this site will remain what it has always been – a place for similarly-minded Indians’ fanatics looking for something more, in terms of insight and analysis.

With that, here’s Al with a great piece on the newly signed CBA and the impact that it figures to have on OUR Cleveland Indians…

__________

Major League Baseball and the MLB Players Union quietly negotiated a new collective bargaining agreement over the past few months, and announced on November 22 that they have a deal that will extend labor tranquility for the next five years.
This ensures that MLB will continue to operate without a work stoppage of any kind since the 1994/1995 strike wiped out the ’94 playoffs and the beginning of the ’95 season. It’s the longest such streak in professional sports, which is a good thing. Some of the provisions in the new CBA though, seem somewhat short-sighted and may serve to hurt small-market clubs like the Indians. In fact, the deal takes options off the table for small-market clubs and does virtually nothing to correct the massive revenue imbalance that currently exists between the big-market teams like New York and Boston and the smaller-market clubs such as the Indians and Pirates. Given an opportunity to fix a clearly broken system, the players looked out for their own salaries and the owners took an opportunity to line their own pockets at the expense of amateur athletes.

The Good

First, let’s hit the high points in the new CBA. One change that I fully endorse is moving up the signing date for Rule 4 draft picks from mid-August to mid-July. Most of the high $$ players signed at the deadline anyways, with several of them having deals in place in advance but having to hold off on announcing them because MLB didn’t like them going over the “suggested” slot. The earlier signing date means that more players will sign in time to make their professional debuts the sam

The second change that I’m in favor of is increasing the use of instant replay to fair/foul and trapped/caught balls in the outfield. The goal is to get the call right, and hopefully this will save baseball the potential of further embarrassment by the on-field performance of an umpire. Ball/strike and safe/out calls are still not reviewable.e year they are drafted, rather than having to wait until the following season. This means they will develop a little quicker, and really means that we’ll get to see them play sooner, which is my major reason to like the change. The mid-August date always seemed arbitrary and pointless, so might as well have an arbitrary date earlier in the process.

To throw a bone to the small market clubs out there, baseball has instituted a “competitive balance lottery.” Basically, it’s welfare.

5. Competitive Balance Lottery

A. For the first time, Clubs with the lowest revenues and in the smallest markets will have an opportunity to obtain additional draft picks through a lottery.
B. The ten Clubs with the lowest revenues, and the ten Clubs in the smallest markets, will be entered into a lottery for the six draft selections immediately following the completion of the first round of the draft. A Club's odds of winning the lottery will be based on its prior season's winning percentage.
C. The eligible Clubs that did not receive one of the six selections after the first round, and all other payee Clubs under the Revenue Sharing Plan, will be entered into a second lottery for the six picks immediately following the completion of the second round of the draft. A Club's odds of winning the lottery will be based on its prior season's winning per

centage.
D. Picks awarded in the Competitive Balance Lottery may be assigned by a Club, subject to certain restrictions.


So the teams in the 10 smallest markets get entered into the lottery (good), as well as the teams with the 10 lowest revenues (bad). I understand the small market idea, but I have no clue why MLB wants to reward teams for not making money. While it is true that revenue is to a point tied to your market size, teams in small markets can still perform well and make money (see Tampa Bay for the latest example). So I like the idea, just not a huge fan of the execution.

The final point I’ll cover here is a brief one, but one that Indians fans should care about. Any player who is arrested for a DUI will undergo mandatory evaluation by the league. I’m not clear on what this mandatory evaluation will consist of, or if it will cause the player to miss any games on the field, but this is a good thing. We all remember the Miggy Cabrera incident from spring training last year, and of course the S.S. Choo DUI from midseason that he admittedly had trouble moving past. These incidents are bad publicity for the league, the team, the player involved, and more importantly they are just plain unsafe. Hopefully this serves to stem what appeared to be an increasing tide of alcohol related incidents involving MLB employees, and we never see a Leonard Little type incident where an MLB player actually kills somebody behind the wheel while drunk. It should serve to increase awareness, decrease incidents, and allow those involved to receive appropriate counseling and move past it. Aaaaaaand I’m off my soapbox.

The Bad

Now, we come to the not so nice side of the new CBA. Bud Selig stated publicly that his #1 priority in the negotiations was to “fix the Rule 4 draft.” What exactly he was trying to “fix” is unclear, as I don’t think anyone was really thinking that the draft was broken other than Selig himself. So what we ended up with was this; a “luxury tax” on teams spending more than the commissioner’s instituted limits on how much each team can spend on the draft. Here’s how it looks like on paper:

3. Signing Bonus Pools
A. Each Club will be assigned an aggregate Signing Bonus Pool prior to each draft. For the purpose of calculating the Signing Bonus Pools, each pick in the first 10 rounds of the draft has been assigned a value. (These values will grow each year with the rate of growth of industry revenue.) A Club's Signing Bonus Pool equals the sum of the values of that Club's selections in the first 10 rounds of the draft. Players selected after the 10th round do not count against a Club's Signing Bonus Pool if they receive bonuses up to $100,000. Any amounts paid in excess of $100,000 will count against the Po
ol.

B. Clubs that exceed their Signing Bonus Pools will be subject to penalties as follows:
Excess of Pool Penalty (Tax on Overage/Draft Picks)
• 0-5 percent; 75 percent tax on overage
• 5-10 percent; 75 percent tax on overage and loss of 1st round pick
• 10-15 percent; 100 percent tax on overage and loss of 1st and 2nd round picks
• 15-plus percent; 100 percent tax on overage and loss of 1st round picks in next two drafts

So the teams picking earlier in the draft will have more $$ to spend overall than the teams picking later, but there are some pretty severe penalties for going over your limits by as little as 6%. Also, if you miss out on signing a pick, you can’t bank the $$ for overslot signings later in the draft, you just lose the opportunity to spend the money. So if the Indians dare to go overslot on signing their 1st round pick and then go on to sign high-upside guys later in the draft for overslot, they will pay up to double for their trouble, not to mention lose their 1st round draft pick in the following season. Again, let me stress that the commissioner’s office has decided that the draft, the easiest and cheapest way for teams to add elite talent, should be rigged so that teams cannot add the most amount of talent, to the point where teams lose their 1st-round pick if they dare go over Lord Selig’s recommended spending level. Per Baseball America’s Jim Calis, a whopping twenty teams (including the Indians) would have been 16% or more over the recommended bonus pool this year, which would put them in the highest possible tax bracket and cost them a pair of draft picks. I’ve always advocated overslot spending in the draft as the best possible way for a small market team like the Indians to compete, and now that advantage is being taken away by King Bud in his attempt to “fix” the draft. You could even argue that the change benefits teams from the larger TV markets, as they can afford to spend overslot, pay the tax, give up the pick(s) and then just do the same thing next year. Because if you think this will cause agents like Scott Boras to take a step back and start asking for lower bonus money, you’ve got another thing coming. So this could actually force the higher level talent to the big-budget teams, because only they will be able to afford to select them and pay the accompanying luxury taxes. So how exactly does this “fix” the draft? A draft that wasn’t broken in the first place? Beats me. For what it’s worth, the tax revenue and lost draft picks will go to teams that don’t go over the cap. I’m going to break a personal rule here and link to a Pittsburgh paper, because Pirates writer Dejan Kovacevic really hits the nail on the head in his piece looking at the same issue. I hated Selig’s unnecessary slot recommendations, I hated how his office forced teams and players to keep the lid on deals that they had agreed to for weeks at a time, and now I hate the latest changes he’s made with respect to the Rule 4 Draft. To say that I’m not a Bud Selig fan right now would be a bit of an understatement.

As if that weren’t enough, MLB has decided to “fix” the international free agent signing process in much the same way. Here’s the new rule, in its entirety:

5 f. International Talent Acquisition
1. By December 15, 2011, the parties will form an International Talent Committee to discuss the development and acquisition of international players, including the potential inclusion of international amateur players in a draft or in multiple drafts.
2. For the 2012-13 signing season, each Club will be allocated an equal Signing Bonus Pool.
3. For each signing period after 2012-13, Clubs will be allocated different Signing Bonus Pools, based on reverse order of winning percentage the prior championship season (i.e., the Club with the lowest winning percentage the prior season shall receive the largest Pool).
4. Bonus Regulation of International Amateur Players
A. Beginning in the 2013-2014 signing period (July 2, 2013 - June 15, 2014), Clubs may trade a portion of their Signing Bonus Pool, subject to certain restrictions.
B. Clubs that exceed their Signing Bonus Pools will be subject to the following penalties in the 2012-2013 and 2013-2014 signing periods: Excess of Pool Penalty (Tax on Overage/Draft Picks)
• 0-5percent; 75 percent tax
• 5-10 percent; 75 percent tax and loss of right to provide more than one player in the next signing period with a bonus in excess of $500,000.
• 10-15 percent; 100 percent tax and loss of right to provide any player in the next signing period with a bonus in excess of $500,0000.
• 15-plus percent; 100 percent tax and loss of right to provide any player in the next signing period with a bonus in excess of $250,000.
C. The penalties for exceeding the Signing Bonus Pool will increase beginning with the 2014-2015 signing period if a draft or drafts is not agreed to by July 2014.

So basically, starting next year, teams will get to spend $2.9 million on international free agents. Per team. Total. So teams like the Texas Rangers, who have invested heavily in their international facilities, scouting, and signing will now have to go from spending $17.6 million like they did last season alone to about 1/6th of that starting next year or face draconian penalties. Much like the draft, international scouting and signings have been seen as a way for smaller market teams to get some more bang for their buck in terms of elite talent. Texas, Cincy, Cleveland, Seattle, Toronto and Boston have historically been among some of the big spenders in Latin America. With the exception of Boston and Texas, those are small market teams. New York no longer needs to worry about spending time and money in their international scouting budget to keep up. More savings for them to waste money on crappy starting pitching in the free agent market. Potential advantage, lost. Not to mention the Latin American athletes who will now be more drawn to soccer and basketball as alternatives to baseball with the bonuses drying up. So for those of you who were thinking that the team could shift draft resources to the international market, no dice.

If you thought this was it, and there was no way the new CBA could possibly have any more provisions that hurt the Indians, I’m afraid I have one more. The new CBA raises the league minimum salary 16%, from $414,000 to $480,000, beginning in 2012. For most teams, that won’t make too much of a difference. But as Jon over at WFNY points out, the Indians had 16 players making the league minimum on their 40-man roster, most in the American League last year. If this year’s roster is similarly constructed, that’s an additional $1 million plus in salary flexibility that the Indians lose without making a single move. For a team that has less than $10 million to play with overall, more than 10% of the FA budget is toast because of the raise. Cause, you know, it’s awfully hard to survive on JUST $414,000 a year, plus per diem. Thank God they stepped in and bumped that up.

The Undecided

Not all of the provisions in the new CBA are necessarily good or bad. Some I am just plain undecided on, or really don’t care about. The ones I don’t care about, such as the Astros moving to the AL, I’m just not going to talk any further about. Some though, have a potential to effect the Indians and baseball as a whole as the years go by, so I’ll at least touch on several of them here.

The players and owners agreed on a HGH testing program for the first time.

IX. DRUG PROGRAM
Commencing in Spring Training 2012, all players will be subject to hGH blood testing for reasonable cause at all times during the year. In addition, during each year, all players will be tested during Spring Training. Starting with the 2012-2013 off-season, players will be subject to random unannounced testing for hGH. The parties have also agreed on a process to jointly study the possibility of expanding blood testing to include inseason collections.

Sounds great, right? Well, it’s a little unclear on a couple of points. Not to sound like a lawyer, but what does “reasonable cause” mean? I know about probable cause, and I know about reasonable suspicion, but I’ve never heard of reasonable cause. Also, the blood test can only pick up HGH if it has been in the system in the past 3 days. So unless a player is actively using, the test really isn’t going to be effective. It’s really more of a PR move than anything, but I’ll hold off on any harsher judgment for now.

MLB has also decided to change the way they give out compensation picks for free agent losses. The Type-A/Type-B designation is done away with, and now compensation is tied entirely to the offer that the team losing the free agent makes to the player. If the team doesn’t offer at least a guaranteed 1-year contract equal to the average of the 125 highest paid players in baseball, then there’s no compensation for losing the free agent. Here’s the text of the new provision:

b. Draft Pick Compensation
1. Starting in 2012, "Type A" and "Type B" free agents and the use of the Elias ranking system will be eliminated.

A. Only Players who have been with their Clubs for the entire season will be subject to compensation.

B. A free agent will be subject to compensation if his former Club offers him a guaranteed one-year contract with a salary equal to the average salary of the 125-highest paid Players from the prior 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 the offer.

C. A Club that signs a player subject to compensation will forfeit its first round selection, unless it selects in the top 10, in which case it will forfeit its second-highest selection in the draft.

D. The Player's former Club will receive a selection at the end of the first round beginning after the last regularly scheduled selection in the round. The former Clubs will select based on reverse order of winning percentage from the prior championship season.

This would mean that a team would have to offer about $12 million or more to a player in order to qualify for draft pick compensation. So if Sizemore comes back and has a solid but not great season and gets a 3-year, $33 million offer from the Red Sox and the Indians don’t offer him at least $12 million for one season, no draft pick compensation when he leaves. This is a pretty neutral change overall; the Red Sox were known for exploiting the draft pick compensation loophole, and a lot of middling relief pitchers and #4 starters ended up garnering draft pick compensation for no real reason. If the Indians develop and lose a real free agent of note down the road, they’ll likely at least make the token $12 million offer in order to be compensated.

The third provision of the CBA that I’m undecided on is the inclusion of an additional wildcard team, starting as soon as 2012. The two wild club teams will now play a one-game playoff for the right to be THE wild card team in each league. Unfortunately, this was not in place in 2000 when the Indians finished a game out of the playoffs. It’s a way for MLB to add drama down the stretch and say that they’re more balanced than they really are by adding another “playoff” team. I’m not a huge fan, but I’m not dead-set against it either. We’ll see how it works out.

The silliest provision in the new CBA, to me at least, is the rule banning all forms of tobacco from all major and minor league dugouts and the playing field once the gates have been open to the fans. Look, I don’t use chewing tobacco. Never have. My teammates in college sure did, but I never got into the stuff, mainly because I think it’s disgusting and causes cancer. But MLB is overreacting by banning the substance from the field entirely. If these guys want to chew, let them chew. I know of very few kids who have started dipping just because their favorite big league ballplayer has a can of snuff in their back pocket on the diamond. Trust kids to be smarter than that. Trust that they can make their own decisions. Don’t take the ability to choose away from the players on the field. That’s just a gross overreaction, and is typical of Selig’s mentality.

So there you have it, sports fans. The new CBA in a nutshell. A really, really long nutshell. Selig and the players union thought it was more important to line their own pockets than to even the playing field with respect to small and large market teams, and the only player population that will suffer are the amateurs, who (surprise surprise) had no voice in the negotiations since they are of course not in the players union yet. Funny how that works out. They “leveled the playing field” in the draft and the international FA market, traditionally the two cheapest methods of adding elite talent to a ballclub, but did nothing to curb free agent spending, the most expensive method and the method in which the Indians cannot hope to be significant players. The new CBA is a win for labor peace, and a win for big-market teams like the Red Sox, Yankees and Mets at the expense of the little guys. It’s now easier to put together a ballclub if you’re rich, and more difficult to do so if you’re smart. Thanks a lot, Bud.

9 comments:

Spills said...

So, basically, if we don't win it all in the next two years, we're likely screwed for the following 10...

Al Ciammaichella said...

Hopefully it's not quite that bad, but we'll see. I'm hoping that I'm overreacting and the bonus pools will be higher than I'm expecting, but I doubt it. For whatever reason, Selig has long seen the "high" bonuses given to the top 15 or so picks as the biggest threat to baseball. So this is his chance to curb that, once and for all. It's a shame.

Clecago Joe said...

Maybe I am just being optimistic on these signing bonus changes, but I think they might actually help the Tribe. Sure, big market teams will be more willing to absorb these taxes on overage payments, but what even the large market teams will not be willing to do is lose 1st round draft picks. Thus, I don't see anyone paying over the 5% greater than the assigned values, except for the rare stud.

If it works out, essentially the league will be setting the signing bonuses prior to the draft. Teams won't shy away from a player due to the fear of a demand (or fear of an agent. High school and college players will know what to expect and will be able to better assess their pro vs college decision.

It will be rough the first few years as clubs and agents duke it out to set precedences but eventually it might even get to the point where clubs know that if a kid is not drafted in the first two rounds he is headed back to school and not waste a pick on him.

Could actually free up money for clubs which is always going to help the small market team more than the larger markets.

Al Ciammaichella said...

I hope you're right Joe, but I just don't see it. I think that if we're relying on guys like Scott Boras to cut a deal with teams on elite talent at the top of the draft, we're in trouble. Teams will be stuck paying top dollar to top talent, and then miss out on players later in the draft.

And if a team like the Yankees goes over their limit and loses a pick, they can just make it up later in the draft. They lose their 1st round pick, they take a HS player demanding 1st round money in the 5th round that other teams can't afford to because of the pool.

Again, hoping it's not that bad, but really afraid of what this could turn into.

Spills said...

I think long term, limiting signing bonuses in the draft is the first step to improving competitive balance. People here in Chicago are going nuts about how this will impact Theo's timeline on getting the Cubs back to relevance.

If this works as it should, and the baseball draft becomes similar to the NBA draft, more money will start to flow towards free agency. If this happens, and free agency blows up even further than its current version, perhaps the next CBA takes steps to further enhance competitive balance at the Big league level.

This is all assuming competitive balance is something that the big picture players are interested in. Either way, this move may be looked back upon 10 years from now as the first step towards a level playing field. That, or the first step in the elimination of small market teams from the equation.

CLohse said...

You're absolutely right that the players union betrayed future members by allowing the owners to limit spending in the draft (thereby "fixing" it - ha.). It's a short-sighted strategy that will only hurt the sport long term. Nobody can really say how great that impact will be but I suspect that a talent drain and an explosion of salaries for top shelf talent in free agency will result. If I'm the Indians, perhaps the one thing I could do to proactively address the new restrictions on spending in the draft is to beef up the corps of teachers in the farm system. If the levels of talent in farm systems becomes more evenly distributed over time, an advantage might be gained by maximizing that talent. Will that be enough to counteract what is sure to be some infuriatingly massive contracts handed out by the Yanks and Sox in the coming years? Um... sure.

Spills said...

So... How would Morales or Trumbo donning a big block C on his hat next year?

Al Ciammaichella said...

I'd happily take either, Spills. But publicly at least, Angels are saying they aren't dealing anyone. We'll see what happens, but I'd expect the Indians to at least be players if either of them goes on the block.

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