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The New CBA: Realignment, Playoffs, Minimum Salaries, Draft Spending, Luxury Tax, Super Twos, Free Agent Compensation, and HgH Testing

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UPDATE 3: A few more interesting details on the agreement that were not included previously:

- There will be a "competitive balance draft lottery" consisting of six additional draft picks after the first round and six more after the second round. The ten smallest market clubs and the ten lowest revenue clubs will each participate in the lottery. They are free to trade these draft picks, unlike regular draft picks.

- The signing deadline for draft choices will be moved up from August 15 to mid July, giving clubs just one month to sign their drafted players. The impact is that colleges will have more time to set their rosters, players chosen the previous year can be traded before the July 31st deadline, and clubs will have more time to evaluate their newer choices in that same season.

- Other deadlines are also moved up starting next year. Clubs have only five days after the World Series to make their offers to the elite free agents- about the time that they'd have to decide whether to pick up an option. Players will have seven days to accept or decline. The deadline to offer a contract to players under club control is moved up from the current December 12, to December 2nd.

- The new limits on international free agent spending do not apply to players that come from Japan through the posting system, or players from Cuba that are over 23 years old or have three years of professional experience. Thus, Yu Darvish and Yoenis Cespedes are not subject to the new limits.

- Some Free Agents signed to minor league contracts that are still on rosters five days before opening day and don't make the major league roster will receive a retention bonus of $ 100K, and may opt for free agency if not called up by June 1st.

- HGH testing will begin in the off season 2012- 2013, and will not be done during the season except for "reasonable suspicion". Obviously, there are details to be worked out on how the testing is implemented, but it includes drawing blood.

- The amount of the pool for draft bonus spending applies to the first ten rounds of the draft. Clubs with the highest picks and a higher number of picks are given a higher limit to spend. Players chosen after the tenth round may receive a bonus up to $ 100K which does not count against the limit.

- The top 200 prospects will be drug tested before the draft. It is not clear how the top 200 are determined.

- Clubs may trade their international signing bonus pool rights during the international signing period. Yes, strange.

- OH! And they've come up with new limits on how players and coaches use "social media" (like Twitter).

See my comments in the comments below this article for some examples of how the new rules would impact the Tigers, should they sign some of this year's free agents.

UPDATE 2: Changes in Realignment, Playoffs, Luxury Tax, Minimum Salary increases, Super Twos, and HGH Testing are pretty well covered in the original story below. Maury Brown has all the details of the new agreement. Some of the highlights not previously reported include:

FREE AGENT COMPENSATION:

- This year, Matt Capps, Ramon Hernandez, Francisco Cordero, Octavio Dotel and Darren Oliver were all Type A free agents this year, but will not require signing teams to give compensation, according to Ken Rosenthal. Their former clubs may receive supplemental draft picks if they offer arbitration and lose the players whether or not they offer arbitration (like a Type B free agent under the old rules).

- Kelly Johnson, Ryan Madson, Josh Willingham, Heath Bell, Michael Cuddyer, and Francisco Rodriguez will still be Type A free agents under the new deal, according to Rosenthal. Should their former clubs offer arbitration and lose these players, they will recieve a first round pick in the slot before the signing team. Teams signing these players will not surrender any compensation.

- Albert Pujols, Prince Fielder, Jonathan Papelbon, Roy Oswalt, Jose Reyes, Jimmy Rollins C.J. Wilson, and David Ortiz, will apparently all be subject to compensation, although Oswalt and Wilson have not been mentioned in any report on the subject.

- Takashi Saito and Carlos Beltran have contracts that prohibit their clubs from offering arbitration, so they should not be subject to compensation.

- The Elias rankings, as well as Type A and Type B designations are completely eliminated in the new agreement. Only the very top free agents will be subject to compensation beginning NEXT off season. In order to receive compensation, the player's former club must offer a one year contract equal to the average of the top paid 125 players from the previous season. This is estimated at $ 12.4 million based on 2011 salaries.

- If a player rejects the offer and signs with another club, the new club will give up it's first round draft pick in the next amateur draft. Only the top ten, rather than the top fifteen picks are protected. The former club will receive a "sandwich pick" after the first round. Order of compensation picks are based on the records of the clubs receiving the picks, rather than on the status or ranking of the free agent players.

- In order to be subject to compensation, a player must have been with his former club for the entire season. No more compensation for players acquired as "rentals" during the season.

DRAFT SPENDING LIMITS:

- Clubs will be given a "pool" of money to spend on bonuses for draft choices. The amount of the "pool" for each club has not yet been reported, but is believed to be based on prior amounts spent on the draft. Danny Knobler reports that MLB says the bonus pool for the 2012 draft will be $4.5 million to $11.5 million, depending on how many picks and on where a team picksThere is at least on report, as indicated in our first update to this story, that there is a mix between the bonus limits for spending on international free agent players.

- The penalties for exceeding the allotted "Pool" amount are quite steep, as outlined in our first update.

- Proceeds generated by the tax will go into the revenue sharing pool. Draft choices that are forfeited will be redistributed through a lottery among clubs that don't exceed their spending limits, with the odds of winning the lottery improving for clubs with lower revenue and worse won-loss record. More details here.

- No guaranteed major league contracts for draft choices.

OTHER CHANGES:

- instant replay is expanded to include some calls on foul and fair balls, and on trapped balls. First, MLB will consult with the umpires to implement these changes.

- Rosters may expand temporarily to 26 players for double headers.

- Minor league salaries are also increased, from the current $ 67,300 up to $ 81,500 plus a COLA adjustment by the end of the agreement

- New restrictions on chewing tobacco in public, and carrying tobacco in the uniform during games is prohibited. Ban on "low density" maple bats, details on a concussion policy are made permanent.

- Participation in the All Star game is mandatory except in the case of a documented injury.

UPDATE 1: MLBTR has some links to reports on expansion of instant replay to include trapped balls, scaled increase in the "luxury tax", details on the implementation of HGH testing, relationship between the international spending cap and the draft bonus spending cap, and more.

The penalties for going "over slot" on draft spending seem to be very severe, according to Jeff Passan.

From MLBTR

  • Teams that spend more than 5% over-slot on the draft will face a 75% tax, according to Passan (all Twitter links). Teams that go over slot by 5-10% face a 75% tax and the loss of a first rounder. Teams that go over slot by 10-15% face a 100% tax and the loss of a first and second rounder. Teams that exceed slot by 15% or more face a 100% tax and the loss of two first rounders. MLB wanted the top players to be selected in order of talent, according to Passan. This set of rules will also reduce draft spending significantly, a bonus for owners.
  • Starting in 2013-14, teams will be able to trade money from their spending allowance for international players, according to Passan (all Twitter links). However, teams can only boost their original spending limit by 50% through trades. Every team will have $2.9MM to spend on international bonuses this offseason, according to Passan. Eventually the limits will be in the $1.8-5MM range, according to Passan.

    STORY:

    Major league baseball will announce a new collective bargaining agreement later today (or Tuesday for you night owls) that will cover a five-year period, through the 2016 season. Many of the changes have been reported in the media.. Following are the details of the major changes expected in the new agreement. I will update this story as details are formally announced.

    REALIGNMENT: As previously announced, the Houston Astros will be moving to the American League’s West division starting with the 2013 season. Each league will have three divisions with five teams each, and teams in each division will play the same schedule. This change was demanded by the players.

    Impact: This change will result in interleague games being played all season long, and will result in further changes to the schedule in 2013 pertaining to the number of interleague games, which have not yet been announced.


    PLAYOFFS: Two wild card teams will qualify for the playoffs in each league, beginning in 2012. The two wild card teams will have a one game elimination playoff. The winner will then play the team with the best record, regardless of whether they are in the same division.

    Impact: Each team, including the Tigers, has better odds of making the playoffs. Division winners will gain an advantage as they do not have to play a one game elimination playoff.

    SALARIES: The major league’s minimum salary will increase from $ 414,000.00 to $ 480,000.00 in 2012 and will reach $ 500,000.00 by the end of the agreement in 2016.

    DRAFT SPENDING: There will be limits on the amount of total bonuses that clubs can pay to players annually in a draft, with penalties of 75% to 100% plus a possible loss of future draft picks for teams that exceed the limit. There will be a separate, similar limit on the amount that clubs can pay to international free agents, mainly from Latin American countries, discussed here.

    Impact: This was the most contentious issue during this round of negotiations. Bud Selig and some owners had pushed for a "hard slotting" system to limit the amount that clubs could pay in bonuses to each player based on where they were chosen in the draft. Opponents argue that clubs in smaller markets use draft spending as a way to compete because they can not compete in the free agent market. A compromise was reached on a tax system. Agents and many GM’s are reportedly unhappy with this provision. The Tigers were one of the more aggressive teams in going over slot, although they did not spend overall as much as some others. There should still be room to be creative with a limited number of picks.

    LUXURY TAX: Currently, teams with an annual payroll above $ 178 million pay a "luxury tax", and the amount of the tax increases each time a club exceeds this "soft cap". The amount of the upper limit will remain the same for 2012, but will increase over the life of the agreement.

    Impact:
    There is still a great disparity in revenues between big and small market clubs, but there was concern about some of the "have nots" taking the revenue sharing money and pocketing it, rather than investing in the product on the field. There may be a tightening of restrictions on the way that clubs spend revenue sharing dollars. Joel Sherman of the NY Post reports that the tax threshold will increase to $ 189 million from 2014- 2016. The amount of tax for repeat offenders, will increase from 40% to 50%. The Yankees are over the cap every year. The Red Sox and Phillies are close. The Tigers once paid a luxury tax, but are not close to the limit now.

    SUPER 2s: The group of players with at least two but less than three years of major league service gave up the right to arbitration in the 1985 agreement, but players regained it for the top 17 percent of that group, ranked by service time, in the 1990 agreement. That will rise to 22 percent after the 2012 season.

    Impact: About five to ten more players each year will qualify for arbitration, rather than earning just above the major league’s minimum salary. Rick Porcello is an example of a Super 2 player who is eligible for arbitration this year.

    FREE AGENT COMPENSATION:

    Changes this year: According to Ken Rosenthal, many Type A free agents may be signed without their new clubs giving up a draft pick as compensation. Former clubs will still receive compensation in the form of draft picks. Only the most "elite" free agents will require that their new clubs give up a draft pick.

    Impact
    : Players that will require compensation, if they are offered arbitration (and most will be) are: Albert Pujols, Prince Fielder, David Ortiz, Jose Reyes, Jimmy Rollins, and Jonathan Papelbon.

    Players requiring no compensation are: Kelly Johnson, Ramon Hernandez, Carlos Beltran, Heath Bell, Ryan Madson, Francisco Cordero, Frankie Rodriguez, Darren Oliver, Matt Capps, Takashi Saito, and Octavio Dotel. Should the Tigers wish to pursue any of these players, they may do so without giving up a draft pick.

    To be determined: CJ Wilson, Roy Oswalt, Josh Willingham, Michael Cuddyer,

    Changes starting next year:
    According to AP, there will be no Elias ranking system. In order to receive compensation for an elite free agent player, a club must tender an offer, believed to be at least $ 12 million, to the player. If the player declines and signs elsewhere, his new club will give its first-round draft choice to the former club, and the former club will receive a choice after the first round. The first 15 draft picks are still protected.

    Impact: No confusing formulas, simplified compensation system, fewer restrictions on signing all but the "elite" free agents.

    HGH TESTING: The new CBA contains provisions for players to submit to having blood drawn to be tested for human growth hormone (HGH). The same penalties will apply as for use of other PEDs, such as a 50 game suspension for first time offenders.

    Impact:
    MLB will be the first major North American sport to implement testing for HGH. Bud Selig wanted this as part of his legacy following sharp criticism that he stood by while the use of performance enhancing drugs was rampant in baseball. The players agreed to immediate blood testing, despite ongoing concerns about the accuracy of the tests and the uncertain effects of HGH on performance.

    THE BOTTOM LINE: There will be baseball without a work stoppage for another five years, and we won’t have to talk about another labor negotiation for five more seasons. This also seems to simplify things a bit.