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MLB’s new collective bargaining agreement hurts the Tigers more than any other club

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New tax threshold penalties and competitive balance formula don’t help Detroit one bit.

MLB: San Francisco Giants at Detroit Tigers Rick Osentoski-USA TODAY Sports

The Detroit Tigers won’t be signing any of this year’s elite class of free agent players during the winter, and not just because they’re in rebuilding mode. Under the terms of Major League Baseball’s new collective bargaining agreement (CBA), Detroit would pay a very steep penalty should they sign a premium free agent.

In fact, the changes in the new CBA probably hurt the Tigers more than any other club because of these new rules.

Reduced compensation when losing qualified free agents

The Tigers would have been prohibited from making a qualifying offer to Justin Upton if he had opted out of his contract following the 2017 season. He was previously given a qualifying offer before the Tigers signed him, and the new CBA prohibits players from receiving more than one qualifying offer.

Under the previous rules, the Tigers could have made a qualifying offer to Upton if he opted out of his contract. They then would have received a supplemental first round draft pick once Upton signed with another team. That’s a whole lot better than Grayson Long and a player to be named later (teenage righthander Elvin Rodriguez), which is what they received from the Los Angeles Angels. There is not another free agent this winter who is valuable enough to warrant a qualifying offer but is disqualified because of a previous offer.

The Tigers also could have received only a supplemental fourth round draft pick for J.D. Martinez (instead of a supplemental first round pick) because the new CBA penalizes teams who exceeded the luxury tax threshold in the previous season. There is not another free agent this winter who is valuable enough to warrant a qualifying offer and played for one of the few teams above the luxury tax threshold. Again, only the Tigers got burned by the new rule.

By contrast, the Kansas City Royals could have three supplemental first round picks for losing qualified free agents. They make five total selections before the Tigers make their second pick in the 2018 draft.

Increased penalties for signing qualified free agents

In addition to reducing the compensation that teams who are above the tax threshold receive for losing a free agent, those teams are also severely penalized for signing a player who has rejected a qualifying offer from his former team.

As a luxury tax payer, the Tigers would surrender their second- and fifth-highest draft picks, plus $1 million in international bonus pool money if they dared to sign a free agent player who turned down a qualifying offer. If they were to sign two such players, they would also lose their third- and sixth-highest draft picks.

Fortunately, the Tigers won’t be inclined to make a big splash in free agency this winter. The rebuilding plan is to first restock the farm system with talent before reopening the check book, so this new rule won’t really hurt them this winter.

No competitive balance round draft picks

Following the first round of the amateur draft, teams who are receiving supplemental first round picks will select, followed by six “competitive balance” picks. Then, Round 2 begins.

Following the second round of the draft, eight more teams will receive a competitive balance pick, and then teams receiving a supplemental second round pick will choose. Then the Tigers will start the third round.

While 14 teams will receive a competitive balance pick in each of the next five drafts, the Tigers will not be one of those teams. The 10 teams located in the smallest markets, plus the 10 teams with the lowest “market score” based on revenue and winning percentage, will each receive these bonus picks, with a limit of one extra selection per team. The Tigers rank near the middle of the pack in market size and in local revenue receipts, so they just missed out on getting a competitive balance pick in each draft.

The 14 competitive balance picks stand out this year more than others for Detroit, since they delay the start of the next round, when the Tigers will have the first pick each time through the draft order. They also have to wait while three of their division rivals, Cleveland, Minnesota and Kansas City, all receive a competitive balance pick.

Less International bonus money to spend

The amount of money that teams can spend on international signing bonuses each year is directly tied to whether they receive competitive balance draft picks. Clubs that receive a Competitive Balance Pick in Round A of the MLB draft will receive a signing bonus pool of $5.25 million.

Clubs that receive a Competitive Balance Pick in Round B of the draft will receive a signing bonus pool of $5.75 million. The same 14 teams in groups A and B will alternate from year to year through the end of the five-year CBA term.

All other clubs, including Detroit, will receive a signing bonus pool of $4.75 million.

Is there any upside?

If there is any ray of sunshine in the new agreement for the Tigers, it is that they are still a revenue sharing recipient rather than a payer, so they will receive a net positive amount of money when local revenues are divided among the clubs. This also comes with the benefit of being able to receive a supplemental first round draft pick should they lose a player to free agency after making a qualifying offer before 2021, when the new CBA is set to expire.

One might argue that the Los Angeles Dodgers are harmed more by the new stiffer penalties at the highest level of the luxury tax brackets, but there is no sign that the new rules have had any impact on their player personnel decisions thus far. For the Tigers, the penalties are immediate and significant.