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New MLB labor agreement within reach
In the bad old days, the tension was evident, the rhetoric disdainful, the contempt palpable.
The owners would try to break the union. The union would dig in against the owners. Work stoppage after work stoppage would commence, and once upon a time, in 1994, the World Series even was canceled.
This, by comparison, is nothing.
This is a dispute over an issue — slotted bonuses for the amateur draft — that is simply not important enough to either side to take down the entire sport.
Thus, a new labor agreement is expected by the time the free-agent market opens at 12:01 a.m. Thursday, enabling certain new rules governing free agency to take effect.
All that remains are the final details.
The draft, sources say, likely will be modified, not by hard slotting, but by a tax similar to the luxury tax on payrolls, with teams penalized for spending over a certain limit.
Draft-pick compensation for free agents also will change, with fewer restrictions on clubs that want to sign certain premier, or Type A, free agents. Some of those restrictions would ease immediately, sources say; other adjustments would take effect in 2012.
The bottom line is this: The amateur draft is a relatively minor issue, a roughly $250 million part of a $7 billion industry. Commissioner Bud Selig wants hard slotting, sources say, but not all clubs are as adamant. Some are fine with the current system, and some even are opposed to slotting, sources say.
On the players’ side, a superstar such as Derek Jeter might not strike on behalf of high school and college players. The union, however, views slotting as a precursor to a major league salary cap, and it has succeeded over the years in educating players about the broader implications of capping spending on picks.
A draft tax, by contrast, is philosophically acceptable to the union, mirroring the luxury tax on payrolls that already is in place. The luxury tax is not an actual cap, but a mechanism to slow down spending, penalizing clubs that exceed a certain payroll threshold.
While the effect of the luxury tax is debatable, the tax has helped create nearly two decades of labor peace. A draft tax would amount to a similar compromise, addressing the escalation in draft bonuses that Selig and many clubs view with alarm.
The bonuses rose from $195 million in 2010 to $228 million in ’11, according to Baseball America, an increase of 17 percent. Some clubs, however, probably were more willing to spend freely in ’11, knowing changes in the system were likely in the new labor agreement.
In any case, the more significant modification in the new agreement — at least from the fans’ perspective — will be the change in draft-pick compensation.
The union is concerned that all but the elite Type A free agents — players such as left-hander CC Sabathia and first basemen Albert Pujols and Prince Fielder — are devalued by the current system.
Draft-pick compensation was designed to reward teams that lost free agents, not inhibit the movement of such players. But clubs now value draft picks to a greater extent than they did when the system was created, making them less willing to sacrifice picks for certain free agents.
While the players who suffered the most harm in recent years were middle-inning relievers who achieved Type A status, sources say that the union also wants to protect certain others in this year’s free-agent class, including designated hitter David Ortiz, who is about to turn 36, and shortstop Jimmy Rollins, who is about to turn 33.
One obvious solution is to make the compensation for Type A picks similar to the compensation for Type B picks. Teams that lose such players receive a supplementary choice between the first and second rounds, but the signing teams do not forfeit picks.
To receive a pick under the new plan, one source said, a team might be required to make its free agent a qualifying offer — perhaps a set amount, perhaps a certain percentage more than his previous salary. The requirement of such an offer still could hurt a lesser Type A free agent; a team simply might choose to let him walk. But at least then that player would be free without the restriction of draft-pick compensation.
Negotiating all this is tricky; the Padres, for example, decided against trading closer Heath Bell before the July 31 non-waiver deadline based on the current rules. They still expect to receive two high picks if they offer Bell arbitration, then lose him as a free agent. The players and owners are aware that other teams made similar personnel decisions, which is why not all of the changes will be implemented immediately.
Again, these are all details to be negotiated, if they haven’t been already.
The tension between the sides no longer is evident, the rhetoric practically nonexistent.
A new agreement is within reach.