The MLB CBA and how it will effect the draft

I went out to grab lunch today and was listening to the “Power Alley” on the MLB Network on SiriusXM. The collective bargaining agreement (CBA) was the topic and the hosts, former GM Jim Duquette and field manager Kevin Kennedy were commenting positively on the proposed changes that commissioner Bud Selig is suggesting. In fact, based on today’s news report, we could see a signed CBA by Thanksgiving.


It amazes me how uninformed fans and even broadcast announcers are about how destructive these proposed changes will be to the game of baseball. It really boils down to a question of free market vs. price controls. Let me explain…

The current rule 4 draft (otherwise known as the June amateur draft) gives the first pick in the draft to the team finishing with the worst record in Major League Baseball the previous year, the second pick to the team with the second worse record, and so on. There are special rules that enable teams that loose players via free agency to get additional picks in the first round and/or receive “supplemental” picks between the first and second round. These picks can prove to be very helpful for teams, particularly small market teams like the Tampa Rays, as these teams collect extra draft picks when their current free agent players elect to sign with a different team. For instance, when Carl Crawford decided to sign with the Boston Red Sox, Tampa received the Red Sox first round pick as well as a supplemental pick. All told, Tampa received 12 first and supplemental round picks in the 2011 draft to compensate for loosing players to free agency.

Another major aspect of the Rule 4 draft is determining how much money you pay a draftee. The commissioner’s office provides guidance, known as a slot recommendation, for each team to use when negotiating with a player. However, for the most part, teams do not adhere to these rules because players want more money and have hired “advisors” to assist in the negotiation. These advisors (we’ll call them agents from here on out) help to increase the offer, resulting in the following results from the 2011 draft: Gerrit Cole signs an $8M signing bonus on a recommended slot of $4M and Bubby Starling signs a $7.5M bonus on a recommended slot of $3.25M. Is this good or bad?

Since I believe in the free market, I not only believe it’s a good idea, I think it’s mandatory. Here’s why…

Not all of the players drafted, want to play baseball as their first choice. Many are elite high-school athletes that are being heavily recruited to play college football or basketball and Major League Baseball needs the flexibility to allow teams to recruit. If you’re thinking that college baseball is an alternative, not so fast… One of the little known facts about college sports is that baseball is not in the same scholarship category as football and basketball. Since baseball is not a revenue sport, Division I Schools are limited to 11.5 scholarships for their entire team while football is allowed 85. Sure, there are more players needed for football, but the difference is nonetheless dramatic.

Take Bubba Starling, taken #5 overall by the Kansas City Royals in the 2011 draft. Starling is an elite two-sport athlete that had a full scholarship to play quarterback for the University of Nebraska. Kansas City had to go over-slot to get Starling to play baseball, otherwise, he would have gone to Nebraska. In the 2010 draft, the same thing happened with Zach Lee. Lee was headed to LSU to play football and was signed by the Dodgers for over-slot money. It doesn’t stop with football, Josh Bell had accepted a scholarship to play baseball at the University of Texas and it took a $5M signing bonus, almost $4M over-slot for Pittsburgh to sign him. The bottom line is that recruiting talent takes money and Major League Baseball teams need to have the flexibility to make these deals.

As the new CBA goes through it’s final edits, it appears that punitive salary caps will be instituted. In other words, teams will be given a budget, based on where they draft, to sign their entire draft class. If you want to spend all of the money on your first pick, fine, you just won’t have any money to spend on other players. Other proposals that are being considered involve the concept of a draft tax. A team can spend what they want, but will have to pay a tax, either in the form of a financial payment to the league or loss of draft choices in the following draft.

In whatever form the final edits take, these types of controls are a BAD IDEA. They will force teams to be more conservative and take players that they feel absolutely confident that they can sign for a reasonable amount. Additionally, players that are taken in later rounds, who are considered “tough signs” because of their desire to play college baseball, will more likely, now, play college baseball.

While this might help some players, college has a history of being unkind to baseball players, particularly pitchers. The goal of a college program is to win games and if that means abusing the arm of a 19-year old by having him throw 150 pitches to win a game in a February game, then that’s what will happen. Players will take the risk that playing college baseball will enhance their chances of landing high in the draft in three years and some will, but many will fall to college abuse and never be heard from again.

The bottom line is that teams will have less of an appetite to sign players like Bubba Starling or “tough-signs”. If they fail to sign a risky pick, they would have under-spent on the draft and for small market teams, that’s going to hurt. Why?

The Pirates, Nationals, and Royals have spent heavily over the past few years on the draft and now have three of the best minor league organizations in all of baseball. In fact, those three teams continued their spending ways in 2011 and were the top three teams in terms of spending on the draft. While a great minor league organization doesn’t guarantee major league success, it sure goes a long way.

Since draftees are not in the union, I would also surmise that the players union would prefer these tighter controls. The theory is that clubs will spend less money on the draft and more in the free agent market. However, history has proven that smaller market teams prefer spending $15M on a draft class to spread the wealth/bets on younger players instead of two aging veterans that may not provide long-term answers.

Changes to the Rule 4 draft rules, may move major league teams to invest even more heavily in the International free agent market. Young talent outside of the U.S is not subjected to a draft or any major league controls. In essence, they can be signed by any team for any amount of money. Because of this, many MLB teams have established baseball academies and scouting bureaus in the Dominican Republic, Venezuela, and other Caribbean countries to recruit young talent. For instance, in July of 2011, the Texas Rangers gave Ronald Guzman, a young 16-year old Dominican outfielder a $3.45M signing bonus and Nomar Mazara, another 16-year old outfielder, a record-breaking $5M signing bonus. Next year, based on the new CBA rules, there may not be a player with a $5M signing bonus taken in the draft. Is this fair or reasonable? It doesn’t feel that way to me and I believe that the commissioner is making a wrong decision that will hurt Major League Baseball in the long run.

While most baseball fans will simply gloss over the CBA changes, it could have lasting effects to the great game that we all love.