The New CBA and You: Lessons to an Angry Mob

Major League Baseball and its Players Association announced the new collective bargaining agreement. While rumors swirled about what would be changed or introduced, the details of the implementation were largely unknown.

Well now we know.

Here are the key points that will affect the Kansas City Royals over the five-year agreement:

• An extra wild card spot will increase playoff teams in each league to five – but we all pretty much knew that was coming
• The Astros move to the American League West in 2013, creating two equal leagues of 15 teams and necessitating interleague play throughout the season.
• Revenue sharing is staying more or less the same as it has been.
• The signing deadline for draft picks has been moved up to the middle of July. This is a good thing. The old August deadline never made sense and only meant that players who waited to the end ended up missing time they could have spent on the field.

But that’s the boring stuff, not nearly the kind of details that would inspire the citizens to take up arms in pitchforks and torches and storm the Commissioner’s office.

The biggest changes involve draft and international spending. Bud Selig has tried to enforce some sort of slotting system for drafted players for some time now and the new CBA grants him that wish.

Teams will have a total based on the combination of assigned values for their draft picks in the first ten rounds. Beyond that, any bonuses exceeding $100,000 after round 10 will be added to the total of spending. If a team’s total goes beyond the assigned total, they’re assessed a penalty. If they grossly exceed the stated total, they could be subject to having future draft picks revoked in the future. The message is clear – stay inside the lines or you’re going to pay.

The immediate reaction for fans of small market teams – like the Royals – is that the way some General Managers have found to level the playing field and inject talent into a farm system is by paying above slot for players who slip based on signability concerns. Wil Myers is a fine example of the type of player who can be added to an organization from this approach.

Myers was selected in the third round in 2009, though the Royals reportedly considered him with the 12th overall pick as well. He slipped through the first round, the supplemental round, the second round and into the third round because most teams thought he was strongly committed to going to college and to persuade him otherwise would require a very large bonus. Myers signed for $2 million and now has a chance to be in Triple A at the age of 21 in 2012.

The idea behind the outrage is that by limiting how much teams can spend on the draft, that some of the high school players and college juniors who may have signed to play professionally would go back to school. Eventually, they’d be drafted but teams like the Royals couldn’t take advantage of another team’s hesitance to go after the risky pick. It’s that strategy that has helped the Royals load up many high-ceiling prospects since Dayton Moore was named General Manager. There was a focused effort to invest heavily into scouting, development and the draft and the Royals were finding a way to compete for big talent outside of traditional free agency.

Now, critics fear, without the freedom to spend away on big bonuses, the Royals (and other small market teams) won’t be able to take advantage in the same way since such a practice would end up costing them additional money or draft picks, both precious resources that they need to continue rebuilding. Also, some two sport stars may have an easier decision with less of a bonus to inspire them to forego college (Bubba Starling is the oft-cited example today).

Spending on international free agents has a similar cap applied to it now. For 2012-2013, teams will have an equal signing bonus pool. After that year, teams finishing lower in the standings will have more money allotted to them. Similar to the new draft rules, exceeding the signing bonus parameters results in penalties and restrictions in the future.

This is the key area that hurts the Royals.

Increasing their presence in Latin America has introduced prospects like Noel Arguelles, Cheslor Cuthbert, Elier Hernandez and others into the farm system. In some cases, the Royals have spent millions on 16-year-old kids on the hope that their scouting is accurate and they can reach their projected upside. It’s risky, but international signings offer great reward as well. Teams who don’t invest in Latin America cut themselves off from an entire region of talent. Teams who choose to invest may find themselves blowing a lot of money on someone who flames out before they turn 20, but it also produces the Pedro Martinezes, the Vladimir Guerreros, the Andruw Joneses of the world. Sure, teams can still spend money on bonuses, but they can’t do so in the same way.

It limits those teams who do choose to put a lot of eyes on Latin prospects. If the Royals choose to spend the money there and the Braves choose not to, that’s their choice. If it burns them, that’s the risk they know going in, but they earn the reward of any five-star prospect they find by doing the work. If the Royals want to spend $3 million on a player they think could become an MVP by age 22, why shouldn’t they be allowed to do so?

Another odd wrinkle applies to the draft. The ten smallest markets in baseball will have a draft lottery to award a selection to six teams, determined by chance. Odds are linked to the team’s winning percentage (similar to the NBA’s lottery system). This part, I don’t get. It eliminates the Type A and Type B free agent compensation (and that system is overhauled into something that I don’t think will apply to the Royals for a while anyway that involves no compensation UNLESS the team offers the average salary of the top 125 salaries). But why a lottery and why just six teams? The previous compensatory picks weren’t limited by an arbitrary number, so any team that happened to snag likely Type A free agents somehow would get additional picks. Period. Some teams exploited this by trading for players projected to yield supplemental picks with no intention to re-sign them.

It’s a step, though. Baseball is recognizing that the playing field is not level. Rob Neyer argued that limiting spending in the draft could end up helping small market teams. His example is that if a player and his agent know that the Royals can only spend a certain amount, then they can ask for that amount and both sides are happy. The team saves a bit and the player and agent get the best deal under the rules. Naturally, Scott Boras hates the deal.

The more I think about it, the new CBA applies to all teams, so it’s not as if the Yankees can go spend more on draft bonuses (even if they can bully everyone around during free agency). The Royals can still go after players to sign over slot value. They may find that some of the high school signings they were able to get don’t sign as often, and the limits in Latin America hurt what became a very big asset to the club.

Baseball has chosen to keep the money loaded into free agency, which doesn’t help Kansas City and draft guidelines will mean the Royals will have to be more creative. It also increases their risk since they may not be able to sign players out of high school as they have found.

So I still don’t like the deal. The Royals signed eight players to draft bonuses greater than $500,000 and it allowed them to have a strong draft class. They’ve chosen to invest $10-15 million in the draft in the past few years to get the kind of talent that would cost them much, much more if they were going to try to find it through typical free agency. It takes time and patience and the dedication to – ahem – trust the process of development. They found an advantage within the constraints of the system and now, they have to adjust.

And, by the way, another part of the CBA – Eric Hosmer will become a Super Two arbitration eligible player after 2012 (barring some kind of demotion).

Okay, maybe we should dig out those pitch forks after all.