MLB and the Union Hammer Out a Deal and Hunker Down in the Face of the Unknown

Major League Baseball and the Major League Baseball Players Association have spent the past few weeks working through a long list of issues brought about by the coronavirus pandemic-driven delay to the 2020 regular season. On Thursday night — on what would have been Opening Day — the two sides announced a deal that settles several key questions that have hung in the balance since MLB postponed the start of the season. In general, the deal gives the league a great deal of flexibility in its attempt to salvage as much of the season as is feasible, and protects the players against the possibility that the season could be canceled entirely by addressing the thorny question of service time. However, it not only sells out amateur players with regards to this year’s draft and international signing period, it does so in ways that hint at more permanent and controversial changes sought by the league, such as a contraction of the minors and the institution of an international draft.

Despite the often-contentious relationship between the union and the league in drawing up the battle lines related to the next Collective Bargaining Agreement (the current one expires following the 2021 season), this deal represents an effort by both sides to avoid prolonged public bickering over billions of dollars in the face of an international crisis. Each side made key compromises that will leave some parties unhappy. The union voted to accept the deal on Thursday, and the owners ratified it via a conference call on Friday. With the ratification, a roster freeze is now in effect, barring teams from signing free agents and making trades, waiver moves, minor league assignments, et cetera, until both sides agree such transactions can resume. Towards that end, on Thursday dozens of players were optioned to the minors.

Per the deal, whose details were first reported by ESPN’s Jeff Passan and additionally fleshed out by the Associated Press, The Athletic, and the New York Post, MLB will advance the players $170 million in salary for April and May. At this point, it’s a virtual certainty that no games will be played during those months so long as the league adheres to the Center for Disease Control’s guidelines, which called for the cancellation or postponement of events consisting of 50 or more people through at least May 10. That best-case scenario, which may be a pipe dream given that the U.S. has now overtaken China in terms of the most confirmed cases of COVID-19 infections and is on an ominous trajectory as far as its further spread, would allow for a three-week resumption of spring training and the start of the season in June.

The $170 million represents only about 4% of the 30 teams’ cumulative payrolls, an estimated $4.27 billion according to colleague Jason Martinez. According to Andrew Miller, the Cardinals reliever who serves on the MLBPA’s executive committee, the money will be divided among four tiers of players. Those with guaranteed contracts will receive $150,000 apiece, while players with different types of split contracts between the majors and minors will receive $60,000, $30,000 or $15,000. That money will be kept by the players in the event that the season isn’t played at all. Assuming the season does start at some point, salaries will be prorated based upon how much of the season is played. As part of the deal, players agreed not sue owners for the loss of their salaries if no games are played.

As to what happens to incentive bonuses based upon counting stats such as games played, games started or finished, plate appearances, innings, or days on the active roster, that detail has yet to be reported. However, players in arbitration will not be penalized for “putting up counting stats that don’t stack up to past comparables,” as Passan tweeted. Additionally, this coming winter’s arbitration decisions can’t be used as precedent in future arbitration hearings.

The big win for the players in the deal is in the area of service time, a topic that Craig Edwards explored in depth earlier this week, and one that represented the union’s highest priority, even ahead of lost salaries. Via the AP:

If there are no games this year, anyone currently on a 40-man roster, 60-day injured list or an outright assignment to the minor leagues with a major league contract would receive 2020 service time equaling what the player accrued in 2019. If a partial season is played, service time would be the equivalent of what the player would have received over a full schedule.

In other words, a player spending 60 days of a 120-day season on the major league roster would be credited with 86 days, half of the 172-day service time standard. If there’s no season, players on long-term deals would not have an additional year tacked on; Gerrit Cole, for example, will have eight years remaining on his nine-year contract with the Yankees, and will still have an opt-out after the 2024 season. Players scheduled to reach free agency following the 2020 season — a class headed by Mookie Betts but also including Trevor Bauer, DJ LeMahieu, James Paxton, J.T. Realmuto, George Springer, Marcus Stroman, and Masahiro Tanaka — would still hit the market. Any qualifying offers issued by their respective teams will be based on full-season salaries (the average of the top 125 players), not prorated ones.

Such an outcome would be a particularly tough break for the Dodgers, who gave up five years of control of Alex Verdugo and six of Jeter Downs in a February blockbuster for Betts and David Price. As it is, however, even if a partial season is played, the aforementioned free agents and their brethren might face a tough break of a different sort if teams use the lost revenues as an excuse to curb their free agent spending. Would some team still sign Betts to a $300 million or $400 million deal? Quite possibly, but the effect of those lost revenues would almost certainly have an impact on the market as a whole.

Under the no-play scenario, players on the verge of arbitration eligibility, such as Walker Buehler, Matt Chapman, and Gleyber Torres, would still reach arbitration as scheduled this coming winter. Those who just went through the arbitration process would receive the salaries that they were scheduled to receive in 2020 in ’21 instead. Per The Athletic’s Ken Rosenthal and Evan Drellich:

Some on the players’ side project one year of service to be worth $800 million in player salaries — certain second-year players earn more when they reach arbitration, certain third- and fourth-year players earn more as they advance through the process and certain fifth-year players earn more as they reach free agency. The ripple effects, according to one player representative, are “almost incalculable.”

While the players’ union protected its membership, it gave amateur players the short end of the stick. Colleague Eric Longenhagen has a closer look at the deal’s ramifications up now, but the short version (whose details were first reported by ESPN’s Kiley McDaniel — yes, it still feels weird to type that) is that the league can delay the amateur draft as late as late July both this year and next (it was scheduled for June 10 of this year) and has the latitude to trim the draft to as few as five rounds this year, and 20 next year, both well below the 40 rounds it’s been since 2012. For both years, the league can leave signing bonus slot values at their 2019 levels despite the fewer picks; by comparison, last year’s slot values were 3.9% higher than the year before, according to MLB.com’s Jim Callis. What’s more, the present-day value of those bonuses is decreased because teams can defer all but $100,000 of the bonus money, with the balance due in installments payable on July 1 in both 2021 and ’22; prior to ratification, this had been reported as 10% of the bonuses being paid this year, with installments of 45% in each of the next two years.

But wait, there’s more! Undrafted players — of which there will be far more coming out of high schools and colleges, even if some players receive eligibility relief due to their canceled spring seasons — would be limited to signing bonuses of $20,000 (up from $10,000 in McDaniel’s initial report), which won’t do much to supplement the sub-minimum wages minor league salaries they’ll receive if they sign. Last year players chosen in rounds 11-40 could receive bonuses up to $125,000 without counting against the team’s total bonus pool (any overage did count against it), and some received well over that; via MLB.com’s draft tracker, Giants righty Trevor McDonald received the highest bonus of any player in the 11th round, $800,000, while Diamondbacks lefty Avery Short received the highest bonus of any player in the 12th round, $922,500.

As Longenhagen wrote, the cap will incentivize players who aren’t seniors to return to college, and steer high school players who were unlikely to be drafted before Day 3 towards campuses, though given NCAA Division I regulations allowing for just 11.7 scholarships per school, programs will likely face a glut barring changes. What’s more, a larger-than-usual group of draft-eligible seniors would lack the leverage of potentially retuning to school in hopes of boosting their stock.

This all adds up to an awful deal for this year’s potential draftees, with a ripple effect that will reverberate through the amateur ranks. Keep in mind that the draft is a comparatively small expenditure. Last year’s bonus pools to cover the first 10 rounds worth of picks, which ranged from about $16.1 million for the Diamondbacks to about $4.8 million for the Red Sox, totaled roughly $266.5 million, an average of $8.9 million per team and an amount representing about 2.5% of the industry’s record-setting $10.7 billion revenue. By comparison, the Opening Day payrolls for all 30 teams totaled about $3.96 billion, an average of $132 million per team and an amount representing roughly 37% of revenues.

As Longenhagen wrote, all of this should be understood against the backdrop of the bigger battles that the league is fighting in its efforts to exert further control over amateur players, both domestically and internationally. With the Professional Baseball Agreement (PBA) between MLB and MiLB set to expire after the 2020 season, back in November, MLB floated a proposal to contract 42 minor league teams, potentially putting more than 1,000 minor league players out of work. If anything close to that does come to pass — and the current outage, which obviously also affects minor league owners as well, could accelerate that by causing some teams to go out of business — a shorter draft is an inevitability, since there will be fewer jobs to staff.

In the deal, MLB also has the right to push back the beginning of the international signing period from July 2 to the following January 15 in each of the next two years, with the end of the signing period delayed from June 15 to December 15. Wrote Longenhagen:

MLB’s newfound ability to slide the start of the IFA signing period around not only enables them to delay spending about $150 million on (mostly) July 2 bonuses until January, but it also enables the league to proactively shift international talent acquisition timelines in ways that it thinks will grease the logistical wheels for an eventual draft, which many people in baseball think will be in place by 2023.

There are prospects from the 2022 international class who already have verbal deals with teams. If MLB moves to put a strict moratorium on early verbal deals for the 2023 class, it will be a clear indication that they have a timeline for an international draft since they’d surely prefer teams not agree to deals that are undone by the institution of such a process. Teams felt comfortable agreeing to 2022 deals because they didn’t think MLB would have enough time to sew up the logistics of a ‘22 international draft (my sources are not in agreement as to whether we’ll eventually have a single world draft or two separate drafts — international in January and domestic in June) even if MLB and MLBPA agreed to a framework during the next CBA negotiations, set to occur after the 2021 season.

As for the rest of the deal, the league and the players will make a “good faith effort” to play as many scheduled games as possible this year, “subject to government rules, travel and economic feasibility,” according to the AP report. The players do have final approval on scheduling; the league can’t unilaterally determine how many games will be played or when. The regular season could extend into October, potentially including additional doubleheaders (the seven-inning variety used in the minor leagues has not been ruled out, though it hasn’t been overly discussed, according to the AP). The postseason could stretch into November, with an expanded format and at least some games played at neutral sites, including indoor stadiums. A glass half-full view of the situation is that this season may provide a unique opportunity to experiment with some ideas that otherwise might not get to be explored.

This deal doesn’t settle every outstanding issue with regards to the 2020 season, because so much is still unknowable about when the schedule will be able to resume. And it certainly won’t satisfy every party, particularly amateur players and their representatives (agent Scott Boras called the draft bonus cuts “unconscionable“). Nonetheless, this has to be regarded as a step forward for the league and the union as both sides hunker down in relative amity while facing a situation that is simply without precedent in MLB history.