All Things Baseball

New Labor Agreement Keeps Baseball Safe Till 2011

Any baseball fan should be overjoyed right now, even if they are rooting for the Tigers in this World Series or are diehard Cubs fan just waiting for a title.  That’s because we know baseball will be safe until 2011 due to the signing of a 5-year labor agreement by Commissioner Bud Selig and the Players Association. 

Bud Selig is finally starting to learn what being a good commish means

So what exactly are the terms of this agreement?  I’ll go through them rather exhaustively later in this post.  If you’d rather just be happy and recline in your La-Z-Boy to watch the rest of the World Series knowing that baseball will continue with little chance of a labor strike for 5 more seasons, so be it.  Those of you who want to dig into it, here’s your part of this post. 

We’ll start with the fact that this new agreement is the longest in baseball history, with the 5-year duration being a huge step-up over the originally expected 3-year deal.  If the contract holds up for all 5 years without major dissent, this will be the first time the MLB has gone 16 years without a labor strike since the beginning of the Collective Bargaining days.  A pleased Bud Selig announced that “This is an historic agreement for Major League Baseball and is emblematic of the spirit of cooperation and trust that now exists between the clubs and players”.  That’s nice to know!

First the basics…

  • This is a 5-year agreement
  • It expires on December 11, 2011 — far enough away that few of us even want to think about what we’ll be doing on that day

Part 2: Revenue Sharing — very similar to old agreement

  • The net transfer of revenue sharing plan will remain the same as the current plan ($326 million during the 2006 season).  The amount will continue to increase as the revenue increases. 
  • Tax rates are greatly decreased with a new “Central Fund Redistribution” mechanism.  Rates will be reduced from 40 to 31 percent for high-revenue teams and 48% for low-revenue clubs as per the old agreement. 
  • For the first time in history, all teams will have to deal with the same marginal rate
  • Commissioner’s Discretionary Fund will remain at $10 million/year, with the 3 million per team maximum remaining in place

Part 3: Competitive Tax Balance — continued from 2002 agreement

  • Rate will remain 22.5% for clubs over the “threshold” for the first time, 30% for teams over for the second time, and 40% for teams that go over 3+ times.  Teams that paid 40% this year will pay the same rate next season. 
  • The “thresholds” will be: $148 million in 2007, $155 million for 2008, $162 million in 2009, $170 million for the 2010 season, and $178 million for the final year of the agreement, 2011.

Part 4: Debt Service Rule — exactly the same as before

Part 5: Amateur/First-Year Player Draft

  • Teams that fail to sign their 1st- or 2nd-round draft picks will receive the same pick in the following year’s draft as compensation.  Teams that fail to sign their 3rd round pick will get a “sandwich” pick between the 3rd and 4th rounds of the following year’s draft as compensation. 
  • The number of years before a player must be protected from the Rule 5 Draft increased to 4-5 years from year of signing with a team (previously 3-4 years from first minor league season)
  • Deadline for signing picks that aren’t college seniors is August 15

Part 6: Draft Choice Compensation

  • Type-C free agents eliminated starting this offseason (teams don’t get any draft pick compensation if a free agent that doesn’t qualify for Type-B or higher leaves)
  • Compensation for Type-B free agents is now indirect.  The team which lost a Type-B free agent receives a sandwich pick between the 3rd and 4th rounds of the draft instead of a draft pick from the team that the free agent was signed by. 
  • Type-A compensation remains at a 1st- or 2nd- round draft pick
  • Starting in 2007, a free agent must be in the top-20% at their position instead of the top-30% to qualify as Type-A.  The free agents between the top-21 and top-40% qualify as Type-B (instead of 31-50%).
  • Salary arbitration offer and acceptance deadlines are now December 1 (offer) and December 7 (acceptance)

Part 7: Benefit Plan

  • PBP (Players Benefit Plan) remains at the maximum allowable benefit under IRS rules. 
  • $154.5 million average contribution to PBP per year
  • Benefits for some retired players improve

Part 8: Minimum Salary

  • The minimum salary for MLB players will be $380K in 2007, $390K in 2008, $400K in 2009, etc… until 2011.
  • The minimum salary for MiLB (minor league) players will be $60K in 2007, $62.5K in 2008, $65K in 2009, etc… until 2011
  • Players on the MLB roster for the first time are due a minimum of 50% of the minor league minimum
  • The “Maximum Cut Rule” which applies to split contracts is reduced from 80% to 60%

Part 9: Free Agency

  • December 7, December 19, January 8, and May 1 free agency deadlines are eliminated
  • The “tender deadline” is December 12
  • The right to demand a trade is eliminated for all new multi-year contracts

Part 10: Miscellaneous/Other

  • League that wins the All-Star Game receives home-field advantage during the World Series (as per the current agreement)
  • Drug program remains the same
  • Over 40 grievances/disputes settled by agreement (too many to list and too boring to read anyway)
  • No strikes/labor disputes during term of agreement, which expires on December 11, 2011. 

That’s about it, and it’s way too much to comprehend in one sitting.  Just treat the MLB Labor Agreement just as you would treat a document you receive from a rental-car company about their insurance, driving, etc… policies.  All the rental agreement says is that as long as you don’t wreck the car, let others drive it, or doing any other stupid things that only a moron could think of (such as driving 120mph on the highway — no offense Esteban Loaiza, but that was just insane).  Similarly, all the MLB Labor Agreement says is that baseball will go on without disputes for at least 5 more years and the rest is for GMs to worry about. 

For more information on the labor agreement see Jason Churchill’s blog “Prospect Insider” at .  If you have any other questions about it, leave a comment and I’ll respond with as much detail as I can give. 

And as the song goes, “Celebrate the times, come on!


Trivia Time!

The last question was…

What are the primary ingredients/components of pine tar?

The correct answer…

Aromatic hydrocarbons, tar acids, and tar basesAs I said in my previous post, this was a question for the “sciency” folk. 

Today’s question is…

Bud Selig succeeded Francis T. Vincent Jr. as the Commissioner of Baseball.  Vincent Jr. was elected commissioner when which former commish passed-away while in office?


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