MLB Labor Agreement Keeps Key Points Of Current Deal In Tact

Selig Announces New Five-Year CBA Before Game Three

MLB and the MLBPA have agreed to a new five-year CBA, extending the sport’s labor peace through December 11, 2011. This is the longest labor deal in MLB history, and will guarantee 16 years without a stoppage in play due to a labor situation. Widely expected for several weeks, the deal is a compromise pact that builds upon the ’02 deal with several meaningful –- but not revolutionary –- changes. Here is an outline of some of the major points of the new CBA.

• A shift in the marginal tax rate on clubs for revenue to 31%. The net amount in total industry revenue-sharing funds — $326M this year — will remain intact, and ultimately rise over the life of the deal to reflect ongoing and anticipated growth in MLB revenue.
• An increase in the minimum player salary from $327,000 this season to $380,000, rising to $390,000 in ’08, to $400,000 in ’09, and then adjusted for cost of living in 2011.
• A shift in the free agency tender date to December 12, and a ban on trade demands for all new multi-year contracts.
• A rise in the threshold for the luxury tax, $136.5M this year, to $148M next year and then steadily to $178M in 2011. Repeater status for assessed penalties on crossing thresholds carries over from the old labor deal to the new one.
• Open language that governs the use of revenue-sharing funds to improve club competitiveness, but with no explicit guidelines beyond that, stays generally as is. But the union will have a more defined means to file grievances if disputes on such matters arise.
• Extensions to the current drug testing provisions, debt-service rules, and the awarding of home-field advantage in the World Series to the winning league in the All-Star Game (Eric Fisher, SBJ).

HGH TESTING: While the CBA continues the drug-testing provision that was added in ’05, MLBPA Exec Dir Donald Fehr said that should a “scientifically validated urine test for [HGH] be developed ‘there’s an understanding we will adopt that test.’” Fehr: “Blood tests we will talk about when one is validated” (USA TODAY, 10/25).

VIEW FROM THE TOP: MLB Commissioner Bud Selig said, “The last agreement produced stunning growth and revenue. I believe that five years from now people will be stunned how well we grew the sport” (AP, 10/25). Noting MLB is experiencing the highest revenue and attendance in its history, Fehr said, “This new agreement will permit that growth to continue uninterrupted” (Baltimore SUN, 10/25). Negotiators said that the deal was completed so early “mainly because the overall economic health of baseball is good, and because there were few broad, philosophical issues that divided the two sides” (WASHINGTON TIMES, 10/25). Blue Jays President Paul Godfrey said, “Both sides simply realized the state of the game is very healthy. And why look for a work interruption when things are going reasonably well for both sides?” (TORONTO STAR, 10/25).

Could Andy MacPhail Become Next Commissioner?

THE NEGOTIATORS: In Toronto, Jeff Blair reports Selig and Fehr were joined at the announcement yesterday by former Cubs President & CEO Andy MacPhail and MLBPA General Counsel Michael Weiner. MacPhail “could be Selig’s replacement if he retires in 2009, as expected,” while “many believe [Weiner] will replace Fehr” when he steps down (Toronto GLOBE & MAIL, 10/25). In Cleveland, Paul Hoynes reports Indians Owner Larry Dolan “participated in all 47 of the bargaining sessions” and spent the past three weeks in N.Y. “helping to reach a deal” (Cleveland PLAIN DEALER, 10/25). Orioles Owner Peter Angelos “did play a role in the labor talks,” but sources said that he “wasn’t nearly as involved as he was when the last CBA was struck four years ago” (Baltimore SUN, 10/25). Fehr said that “at least 100 players had input” into the new CBA (N.Y. TIMES, 10/25).

REVENUE SHARING: In St. Petersburg, Marc Topkin reports the new CBA reduces from 48% to 31% the amount of “locally generated revenue that each team must contribute to [MLB’s] central fund.” Fehr and MLB President & COO Bob DuPuy said that it “should encourage a team such as the [D’Rays] to work harder to increase revenues as they get to keep more of the money.” Fehr: “This gives them a big incentive to raise revenue. And you don’t raise revenue for very long without having a better team on the field” (ST. PETERSBURG TIMES, 10/25). Rangers Owner Tim Hicks said that the team “should see their financial contribution to the revenue-sharing plan reduced significantly” (DALLAS MORNING NEWS, 10/25). In Baltimore, Rick Maese writes, “It sure looks like this new deal picks up right where the last one left off -– taking care of small- and mid-market teams and limiting the excuses teams like the Orioles can throw out each October.” Dolan, whose club had an Opening Day payroll of $56M, said, “If you have the energy and the ability, this will enable us to do better” (Baltimore SUN, 10/25). However, Pirates Managing General Partner Kevin McClatchy said, “I’m sure on the extreme side –- on our side and the guys in New York -– it was a case of not getting everything you wanted. The Yankees probably think there is too much revenue sharing, and we’re probably on the other side of that belief. ... Anybody thinking we are moving to the old NFL style –- we’re not there” (TRIBUNE-REVIEW, 10/25).

A WIN FOR BIG MARKETS? In N.Y., Murray Chass reports the MLBPA “proposed that the rate schedule for the tax on payrolls above designated thresholds start over” in the new CBA, but the “clubs’ negotiators wouldn’t go for it.” The union was trying to get the Yankees to “go back next year to a [luxury tax] rate of 22.5[%], which they have not paid since 2003.” The Yankees “may be the only team to pay the luxury tax this year,” as the Red Sox are expected to come in “just under or just over the $136.5[M] threshold.” Under the current CBA, only the teams that paid the tax in ’05 –-the Yankees and Red Sox –- “were subject to the tax this year.” The Yankees’ payroll will come to about $201M for ’06, resulting in a tax of $25.8M, meaning the team will have paid $96.6M in luxury taxes during the course of the CBA (N.Y. TIMES, 10/25). But a source said that the Yankees and Mets “didn’t lose anything, and the competitive balance tax and the revenue sharing helps them. The revenue sharing makes it better and the tax helps a lot.” MLB Exec VP/Labor Relations Rob Manfred said, “The marginal tax rate is something fast-growing clubs are interested in” (N.Y. POST, 10/25). In Chicago, Phil Rogers writes the new CBA is a “win for the [Yankees] ... and a loss for teams like the [Royals] and [Pirates]” (CHICAGO TRIBUNE, 10/25).

FREE AGENT COMPENSATION: In Dallas, Evan Grant reports that under the new CBA, teams will also “still receive draft pick compensation for most of its free agents this winter -– if [teams] offer salary arbitration and if the players sign elsewhere” (DALLAS MORNING NEWS, 10/25). In St. Paul, Gordon Wittenmyer reports the extra picks have been “especially useful to lower-revenue teams trying to keep enough talent coming through their systems to restock big-league rosters with salary-driven high turnover rates.” However, Twins GM Terry Ryan said, “I don’t really see where it’s going to change clubs’ thought processes. ... I don’t see where it’s going to really put a dent in teams’ plans” (ST. PAUL PIONEER PRESS, 10/25). A’s GM Billy Beane said that he was “satisfied with the new accord in general and the free-agent-compensation system in particular.” Beane: “Under this system, we’d have more freedom to sign a free agent, and the team that loses its free agent would still get a (sandwich) pick” (S.F. CHRONICLE, 10/25).