Originally written on Pirates Prospects  |  Last updated 11/22/11

I tried to watch the press conference where Bud Selig announced the new Collective Bargaining Agreement, although it was hard to keep track of the announcement while following all of the details on Twitter.  I didn’t catch every word that was said, so I probably missed an announcement that went something like this:

“We’re proud to say that with this new Collective Bargaining Agreement, the Pittsburgh Pirates have forever been eliminated from the playoffs”.

I can only assume that this was said because all of the details that have come out about the new CBA pretty much have said the same thing.

Take the draft for example.  No team has spent more on the draft the last four years than the Pirates.  In this time they’ve gone over-slot on middle round guys like Robbie Grossman, Nick Kingham, Ryan Hafner, Colton Cain, Zack Von Rosenberg, Zack Dodson, Stetson Allie, and most recently, Josh Bell.  That will all change with the new rules.

Teams are now limited to their total spending, which is determined by the sum of their slot prices.  Any team that spends more than this amount will be penalized, and the penalty is harsh.

  • A team can spend up to 5% more than slot, although if they go over 5% they get a 75% tax on that extra spending.
  • If a team spends between 5% and 10% more than slot, they would face a 75% tax and a loss of a first round pick the following year.
  • From 10-15%, a team would face a 100% tax and a loss of their first and second round picks the following year.
  • If a team spends 15% or more they face a 100% tax and the loss of two first round picks.

The new CBA eliminates any chance of getting a Josh Bell for $5 M in the second round.

It’s not really hard slotting, but it kind of is.  To put these numbers in perspective, the Pirates spent almost $16.5 M on their first ten picks in the 2011 draft, which was almost three times the amount of their slot prices, and well over the 15% mark.  Under the new CBA, the Pirates would have had to pay a 100% tax on the $10,311,500 amount that they went over-slot.  They’d also have to give up their first round picks for the 2012 and 2013 drafts.  That negates any value the Pirates receive for going over-slot for a guy like Josh Bell, whose bonus alone would have triggered the 15% mark.

This also doesn’t include the bonuses after the 10th round.  Any bonuses larger than $100 K after the tenth round will see the excess count against the draft pool.  That wasn’t a big problem for the Pirates in 2011.  The only player they signed above $100 K was 12th round pick Candon Myles, who received $125 K.  It would have been a problem in previous years.  In 2010 the Pirates signed 15th round pick Drew Maggi for $468 K, 17th round pick Ryan Hafner for $450 K, and 23rd round pick Jared Lakind for $400 K.  In 2009 they signed 12th round pick Jeff Inman for $425 K and 34th round pick Zac Fuesser for $125 K.  In 2008 they signed 16th round pick Wes Freeman for $150 K, and 20th round pick Quinton Miller for $900 K.

What this means is that we have seen the end of the Pirates landing top 15 talents in the second round, which they’ve done in the previous two drafts.  They paid $2.25 M to Stetson Allie and $5 M to Josh Bell after each fell due to signability concerns.  It will also be unlikely that we will see guys like Robbie Grossman signed for $1 M in the sixth round, or Nick Kingham signed for $480 K in the fourth round.  Considering their 2011 seasons in pro ball, both players would have been future first round picks, Grossman in 2011 and Kingham in 2013.

There’s also the large scale impact on the sport with the new CBA driving players to other sports.  Take Bubba Starling, for example.  He had a commitment to play quarterback for Nebraska, but ended up signing a $7.5 M bonus with the Royals as the fifth overall pick.  Based on the slot prices, Starling would have made a third of that as a fifth overall pick.  The highest he could possibly go would be $4 M, which was the slot price for the first overall pick.  So the best case scenario for Starling is that he gets taken first overall, either now or after his junior year, and makes $4 M, with that amount likely to be marginally higher after his junior year.

By comparison, the first overall pick in the 2011 NFL draft, Cam Newton, received a four year deal that guaranteed him $22 M.  Even 10th overall pick Blaine Gabbert received four years and $12 M guaranteed.  Starling could never see that type of money in the draft under the new CBA.  So what do you think he would do?  Play baseball with the Royals for around $2-2.5 M, or play quarterback for Nebraska with the chance for a huge payday in a few years in the NFL?

If you’re thinking that teams can just get around this type of scenario by handing out a major league deal, think again.  Major League deals are no longer an option for draft picks under the new CBA.  This ends deals like the one Trevor Bauer received, where the UCLA right hander signed a major league deal worth upwards of $7 M, with a $3.4 M signing bonus, only $400 K above slot.

There are two good changes to the draft.  The first is that the signing deadline will be moved up to mid-July, taking place between July 12th and July 18th.  That’s a good thing, as it will allow teams to get players in the system, rather than waiting until the mid-August deadline, which doesn’t provide enough time for players who sign at the deadline to get any time in pro ball during their drafting year.

The second change is that Major League Baseball is adding six picks at the end of the first round, which will be given out via lottery to teams with the ten lowest revenues in the ten smallest markets.  It’s always nice to see new draft picks given to small market teams, even if the teams can’t go over-slot for those picks.  However, it seems a bit strange at how MLB approached this system.  They recognized that small market teams have a disadvantage and could benefit from extra picks.  Rather than awarding an extra pick to all of the small market teams, they only added six picks, with ten teams competing for them.  The odds of the team winning a pick will be based on the previous season’s winning percentage.  If a team doesn’t get one of those picks, they will be entered in a lottery open to all teams for one of six picks after the second round.  So there’s no guarantee of any extra picks for a team like the Pirates.

If you’re thinking that the Pirates might be able to shift their attention to international spending, you’re wrong.  The new CBA will also limit the international spending, with teams being capped based on their previous season’s record.  The bad teams will receive a total international bonus pool of around $5 M, while the good teams will receive around $1.8 M.

One interesting change is that teams will be able to trade international money.  If a team doesn’t want to spend all of their bonus money, they can trade that money to other teams.  Teams can only trade for up to 50% of their bonus money, which means a team with a $5 M bonus pool can trade for up to $2.5 M, giving them a total of $7.5 M to spend.  This does provide some opportunity for big spending.  For example, the Pirates spent $5 M in 2010 when they signed Luis Heredia, Willy Garcia, Yhonatan Herrand, and Dilson Herrera to big deals.  Also, capping the spending of some of the successful teams will allow the Pirates a better opportunity to land the big players in the international market.

The new CBA will also classify Cubans under 23 years of age as amateurs which will count against international bonuses.  That wouldn’t affect guys like 26 year old Yoenis Cespedes, but would affect Aroldis Chapman, preventing him from seeing anything close to the $30 M he received from the Reds in 2010.

Overall the changes to the international market are much more favorable to a team like the Pirates than the changes to the draft.  But gone are the days where the Pirates can spend $20 M combined between the two markets.  The international changes will go in to effect in 2012, with all teams having $2.9 M to spend.  The scaled budgets and the ability to trade money won’t happen until after the 2012 season.

What this all means is that scouting will become much more important.  I don’t believe that it’s impossible to get good talent at slot prices.  Just look at the Angels as a prime example.  In the past few years they’ve pretty much stuck to slot prices, but have still been able to find guys like Mike Trout due to good scouting.  There will also be a benefit to having extra picks, as that will only increase the chances of adding impact talent.

Where this deal really hurts the Pirates is their ability to take advantage of the one area where they can load up on potential impact players.  They can no longer add future first round picks like Grossman or Kingham by giving them above-slot bonuses.  They can’t add a top 15 prospect in the second round by shelling out a ton of money.  Scouting takes you so far, but being able to spend freely in the draft is a huge advantage.

That might be one of the most frustrating things for Pirates fans.  Every year we see teams like the New York Yankees spend freely on the top free agents, handing out deals to players with annual values that are greater than the entire 2011 Pirates’ draft spending.  The Pirates abused the draft system by spending $17 M in 2011.  In 2009 the Yankees abused the free agent market, handing out a $161 M deal to C.C. Sabathia, a $180 M deal to Mark Teixeira, and an $82.5 M deal to A.J. Burnett.  The Yankees committed almost a half billion dollars to three players in one off-season and no changes were made, except for the renewal of the ineffective luxury tax, which will allow teams to spend more under the new deal.  The Pirates spent $17 M on 24 draft picks, and the draft system was overhauled.

In each case scouting plays a huge role in adding talent, although there’s a clear benefit to being able to spend freely.  The Pirates can’t compete for impact players on the free agent market because Major League Baseball did nothing to fix that part of their game which was broken.  Now they also can’t load up on as much talent as possible in the draft because Major League Baseball did decide that the Pirates spending $17 M in the draft was ruining the game.

The Pirates haven’t been eliminated from the playoffs in any future year, but with today’s announcement they kind of have been.  Their best shot at competing with big market teams was doing what teams like the Rays did: building through the draft.  The best way to do that was to spend an excess amount on over-slot bonuses.  If it wasn’t hard enough for small market teams to compete, the new CBA makes it that much harder, and one could say, nearly impossible.

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