How the New CBA Affects the Orioles

Yesterday the MLBPA, with union head Michael Weiner, and the MLB owners, headed by commissioner Bud Selig, announced a new five year collective bargaining agreement, or CBA. This agreement is, on the most basic level, a deal that sets the rules for the sport and guarantees no strikes or lock-outs through the 2016 season. That guarantees at least 21 consecutive years of labor peace, which stands in a wonderful and sharp contrast to basketball, hockey, and even football which went through a contentious offseason that jeopardized games being played. You cannot understate how great it is to have a sport where there is no drama about work stoppages.

If you go to practically any baseball website today, you can find a summary of the details of the new CBA, along with some commentary on those changes. I'll even happily link you: Baseball America's Jim Callis, ESPN's Keith Law, fangraphs's Dave Cameron, and Baseball Nation's coverage are all good places to start. The general gist of the reactions from the pundits and, reportedly, from the front offices around the game is that these changes are bad for the long-term health of the sport. Specifically, the changes to the way amateur players are acquired in the draft and through international free agency, will force an unnecessary limiting of the talent pool feeding the major leagues, resulting in a weaker product down the road.

The rule in question is a cap (technically a soft one, but with penalties severe enough to make it ostensibly a hard cap) of allowed spending in the draft and international free agency, with an international draft looming. A lot of ink has been spilled over the implications of talent development in international markets which would fall under a draft system (as opposed to the free agency that is in place right now). Specifically, Puerto Rico has apparently seen its exporting talent dwindle significantly since becoming a part of the draft. Watching foreign markets for baseball dry up is one of, if not the, last things baseball needs. Quite the opposite, in fact; baseball needs to be ever-expanding.

But what's interesting to me is why impose limits on amateur spending at all? The players might see it as putting more available money towards signing them instead of the amateurs, and the owners almost certainly see it as saving millions of dollars, but amateur spending is a drop in the bucket. It's an oft-heard refrain on CamdenChat, but why are teams scared of putting $20 million into acquiring 30+ potential prospects, but are all too happy to throw $5 million straight down a flushing toilet by signing players like Garret Atkins?

At any rate, I'd would caution against making bold predictions on the long-term ramifications of this CBA. It looks like it could easily be bad for the sport, but any scientist can tell you that theory and reality are often at conflicting purposes. And the beauty of it is that in five years, if it is obvious that these new policies are harming baseball, they can be thrown away again.

Now, to butcher Arlo Guthrie, I didn't come here today to talk about the draft, I came to talk about the Orioles.

Specifically, how do the new rule changes affect the Orioles, and our zealous devotion to them? This won't be all-encompassing, but let's go through the big rule changes one by one:

The Houston Astros will move to the AL West in 2013, expanding interleague play.

The schedule will remain unbalanced, which is annoying but oversold as an excuse for the struggles the Orioles have had over the last 14 years. A different allotment of games against non-division teams is just different, and I don't see this being a positive or a negative for the O's moving forward.

A second wild card spot has been added to the playoffs.

This certainly lowers the bar needed to be competitive, which is an advantage to the O's. However, as MASN's Steve Melewski points out, the bar is still 90+ wins, which is obviously a bar that many teams struggle with regularly.

Draft Pick compensation has been re-done.

There are no more "Type A free agents" and no more "Type B free agents". Now, teams can only get draft pick compensation for departing free agents that have been on their team for the entire preceding season, and who have declined a contract offer equal to at least the average of the top 125 highest-paid players in the game. This offseason, that limit would be about $12 million. Players that meet those standards can then be signed, but the signing team forfeits their first round draft pick, and the losing team receives another pick between the first and second rounds of the draft. Which is how "Type A free agents" work under the old CBA.

The effects of this are enormous to the Orioles. Relievers are almost guaranteed to be free of compensation, so no more horrible Michael Gonzalez kind of signings. However, this will also likely raise prices of free agent relievers, so expect more horrible Kevin Gregg kind of signings, or for more teams to covet their developing relievers. Additionally, the gaming of the system that resulted in teams like Toronto trading for players just to get draft picks is over. Now, you have to really want the player and not be able to re-sign him to receive compensation.

It also has large implications for even this off-season's trade deadline, as prices in August will be lower than in January without any compensation attached to traded players. For the Orioles right now, that means that the odds of them trading away Jeremy Guthrie before Opening Day must go up, as his trade value takes a hit after the first pitch is thrown.

The Draft Signing deadline has moved to mid July from mid-August.

A welcome change, as it will get the top players actually playing the year they are drafted, which may or may not slightly accelerate rebuilding efforts (emphasis on slightly). Dylan Bundy threw zero pitches in anger for the Orioles franchise last season, so there is no baseline for him going into this year. Under the new CBA, that situation won't happen again.

Drafted players may only sign minor league contracts.

Any Orioles fan should understand the danger of draftees, especially out of high school, signing major league contracts (see: Loewen, Adam), so it would appear that removing the option from the draftees' leverage toolbox is good. But, and this is a recurring theme with the draft changes, take away enough of their leverage and eventually you'll push kids away from the sport in favor of more lucrative athletic pursuits, be it in college or in other professional leagues. For a rebuilding team like the Orioles, losing top draft picks because of the system would be horrendous and frustrating. Again, it's not at all guaranteed to work out that way, but you don't want to set up a system that pushes you in that general direction.

Teams will be given a set number of funds for their top ten draft picks based on the picks they have to make, as long as draftees after the tenth round received less than 100,000 dollars.

The penalties for overspending in the draft, by the percentage of overage:

• 0-5 percent; 75 percent tax on overage
• 5-10 percent; 75 percent tax on overage and loss of 1st round pick
• 10-15 percent; 100 percent tax on overage and loss of 1st and 2nd round picks
• 15-plus percent; 100 percent tax on overage and loss of 1st round picks in next two drafts

These are very harsh penalties, so I would never expect any team to go over the 5% threshold (although it would be an interesting conundrum with a draftee like Stephen Strasburg). The good news here is that teams with high draft placement, like the Orioles, will have more money to spend than teams with low draft placement, like the Red Sox or Yankees. Depending on the exact budgets available, that could be a huge advantage in the rebuilding wars.

Additionally, with a set cap and the ever-expanding importance of acquiring strong amateur talent, I have to believe that the Orioles will be spending nearly 100% of their controlled budget every year, which at least eliminates conversations like "Why should we sign Player XXX for $10 million when we could spend it in the draft?!". Maybe the new market inefficiency is going to be front office staff?

Competitive Balance Lottery

Basically, the poorest teams in terms of money and record will be in a lottery to receive an extra pick between the first and second rounds of the draft. One assumes that extra budget would then be allotted for that pick. This is an advantage to rebuilding teams, but based on the attrition rate of draftees I can't help but think it's a band-aid on a third-degree burn.

Teams will be given a set number of funds to spend on all international free agents in a given year.

The penalties for over-spending are very similar to the ones for the draft:

• 0-5percent; 75 percent tax
• 5-10 percent; 75 percent tax and loss of right to provide more than one player in the next signing period with a bonus in excess of $500,000.
• 10-15 percent; 100 percent tax and loss of right to provide any player in the next signing period with a bonus in excess of $500,0000.
• 15-plus percent; 100 percent tax and loss of right to provide any player in the next signing period with a bonus in excess of $250,000.

The Orioles are notoriously bad at international scouting, and I do not believe this especially helps. The main problem, reportedly, has been lack of desire to get into these markets. It certainly has not been a lack of funds. Hector Veloz remains the Orioles' signature bonus baby, and he only received a $300,000 signing bonus, which is well below even the set penalties.

Again, we can talk about the limiting of the talent pool that this rule provides, and certainly there is proof that the talent pool under the old CBA is not large enough for every team to be competitive. And we can talk about how the Orioles' previous options were to excel in the draft, internationally, or in free agency, and having fewer players available in the two cheaper avenues would be potentially fatal to the long-term health of the franchise (as well as many others), but let's see how it plays out.

Other stuff (expanded replay, hgh testing, smokeless tobacco rules)

These things are all good in their own ways, but don't make much difference to roster building or so on.

* * * * *

The new system is designed, at least in part, to help give rebuilding teams advantages in the traditional rebuilding avenues, so it's actually easy to see where the Orioles have been given new life. But a lot of it depends on the specifics like what exactly the draft budget is going to be. Reportedly, teams picking  higher will receive close to $11 million for the draft, which would be right in line with what the O's have been spending anyway, so the limits of the new CBA would only affect non-rebuilding teams. Advantage: Baltimore.

But like most things of this nature, what will become important about it is a) how things actually play out over the next five years, and b) what loopholes executives and agents find to take advantage of the new rules. The old loopholes, particularly with free agent compensation, are gone forever now, which would be frustrating if the Orioles' rivals were the ones taking the biggest advantage of those loopholes. Let us hope that the new front office in Baltimore is up to the challenge of finding the new ones.

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