MLB, union announce new labor deal
New Basic Agreement will run through 2011
ST. LOUIS -- Call it the golden age of the sport. Call it economic parity. Call it what you will, but call it labor peace for Major League Baseball for the next five years.Reflecting the health of the sport and unprecedented partnership between the sides, Major League Baseball Commissioner Bud Selig and players association head Don Fehr jointly announced Tuesday one of the longest labor contracts in baseball history, a five-year deal through 2011. The agreement, signed late Monday night and announced Tuesday during a press conference at Busch Stadium in the hours before Game 3 of the World Series between the Cardinals and Tigers, must be ratified by the owners and the players. That is considered a formality. The deal includes adjusted formulas for revenue sharing, a higher threshold for the competitive balance tax, a revamped draft for amateur players, changes in draft-pick compensation for free agents and the elimination of long-standing deadline dates for Major League free agents, giving teams added flexibility in re-signing their players. It also extends the current drug policy, amended for the second time last year, from the end of the 2008 season to the length of the new agreement. "This is the golden era in every way," Selig said. "The economics of our sport have improved dramatically, and that's good. The last agreement produced stunning growth and revenue. I believe that five years from now people will be stunned at how well we grew the sport. This agreement encourages that, and I'm very confident that it will produce the same results that we're all concerned about and that I certainly am -- not only economic growth, but parity." Baseball is seemingly already there. When this World Series is over, the Fall Classic will have produced seven different champions since 2000, an unprecedented run in major sports. Gross revenue has increased to $5.2 billion this season from $1.2 billion in 1992, the first year Selig took over as Commissioner. The average player salary has increased to $2.8 million this season from about $1 million in 1992. Both are records.
Highlights of new CBA
Under the new deal, larger-revenue clubs will continue to transfer $326 million in local revenue to smaller revenue-generating franchises. Net transfer amounts will continue to grow with revenue and changes in disparity.
Tax rates will be reduced to 31 percent for all clubs.
Smaller-revenue clubs must continue to invest revenue income to improve the team's on-field performance.
|Competitive balance tax|
Levels remain unchanged from the prior contract: 22.5 percent the first time a club exceeds the threshold, 30 percent the second time and 40 percent the third time. Clubs that paid at a 40 percent rate in 2006 will enter new contract at same rate.
Thresholds reset to $148 million in 2007, $155 million in 2008, $162 million in 2009, $170 million in 2010 and $178 million in 2011.
|First-Year Player and Rule 5 Drafts|
Clubs that can't sign their first- or second-round picks will be slotted in for a compensatory pick at the same slot in the following year's draft. Clubs that can't sign a third-round pick will receive a sandwich pick between the third and fourth rounds at the following year's draft.
Clubs have an Aug. 15 deadline to sign all draft selections except college seniors.
Minor League players can now be protected from the Rule 5 Draft for an extra year, to four or five years.
Dec. 7, Dec. 19, Jan. 8 and May 1 deadlines are eliminated.
Date to tender contracts moved to Dec. 12 from Dec. 20.
|Free agent compensation|
Type C free agent classification is eliminated.
Teams that lose a Type B free agent will now earn a sandwich pick instead of taking selection from club that signed player.
The pool of Type A players shrinks from top 30 percent of each position to top 20 percent, while the Type B player pool will be reduced from the top 31-50 percent of players to 21-40 percent.
Drug-testing rules will stay unchanged.
Both sides agreed to further discuss HGH testing in the future.
Major League minimum salary will increase to $380,000 in 2007, $390,000 in 2008, $400,000 in 2009 and to a cost-of-living increase in 2011.
Minor League minimum salary will increse to $60,000 in 2007, $62,500 in 2008 and $65,000 in 2009.
Players traded in the middle of a multi-year contract no longer have the right to demand a trade. Players who currently hold that right from the last CBA are grandfathered in and can still demand a trade.
Salary arbitration offer deadline moves to Dec. 1, while the acceptance deadline moves to Dec. 7.
All-Star Game winner continues to have home-field advantage in World Series.
There will be no contraction during the term of the agreement
The Commissioner's discretionary fund will remain at $10 million a year.
As in the old contract, clubs cannot borrow to pay existing debt but must raise revenue or reduce expenses to pay existing non-player-related debt.
The lack of acrimony in the talks also signaled what both sides said is a new era in labor peace. The agreement was completed two months before the Dec. 19 deadline and was marked by a virtual news blackout as the sides negotiated in private, and without rancor."What was really different this time was that the approach to bargaining, while it had its difficult moments, was very workmanlike, very pragmatic, very day‑by‑day," Fehr said. "There was a shared desire to see if we could resolve this well ahead of time and if we could get it done by about the time of the World Series, before the free agency declaration period began." The 2002 talks in New York went right to the edge of an Aug. 30 strike deadline called by the players, and for months beforehand the two sides were conducting independent conference calls and press conferences. But four years ago, the contract was settled for the first time without a strike or lockout. There had been eight such work stoppages from 1972 to the strike that wiped out 1994 postseason and delayed the opening of the following season. "They were without the usual rancor. They were without the usual dueling press conferences. They were without the usual leaks," Selig said. "In other words, these negotiations were conducted professionally, with dignity and with results. These negotiations were emblematic of the new spirit of cooperation and trust that now exists between the clubs and the players." The success of this year's World Baseball Classic, a joint venture that will be staged again in 2009 and every four years thereafter, was also credited with laying the foundation for teamwork between the sides. "That was the first really dramatic foray we made and we made it together," Selig said. "We made it as partners. They were wonderfully cooperative and it produced an event that exceeded everybody's finest expectations. So I would say that it was a great precursor to what happened here." Much of the new agreement mirrors the old agreement. Revenue sharing was slightly modified. The competitive balance tax was altered with the threshold rising from $136.5 million this year to $178 million in 2011. The winning league in the All-Star Game will continue to get home-field advantage in the World Series. The debt-service rule, in which clubs cannot borrow to pay existing debt, remains the same. The Commissioner's discretionary fund stayed at $10 million a year. But there were new facets to the deal. The Dec. 7 and Jan. 8 deadlines for free agents to re-sign with their former teams were eliminated, allowing clubs more flexibility to retain their players. Additionally, any player traded in the middle of a multi-year contract can no longer demand a trade. Clubs that can't sign early-round picks in the First-Year Player Draft will be compensated with comparable selections in the subsequent year's draft. Teams will also face a much shorter deadline to sign draftees, with all picks other than college seniors required to be signed by Aug. 15. Players will see the MLB minimum salary rise from its current $327,000 -- plus cost of living -- to $380,000 next year. After that it goes to $390,000 for 2008, $400,000 for 2009 and 2010, and $400,000 plus cost of living adjustments for 2011. And while the current drug-testing rules will be extended through the 2011 season, both sides said they would consider testing for the synthetic hormone, HGH (human growth hormone). "If a urine test is developed and scientifically validated and all the `i's' are dotted and 't's' are crossed, there is an understanding that we will adopt that test," Fehr said. "Blood tests we will talk about when one is validated. But as far as I know, and we check fairly frequently on this, there is not that testing available yet."
Barry M. Bloom is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.