New Deal saves 2020 MLB draft, but damages incoming talent

Mar 28, 2020 2:40 AM ET

Due to the late 2020 season, Major League Baseball had cash flow issues and began negotiations with the Major League Baseball Players Association to look for ways to cut spending this season. Given the uncertainty of potentially lengthy litigation in the struggle for service and MLB players’ salaries when no 2020 season was played, the MLBPA tried to ensure service and part of the MLB salaries were guaranteed for 2020.

Both MLB and MLBPA got a lot of what they wanted in a new deal that is expected to be ratified today. The MLBPA received service time guarantees for MLB players, even if the 2020 season is canceled. The MLB has drastically reduced the amount it will have to spend on the acquisition of amateur talent in 2020.

This agreement was associated with considerable costs for the MLB conscripts. In many cases, the door to the pro baseball game will be closed in 2020 unless they are willing to accept bonuses that are well below market value. The agreement may also postpone the international signing periods 2020-2021 and 2021-2022 by six months. MLB has the flexibility to postpone the start dates of these signing periods to January 15 for each of these years.

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Under the terms of the agreement drawn up between MLB and MLBPA, the 2020 draft will be cut to no less than five rounds (MLB can expand it if so desired and several scouting departments hope it can be expanded to 10). . The draft will be available as of the current start date on June 10th and only on July 20th. The data for both periods is fluid due to the emerging novel coronavirus situation. If the signing period is postponed, the current signing period, which expires on June 15, will also be extended. However, no aspiring 16-year-olds can sign until the next deadline.

The deadline for signing the draft is 1 August at the latest, but could be postponed due to the draft date. MLB is expected to set a design date approximately one month before the design to give the teams time to prepare. Although no details have yet been formalized, it is expected that the current design date will be used to set the due date for 21-year-olds with design authority, even if the design date itself is moved.

Both the 2020 and 2021 designs have voluntary pre-design showcases (depending on conditions across the country) to help MLB teams see players whose seasons are due to the corona virus were shortened.

A reduction to five rounds would be a dramatic change for the largest draft of US sports. The MLB draft ran for almost four decades until the last team decided to discontinue the selection. In 1996, the Yankees chose 100 laps, setting the record that is unlikely to be broken. The design was reduced to 50 rounds in 1998 and to 40 rounds in 2012.

Reducing the design to five rounds would reduce the design by 86 percent in one year. Last year, 167 players were accepted in the first five rounds. A total of 1,217 players were drawn in and 960 players signed.

Potentially more importantly, teams don’t have to spend more than $ 20,000 to sign an uncovered player. Previously, teams could spend up to $ 125,000 on late-elected and undrafted players without accessing their bonus pool. Such a provision ensures cost containment for the owners at the expense of limiting opportunities for potential professional players. Of the 960 players who signed last year, 680 signed for more than $ 20,000.

And over the next two years, the teams will have no flexibility when it comes to spending on undrawn freelance agents. In recent years, teams have been able to use the money from their bonus pool allocation to exceed the $ 125,000 limit for a player who has not been withdrawn. The best known is that the Reds spent $ 700,000 to sign TJ Friedl, who was unoccupied and then impressed the scouts when he played for Team USA. The Reds could do this because they had leftover money that they were allowed to spend as part of their entire bonus pool. Over the next two years, the draft spending will be “use it or lose it”. It can only be spent on players who have moved in. Anyone who hasn’t moved in is limited to a maximum bonus of $ 20,000.

Such a decision will have a big impact as some teams spend very aggressively in later rounds, while other teams spend much more conservatively as the design progresses. Last year, 14 teams spent more than $ 1 million after the 15th round. Four teams spent less than $ 700,000. The Braves were the most aggressive, spending $ 2.83 million after the 15th round. The Dodgers spent $ 2.28 million, including five undrawn free agent signatures, three of which signed for $ 100,000 or more. Other teams were less aggressive. The Cubs spent $ 672,000 after the 15th round, while athletics spent only $ 345,000 – the lowest of all teams.

This will likely force a significant number of high school students to go to school. Some will choose to go to junior college to resubmit the draft for next year, while others will honor their NCAA Division I commitments to participate in the 2023 draft (and in some cases until 2022 if they are old enough) to qualify). But these arriving newcomers will face overcrowded rosters. Many drawable juniors are likely to be removed from the design in this arrangement. This agreement will make the NCAA decision next Monday even more important for Division I players.

The NCAA has yet to decide whether an additional year should be extended for all Division I showers, only seniors, or none at all. If the NCAA decides not to renew eligibility for any D-I spring athletes or only for seniors, the uncovered juniors will have two bad decisions. In a normal year, a college junior selected between the sixth and fifteenth rounds could expect to sign normally between $ 125,000 and $ 250,000. In 2020, they can either sign for a maximum of $ 20,000 or return to school if they know their bargaining chip will be limited the following year as a senior sign. Depending on the NCAA’s decision on eligibility, they would also have to risk returning next year with a much larger pool of older players and fighting for bonuses, in addition to competing for the season with an extremely talented junior class.

The bonus slots will be identical to those of 2019 and will remain fixed at this amount in 2021. Before that, they should increase by 3 percent.

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Negotiations between the MLB and the MLBPA began with a contingent of MLB owners who pressed for the flexibility to postpone the draft to 2021 after the fifth round last year) and deferral of draft bonuses. Under the terms of the agreement, conscripts will receive up to $ 100,000 of their signing bonus within 30 days of signing the contract. Then 50 percent of the remaining bonus will be paid on July 1, 2021 and the other 50 percent of the balance on July 1, 2022. These bonus payment schedules are fixed and not subject to negotiation.

The draft for 2021 will include at least 20 rounds. If the 2020 MLB season includes fewer than 81 games in the regular season, the draft order for the 2021 draft can be determined by the commissioner’s office in consultation with the MLBPA. Competitive designs in the 2021 draft cannot be traded, which is a change from the current rules.

The changes in the international amateur market are also somewhat in the air. MLB has the flexibility to postpone the start of the signing period from the current opening on July 2 to January 15, 2021. MLB also has the flexibility to postpone the start and end dates of the following signing period. For international signatories, the schedule for the bonus payment remains unchanged as in previous years, without the deferral dates set for the MLB draft.

Perhaps it is just as important that MLB teams are not allowed to trade bonus pool allocations in the next two international signing periods. In the past few years, teams have been able to earn up to 50 percent additional to their pool allocation by doing business with other teams. This could be a headache for some teams that were planning to exceed their pool allocation, and is likely to reduce overall spending by a modest amount because teams that choose not to spend their entire international bonus pool cannot pass this money on to other teams.

If the international signing period is postponed, player signatures will continue to be treated as if they had occurred during the 2020 season, which will be important for Rule 5 eligibility and 40-man squad eligibility in the coming years.

The MLB-MLBPA agreement does not cover the multitude of decisions still to be made regarding compensation and other issues for small league players who are not on the 40-man big league list. They are not represented by the MLBPA. MLB will unilaterally decide to compensate them during the soon-to-be-suspended MiLB season (which is expected to begin on April 9). The MLB will also determine whether players will receive one-year credit in 2020 if no games are played. This refers to the salaries of MiLB players in the coming years and the eligibility for a free agency in the minor league.

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