What the MLB deal with players means for 2020 season and beyond

Following round-the-clock negotiations since the coronavirus outbreak postponed the beginning of the season, Major League Baseball and the MLB Players Association struck a deal Friday that outlined how the sport would proceed in the coming months. The players gained certainty that even in a lost season they would be granted full service time. The league received significant financial hedges and control over how baseball would resume play.

It was a significant agreement with enormous implications that go beyond 2020. Let’s unpack the full breadth of its consequences.

What does this agreement cover?

Almost every issue of significance to the sport as it tries to navigate this confusing moment in history: the resumption of play and scheduling, service time, player pay, amateur talent, arbitration, debt service and the luxury tax, among other issues.

Why was it necessary?

With MLB’s original Opening Day scheduled for Thursday (March 26), the league faced a deadline on how it would handle player contracts. Paragraph 11 of the uniform player contract allows commissioner Rob Manfred to suspend deals in the case of a national emergency, which President Donald Trump declared March 13. Had the agreement not been agreed upon by the players Thursday and ratified by owners Friday, Manfred could have invoked Paragraph 11. Neither he nor the players wanted to display such myopia in the midst of a health crisis, so the incentive for both sides to compromise was strong.

So when is baseball coming back?

While that remains unclear, the agreement, obtained by ESPN, illustrates how baseball might go about returning to the field.

Before anything else, it addresses resumption of play and says both parties will work in good faith to “complete the fullest 2020 championship season and postseason that is economically feasible.” The agreement outlines three necessities to start the 2020 season, though it offers significant caveats that allow Manfred — in consultation with the union — to override them.

1. No governmental edicts on mass gatherings that would prevent teams from playing in their home stadiums;

2. No travel restrictions in the United States or Canada;

3. The determination, after talking with health experts and the union, that playing does not expose players, staff or fans to health risks.

The caveats are the key to this seminal part of the agreement: Manfred, it says, can consider the use of neutral sites instead of home stadiums as well as the possibility of playing in front of no fans. Though not ideal, games with no fans in areas that are not coronavirus hot spots provide the clearest path toward games being played.

Let’s say the curve flattens, medical facilities are no longer overrun and a national recovery begins. What is the first step?

There are three obvious ones that should happen simultaneously: map out a schedule that covers the regular season and postseason, bring players to training camps, and execute a detailed plan that does its best to ensure the safety and health of every team.

What does a potential schedule look like?

That remains completely TBD. The agreement illustrates just how open-minded both parties are to achieving a shared goal: as much baseball as possible.

MLB is willing to amend roster rules to ensure a shortened Spring Training 2.0 — games could begin as soon as two weeks after players report back to camps to prepare for the season — doesn’t leave teams hurting for innings because starting pitchers aren’t stretched out. Players are willing to schedule more doubleheaders to squeeze in as many games as possible. Both were fine with the regular season stretching into October and the postseason into November. A neutral-site World Series in a warm-weather location? Sure. Expanded playoffs of a new, and potentially unique, variety? Yup.

“Players want to play,” said Tony Clark, the executive director of the MLBPA. “That’s what they do. And being able to get back on the field and being able to play, even if that means their fans are watching at home, is something they’ve all expressed a desire and interest to do and to do as soon as possible.”

The best-case scenario seems to be that players head to camp in mid-May and target a return in early June. That might be wishful. But it’s where they are for now. And if they do, then a 130-game schedule is not out of the realm of possibility. It’s quite optimistic, though, and anywhere from 80 to 100 games would be a huge win.

Is keeping players healthy really possible?

Tough to say. In Japan, where Nippon Professional Baseball had postponed its March 20 opening day until April 24, star pitcher Shintaro Fujinami tested positive for the coronavirus Thursday along with two of his Hanshin Tigers teammates. The rest of the team is in quarantine, and the Tigers canceled practices through at least April 1. NPB secretary general Atsushi Ihara said the league still planned to open on the 24th.

Would MLB do the same? What if an outbreak happened inside a clubhouse in July? Or during a pennant race? Or in the postseason? As much as these are hypotheticals, they are also questions MLB must ask itself before returning. The agreement does give at least a sliver of insight into the possibility, saying that Manfred can suspend or cancel games after the season starts provided “there is a change in circumstances.”

Why does everyone so badly want to play?

Well, for one, because baseball rules.

Beyond that, every day without a game is a day without money flowing into the league’s coffers and players’ pockets. The coronavirus could wipe out billions of dollars in revenue after a record-setting financial year, and while players are not guaranteed a percentage of those revenues because MLB does not operate on a salary-capped system, salaries typically ebb and flow with the financial health of the sport.

Especially acute to the sport’s financial standing are cash-poor franchises that already have considered laying off or furloughing employees. Manfred secured promises this week from all teams that they would continue to pay their employees through at least April. Job cuts could arrive in May, if there is no season scheduled, and nobody in the sport wants that. The fear among employees across the sport already is palpable, and if baseball desires to be a healing agent for the nation — and it does — saving jobs is a good start.

Since the schedule is more or less up to this pathogen about which we still don’t know very much, what do we know?

Players cared deeply about the doomsday scenario. Service time, which awards players for days spent in the major leagues and goes toward determining free agency, arbitration eligibility and pension, was their focal point — particularly service time in the event of a lost season.

For days, the union insisted that major league players receive full service regardless of the outcome. When MLB relented — thus guaranteeing Mookie Betts, J.T. Realmuto, George Springer, Trevor Bauer and Marcus Stroman, among many others, the right to be free agents this winter — the deal went from probable to near-certainty.

Only players who logged an entire season of major league service last year will receive the full year in the doomsday scenario. If a season is played, a full year of service can be earned even if the season is shorter than the typical 172 days to reach that milestone.

So players got service time. Are they getting paid now, too?

Their salaries for 2020 will be prorated. If teams play an 81-game schedule, players will get 50% of their full, agreed-upon money. If they play 120 games, they will receive 74%. Performance-bonus clauses will be prorated too.

If the season is canceled, the only payment players will receive is the $170 million advance teams guaranteed players to be distributed in April and May. The money is essentially a down payment on salaries for 2020. Should games be played, it will be factored into paychecks. If no games are played, the players get to keep the $170 million without repayment.

The agreement adds that players cannot sue for their salaries — an important distinction even though Paragraph 11 almost certainly would have held up in a grievance setting.

Who among the players wins biggest in this scenario?

All major league players who have reached arbitration and thus do not have contracts with a different salary whether they are in the major leagues or minor leagues. They will receive $5,000 a day in April and May — or about $150,000 a month.

Where does the remainder of the money go?

There are three other classes of players, as defined by the MLBPA’s plan to split the advance.

A young star like Juan Soto of the Washington Nationals has what is called a split contract, which calls for him to be paid $629,400 in the major leagues and $289,150 in the minor leagues. Players with split deals for more than $150,000 in the minor leagues will receive $1,000 a day — or around $60,000.

Stud rookie Bo Bichette of the Toronto Blue Jays is on a split deal, with a minor league salary that’s in the $91,800 to $149,999 range. He’ll get $500 a day — half of what Soto is making and 10% of a veteran.

Top prospect Cristian Pache, whom the Atlanta Braves added to their 40-man roster this winter, is on the minimum for a split deal: $46,000. Those on split deals under $91,800 will be paid $275 a day, or somewhere in the neighborhood of $16,500.

Those who lose the worst are non-roster invitees and current free agents. Non-roster players who signed minor league deals hoping to get added to a 40-man roster for Opening Day don’t get a penny, though the union is considering ways to financially assist such players. And current free agents are prohibited from signing thanks to the roster freeze that went into effect upon the owners’ ratification of the agreement.

What else?

So much else!

• The arbitration system will be adjusted to consider lessened counting statistics because of the shorter season, and salaries secured during the 2021 offseason through arbitration won’t be used in the precedent-based system going forward.

• The MLBPA gave up the right to challenge Manfred’s enforcement of the debt-service rule, which is supposed to limit teams’ debt to 10 times earnings before interest, taxes, depreciation and amortization. Translation: Teams may borrow money to stave off financial problems, and MLB and the players are fine with that.

• When determining which teams have exceeded luxury-tax thresholds, the league will base it on what full-season salaries were supposed to be, not prorated salary payment. The taxes paid, however, will be on a prorated basis. And if there is no season, there will be no taxes owed, implying every team would reset to the lowest competitive balance tax threshold.

• Depending on when the season starts, players believe the All-Star Game could be eliminated.

The what could be what?

As if this whole situation wasn’t already bad enough for the Los Angeles Dodgers. First they could lose Betts without him playing a single non-spring training game in a Dodgers uniform (if the season is canceled, that is). Now they might get rid of the All-Star Game at Dodger Stadium, too? If the season starts July 1, stopping it 11 days later for the Home Run Derby and an exhibition game doesn’t exactly make a ton of sense.

Poor Los Angeles, right?

There’s a solution here, you know. Not one that would make up for possibly losing Betts or the All-Star Game or both but one that at least lessens the sting. If baseball is played this year, it’s almost assuredly going to have a neutral-site World Series. What better place than Dodger Stadium? Los Angeles loves baseball. The stadium is a gem. The weather is perfect. It makes too much sense not to happen.

Back to the agreement. So there are draft changes?

Of all the points in the deal, this one caused the most consternation, because amateurs historically get short shrift in these agreements. Owners want to suppress amateurs’ salaries. And no amateurs are part of the MLBPA, so their interests often do not dovetail with those of a union of professionals.

MLB has the right to move the 2020 MLB draft back from June 10 to as late as July 20, with a signing date as late as Aug. 1. A concrete date hasn’t been set yet. The rounds have been reduced from 40 to as few as five, though Manfred has the option to increase that number at his discretion — and might do so if games are being played and revenue is coming in. MLB also can shorten the 2021 draft to as few as 20 rounds and move it to the same dates.

In both years, the payment of draft bonuses will be delayed significantly. While signing-bonus slot values will remain the same as the 2019 draft — typically, they increase 3% to 4% annually depending on revenues — the maximum up-front payment in 2020 and 2021 will be $100,000 within 30 days of an approved contract. Fifty percent of the remaining value will be paid on July 1 the next year, then the balance on July 1 two years later.

Undrafted players cannot get more than $20,000, even if a team is under its allotted draft pool, in both the 2020 and 2021 drafts. This would be especially onerous in a five-round draft, and executives and agents agree there would be significant financial jockeying by teams starting in perhaps the third round. For example, consider a fourth-round pick with a slot value of around $500,000. A club could call a player and tell him it will pay him $200,000 if he agrees to sign at that pick. If the player doesn’t accept that amount, he runs the risk of going undrafted and maxing out at 10% of that. It’s a difficult gamble to take — and while teams could use that extra $300,000 to pay a higher-round pick, they also have the option of not spending the money at all.

For both the 2020 and 2021 drafts, MLB has the right to organize voluntary showcases for players — essentially a combine. Players on MLB’s Top 300 Medical Information Program — used to pool medical info for clubs on top prospects — may not provide exclusive data or video to one team without also offering it to MLB to be shared with all teams.

To curb the selling of draft picks, the agreement nullifies teams’ ability to trade competitive-balance selections, previously the only ones that could be traded, in the 2020 or 2021 drafts. In the 2020 MLB season, if every team plays fewer than 81 games, the commissioner has the right, after negotiating with the MLBPA, to change the draft order for the 2021 draft.

Why change the draft?

The reason is to save money and pave the way for a new draft system, which MLB was hoping to achieve in the next collective bargaining agreement. In 2019, the total value of bonus pools was $266,480,400. The slot values of the first five rounds were $238,094,400. That’s a savings of $946,200 per team for 2020 and 2021.

There won’t be a mess of $125,000 bonuses handed out after the 10th round, which ran up total expenditures for teams but didn’t count against their draft pool. While clubs are still paying their scouts, travel budgets will be far lower than in 2019.

What was the reaction to the draft changes?

Agent Scott Boras, a longtime advocate for draft rights, lashed out, telling The Athletic: “It’s unconscionable the owners in this climate would reduce the collectively bargained money given to drafted players in the top rounds. I don’t mind them reducing the rounds. That’s not the issue. It’s reducing the payments to those players. To cut their bonuses in this climate and use a pandemic situation in our country as a means to do that, I really find it unconscionable.”

Sound though Boras’ point might have been, it registered as tone deaf to a wide grouping of people around the league, particularly with millions of Americans suddenly unemployed and the crux of his point that amateurs wouldn’t be getting a raise.

“Everyone is entitled to their opinion,” Clark said. “The players were committed to preserving entry in some form, which was quite different than what was being represented from the other side. Eventually we reached a compromise. It wasn’t perfect.”

Which teams can take advantage of undrafted free agents?

Two types of teams: legacy franchises and ones with robust player-development systems. This could be a jackpot for the Los Angeles Dodgers and New York Yankees, both of whom are industry leaders in player development and have enough brand value to entice players to sign with them. With the $20,000 maximum, other teams could entice undrafted players with simple opportunity. The sales pitch: If the money is the same everywhere, come to the team that’s going to make you better. In other words, make the best of a bad situation.

How does this affect amateur baseball?

For amateur players, it is just a lot of bad news. Those inclined to sign and turn pro in the 2020 draft might receive similar money to last year, and it will be paid over a two-year period without interest. The loss is marginal but real. The college junior set to sign for $300,000 after the fifth round, who turned down some money out of high school in anticipation of this day, gets hit the hardest. It’s either $20,000 this year or probably the same as a senior next year, due to reduced negotiating leverage. Not to mention the fact that college coaches might prefer to spend some of their 11.7 scholarships on incoming freshmen who can contribute for three years rather than keep a senior.

It will be a boon for college baseball because of the surfeit of talent. Fewer high school prospects will turn pro. College juniors can return to school. Same for seniors, if granted extra eligibility. It might get ugly trying to make a new roster amid all of a college coaching staff’s prior assumptions and commitments, but there will be more talent across the board.

The Division I council will vote on Monday about roster relief. Programs could get extra spots to handle the change. Redshirting and junior colleges will be the way to manage this influx of players to college baseball, and it’s possible independent leagues or Japan’s Nippon Professional Baseball could be an option, as they have occasionally been in the past.

“Juco baseball is going to be amazing next year,” one longtime scout said.

How will players be scouted this year? Weren’t all the games canceled?

It’s unclear exactly how this will play out, with so much uncertain regarding the gathering of people in public places. If games can be played, college players will go to summer leagues — the Cape Cod League being the top option — and high schoolers will play in a number of showcases and tournaments as they normally do over the summer. A potential MLB combine would also be a part of this showcase schedule. MLB has run similar summer events for prep players, only for players a year before they’re eligible to be drafted. There’s obviously a chance none of these things happen.

How would teams draft players if they don’t play any games between now and draft day?

Clubs are confident in their evaluating ability, and scouting for the draft is a year-round endeavor. The southern half of the country was playing for about a month before everything stopped, and there are reams of data and high-speed video, along with a full summer and last spring’s worth of data already collected. Teams could draft multiple rounds confidently with no additional games played or data and video collected, as they’d all have less information in a somewhat uniform way. Both scouting-driven processes and analytical-model-driven processes thrive on information, but there is a point where the marginal benefit is pretty small.

How does this tie into MLB’s grander plan?

With the proposal by the league to eliminate as many as 40 minor league teams, the league would cut player-development costs by outsourcing talent to college. Effectively, low-tier pro prospects won’t be signed out of high school and develop in the minor leagues as teenagers, using club resources the whole time. Rather, they will go to college to develop, the cream will rise, clubs will have more certainty about their draft investment in that college player and he’ll get to the major leagues more quickly from the day he’s drafted. The return on investment is undoubtedly higher and the development costs to MLB clubs lower. MLB and the NCAA hadn’t collaborated much in the past until December’s agreement to hold the draft in Omaha the day before the College World Series starts.

Moral hazards in college baseball exist. Winning in the short term for a college coach to get a contract extension or move to a bigger program means, broadly, that some things not in the long-term interest of some players and MLB clubs that might pick them — more sliders thrown, more pitches per game, more bunts, different swing mechanics, fewer reps — are a reality of the college game. But MLB teams now regularly dip into the college ranks to find coaches, so the incentive gap has narrowed.

It also could lessen opportunities for players from disadvantaged or multisport backgrounds who need high-level reps to improve. Gone would be later-round draft bonuses or developmental spots in top college programs. If these things were thought of as a marketing cost to increase the popularity of the game, akin to MLB’s RBI Program, it might be more palatable to owners. The same goes for eliminating small-town minor league teams.

What about the minor leagues this season?

The agreement doesn’t address the status of the minor league season since less than 10% of minor league players are part of the MLBPA. Around baseball, there is significant skepticism that it will look anything like it has in recent years.

Major league teams clearly need a grouping of Triple-A and Double-A players to be ready in case of injuries, but that’s also baseball in 60 cities — cities with their own questions about health and safety and the ability to operate with no fans. Two player-development directors this week talked about minor league baseball turning into a complex-only operation — lots of back-field and intrasquad games among the lower-level minor leaguers and perhaps games at spring sites between organizations’ Triple-A and Double-A teams.

Short-season ball is for all intents and purposes dead in 2020 because the influx of amateur talent into organizations this year will be minuscule. Now it’s simply a matter of how the league chooses to handle those players already with teams.

What about the international signing period?

Manfred has the right to delay the 2020-21 signing period, which was set to begin on July 2, until as late as Jan. 15, 2021 through Dec. 15, 2021. There isn’t a concrete bonus deferral for the international realm like the draft, but this big of a potential delay could act as a version of one. Should MLB delay the beginning of the new signing calendar, there would be a dead period from July 2, 2020 to the beginning of the 2020-21 class. The league also can push back the 2021-22 signing period to Jan. 15, 2022 through Dec. 15, 2022.

The bonus pools for the 2020-21 and 2021-22 signing periods will be the same as 2019-20. Teams will not be allowed to trade pool space — they could previously trade for up to 50% on top of their original pool — for both periods.

What will this mean for teams in the international realm?

Most of the 2019-20 money is spent and most of the 2020-21 money is already committed. Teams could try to renegotiate deals for the next signing period, though that would be seen as a deep breach of trust by the trainers who develop most of the talent in Latin American countries.

How about for players and trainers?

It is a potential disaster for two different economies. The first is for players. A not-insignificant percentage of elite players’ families take out high-interest loans against their expected bonuses. This can happen for players as young as 13 years old, who can receive multimillion-dollar commitments from teams that want to sign them at 16. If loan payments come due and the families do not have the money to repay them, the compound interest could potentially wipe out a significant portion of the bonus money they do receive. Further, when Latin American teenagers sign with major league teams, they almost never spend their first season in the United States — and, thus, are not subject to U.S. tax laws on the bonus. Top players from the 2020-21 class who sign in January 2021 could be asked to play in the states and would find their bonuses taxed accordingly.

The greatest expense for players is paying the buscónes, or trainers, who house them, feed them and train them from as young as 10 years old. Often a child will drop out of school and start at a local academy. If he shows promise, the trainer there will shop him to more well-known trainers, who give the local trainer a percentage of the player’s eventual signing bonus. In total, players typically pay 30% to 50% of their bonuses to buscónes. Academies, though, can run on thin margins, particularly those with a significant number of players. One person intimately familiar with Dominican baseball estimated the potential six-month float could cause half the academies in the D.R. to shut down. Academies time their expenses to a July 2 signing period, and changing that could devastate them.

All of this fits with what now feels like an eventuality: an international draft come 2022. The timing, actually, lines up perfectly: If MLB pushes back the 2020-21 signing period, its end will coincide with the expiration of the current collective bargaining agreement. The consequence would be a potential double class — those from the 2021-22 group whose signings were pushed back and those who were set to be 16 by July 2, 2022 — but that could be addressed with a higher bonus pool for that first year or a resetting of the signing age.

This is a lot to digest. How do we close this thing out?

By closing team workout facilities, which they’ve finally done. The hope now is that they’ll reopen soon, that this agreement wasn’t for naught and that baseball — real, regular-season baseball, the kind that, regardless of crowd, is compelling nevertheless — will be a reality sooner than later.