This Friday marks an important deadline in baseball, as teams need to make the decisions on who to tender for the 2017 season. But Thursday is an even bigger deadline, as that is the day the current Collective Bargaining Agreement ends between MLB’s owners and the MLBPA. So far, the negotiations haven’t progressed much, and they could impact the upcoming winter meetings, as Buster Olney reported today.

Fortunately, Ken Rosenthal had an update later that indicated some progress could be made, with the owners adjusting one of the demands that was holding up the process. That demand was an international draft.

The international market is a difficult situation. The players are against the draft, because it restricts the earning power of those amateur players. We’ll ignore for a second that US-born players are subjected to that same system, and no one seems to care. We’ll also ignore that the players took the opposite stance the last time around and gave up earning power for US amateur players. I think it’s the right move to fight for the earning power of the small guys though, even if it means giving up a bit from the guys at the top — in this year’s case, it would be the guys receiving qualifying offers to restrict their markets.

But while it’s the right move to fight for more earning power, the international system is clearly broken. There are spending restrictions and punishments towards teams, but they don’t really provide much of a restriction. Every year, about ten teams are subjected to the penalties for going over their bonus pools. Ben Badler had a great theory on how to solve this, suggesting that the answer is higher bonus pools.

The current bonus pools are too small, which Badler argues well by pointing out that the 17th pick in the draft had a slot amount higher than half of the international bonus pools in 2016-17. Teams like the Pirates, who get penalized with lower bonus pools due to their success, have only $2 M to spend. There has been a lot of discussion about this, and about whether the Pirates should go over their bonus pool for additional prospects. Part of that argument is that they should sign big bonus guys one year. The flip side to that is they should just sign the lower bonus guys that have worked for them, but sign a lot more of them. But the downside to both is that they’d be spending a lot of money in fines, rather than spending on players.

Badler noted that the Rays went over their bonus pool, spending $11 M total, with $4 M in taxes. The Athletics took the same approach, spending $10 M total, with $3 M in taxes. When a third of your money is going to pay fines, that’s not a good investment. You could look past the fines, and just think that you’re actually paying $6 M for a player, instead of $3 M to the player and $3 M to the league. But that’s another problem. If a player is worth $6 M, then he should get $6 M, rather than getting half that amount and having the other half go to a league making billions of dollars.

The problem with the international market is mostly on the owner side. They are saying that the players are worth much more than the current bonus pools by bidding higher on those players. At the same time, they’re trying to restrict spending by adding penalties and proposing a draft. It’s almost like they realize they have a problem with spending, and they just can’t help themselves, so they try to prevent the spending with either ineffective or extreme penalties. The ineffective approach isn’t working now, and the extreme approach of a draft looks like it would lead to a work stoppage. They might just have to give in, allow the spending, and make it so that teams are paying for players, rather than paying fines.

I don’t think either side wants a work stoppage, especially with MLB making more money than ever, so they’ll find a way to reach an agreement. It seems the owners have taken the first step here by backing off their demand of an international draft. Hopefully at this time next week, the story will be about day one of the winter meetings, rather than a disastrous situation with the CBA talks at a standstill.

**Pirates Reportedly Open to Trading Josh Harrison. This makes sense. If they’re open to discussing Andrew McCutchen, then they should be open to discussing anyone with one or two years remaining on their deals.

**Winter Leagues: Eric Wood Continues to Work on Versatility While in the Dominican. On a related note, the Rule 5 draft is next Thursday.

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37 COMMENTS

  1. Translation….the Pirates are too cheap to be active in pursuing the best possible talent in the International Market. Instead, they will sign 15-20 low end players, in the hope they find a diamond in the rough once a decade. The ownership needs to decide if it wants to be in the business of running a MLB franchise….if not, sell the team to someone who is willing to make the necessary investments. I don’t expect the Pirates to compete financially with the Yankees, Red Sox, Dodgers, and Cubs – but we better compete with the Rays, Padres, Twins, Royals, Reds, Brewers, A’s, etc. – and presently, we don’t. All those teams compete in the International Market – maybe not every year, but more than once a decade…

    • The Pirates finished last season with a better record and more talent on their roster than every one of those teams except the Royals. Not really a good arguement. And the same can be said for every year in the last 4 years.

  2. The owners are looking for the Union to make some concessions in exchange for the higher threshold for luxury tax, ending the Qualifying offer and adding a 26th man. These are all significant gains by the Union. The International Draft is/was a minor concession by the Union. If the owners are moving away from this they are gaining something else. Professional Negotiators dont make concessions without extracting something in return.

  3. Isn’t it too soon to declare the approach by Oakland and Tampa as a bad investment? If it pays off, won’t they actually be saving money by having better talent under control for lower dollars/risk? It seems to me the tax money is a drop in the bucket vs. the potential gain. Heck, they’d save that kind of money on one player in one year if it works out. The pressure is all on your ability to evaluate talent (and hope for few injuries and personal problems). Looking at it another way, what are they doing with the money NOT spent on the tax to improve the team? Acquiring free agents? not many of notable talent. keeping their own talent? Maybe but then they trade them away if they think they made a bad deal. Seems to me that it costs more to retain an already performing player vs. acquiring one who has high potential.

  4. What happens with the over spending tax money? Does MLB give it to teams like they do with the payroll overage tax? If that is what happens with the money, then the teams mentioned that were taxed get that money back through revenue sharing? If so, sounds like a win, win, to me and the Pirates should jump in and do it as well.

  5. Tim I’m perplexed how you simply rationalize Pirates being open to trading Harrison as making sense because they are open to trading Cutch when just recently you wrote this:

    “The Pirates would be better off sticking with Harrison as the starter.HE’S WORTH HIS CONTRACT, and THEY CAN AFFORD THAT PRICE . You could make the argument that they could find someone with similar value who makes less, and use the money saved to upgrade the team elsewhere. For that to happen, they’d have to find an internal option, and the only options right now are downgrades defensively. Frazier would be the top replacement, and I’ve already gone over his strengths and weaknesses.”

    I think the evidence strongly suggests they can’t afford that price which was a point many of us were making all along. Asking if Josh Harrison is worth 7.5M or 10M based on market rates in MLB was the wrong question to ask.

    And now that you seem to suggest it makes perfect sense to possibly deal Josh Harrison who is the “INTERNAL OPTION” to replace him since you clearly said Frazier and Hanson are not good options to replace him.

    I highly doubt anything meaningful is coming back in a Josh Harrison trade. No they won’t add prospects but if this happens I fully expect a Morton/Whitehead type deal, ie SALARY DUMP.

    • The Pirates being open to trading McCutchen and/or Harrison has nothing to do with not being able to afford the individual contracts, or the players not being worth their contracts. Both cases are about finding ways to improve the overall team.

      In Harrison’s case, the plan was to replace him with Rodriguez, which could have saved $7 M over two years.

      Also, I never changed my stance on dealing Harrison and replacing him with Frazier or Hanson, which you’d see if you read the article from last night.

      • Well Srod isn’t an option anymore. So at this point you wouldn’t be OK with them trading Harrison in a Whitehead sort of deal?

        Because doing that sure as hell isn’t going to improve this team.

        I don’t buy for a second now that Srod is off table they are done shopping Harrison.

        Explain to me at this point in time how in the hell trading Josh Harrison would be about improving the team?

        • Hypothetically, if you were to trade Josh Harrison, or Andrew McCutchen, or Tony Watson in a salary saving/dumping scenario, my belief is that it would be done for a second, larger deal. There is not any real reason to dump a salary unless the money saved is then turned into a player that better helps the team. If you trade Harrison for Lars Anderson and replace him with Hanson/Frazier, then turn around and deal for Chris Sale, IMO, the team is better built to win. I fully understand that in my scenario, there are a lot more moving parts not discussed, mainly, what it takes to deal for Sale, but I was trying to answer your question in the simplest way possible.
          In essence, the Pirates have no actual need to move Harrison in any deal, but if you can move him, save the value of his contract, then turn that into a more valuable member to the team, then it makes sense to trade him.

      • It’s premature to determine their motivation/goal for wanting to shop McCutchen. Being able to afford and willing to afford — very different. They certainly can afford his contract. If his deal is like Lirano’s, then I think we’ll know that the motivation is saving money even though we’ll get the same “reallocate dollars” lip service to which they cannot ever be held accountable. If they actually get reasonable value for him in return, then maybe that’s improving the team. Likely they’ll get a middling major leaguer to save face and some prospects. Is that improving the overall team or saving money? Certainly moving Cutch and replacing him with a hodge podge of players is not likely to improve the team in the short term. Hard to say definitively one way or the other.

        • But it’s not just money with McCutchen. It is also Meadows in AAA who might be able to replace McCutchen as a quality outfielder. Trading McCutchen would mean middling replacements for 2017 though.

          • Meadows is a fine prospect and may be a good big leaguer someday but I doubt he comes up and replaces Cutch (even the 2016 version) in his rookie campaign.

          • And hanson might be just as valuable as Harrison if given a chance….we have about 5 people whom could be decent second base options available in the next 1.5 seasons

          • Actually, with Cutch, it is Bell playing a spot that he is comfortable with, having Jaso/Freese at first, and waiting for Meadows to be ready.

      • I’m simply not convinced that SRod will replicate his 2016 offensive numbers. I guess Srod at his career averages offensively is probably better dollar value than Harrison. If you accept that logic, that kind of player swap is all about money b/c who knows whether they spend the $7m savings on actual improvement to the team. We simply would never know the answer to that question.

        • I’m convinced he will literally never duplicate those numbers again. There is a better chance Harrison will recapture 2014 than SR will ever duplicate 2016

    • This doesn’t really address your argument, but I wonder if the Pirates were expecting revenues to keep increasing when they signed Harrison to this deal. It appears their budget is topping out around $100 million. That makes Harrison (or any player) less affordable than if the budget could increase $5 – $10 million every year.

  6. Why can’t every team get the same allowance for amateur talent? I dislike the draft limits, but that will not go away now. If your allowance is lower for the draft your allowance for international should be higher. It really hurts when a team like the Pirates do well and have their draft allowance cut and also have a lower international allowance. If every team had the same total amount it would come down to which team could manage their allowance best. Maybe give the team the right to spend that amount in either way. If it is a strong draft year use more of that allowance for the draft and go with less for international. If a team has a stronger international presence they could use more for the signing period.

    • Why does there need to be any cap on spending on amateur talent at all? Why can’t teams trade draft picks? Why isn’t there a salary cap and a salary floor for major league teams.
      Any of these things could be negotiated during the CBA, but what is one side willing to get up in order to get them? Very rarely, if ever, will management and workers, ie owners and players, see eye to eye on matters involving money.

    • Perhaps a better system would tie draft pool allotments to the size of revenues or the size of the local market. This would help balance out the advantages rich teams have in signing free agents. However, since the rich teams control everything (in conjunction with the rich players), there is no way this could happen.

    • The success of the team should be contexted versus the market size. weight half equally…….you were 4th best team and 24th biggest market- therefore your pool is 14th. why is this so hard to compromise on?????

      • Our current core and farm system gives me hope too but I just feel like management isn’t gonna actually go and acquire Phil Kessel.

      • The front office made a lot of bad decisions last offseason which has me pretty skeptical about this season. But I try to keep in mind that the decisions they made after the 2013 and 2014 seasons generally turned out great. Perhaps 2015 was bit of regressing to the middle.

  7. “It’s almost like they realize they have a problem with spending, and they just can’t help themselves, so they try to prevent the spending with either ineffective or extreme penalties.”

    Difference between Ownership and Front Office.

    *Owners* want to do everything they can to make more money, and artificially restricting the cost of talent without representation is the easiest way to do so.

    *Front Office* personnel are (mostly) smart enough to understand that amateur talent is still, by far, their best return on investment and have largely ignored the inadequate fines ownership negotiated last time around.

  8. “It’s almost like they realize they have a problem with spending, and they just can’t help themselves.” Hahahahahaha! Where have I heard that before?

    • And these folks (Owners) are asking the players to trust them even though they (Owners) cannot trust one another? Two of the teams with the lowest annual player salary levels have $10 and $11 mil to spend on 16 year olds that are at least 5 years away from MLB? Gotta love it when a plan comes together.

  9. I think they’ll end up with a system very similar to what Badler suggested. Much larger bonus pools with real penalties for exceeding it.

    On a macro level, no way Owners are going to die on the cross so to speak on this issue. There are some things worth fighting tooth and nail over (revenue sharing), but signing bonuses for 16-year olds isn’t one of them.

    • Worst bluff ever.

      I know people gotta write something at this time of year, but there’s no way owners would risk losing a day of MLB revenue over this relatively minor expense.

  10. When everything is all done, I predict another terrible agreement that will will work even more against small market teams. Another Neville Chamberlain peace for our time.

    • “However much we may sympathize with a small nation confronted by a big and powerful neighbours, we cannot in all circumstances undertake to involve the whole British Empire in a war simply on her account.”
      He was referring to the PBC not Poland. Terry nice reference.

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