New CBA

by cmathewson on Oct 25, 2006 3:07 PM EDT

With the new Collective Bargaining Agreement (CBA) signed before the organizational meetings are over, the Twins have several new realities in which to plan for next year. Here are the changes that seem to affect the Twins the most:

Rule 5 draftees don't need to be protected as early. Clubs have five years from the draft stage or four years from signing to place a player on the 40-man roster or risk losing him to the Rule 5 draft. It doesn't look like they still destinguish between high schoolers and college players anymore. That's not explicit. But it at least buys the Twins an extra year for the college players thy will need to protect, such as Jay Sawatski, Kyle Aeselton, Matt Tolbert, and Matt Fox. This effectively minimizes the Twins risk in losing players to the Rule 5 draft, and pushes out the tougher 2008 decisions by a year.
Teams that cannot sign top draft choices get a comparable draft choice in the following year (one slot back). This will reduce the number of players who fall in the draft for signability purposes because poorer teams no longer lose a high draft pick altogether if they fail to sign a player. It should also keep signing bonuses in check because teams have more leverage.
Draft pick compensation is much clearer now. Type A free agents bring a first-round draft choce or a sandwich pick from the signing team. Type B free agents bring a sandwich pick between the first and second round from the pool of available picks. Type C free agents no longer get compensation. And the Type A and Type B designations will be harder to qualify for, so there will be fewer of them. This will not affect the Twins much this year because they will not have many free agents in either Type A or Type B categories, if any. But longer term, it means the Twins will not be able to get as many high draft choices as they have in some years, especialy 2004 and 2005. In some cases, it will improve the draft choices they get. For example, the Twins will be compensated for a player like Jacque Jones with a first round pick regardless of how many free agents were signed by the signing team, rather than the fourth rounder they received.
The minimum player salary will be $380K in 2007, $390K in 2008, and $400K in 2009. This should not affect the Twins too much, but players in their first three years of experience will no longer be all that cheap when the Twins big salary crunch happens in 2009.
All teams will contribute the same percentage of their local revenue streams to a pool to be distribued to poorer teams. This is in contrast to the old agreement, which forced small-market teams to contribute 48 percent of their local revenue, while large-market teams only contributed 40 percent. Now everyone contributes 31 percent. This will help the Twins until they become a mid-to-large market team when they build a new stadium. At that point, it will hinder them slightly, but the agreement only lasts one year beyond the new stadium. So it's a net gain for the Twins in terms of the cost of doing business in the MLB. And it should not reduce the amount of revenue sharing it gets all that much because of the economic health of the MLB. It should improve the Twins fortunes, which should have some impact on the Twins player salaries for 2007.

Those are the major changes. At first glance, they will all help the Twins this offseason. And they shouldn't do much harm long term either.

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Change in Rule 5

Clubs have five years from the draft stage or four years from signing to place a player on the 40-man roster or risk losing him to the Rule 5 draft.

I missed that one. I thought they just added an additional year to the existing rule which was three and four years depending on the age a player was signed. How does that work with the August 15 signing deadline?

by TT @ Twinkie Town on Oct 25, 2006 3:47 PM EDT reply actions

I'm no expert on the CBA

I am not sure that wording is correct now that you mention it. I paraphrased it from a report that did not quote the agreement verbatim. And the more I think about it, the more it seems odd. As worded, it would seem to encouarge teams to draft players and sign them to contracts for the next year, as the Twins did with Denard Span. If merely signing a player took a year off the time the team has before needing to protect a player, signing is a disincentive. I will have to look at the agreement again. In other places, reporters just said you add a year to the current structure.

Joe Mauer for MVP.

by cmathewson on Oct 25, 2006 4:28 PM EDT reply actions

You missed one other major change...

...listed here, probably other places, too:

The signing deadline for draft selections is now Aug. 15, except for college seniors.

This means the end of "draft-and-follow" as we know it, which is a shame because I'd imagine the Twins are probably one of the better teams around at that (although I have absolutely no evidence to support that claim). It also means that there's a lot less reason for anyone to go to JC ball.

On the other hand, that might mean that good talent is more concentrated in fewer leagues, potentially making it easier for scouts to evaluate talent in those leagues. Maybe.

I think it's kind of scummy that the player's association basically negotiated away nearly all the leverage that incoming players had in order to reduce signing bonuses and increase their own pocketbooks. I can understand that they're looking out for themselves, but as it currently stands, no one is representing the interests of draftees.

by ubelmann on Oct 25, 2006 5:20 PM EDT reply actions

I see TT...

...mentioned this in his diary on the subject, too.

by ubelmann on Oct 25, 2006 5:23 PM EDT up reply actions

Draft and follow

TT mentioned in his post that the Twins have not reaped the benefits of draft-and-follow to date. In a sense he's right. There are no draft-and-follow guys in a Twins uniform, unless you count Pat Neshek, whom the Twins drafted, followed and drafted again. But in terms of guys who were drafted low and signed out of community colleges before the following draft, the two best draft-and-follow prospects right now are Danny Santiesteban and Brian Kirwan.

Santiesteban is a pure center fielder drafted in the late rounds in 2004. He will be in Beloit in 2007 after two years in which he showed flashes of brilliance in rookie ball. You can check out his Q&A over at Seth's site for more insights on him. He is a five-tool player who has some rough edges but could move through the system quickly if he has a breakout year in Beloit.

Kirwan is a kid who was projected as a top 5 draft choice overall until a knee injury in football prevented him from pitching in his senior season, so he fell to the 11th round in the 2005 draft. The Twins still managed to sign him during spring training 2006 and he ended up in Elizabethton. Though he had an up-and-down rookie season, BA projects him highly. He will likely end up in Beloit as well next year, where he will be young for the league, but not as young as an even better prospect drafted just after Kirwan in the same draft, Alex Burnet.

Joe Mauer for MVP.

by cmathewson on Oct 26, 2006 10:40 AM EDT up reply actions

Stats

Forgot to add numbers, sorry ubelmann:

1. Santiesteban: After a VERY slow start, he picked up his game substantially to post these numbers:

244 AB 61 H 13 2B 2 3B 6 HR 23 BB 63 SO .250/.328/..398

2. Kirwan: Had to make a lot of adjustments, but he had his moments:

64 IP 67 H 9 HR 23 BB 58 K 1.41. WHIP

BA ranked him as the #14 prospect in the Appy League (one ahead of Burnett). Kirwan and Burnett were the only players at Elizabethton to be ranked in the top 20.

Joe Mauer for MVP.

by cmathewson on Oct 26, 2006 11:47 AM EDT up reply actions

Yeah...

...that's sort of what I figured. Most guys who are draft-and-follow aren't all that great (which is why they don't get signed in the first place), but in principle, it allows a team with good scouts the chance to catch some diamonds in the rough. Thanks for the info on current players who we signed by draft-and-follow, I didn't know the list at all.

by ubelmann on Oct 26, 2006 1:25 PM EDT up reply actions

They could

Ahha, but a draftee could also play poorly and lose his one great chance to bust in with cash, so it really eliminates something the team would do that could either help or hinder the draftee.

just saying.

Altogether, this is very good that this is done so soon. hopefully, the sport is moving towards more stability.

"Baseball is great because you can't take a knee or kill the clock. You have to put the ball over the plate and give the other guy his damn chance." C Stengel

by AdamOnFirst on Oct 25, 2006 9:49 PM EDT up reply actions

non union draftees.

Since the draftees are not union paying members, why wouldn't they throw them under the bus to get more benefits for the members who are paying union fees. I think that is a smart move for the union.

by doofus04 on Oct 26, 2006 12:57 AM EDT reply actions

LIke I said...

...I can see why they did what they did, but it just sucks that the draftees get no representation in the whole process. There's not really much to be done about it, but it still sucks.

In a lot of ways, we're moving to a system that encourages paying guys like Kyle Lohse more and guys like Joe Mauer and Justin Morneau less. Maybe there's not a good way to fix the situation, but that doesn't mean it's not a crappy situation.

by ubelmann on Oct 26, 2006 2:01 AM EDT up reply actions

I could swallow that actually...

...paying mediocrities more and superstars less. As you said it might not be a good way to go about it but there are definitely worse ways.

I wonder if there's anyway that high school players can form a union as well.

by MNPundit on Oct 26, 2006 6:04 PM EDT up reply actions

I wouldn't necessarily...

...mind seeing the free agent superstars get a little less money in favor of the average guys, but under the current system, if you're a superstar, you're underpaid until your arbitration period expires. It's the pre-arbitration guys that I think are getting the shaft, relatively speaking.

by ubelmann on Oct 26, 2006 6:52 PM EDT up reply actions

Wait, wait, wait.....

Most draftees have the old agent looking out for them (and themselves).

Some tightening does have to occur in the draft process. Getting a million or mroe out of high school (or even college) doesn't necessarily inspire great play...look at the number of guys that never go anywhere...just on the Twins side of things.

It does allow that we'll see a bit mroe of those incentives like spring camp invites, 40-man roster guarantees and the like, that would hopefully advance the quality draftee thru a system faster,

Still think something has to be done with arbitration. You either have to pay a player, sometimes mroe than theya re worth, or elt them walk. Kinda a reverse form of free-agency, and if the player does do better than expected (i.e. Ortiz) you don't reap the reward you could've because you were stuck with arbitration...not negotiating a lower-than-expected contract.

by twintown on Oct 26, 2006 6:06 PM EDT up reply actions

Can't necessarily fight the system...

Most draftees have the old agent looking out for them (and themselves).

Right, but with enforced slotting of draft bonuses, how is an agent going to help them? Players get drafted, and they're left with two choices: sign at $$ or don't sign at all.

Getting a million or mroe out of high school (or even college) doesn't necessarily inspire great play...look at the number of guys that never go anywhere...just on the Twins side of things.

First rounders are basically the only players that get a million or more. And dollar-for-dollar the return that teams get on first-round talent greatly outstrips the return that they get on the free agent market. You'd be very hard-pressed to convince me that, on the whole, first-round drat picks are overpaid compared to their contributions to their employers.

Really, the only way players are going to be the most fairly compensated for their abilities is to do away with a draft entirely and do away with the whole serfdom period--basically an all-out free market. Since money throughout the league isn't distributed evenly, a free market wouldn't be the best thing for baseball, but it would produce players that are paid more in line with their contributions than what we have now.

So I know a free market solution wouldn't be the best for baseball, but I think first-round draft picks were already more or less underpaid, and now they're going to be getting even less money. Labor peace is cool, but I just would've preferred if it didn't mean throwing those guys under the bus.

by ubelmann on Oct 26, 2006 6:49 PM EDT up reply actions

First Round Choices

You'd be very hard-pressed to convince me that, on the whole, first-round drat picks are overpaid compared to their contributions to their employers.

I thought that close to half the players taken in the first round never played in the major leagues. Until they do, they are an ongoing cost to the organization for coaching, salary etc, not contributors. And once they become contributors, they get paid a fairly hefty salary of several hundred thousand dollars even at the major league minimum.

Joe Mauer may have been underpaid, but not by much. Between his signing bonus and his major league salary he has made pretty good money for two and a half years as a contributing player.

I am not sure what happens with a "free market". It would so dramatically change the game's finances, I don't think you can even anticipate what that would look like.

by TT @ Twinkie Town on Oct 27, 2006 11:12 AM EDT up reply actions

Shockingly

Shockingly enough, i'd have to tentaivly agree with TT here. Sorry ubelmann, but I'm not o sure who gets the better deal. It would be a good study.

I think where the real value comes in is later couple rounds.

Besides, those top draft picks make the big bucks eventually anyway if they are all that good.

I wonder how much each year average franchises spend on draftees, and how much production they get out of that, and how much they spend on minor league contracts as a whole...

"Baseball is great because you can't take a knee or kill the clock. You have to put the ball over the plate and give the other guy his damn chance." C Stengel

by AdamOnFirst on Oct 27, 2006 1:12 PM EDT up reply actions

Joe Mauer...

...was more or less the most valuable player in the league this year. Last year, you could make a good case that he was the best or second-best catcher in the league. MVP salaries are conservatively around $14M these days. So, say his performance over the last two years warranted about $20M. Mauer got a $5M signing bonus and has played for the minimum since then. The Twins have underpaid him relative to his performance by at least $10M. At least.

And over the next couple of years Mauer will continue to be drastically underpaid, even with a raise that puts him at a seven-figure salary. Looking at free agents who are young and play an up-the-middle position, I think of Rafael Furcal, who got a 3 year/$39M contract. There's no doubt in my mind that Mauer would make more than Furcal if he was a free agent. By the time Mauer reaches arbitration, the Twins will have probably saved $20M+ on Mauer relative to what they would've paid on the free agent market (which is also no gaurantee of performance) for a player who would've given the team similar contributions.

Here's the bottom line, though--the really good young players (like Mauer, Morneau, Wright, Reyes, Howard, etc.) that you can get through the draft are so extremely underpaid that it's totally worth spending the $1M/year or so on the signing bonus for your first-round pick. It's like playing in a lottery where the odds are heavily slanted in your favor. Sure, sometimes you're going to lose, but when you do win, you earn back your losses and then some.

And once they become contributors, they get paid a fairly hefty salary of several hundred thousand dollars even at the major league minimum.

Several hundred thousand dollars is a lot when you think about it on a personal level--how much that one person can afford to buy, and the fact that they're (roughly) in the upper 1/2 percent of income in the US. However, from the Twins' standpoint--which I contend is the one that matters when we're talking about value to the team--that's chump change. It's a very small fraction of the payroll, and they have to pay someone the minimum anyway (it's the price of running a team), so arguing that a player's league minimum salary is somehow an additional expense to the team seems rather specious to me.

I thought that close to half the players taken in the first round never played in the major leagues.

Not true. Rany Jazayerli wrote a whole series of articles on the draft that are very much worth reading and explain the basis of my opinion on this much better than I have. But if you take a look at the first article, you can see this graph, which indicates that teams really do have a pretty good idea what they're doing in the draft:

So really, about half reach the majors (in some form) averaging roughly over picks 1-100. And in the first round, you're looking at about 70% of the picks that reach the majors. But it's clearly a different story when you're picking someone 1st than when you're picking someone 30th.

And to preempt this argument--yes, I know it's not just reaching the majors that matters. He doesn't break it down pre-/post-arbitration, but here's the average value of a draft pick over his career, by draft position:

Over their careers, the first overall pick is worth, on average, about 45 WARP. ~100 WARP will get you to the HOF. So paying those guys $4-5M to find out is completely worth it.

by ubelmann on Oct 27, 2006 2:17 PM EDT up reply actions

Mauer vs. Garbe

I think you laid out the best case quite well. Nobody will argue that Mauer was more than worth the investment. The worst case would be someone like B.J. Garbe, who revceived a then record $2.5 million signing bonus (I think), spent five years with the organization, never played beyond AA ball, and was traded for a month of Pat (Passed Ball) Borders. The total investment for Garbe was something like $3 million, and the return was next to nothing.

Paying for veterans is a relatively low-risk proposition because they are known and proven commodities. It's also low reward because more often than not, you pay more for their performance than they deliver. Paying for draft signees is a high risk proposition because they could be the next Joe Mauer or they could be the next BJ Garbe. It's a high reward propsition because if you score, you score big.

Signing veteran free agents is like buying large-cap stocks. Drafting and signing is similar to small-cap stocks, you need to buy a lot of them and average out their performance because some will tank and some will hit big. So a more apt analysis would be to take 10 years worth of first-round draft choices, average their bonuses and average their perfromances. When you do that, you see why some teams don't want high draft choices because they don't want to dabble in small caps. Brian Sabbean, for example, will usually sign a Type A free agent so he won't need to pay a first-round signing bonus.

It's really not a question of fairness. The system is set up simiar to many investment systems. Some players succeed and, like successful start-up enterprenuers, must work really hard before a bigger payout (selling the company). Others fail and get their payout without needing to work too hard for it.

What was it someone wrote about laissez-fair capitalism?

Joe Mauer for MVP.

by cmathewson on Oct 27, 2006 3:34 PM EDT up reply actions

Tried to do.....

it with draft signing bonuses...to keep teams that will remain nameless overpaying for first rounders who refuse to negotiate with low-rung teams.

If the Twins are only go to pay you a couple of millin and the Yankess might dange $5 or more...I don't want to be drafted by the Twins.

Which brings us abck to the inequity of baseball. Torii Hunter, at $12, is an average-salaried player in New York. In Minnesota, he's breaking the bank and causing fan uproar.

This is and always has been a team sport that relies on putting a group of guys on the field who will shine...as a group. Okay, maybe someone does something better and they actually put butss in the seats (in Minnesota, it is Santana, although you can hardly say that his games are sellouts compared to otehrs). Sorry, Puckett didn't put people in the seats, nor does Hunter. Neither will mauer. But they can be amrketed locally to sell more stuff and to keep the fan abse excited...as long as the rest of the team does its job and win!

by twintown on Oct 27, 2006 3:46 PM EDT up reply actions

Mauer

What a free agent catcher receives is in part based on the fact that teams pay slaves a lot less and partially on the fact that only a small number of players are free agents each year. The combination greatly inflates what people are willing to pay. Moreover they are almost always multi-year contracts. To say Mauer is "worth" that much isn't accurate if every other player was receiving what they were worth.

The current system really rewards players who are productive players as free agents, nominally rewards players who reach arbitration and screws with people until they have three years of service. The proper comparison for Mauer is guys like Liriano, Morneau or Kubel. By that standard, he has done pretty well.

The articles you site are part of BP's paid content, but those graphs look awfully herky-jerky and its not clear what dataset they are using. And WARP is about as useful as a bucket of warm spit.

It appears that the Twins spend about $6-10 million each year on draft choices. I don't know what the cost of their minor league system is - but they have to pay for that as well. All of that investment is required to produce players like Mauer and has no revenue return.

by TT @ Twinkie Town on Oct 27, 2006 5:08 PM EDT up reply actions

Cost of Minors

Probably in the $2.5-3 million range to pay players, coaches and staff...plus facilities might add a tab more to that.

by twintown on Oct 27, 2006 7:03 PM EDT up reply actions

With the exception...

...of Ft. Myers (Miracle and GCL), the Twins do not pay for the facilities at the other franchises. Each of the other clubs is owned locally, collects the revenue and pays for the cost of operating the team...with the exception that the Twins pay the salaries for the players, coaches and related staff.

I also suspect that your estimate of $2.5-3.0mm is a tad light. We all know that players at the lower end of the organization don't make a lot, however, many of the players at the AA and AAA levels are actually paid real money. Considering that there were about 180 players under contract, the total cost is probably much higher.

by roger @ Twinkie Town on Oct 28, 2006 8:21 AM EDT up reply actions

I would agree with you.....

AAA guys do make more. We have the extended leagues (not to mention the South American league set-ups), plus transportation costs, meal money and such. But if you say $5 million total for 180 players, not bad.

by twintown on Oct 28, 2006 11:59 AM EDT up reply actions

You

You made some major ground in proving that claim, in my mind, with the first graph.

What I'd really like to see is maybe 10 consecutive first round draft classes averaged. How much money was spent by ALL teams signing how many of thei drafted players, and how many of those reached the majors, and then the total WARPs of those players for the first 5 years in the majors (when they are still cheep and below market value). Then we'd have to see how much total they were payed extra in the majors, so we'd have added up all costs to the organizations for those players, and compare it to market value for such players.

But that would be in depth as hell.

"Baseball is great because you can't take a knee or kill the clock. You have to put the ball over the plate and give the other guy his damn chance." C Stengel

by AdamOnFirst on Oct 28, 2006 4:00 PM EDT up reply actions

unions

Well to pay based on performance goes against the union ideal of pay for seniority. So in baseball and other sports too I guess we get a hybrid of the 2. Thats no different in the real world either though where you have to start out as a minimum wage cashier at McDonalds before you get a higher paying position at shift leader to asst manager to manager...... So a player starts out making peanuts in the minors, get promoted to "shiftleader" majors and makes more then develops a history of success and gets paid more as a "manager" Arbitration years then makes franchise owner money as a free agent. Not all ballplayers follow this progression but few McDonalds cashiers go on to own a McDonalds franchise either.

by doofus04 on Oct 26, 2006 9:51 AM EDT reply actions

I guess...

...I figure the seniority structure makes a lot more sense in the majority of businesses out there than it does in baseball. My initial thought is that in most jobs, you can continue to get better and better at your job as you age--or at least you peak somewhere well past 28 years of age. So it kind of makes sense to pay based on seniority, at least as a first approximation.

The only way it would ever really hurt me as a consumer is if baseball started losing players because athletes could get better bonuses, etc. in other sports. (Imagine if Mauer chose to go to college to get to the NFL because the Twins offered him peanuts for a bonus.) As it stands, I don't see that as a big problem, but if they continue to go in this direction, it might start to be a small issue.

by ubelmann on Oct 26, 2006 1:19 PM EDT up reply actions