Dec
01

The New MLB Collective Bargaining Agreement’s Negative Effect On High School Draftees

The following guest contribution was written by Justin Herzig.  Follow Justin Herzig on Twitter: @JustinHerzig.

Let’s start things off simple. It is great news that the Collective Bargaining Agreement between the MLB owners and the MLBPA was agreed upon, and that baseball will continue without a gap for at least five more years. After the NBA and NFL lockouts, this is no small accomplishment. However, the good news coming from the CBA doesn’t extend far beyond the fact that it will prevent a labor dispute.

The owners have been blinded by their short-sightedness to save money in the short term, and the players are simply relishing in the fact that the minimum salary will increase by about 16% to 480,000, with a few other small free agency advantages as well. However, the people most hurt by the new CBA were the ones with no representation at the table, the amateurs.

I’m not complaining for the Strasburg’s and Harper’s of the world that will now be making a few million dollars less than before. I am talking about the majority of high school prospects that aren’t selected in the first few rounds. Due to the new slotting system with a soft cap, teams would be nonsensical to spend more than the 5% grace zone, having to pay a 75% luxury tax as well as forfeit a future first round pick, with even greater penalties if they spend more. Thus, all discussion must continue on the assumption that teams follow the new slotting system.

The new CBA rules state that any bonus of more than $100k provided to players drafted outside the top 10 rounds, will have that amount go against the team’s Signing Bonus Pool. These high school prospects, as well as the ones drafted in rounds 6-10 that will most likely only be offered less than $200k, are put into a very difficult situation. Unlike college basketball and football, even the top recruits are only offered partial collegiate scholarships, forcing the families to make up the remaining tuition. For many families, coming up with that tens of thousands of dollars for the next three years or four years is not an option; they are rather left with the decision to take that small signing bonus or attend a community college.

While $100-200k may sound like a goldmine to an 18 year old, this allure of instant money may only worsen the situation. However, the opportunity cost for accepting that money must be noted. That 18 year old will now be spending the next however many years making less than $2,000 a month. And what happens when the baseball dream dies as it does for 95% of all draftees? They are left with no college education, no real world skill set, and very little to fall back on. For families that cannot afford to pay for their child’s college education, the MLB is merely setting them up for a life of poverty.

There was an easy solution to this. Allow the teams to guarantee future college tuition to the draftees they choose, while not having it go against their Signing Bonus Pool. Honestly, who would this hurt? The owners would only have to provide those educations to the draftees as they choose. The leverage and signability effect by including future tuition is minimal and clearly outweighed. But rather, with no one at the table negotiating on behalf of the amateurs (the future of the game) they merely get overlooked and ignored. What do the current high school baseball players have to say about this? And their parents? Unfortunately, it does not matter.

  • Ken

    Interesting take on the new MLB CBA.  Taking money and opportunity from non-represented parties at the bargaining table is not new.  The NFL, NBA and NHL have all done it.  In fact, it is done all the time in politics and other industry union negotiations.  It is easy to take things from people who have no voice or vote.

    I think we might be losing sight of one fact, though.  Not every high school player drafted is college material.  Just like in life, not every high school graduate is college material.  There is nothing wrong with that.  Each person is different and each will travel their own path in life.  So guaranteeing college tuition may not be the easy answer it appears.

    The rules of the draft signing game have changed. I am sure players, families, agents and advisers will find a work around. College material players that get drafted can take the bonus money, put it into a 529 plan for later use on college tuition, and pursue their MLB dream.  It may take a little discipline not to just go out and spend.  But doesn’t this accomplish the same thing as a tuition guarantee? 

    Players drafted out of high school always had the choice to attend college and they still have that choice.  I don’t think the new structure will, in the long run, have that dramatic of an effect on the players. 

  • Ken

    Interesting take on the new MLB CBA.  Taking money and opportunity from non-represented parties at the bargaining table is not new.  The NFL, NBA and NHL have all done it.  In fact, it is done all the time in politics and other industry union negotiations.  It is easy to take things from people who have no voice or vote.

    I think we might be losing sight of one fact, though.  Not every high school player drafted is college material.  Just like in life, not every high school graduate is college material.  There is nothing wrong with that.  Each person is different and each will travel their own path in life.  So guaranteeing college tuition may not be the easy answer it appears.

    The rules of the draft signing game have changed. I am sure players, families, agents and advisers will find a work around. College material players that get drafted can take the bonus money, put it into a 529 plan for later use on college tuition, and pursue their MLB dream.  It may take a little discipline not to just go out and spend.  But doesn’t this accomplish the same thing as a tuition guarantee? 

    Players drafted out of high school always had the choice to attend college and they still have that choice.  I don’t think the new structure will, in the long run, have that dramatic of an effect on the players. 

  • Pat

    Without an International draft what will be the effect on the large signing bonus potential in Latin America, Europe and Asia. Will these bonus amounts count against the pool?

    • http://twitter.com/JustinHerzig Justin Herzig

      For 2012-2013, all teams will have an equal International Signing Bonus Pool. For years after that, each team’s pool will be awarded based on reverse order of winning percentage the prior season. The numbers have not been officially determined yet but that will be the system. Look at Section 3, part f for more info: http://mlb.mlb.com/mlb/downloads/2011_CBA.pdf.

  • Donnebaseball

    I had not heard the CSP provided by MLB had been stopped.  If this is true most all players will attend college first. If the CSP is in place and does not and should never count towards the Sign Pool your last paragraphy needs to be resended ASAP and the fact checker on this story needs also make sure that this in corrected. I REALLY HOPE you made a mistake.

    • http://twitter.com/JustinHerzig Justin Herzig

      Prior to making this post, I had done a great deal of research looking into this. According to the 2011 CBA provided by MLB.com (http://mlb.mlb.com/mlb/downloads/2011_CBA.pdf), “any amounts paid in excess of $100,000 will count against the Pool.”

      As well, when looking on the MLB College Scholarship Program’s website (http://mlb.mlb.com/mlb/official_info/scholarship.jsp), no current information is given.

      If future college tuition can be provided to draftees, without it affecting the Signing Bonus Pool, than I hope this article can possibly be a catalyst for that information becoming public. I do truly hope that this has merely been a lack of communication by the MLB and MLBPA and not such a grave flaw in the new CBA.

    • Rick Meyer

      You should probably proof read but you ask the writer to “rescind” rather than “resend” something. Simple grammatical corrections would also make it easier on the eyes of your fellow readers.

  • Hinte06

    Given the greed shown by the current the multimillionaire MLB players in conjunction with the owners, the time may have come for a class action lawsuit similar to Curt Flood’s suit against MLB on behalf of current high school players who will suffer substantial financial harmed under the new CBA.  As most know, though Flood lost but his lawsuit, it led to major changes in free agency rules.  And if baseball’s antitrust exemption would prevent a successful lawsuit now then the alternative is to mount a campaign with congress to remove baseball’s exemption.  Congress, at an all time low in public opinion, certainly does not need to give another potentially large group of voters reason to be further dissatisfied with their performance so the time may be perfect to mount a successful challenge to MLB’s coveted anti-trust exemption.  With a significant challenge building steam, most likely the MLB would make concessions before allowing the exemption to be put at risk.Anybody have any ideas where to start or how to spread the word?  Sure the chance of anyone’s high school son eventually being drafted is a long shot but waiting until the year the fortunate ones are actually drafted will then be too late.