Major League Baseball and the Players’ Association reportedly reach an agreement over pay during the shutdown, service time implications, and conducting the 2020 Draft

Over the past week, Major League Baseball and the players’ union have been negotiating over how to conduct the 2020 season. The 2020 regular season has been delayed by at least eight weeks due to the outbreak of the COVID-19 virus affecting the entire world and shutting down all major sports. There’s no definite timetable for when the season will start up again and there’s still the possibility that the entire 2020 season could be cancelled outright. Since the virus will likely shorten or cancel the season, MLB and the players’ union worked to strike a deal on how to proceed forward.

Over the last couple days, the two sides have reached an agreement with the 30 players representatives voting on it yesterday and the owners expected to ratify it today. Here’s what we know about the agreement:

How will players get paid?

ESPN’s Jeff Passan reports that the league will advance $170MM to the players.

As mentioned in the negotiations article, the pay will be divvied up between three different classes of players: players on the 40-man roster for the first time, players with minor/major league salary splits, and players signed to MLB deals. I’m not sure what the percentages will ultimately be. The players will not be required to pay back the advance should the season ultimately be cancelled.

In the event the season isn’t cancelled, players will receive a prorated version of their 2020 salary based on the number of days in the likely abbreviated season.

Service Time Implications

The second most important issue is how this will affect a player’s service time in regards to the 2020 season. The biggest hurdle in the negotiations was what would happen if the season were to be cancelled. Jon Heyman is reporting that if that happens, then 2020 service time would be based on how many days of service the player picked up in 2019.

For the Diamondbacks, that means if there are no games played, then Robbie Ray would be eligible for free agency. The team can elect to issue a one-year qualifying offer to Ray, which he can either accept or decline and allow the D-backs to acquire draft pick compensation. Should Ray end up signing for more than $50MM on his free agent contract after declining the QO, the D-backs would receive a draft pick after the end of the first round. If Ray signs for less than $50MM, the D-backs would instead get a compensation pick after the conclusion of the second round.

Another noteworthy issue for service time also comes down to the arbitration system. In the event of a shortened season, player counting stats will be down compared to a full season. According to Passan, the arbitration guidelines will change to account for the shortened season.

We won’t know how this will add up until the off-season when we see teams and players exchange filing numbers. Personally I believe the arbitration system is currently flawed and relies too much on counting stats like ERA, saves, and RBIs, instead of paying a player based on the value he offers the team.

The Draft

I published an article yesterday about the likely framework for the 2020 Draft and how it will be conducted. The draft will be 5 rounds, although MLB has the discretion to increase the number of rounds to 10. After the draft teams could sign undrafted players for up to $20K, according to Heyman, higher than the previously stated amount of $10K by McDaniel.

I can accept baseball attempting to reduce the total number of rounds in the draft, but shrinking the draft from 40 rounds to 10 rounds, possibly as few as 5, is too drastic. I would have been fine with cutting it down to 30, even as low as 25 rounds, both in the present and future drafts. The draft will also be moved back to July, which I don’t understand over just holding it in June with no meaningful high school or college games will be played between now and then. Looking at the amount of spending for the 2019 Draft, teams could stand to save $55MM-$62MM from shrinking the draft from 40 rounds to 5 or 10. That’s roughly about $2MM each owners would be able to pocket instead of spending on the draft.

J.J. Cooper of Baseball America raises an important issue about shrinking the draft to 5 rounds.

I’m not sure how teams would fill that void, although it’s possible they just move up guys from lower parts of the minors or try to sign as many college seniors as possible. Carlos Collazo, citing a player agent as his source, reports that it could also increase the odds of MLB going through a 42-team contraction of the Minors along with the economic damage those teams face as a result of the outbreak shutting down baseball.

The next question with the draft comes down to signing bonus money. According to Ken Rosenthal, the signing bonuses will remain at 2019 levels for the next two drafts. MLB Super Agent Scott Boras called such a deal as “Unconscionable”, most likely because his clients are more likely affected by signing bonuses not continuing their yearly increases.

This will make high school talents that might be fringe Day 1 guys elect to go to college and re-enter in 2023 to land a bigger bonus. It might not affect eligible sophomores and juniors that were likely to go the first five as much, although I could see a few of them staying put and waiting until next year to sign. That will create a logjam at the Division-I level, as there will be more players competing for roles than previously estimated.

Unfortunately the whole draft proposal is the union allowing MLB to short-change amateurs for the sake of money, who don’t have a seat at the negotiating table. Even those baseball has shut down, teams have enough information to make calls on which players to select in the draft.

Conclusion

Both MLB and the MLB players came away from this deal with some victories. Owners are only on the hook for $170MM in player expenses should the season be cancelled and can pocket up to $60MM that won’t be spent on the draft. MLB players will be paid during the shutdown and won’t come up empty and will be able to gain a year of service time in 2020 even if the season is cancelled. Unfortunately, the 2020 draft class and Division-I college programs ended up getting the shaft from the changes to the draft. I personally don’t agree with the idea of screwing over amateur players and minor league teams, but at the end of the day the union doesn’t represent them so they don’t have an obligation to help them.

We’re still weeks away from any baseball games resuming and we still don’t know how long the 2020 regular season could be and when it will start.