Baseball Basics for Brits

Volume 3. Players: Development, Contracts and Transactions

In this volume of Basics for Brits we will be looking at the standard career path of MLB players. This includes:

 The amateur player draft  How players make their way to the Majors  The contracts they can receive when they get there  How players move between different teams.

Player development draft players when they have finished The subject of MLB players - how they high school (aged 18) at the earliest, are acquired and moved by teams, although occasionally overseas players what types of contracts they sign, and are signed at 16 or 17 years old. Their so on – is an important one for Brits to development up to that point is the learn about because many aspects are responsibility, both in coaching and quite different to how things work in financial terms, of schools and colleges British sports. rather than the teams themselves.

This is true right from the very start in how Remember from Volume 1 that there are players begin their professional careers. 30 MLB franchises across North America (all but one, the , in In Britain, it is the professional clubs America) and these are essentially the themselves that predominantly coach, only show in town to play professional develop and bring through young baseball there, other than some players. Players can start with a club independent leagues that across from an early age ('under eights' teams the States. are common) and, if good enough, a player will move into a team's Academy Every MLB team has a series of Minor at sixteen years old before 'graduating' League affiliate clubs (usually five) to as a professional. which essentially they loan the players and then control how they move In baseball, Major League franchises between them (e.g. if a player is at their Single-A team and is performing well, Baseball Basics for Brits – Volume 3. Players: Development, Contracts, Transactions the parent MLB club may decide to If a player is drafted out of high school, reassign them to their affiliated club in he has more leverage in the the next level up, -A, and neither negotiations because he can opt to go affiliate gets a say in the matter). to college instead of signing with the team. Although a team that 'loses' a The Amateur draft player in this way will receive an extra Most players enter the ranks of pick in the following year's draft, teams via the amateur try to avoid this situation if at all possible. player draft, which takes place in June each year. Ultimately the decision to sign out of high school or go to college instead will The draft is open to players in America, depend on each individual case. Canada or an American territory who have just graduated from high school, or Some simply don't want to carry on in college players once they have the education system and want to focus reached 21 years old (players at junior or on baseball full-time at 18 years of age. community colleges, somewhat It's generally considered that dedicating equivalent to sixth form/colleges in yourself in this way alongside all the Britain, can be drafted at any age). support (coaching, playing opportunities etc) a professional The draft includes 50 rounds and the organization brings is the best way to general order in which teams pick in develop. each round is determined by the final standings from the previous season. The However, others will want to go to team with the worst regular season college for more than sporting reasons. record picks first, the team with the best Additionally, some players develop at record goes last (pick number 30). This different rates and signing at 18 would order can change in the first couple of be selling themselves short. rounds. If a team loses one of the better players in the game via free agency, That's what happened to pitcher they will receive a draft pick as . By his own compensation from the team that admission, he wasn't ready to be signed the player. drafted out of high school, being overweight and needing to mature both The players don't really get a say in who on and off the field. After his time in they are drafted by. Once a team picks college, he was one of the most talked a player they still have to agree a signing about prospects in recent memory and bonus with them, so some players can was selected with the first pick of the make it clear they are looking for a 2009 draft by the Washington Nationals. significant sum and end up falling to a They gave him a record-breaking richer team as a result. $15.1m contract.

However, if a player doesn't come to an Since this point, a new system has been agreement with the team he is drafted introduced that is designed to limit how by, he cannot simply go and negotiate much each team can spend on draft with another team instead. He has to bonuses. wait another year for the next draft to come along. MLB teams now are given a ‘bonus

Version 3 2 www.baseballgb.co.uk Baseball Basics for Brits – Volume 3. Players: Development, Contracts, Transactions pool” to spend on their drafted players. the sum paid by the Minnesota Twins to There are guide prices set for the 16 year old German Max different picks across the first 10 rounds Kepler-Rozycki in 2009. He made his and a team’s bonus pool is based on the Major League debut for the Twins at the number and type of selections they end of the 2015 season. have that year. Teams are penalised for exceeding their bonus pool in the form Japanese players of a tax and the potential to lose first- Players from Japan deserve their own round picks in the following season. section as there are specific rules that apply in their case. In 2016, the have the first selection due to having the worst A Japanese player cannot move to MLB record in 2015 (63-99), however their as a free agent until he has played for bonus pool of $13.4m is slightly less than nine years in the Japanese Nippon that of the second-picking team the Professional Baseball (NPB) competition. Cincinnati Reds’ ($13.9m), in part due to They can only move to MLB before this if them having an additional Competitive their Japanese team agrees to put him Balance pick. For comparison, the through the ‘posting’ process over the will have the lowest offseason. MLB teams have four days to bonus pool of just over $2.24m. submit a blind bid as part of an auction and if the Japanese team finds the Players signed in the first round can highest bid acceptable, the player then expect a draft bonus of between $1m has 30 days to negotiate a contract with and $2m, with the very top picks getting the MLB team. even more. It's often not a great system for the International players player. Not only does the player have Players from other countries that were just one team to negotiate with, by this not resident and educated in North point the team has already allocated America generally are not currently several million dollars to win the rights to subject to the draft and are free to the negotiations. Much as the player negotiate with all teams; however plans and his agent wants them not to, they are afoot introduce an international will consider this expense when it comes draft in the coming years. to deciding how much they are prepared to offer the player in his The most notable country that supplies contract (all of the posting fee goes to players in this way is Cuba. This is a the Japanese team). Consequently baseball hotbed, but the political only a few players go through the regime in the country doesn't allow posting process each year. players to make their way over to the States. Cubans have to defect, often in A similar ‘posting fee’ system also exists secret escapes leaving behind family for players in the Korean Baseball members in the knowledge that they will League. not be allowed back into the country. Moving through the minors Some players are signed out of Europe. A player's development from draftee to The current record signing bonus for a Major Leaguer will be different for each European youngster is $800k. This was individual. In fact the majority of players

Version 3 3 www.baseballgb.co.uk Baseball Basics for Brits – Volume 3. Players: Development, Contracts, Transactions that are drafted never make it to the and regardless of how they move Majors, such is the standard required. between teams, the contractual rights Most will spend two to four years simply move with them rather than a developing their game in the minors, new contract being agreed. progressing through the different levels, before getting the call. Occasionally a When a player is drafted, he is under player can make it within a year or so. contract for seven minor league seasons. During that time by and large Factors that can play a part include he can be moved between teams ability, work ethic, injuries slowing down (different affiliate clubs of the same MLB progress, and the player's age when team, or moving to another MLB they were signed. A player signed organisation and being assigned to one straight out of high school may need of their affiliate teams etc) without any more development years in the minors say-so on his part. The compromise there than a player who has spent an extra 3 is that the underlying contract stays the or 4 years playing college baseball, for same. example. Major League contracts Salaries within the minors are much When a player gets promoted to the lower than even the Major League Major Leagues, he is then under minimum and are negotiated on an contract for six full MLB seasons before individual basis, other than for first-year he becomes a free agent. His contract players whose salary is set by the MLB may be cancelled or extended during Commissioner’s Office. Indeed, a this time for various reasons. federal lawsuit was filed in 2014 aimed at increasing salaries based on the claim In the first year, players receive the that the Major League teams in control minimum salary as set by MLB ($507,500 of the Minors were deliberately in 2016, equivalent to £356k, March supressing salaries (the lawsuit it still 2016). For the next two years, most ongoing). Additionally, players only get players receive a salary close to, if not a paid during the season. little higher, than the minimum salary set for those years. As a rough guide, players in Single A (the main lowest level) receive $1010 per During the final three years, a player is month, $1550 in Double A and $2150 in said to be arbitration eligible. This Triple A (the highest minor league level). means that each year the team and the On top of these salaries, players get $20 player will negotiate a one-year meal money per day. contract. If they cannot come to an agreement on the salary, an arbitration Contracts hearing is held where each side will put forward their case. The arbitration panel There are two fundamental points will choose one of the two figures on the relating to MLB contracts that you need table (they cannot just split the to know. The first is that every player that difference between the two offers) and enters MLB via the amateur draft gets their decision is final. covered by the same standard contractual rights. The second is that At the end of these six years, the player those contract terms sit with the player becomes a free agent and is able to sign

Version 3 4 www.baseballgb.co.uk Baseball Basics for Brits – Volume 3. Players: Development, Contracts, Transactions for any team they like (the equivalent of up in the Majors, he was under contract a 'Bosman' free transfer in football). This for six years before he could become a is the stage at which players can free agent. command lucrative multi-year contracts worth millions of dollars and is also the Over his first three seasons, Heyward first time in which they get a chance to earned either the MLB minimum or a bit decide which team they will play for. more than this, namely: 2010 - $400k, 2011 - $496,500, 2012 - $565k. The player once again becomes a free agent when each subsequent contract Heyward’s salary was ‘arbitration he signs runs out, or at a point when he eligible’ for the first time in his fourth can opt-out of the contract. season and, because he had become a very good player over those first three Exceptions seasons, his salary jumped to $3.65m. Some players will reach arbitration at the end of their second year. They are Prior to his fifth season, Heyward and his known as Super 2 players and it means then team the Braves agreed a the very top young players can earn a two-year contract to cover his slightly higher salary than the relatively remaining two arbitration years under modest sum they would get otherwise. contract, amounting to $4.5m in 2014 and $7.8m in 2015 (that became $8.3m The process of arbitration can be with bonuses added). disruptive for both the club (who don't know how much they will have to pay Prior to Heyward’s final season under his the player year-on-year) and the player initial 6-year period, the (who, via his agent, has to go through traded him to the St Louis Cardinals. the hassle – particularly the media Atlanta decided that they would be interest - of agreeing a new deal each unable to afford to sign Heyward to a year). longer-term contract to avoid him becoming a free agent and therefore Consequently, teams and the better- traded him for some other players, performing players will often look to rather than see him walk away at the agree a multi-year contract to cover end of the season. This happens quite some or all of the arbitration years, and frequently in MLB. even sometimes to delay that player’s free agency. In those cases, a player Once Heyward completed his 2015 understandably will be expecting a season with the Cardinals, his initial 6- good payday if it means giving up his year contract period expired and he right to negotiate with every other team became a free agent, able to negotiate by a few years. with any team. In this situation, the team doesn’t pay any transfer fee to sign the Case Study: Jason Heyward player, but does normally forfeit an amateur draft pick. As an example, let’s look at outfielder Jason Heyward’s career earnings so far. Heyward ended up signing an eight- He signed a $1.7m draft bonus with the year contract with the Chicago Cubs Atlanta Braves in 2007 and then made that is worth a total of $184m. With the his MLB debut in 2010. As noted, once way the contract is structured, Heyward

Version 3 5 www.baseballgb.co.uk Baseball Basics for Brits – Volume 3. Players: Development, Contracts, Transactions will earn $15m in 2016 (nearly double his or loaned. 2015 salary) and then will earn around $21m every year for the next seven. In many cases, the players involved get no say in whether they want to be That may sound a wonderful position to traded, never mind where to. A player be in already, but the other key thing can be part of a division-leading club on about Heyward’s contract is that he can the east coast one day and then find opt-out of it (i.e. tear it up and become himself playing for a west coast team at a free agent again) after three years. the bottom of the standings on the next.

You’d be forgiven for reacting to that by The crucial point is that the player will not thinking he would be mad to do this; lose out financially: his existing contract however Heyward made his MLB debut will simply be carried over and honoured at 20 years old, a young age in baseball. by his new team. The Players union understandably would not accept the In three years (the end of the 2018 idea of a player having his salary slashed season) he will still be only 29 years old, when being traded without his consent. so if he performs well before then he will So that is how things stand: the contract probably be able to get a longer and stays the same regardless of who is more lucrative contract than the 5 years paying it. and $106m that will be remaining on his existing deal. And, of course, if he As an off-shoot, players do not agitate doesn’t play well during those first three to move to a new team simply to earn years, he can just stay where he is on his more money, as is the case in Britain original, very well-remunerated where a transfer means a new contract contract. for the player (and a slice of the transfer fee as well). Over the past year or so, such opt-outs have become more common among In fact it is often the other way around: a the elite free agents. Business is booming team may try to trade a player part-way in baseball and salaries keep rising, so through a multi-year deal because they negotiating the opportunity to become can no longer afford (or want) to pay a free agent again a few years down the salary remaining on the contract. If the line makes sense. the contract is particularly burdensome (in length and dollars), a team can face There are fewer advantages for the difficulties in agreeing a trade for the team as they are taking on most of the player and they may have to agree to risk – they are stuck paying the player if pay part of the salary remaining on the he performs poorly, but could see him contract. walk away if he performs well – so it’s only the elite talent that are likely to They may also have their hands tied in have the bargaining power to get a regards to who they can trade the team to agree to this. player to. When a player is a free agent, they can use their bargaining position to Trades insert no-trade clauses into their One of the biggest differences between contracts (this can also happen when a MLB and British sports is the way in which player agrees a deal to cover their players are traded, rather than bought arbitration years). Occasionally these

Version 3 6 www.baseballgb.co.uk Baseball Basics for Brits – Volume 3. Players: Development, Contracts, Transactions will be complete no-trade clauses (i.e. Additional Information the team cannot trade the player, This is just an introduction to the subject without his consent, to any team), but of player contracts and there’s plenty more often the no-trade clause will more details you can delve into if you relate to a list of teams chosen by the wish. To find out more, visit the Cot's player (for competitive and geographic Baseball Contracts site and consult the reasons). 'Glossary' section.

You can see that there is a certain What should also be noted is that player amount of give-and-take to the process. salaries and contracts become public In a player's early Major League years, knowledge, right down to what bonuses he will receive less money (relative to and perks they receive. Everyone knows free agents of a similar talent) and has what everyone else is earning; a very less rights in regards to being traded. different scenario to how it works in football, for example. In return, after six years the player has earned the right to be a free agent and Sources can 'sell' his services on the free market, Cot's Baseball Contracts: giving him the opportunity to seek a https://www.baseballprospectus.com/ lucrative contract and more control compensation/cots/ over his future. Don't forget though that the player is often 29 or 30 years old by ESPN MLB Transactions Primer: this point. http://assets.espn.go.com/mlb/s/transa nctionsprimer.html Veterans Regardless of whether they are National Sports and Entertainment Law negotiating a free agent contract, Society, article on the Minor League players earn extra rights if they play in pay structure: the Majors for a number of years. In http://nationalsportsandentertainment. particular, a player who has been in the wordpress.com/2010/03/17/pay- Majors for ten years, and five with his structure-of-minor-league-baseball- current team, cannot be traded without players/ his consent. These players are referred to as 'five and ten' players (sometimes http://www.baseballamerica.com/min 'ten and five'). ors/players-sue-for-better-salaries/

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