The new collective bargaining agreement and how it affects the Royals

Labor peace!

If you ever wanted to feel happy about billionaire owners and millionaire players continuing to make millions and villions of dollars, it is when baseball agrees to a new collective bargaining agreement, ensuring there will be no work stoppage for baseball for the next five years. The current collective bargaining agreement expired last night, and the threat of a lockout by the owners loomed over negotiations on a new deal. Thankfully, with the sport swimming in cash with its record-high attendance figures, record local TV ratings, and a hefty national TV deal, there was little reason for the two sides to draw a hard line, and they came to a deal that will give baseball a streak of 27 seasons without a work stoppage.

Let’s take a look at how the changes in the new collective bargaining agreement (CBA) might affect the Royals.

Free agent compensation changes

This is the area most Royals fans were concerned about with the Royals potentially facing free agency from several key players - Eric Hosmer, Mike Moustakas, Lorenzo Cain, Danny Duffy, and Wade Davis - in 2017. It is important to remember that under the current system - and under the new CBA - the system that compensates teams for losing a free agent is separate from the system that punishes teams for signing a free agent. Currently, a team that loses a qualified free agent gets a sandwich pick at the end of the first round. A team that signs a qualified free agents forfeits their first-round pick, but that pick does NOT go to the old team - it simply disappears.

Under the new system, teams that lose free agents will still receive a compensatory pick. According to the AP, if the player rejects a Qualifying Offer and signs a $50 million contract or more, the old team will continue to get a sandwich pick at the end of the first round. If the player signs a contract under $50 million, the pick will be after the second round. However, if it is the team losing a free agent has exceeded the luxury tax threshold - last year this applied only to the Dodgers and Yankees - the compensatory pick is only a fourth rounder.

The potential free agents for the Royals should reach the $50 million threshold in free agency, with Wade Davis being the only exception if he continues to have injury concerns. That threshold may make it more likely the Royals trade Davis this winter or next summer to get a better compensation package for him.

The bigger change is that teams that sign free agents will no longer have to forfeit a first-round pick, as the Royals had to do to acquire Ian Kennedy. Instead, teams not over the luxury tax threshold will only have to forfeit a third-round pick. This is a concession to players, since the Qualifying Offer system was hurting non-elite free agents like Kendrys Morales in 2014, since teams did not want to give up a first-round pick for such players. That could lead to higher player salaries, making it more difficult for the Royals to compete for free agents. On the other hand, they can sign free agents without worrying about giving up a first-round pick. Also, with teams no longer forfeiting first-round picks, that pushes back the compensatory sandwich picks, making them a bit less valuable.

Players will also no longer be able to be given a Qualifying Offer more than once. The free agent compensation changes would go into effect next off-season.

Luxury tax threshold increase

This was a point of contention for some of the bigger market clubs and they get some of what they wanted with the threshold going up from $189 million to $195 million next year, with the limit rising gradually up to $210 million by the final year of the deal. However the luxury tax threshold has not kept up with overall revenues in the game, so the gradual increase will help keep a lid on player salaries.

Any team that goes above that amount will face a luxury tax, and the new CBA will significantly increase penalties for teams that greatly exceed the threshold as the Dodgers have in recent years. This obviously doesn’t directly impact the Royals, but the threshold has been fairly effective at capping some of the larger payrolls, preventing teams from going hogwild on free agency.

Revenue sharing changes

The details are still pretty murky on this, but it could have the biggest impact on the Royals. According to Jeff Passan, "Performance Factor" may be eliminated from revenue sharing, which could mean the wealthier clubs could be paying less. The Performance Factor is a multiplier for the supplemental revenue sharing plan.

The large-market clubs had been complaining about revenue sharing for some time, but mostly about the free-loaders who weren’t using the revenue to improve their clubs. Due to those concerns, the Oakland Athletics will be phased out of revenue sharing. This threat could make it less likely the Royals return to their low-spending ways if there are punishments for simply pocketing revenue sharing money without spending it on player personnel.

International bonus spending cap

Owners had proposed an international draft to deal with escalating bonuses from Latin American players. The proposal drew protests from Latin-American prospects and current players. In the end, owners dropped plans for an international draft. Instead, there will be a hard cap that clubs cannot exceed. The bottom 15 revenue clubs will have a $6 million total bonus pool to sign international free agents, while the top 15 clubs will have $5 million.

The Royals have actually been one of the bigger spenders recently in the international market, and are currently serving a "penalty" this year for exceeding their international bonus pool in 2015 to sign prospects Seuly Matias and Jeison Guzman. Not having a draft probably helps them right now, since they would not pick near the top of a draft based on their record. The hard bonus cap may inhibit their spending, but it also keeps bigger market teams from spending, and will likely keep bonuses low enough for the Royals to remain competitive.

No expanded rosters

There was talk that perhaps rosters might expand to 26 in exchange for a reduced roster size in September, but ultimately there wasn’t much interest in haggling over this from either side. An expanded roster might have allowed the Royals to carry a pinch-running specialist like Terrance Gore all season, or potentially an extra bullpen arm. Instead they will have to make due with 25 players just like everyone else.

Other changes:

• Home field advantage in the World Series will depend on best record, not the All-Star Game result.
• The All-Star Game will include a cash prize incentive for the winners.
• The disabled list will be shortened from 15 days to 10 days.
• There could be changes to the June amateur draft, possibly including trading picks.
• Starting in 2018, the season will begin a few days earlier to give teams more off-days throughout the season.
• Penalties for drug violations are likely to be tougher.
• Changes are likely to the league’s domestic violence policy.
• There will be a ban on smokeless tobacco, with current players grandfathered in.
• There will possibly be a MLB game played outside of the U.S. and Canada in 2018, likely in Mexico or London.