Wednesday, May 29, 2013

How Labor Law Has Shaped the Ravens and Orioles

By Chris Simmons

This off-season, the Ravens experienced an exodus of players from their Super Bowl winning team.  Meanwhile, the Orioles made no major moves, content to utilize the same roster that many pundits thought overachieved last season.

In both Major League Baseball and the National Football League, players have unionized to bargain for their working conditions. Until the 1970s, player movement and salaries were severely restricted in both sports, as one team owned a player's rights unless it decided to get rid of the player. 

That has changed in recent years.  These new working conditions and rules are complied in a collectively bargained agreement, signed by both the leagues and the unions.  Many of these rules influence how teams build their rosters.

In baseball, the player  agreement allows for free agency after six years of service time.  But prior to free agency, when a player can sell his services to the highest bidder, a player can go to salary arbitration to settle any disputes with a team over a salary.  It is a nuanced area, but in general, the player has this right to do so when he has played at least three years, but less than six.  However, if a player spends at least 82 days on a roster in his first year, he can be eligible for arbitration after his second season.

This has led teams to hold Major League-ready players down in the minors for the first few months of the season to avoid starting their arbitration clock a year early.  This could potentially save a team millions, as most rookies will only make about $500,000 per year.

Many teams are now buying out those arbitration years before a player gets there, by giving long-term contracts to young players.  This gives the player more long-term security, while giving the team a cheaper rate over that period.

Rather than dabble in free agency, this appears to be the Orioles' approach:  develop a young core and spend to secure their rights early while building with cost-effective players in other positions.  The Orioles have already locked up Adam Jones to a long-term deal, and will likely attempt to do the same for Matt Wieters and Manny Machado.   

The Ravens have taken a similar approach since the newest collective bargaining agreement was signed in 2011 after a lockout of the players by the owners.

The new CBA implemented a rookie wage scale.  Before this iteration of the bargaining agreement, teams were free to make rookies some of the highest players in the league.  Now the league limits how much money teams are allowed to spend per year and all players are given four-year deals, with first-round picks getting a fifth year option.

These contracts are now slotted with a certain value, at significantly less money than veterans earn (the agreement also gives veterans a higher minimum based on their years played).  This has led teams to cut non-Pro Bowl veteran players who can be cheaply replaced with players on rookie deals.  Teams would rather pay younger players less money and retain control over their rights than keep higher-paid veterans.

This may help explain why the Ravens traded Anquan Boldin for a sixth-round pick.  Boldin was set to make $6 million per year.  The Ravens' first-round pick this year, the 32nd in the drafted, has been slotted at four years for a total of $6.7 million over the total length. This means that the Ravens' pick, Matt Elam, will be forced to accept a deal for approximately that value because of the rules limiting the amount of money teams can spend on rookie players.  The Ravens were simply building in the way the new collective bargaining agreement dictates:  give expensive deals to players you cannot replace, but seek cheap, young replacements for nonessential veterans.

It's easy to see how both teams reached their conclusions on the best way to structure their rosters.  All they had to do was look to the bargaining agreement.

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