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  1. Wouldn’t Marcum still get that $8.5 million from the Royals if he was traded in that scenario? The Astros would have to also pick up cash in the deal, which would have to be approved by the league office, correct? I doubt the league office would sign off on cash changing hands in a scenario like this since they don’t seem too keen on the idea of sign-and-trades (or else I’d figure they’d have included it in the CBA somehow). I could be wrong; just my initial thought.

    Comment by CaliforniaJag — October 30, 2012 @ 2:03 pm

  2. Maybe I read this wrong, but I didn’t quite understand something. In the Royals-Astros scenario, the Astros would pay a chunk of Marcum’s salary? If so, that would make a LOT of sense for Houston or Chicago to try and do.

    Comment by JBentley — October 30, 2012 @ 2:04 pm

  3. I’ve added a sentence to the end of that paragraph clarifying that the Astros are still paying Marcum. Sorry, in my mind, that was implied, but I never actually wrote it anywhere in the text.

    And, yes, this would require a sign off from the commissioner’s office, but it’s really not much different than what these teams already do, just with the time table pushed up. The Cubs signed Paul Maholm as a free agent last winter, let him build up a bit of value, then shipped to Atlanta for prospects at the deadline. This is that, just on a faster schedule.

    Comment by Dave Cameron — October 30, 2012 @ 2:06 pm

  4. Right … all this is contingent on the Astros having the go-ahead to cover Marcum’s entire salary.

    Comment by Ixcila — October 30, 2012 @ 2:06 pm

  5. “a pick in the compensatory round between the 1st and 2nd rounds of the draft – essentially, a pick somewhere between #31 and #40 or so.”

    The comp picks would occur even earlier if the signing teams are forfeiting their 1st round picks. Say 6 compensation eligible guys sign to teams outside the top 10 picks in the draft. Then round 1 would only be 24 picks long and comps would start at #25.

    Also, in your sign and trade scenario, wouldn’t the Astros have to send $8 million to KC for the deal to work? The commish could veto that type of nonsense.

    Comment by Pirates Hurdles — October 30, 2012 @ 2:07 pm

  6. The sign-and-trade loophole makes too much sense not to happen. The CBA’s new rules read like a list of ways to punish rebuilding teams and force clubs to the free agency trough, so teams like the Astros might as well use free agents to buy up prospects.

    Comment by Well-Beered Englishman — October 30, 2012 @ 2:14 pm

  7. Sounds like nonsense when we read it here, but as Dave said, it’s similar to the existing system, only faster. Say the ‘stros take Marcum and pay him whatever part of the $8.5M is appropriate for pitching the first half of the season for them, and then they trade him to the Royals, agreeing to eat his salary. This is the same as that, just sooner, so maybe MLB will allow it, no?

    Comment by wiggly — October 30, 2012 @ 2:16 pm

  8. Very interesting. Though, I’m assuming (in your example) the AAAstros would pickup some money of Marcum’s contract in that trade. Otherwise, you’d be trading Marcum and his new 8.5 M contract to Royals, as if they had signed him. Am I getting this right? or missing something?

    Comment by llellolovesace — October 30, 2012 @ 2:17 pm

  9. oops sorry, should have refreshed the page to see comments above before posting mine. Makes sense!

    Comment by llellolovesace — October 30, 2012 @ 2:19 pm

  10. Don’t forget the 6 Lottery picks that come immediately after the first round and before the Compensation picks.

    Comment by josh — October 30, 2012 @ 2:28 pm

  11. Doesn’t compensation also require that the pending FA needs to be with the team for the full year? So even if the Angels make a qualifying offer to Grienke, even if he declines and signs elsewhere, the Angels don’t get the compensation pick, right?

    Also, according to budget rules, wouldn’t that still technically count against the Royal’s cap/luxury count? I would assume that the Astros would be sending Marcum and cash to cover the 8.5M +500k (which would still require approval from the commissioner)… Now that wouldn’t matter much for the Royals in this case since they’re not anywhere near the luxury threshold, but say it was the Yankees instead of the Royals, then it would make a big difference.

    Comment by Steven — October 30, 2012 @ 2:29 pm

  12. Is there some rule forbidding the Astros from just giving the Royals several million dollars for Cain? Then the Royals just use that money to sign Marcum without any sign-and-trade nonsense.

    Comment by guesswork — October 30, 2012 @ 2:34 pm

  13. How does the order for comp picks work? And yes, since very few of the players who will be signing these top FAs are in the bottom 9, the comp picks should start around #25ish.

    Comment by TKDC — October 30, 2012 @ 2:36 pm

  14. *teams, not players.

    Comment by TKDC — October 30, 2012 @ 2:36 pm

  15. I am a Ranger Fan and the Idea sounds nice for a team like the Astros or Cubs but also sounds like a way the Yankees could buy thier way under the luxury Tax threshold and still sign the best players. Although not sure thier farm system is deep enough for a team to do that with a top tier tallent.

    Comment by wepuckett — October 30, 2012 @ 2:40 pm

  16. Seems like it would be easier for the money to go the other way. For instance, the Astros take a guy like Francouer and his whole salary along with Cain for a non-prospect. Seems like there would be plenty of opportunities like that without the commissioner sign-off hurdle.

    Comment by TKDC — October 30, 2012 @ 2:41 pm

  17. And the Royals might not be the best example, as they might value Francouer at around the 6.75 million he’s due, but a team like the Mets with Jason Bay would seemingly be willing to throw some pretty good prospects in on a deal that sent him packing.

    Comment by TKDC — October 30, 2012 @ 2:42 pm

  18. they could send the Royals Cassius “Cash” Considerations

    Comment by Ben — October 30, 2012 @ 2:46 pm

  19. Josh, I’m fairly sure the Comp picks come before the lottery picks, not after.

    Comment by Pirates Hurdles — October 30, 2012 @ 2:47 pm

  20. The issue is that if the Royals payroll rises above a certain level they lose a chance at being in the competitive lottery and lose the compensation picks low payroll teams receive.

    Comment by Tomcat — October 30, 2012 @ 2:48 pm

  21. It would make sense to do it this way if it wasn’t the Royals… say it was the Mariners, then the Mariners wouldn’t have to surrender their 1st round pick, while the Astros get a better prospect for a 2nd round pick.

    Comment by Steven — October 30, 2012 @ 2:50 pm

  22. Correct, Grienke is not compensation eligible. A player has to spend the entire season on his team to be eligible.

    Also, traded salaries count towards the luxury tax, no? I think this is correct. If you trade for player X who makes $15 million a year and you also get $8 million, your payroll is $15 million and the $8 million is simply revenue.

    Comment by Pirates Hurdles — October 30, 2012 @ 2:51 pm

  23. I know you were just making up a random example, but why would the Astros want to pay 8.5 mil for Lorenzo Cain? I thought you were gonna use an example where the Royals sign an international FA then trade him for Marcum, not a 27 year old (in April) outfielder.

    Comment by Mike — October 30, 2012 @ 2:56 pm

  24. This isn’t a new “loophole”. Players have had the right to approve a trade before the June 16th reassignment date since at least 2002.

    The “sign-and-trade” option has always existed and never been used before. If teams thought this was a viable way to acquire young talent it would’ve been exploited long ago.

    I also have my doubts about teams wishing they could transfer money from their mlb budget to their draft or international free agent budgets. Most clubs haven’t had to cut their amateur budgets much due to the new caps. And for those who did spend less this year than last, there’s little evidence that that savings was re-routed to big league payroll.

    Comment by josh — October 30, 2012 @ 3:16 pm

  25. I agree that this is the same thing on a faster schedule, but I’m not so sure that Selig and MLB will view it that way. If they perceive this as trying to “game the system”, I could very easily see Selig refusing to approve such a deal, even though it’s in the best interest of all parties.

    Comment by harpago17 — October 30, 2012 @ 3:59 pm

  26. If I were the Astros in this scenario, Cain, given his fragile health and inconsistency, is not what I would want. It’s understood that Houston needs major-league ready players, but 1-2 WAR players aren’t even going to make the Astros competitive now.

    Comment by KCDaveInLA — October 30, 2012 @ 4:32 pm

  27. Very interesting wrinkle on sign and trade potential in baseball, thanks for the article, very informative.

    Comment by obsessivegiantscompulsive — October 30, 2012 @ 5:23 pm

  28. Cameron said that he was just making up an example for illustration, not that it was one that made total sense.

    His main point is that teams can buy prospects by using their available funds (which can’t be used for the draft or international free agents with the new CBA) to sign free agents and then trade that player to another team who don’t have the money, but do have prospects they are willing to trade. His example was just meant to show how that would work. He probably should have went with “Team A” and “Team R” instead, and Free Agent M and Prospect C.

    Comment by obsessivegiantscompulsive — October 30, 2012 @ 5:28 pm

  29. Thinking further on this, I don’t think Marcum would necessarily need more money in the deal. Maybe Team A can give him the most money but would need to trade to Team Z because they would rather have that packet of prospects. If he don’t take the $8M being offered by Team A, he risks that no other team would match that and maybe be forced to sign with Team X for $7M instead. So he won’t necessarily need more to incent him to do the deal, that deal might be incentive enough.

    Comment by obsessivegiantscompulsive — October 30, 2012 @ 5:32 pm

  30. I knew that at least one commenter would miss the point that this is just an example, but I didn’t think that anyone would miss the point that the Astros would be signing the player just to trade him.
    I am aghast.

    Comment by Baltar — October 30, 2012 @ 6:13 pm

  31. Do the compensation picks come before or after the “competitive balance” picks?

    Comment by Joelskil — October 30, 2012 @ 6:14 pm

  32. So the players and owners collaborated to create a scheme to make the rich richer at the expense of the poor and made it so complex that it would obscure the real reason for it.
    When will the rich teams and players realize that they could not make all that money without the poor teams and players to compete against. It is even in their best interest to junk the status quo and replace it with a simple plan that benefits everyone.
    Eliminate any and all provisions that punish teams for how they spend their money (limits on draft spending, foreign amateur free agent spending, luxury tax, et. al.). Institute a very progressive revenue tax/subsidy, one that would, for example, tax the yankees say $200M and subsidize the lowest revenue teams say $40M and other teams somewhere in-between. Make all amateurs free agents (no draft).
    This would make the teams much more equal, reward good management and punish poor management (since the tax/subsidy is on revenue, not profit) and eliminate Byzantine structures that are always going to be abused by someone.
    Each team could make their own choice on how to try to improve their team, thru pro free agent signings, amateur free agent signings, investing in minor league instruction, spending on foreign or domestic players, and anything else they could think of.
    And, yes, I know it will never happen, so don’t bother to tell me that. I just wish it would.

    Comment by Baltar — October 30, 2012 @ 6:30 pm

  33. Why not just require the teams to kick in all TV revenue into a pot that get divided out equally to all teams.

    Comment by Gasman — October 30, 2012 @ 11:05 pm

  34. Did they eliminate the rule that major-league free agents can’t be traded until June 15?

    Comment by Talsla Ron — October 31, 2012 @ 7:56 am

  35. No, the rule has always been that a player must give consent to be traded before June 15th. It has never been against the rules.

    Comment by josh — October 31, 2012 @ 9:00 am

  36. Since you don’t get free-agent compensation for a player traded midseason, doesn’t it follow that decent qualifying-offer types, with one year left on their contract, at teams unlikely to be competitive, should be traded now – unless an extension can be worked out.

    David Wright / Josh Johnson seem to be the biggest names who might fit into this category this year, and Felix Hernandez could be in this position next year.

    Comment by Aaron (UK) — October 31, 2012 @ 10:05 am

  37. I would love to see something like this happen, but you would also need to allow free movement of franchises to create a true free market. To prevent the A’s from moving out of Oakland restricts their ability to create a revenue stream that will compete with the big boys. They say that they would like to move to San Jose, but I think they would much rather become the third franchise in the NYC market. But the Yankers would blow an artery fighting this one to preserve their oversized and underrepresented market.

    Comment by The Rajah — October 31, 2012 @ 11:58 am

  38. Fangraphs commenters: just when you think you can’t underestimate them…

    Comment by joser — October 31, 2012 @ 1:06 pm

  39. In theory, yes; in practice, Felix will get an extension.

    Comment by joser — October 31, 2012 @ 1:09 pm

  40. Can teams trade there international free agent pool to other teams? Like could the Royals trade there pool to the Astros for like 15 million and then use the 15 million to get free agents and then the Astros would be able to get more international prospects?

    Comment by Trent — November 4, 2012 @ 10:05 am

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