Elias Eliminated

This past weekend reports surfaced that the current CBA had been amended, specifically with regard to draft pick compensation. According to Ken Rosenthal’s tweets, teams will no longer have to forfeit picks for signing type A Relievers. The amazing thing is that it only took us two posts and less than 100 comments to fix this problem. Okay, maybe we can’t take all the credit for changing the new CBA, but the owners and players clearly read your comments, because not only will there be no more compensation for type A relievers, but the Elias Ranking will be gone as well (starting as soon as next year). Good job, influential FanGraphs commenter!

As you, the readers, prescribed, compensation will be determined in the future by how much money a team spends on a player. No longer will Baseball rely on “A Statistical System for the Ranking of Players”, but rather the invisible hand of the free agent market. According to the Associated Press, there will be a hard cut off at $12.4 million; Players that are offered at least a one year salary of $12.4 million or more by their former team, and elect to sign elsewhere, will net compensation for their former team in the form of some sort of sandwich pick (the details should be announced later today when the new CBA is officially signed).

$12.4 million seems like an arbitrary cut off, but it is a step in the right direction and is subject to change as the CBA matures. It seems to me though that there is a stark difference between a player that is signed for $13 million a year and one that is signed for $25 million a year, and yet both will be considered equal under the new system. It is not unreasonable to have multiple tiers for salaries, even one extra tier at say $18 million, could make a big difference, and should be considered as a future amendment.

The loss of reliever compensation is in effect now. Unfortunately for the Phillies, this new clause is not retroactive to the beginning of free agency, which means Philadelphia will have to forfeit their first round pick in this year’s rule 4 draft for signing Jonathan Papelbon. This news makes the Papelbon signing seem a bit more questionable, but the Phillies cannot be blamed, assuming they could not see this new rule coming. It will be interesting to see how teams react to this rule change when it becomes time to make offers.

Under the new system teams will no longer forfeit their picks, instead they will be placed at the end of the round. Details of how MLB will determine the order for those teams placed at the end of the draft are still uncertain. I would imagine that the order would depend on the size of the contract, but it could potentially be determined chronologically, with teams signing players later ending up later in the round.

Another issue that is rarely talked about, but could prove to be important, is the quota clause in the soon to be expired CBA. The clause states that, “If there are from 39 to 62 [Free Agents], no Club may sign more than three Type A or B Players. If there are more than 62 [Free Agents], the Club quotas shall be increased accordingly.” It is unclear what “increased accordingly” actually means in practice, but if the new CBA contains a similar clause, the new compensations system could prove to be a thorn in the side of big spenders. Imagine if, for the lifespan of this new agreement, the Yankees could only sign four players above the threshold. The quota takes on a whole new meaning now that compensation is defined by the market, and could play a pivotal role in how teams attack the offseason. My guess is the quota will be removed from the coming CBA, but we’ll have to wait and see.




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47 Responses to “Elias Eliminated”

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  1. brian says:

    How do you prove that the former team offered at least $12.4 million?

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    • Rice Cube says:

      I’m guessing some paperwork has to be filed.

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    • notsellingjeans says:

      They’ll have to make free agents a qualifying “offer sheet” at that amount, similar to the NFL’s system.

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    • Perceptron says:

      I’m guessing it will be very similar to how currently a team can offer a player arbitration. By some deadline, you have the choice of offering all your free agents a 1 year, $12.4 year contract or not. Players can just reject it (just like rejecting arbitration), and both sides and continue to discuss it. or the player accepts and you pay him that contract (just like accepting arbitration).

      In effect, the qualifying offer is a separate entity than your standard free agent contract.

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  2. Matt says:

    So relievers that are offered $12.4 million and elect to go elsewhere don’t net a sandwich pick?

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    • Yirmiyahu says:

      You’re confusing the rules for this offseason and next. The rumor is that the rules this offseason will be the same, except that teams signing Type A relievers (except Papelbon) will not lose a draft pick.

      In the future, compensation will be dictated entirely by the $12.4M/year qualifying offer (not Elias rankings). I see no reason why that couldn’t apply to relievers, except for the fact only three relievers have ever been paid $12.4M/year

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      • Franklin Stubbs says:

        You see no reason that it couldn’t apply to relievers… other than the fact that “teams will no longer have to forfeit picks for signing type A Relievers.”

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      • placidity says:

        Franklin, after this year, there are no more type A/type B free agents. If you offer your reliever a 1 year, $12.5M contract and he turns it down to go sign elsewhere, you’ll get compensation.

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  3. greenfrog says:

    So, what’s the deal with Type B compensation? My understanding is that it will continue this off-season, but next winter will there be no Type A/B compensation whatsoever, only compensation for FAs-to-be offered $12.4M or more? Also, will teams receive compensation this off-season for all Type As that sign elsewhere (including lesser ones like Kelly Johnson)?

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    • Rice Cube says:

      I’ve heard different versions but most people seem pretty sure that Type B compensation sticks around this offseason and goes away after that.

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  4. Nik says:

    There are going to be a lot 12.39MM arbitration offers coming up. Also the fact that Philly gets screwed is pretty unfair.

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    • Yirmiyahu says:

      I’m not convinced that the Phillies get screwed simply because they signed Papelbon too soon. I think that this temporary system is an acknowledgment that Papelbon is a special case, and is the only reliever this offseason worthy of Type A status. Any $50M/4 player should be a legitimate Type A, and it’d be pretty odd to have a compensation system where he wasn’t a top-tier free agent. Even under this new rumored ‘qualifying offer’ system, the Red Sox would’ve offered him a one-year $12M deal. I don’t think you can say that about any other reliever this offseason.

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    • Antonio Bananas says:

      How is it unfair? They signed a 30 year old CP to a ton of money. Sucks to be them on the deal anyways but they knew the new CBA was coming up. Had to have that in the back of their minds.

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      • DavidCEisen says:

        Because they were assuming Madson leaving would return a compensation pick. Their calculus was Papelbon – 3 million dollars > Madson

        The question is now would the Phillies have valued Papelbon – 3 million dollars – a first round draft pick as greater than Madson.

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      • deadpool says:

        And again, they new this was a possibility. Its not like they wouldn’t have an ear to the negotiations. They gambled it wouldn’t happen, it did, and now they pay the consequences. I figure they made an informed decision that didn’t pan out.

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    • Barkey Walker says:

      Why would you offer $12.39M when you could offer $10k more and get a compensatory pick when they sign somewhere else.

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  5. Tim says:

    Still nothing to prevent the handshake agreements in which the team offers a player $12.4M, knowing the player will decline.

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    • Brad Johnson says:

      Not even that, any player who can point to a multiyear deal worth say $18 mil would probably take that over a 1 year 12.4 deal.

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      • Perceptron says:

        This is where the new system becomes fun. Guys like Ryan Madson and Heath Bell are probably capable of getting 3 years, $21M, and possibly quite a bit more (nevermind what they are actually worth). If the Phillies/Padres offer them the $12.4M qualifying contract, would they necessarily take it? Do you take a slightly larger 1 year deal or a multiyear deal that promises you more money and stability?

        And if they accept the deal, are they tradeable? I’m sure a team like the Red Sox might be interested in those guys for a 1 year, $12.4M deal. Of course, it’s a huge risk for a team like the Padres, but it still is an interesting question nonetheless. And I’m sure most of us would agree that 1 year, $12.4M for Madson is a better deal than 4 years, $50M for Papelbon.

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      • Yirmiyahu says:

        A reliever (considering their volatility) should definitely take the $18M/2 over the $12.4/1. But I don’t think most players would do that. Players are confident in their own abilities, and aren’t going to assume they’ll suddenly flame out. And in baseball there’s a huge cultural opposition to taking a pay cut in terms of annual salary, even where it makes financial sense. Almost all long-term deals are back-loaded, even though a front-loaded deal is more in line with expected production and a front-loaded deal would be better for the player.

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      • Franklin Stubbs says:

        Are you guys having trouble understanding that signing a reliever no longer requires compensation? You seem to be missing that…

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      • Yirmiyahu says:

        Franklin, different rules for this offseason and starting next offseason. The special case of relievers only applies to this offseason.

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  6. Brad Johnson says:

    “This news makes the Papelbon signing seem a bit more questionable, but the Phillies cannot be blamed, assuming they could not see this new rule coming”

    Blamed? Under this assumption, the Phillies should be threatening not to participate in the 2012 season. The only way it is reasonable not to retroactively apply the rule is if the Phillies were expressly told “hey, we’re pretty sure Type-A on relievers is going to go away this offseason. But if you sign Papelbon before that is official, you will still forfeit the pick.”

    Either the league informed the Phillies of the risk and they chose to accept the tradeoff, OR something very bullshit happened.

    What I think happened is that the Phillies decided that a modest per year savings on Papelbon’s contract was worth more to them than a late first round pick. The Phillies routinely take first round talents in the mid-rounds, their late first round picks haven’t been terribly successful.

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    • Nik says:

      Its pretty ridiculous to change the rules in the middle of a game.

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      • Antonio Bananas says:

        uh….you mean like how they always change rules when negotiating CBAs? It’s not like this is mid July and they change the rule to “7 inning games only” and the Phillies had just lost a game where they were up 5-4 after 7 and blew it in the 8th.

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    • 44 says:

      The Phillies absolutely should have known something like this was possible. Their front office has to take some blame here.

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      • david says:

        On a list of stupid things for which Ruben Amaro should take the blame, this one’s relatively far down the list.

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    • Jonathan says:

      “Either the league informed the Phillies of the risk and they chose to accept the tradeoff, OR something very bullshit happened.”

      I’m a random schlub on a baseball website.

      As of Papelbon’s signing:

      I knew that the current CBA was set to expire in December.
      I knew that the compensation system was being reviewed and significant changes were likely to occur.
      I knew that one of the biggest issues with the compensation system was Type A relievers.

      Considering I am, as noted, some random schlub on a baseball website and was able to put those three points together to come to the conclusion that signing a Type A reliever before the CBA was agreed upon was a bad idea. Why couldn’t Amaro figure that out?

      Read around on MLBTR, Papelbon was the only ranked reliever to sign a deal for a reason prior to the new CBA being agreed to, because every single other GM wanted to wait until the CBA was resolved before making a move like that.

      Yeah, the Phillies got hosed on it, but they have absolutely nobody to blame but Amaro. He could’ve waited a whole extra week like everybody else. EVERYONE knew this was probably going to happen. If some random schlub on a baseball website figured it out, I have to assume Amaro figured it out.

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  7. Eric R says:

    ““If there are more than 62 [Free Agents], the Club quotas shall be increased accordingly.” It is unclear what “increased accordingly” actually means in practice”

    Reminds me of one of my favorite liens from Futurama:

    “We will begin with the firemen, then the math teachers, and so on in that
    fashion until everyone is eaten.” :)

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    • Yirmiyahu says:

      The current system allows for 3 ranked free agents out of an assumed 62 total free agents. I’d guess the clause is intended to keep that ratio the same. So if there were 83 free agents in a particular year, then a club should be allowed to sign 4 ranked free agents.

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  8. david says:

    The quota rule is an ANNUAL total of free agents. So, if it exists in the new system, there will be no practical change from previous years. In fact, three winters ago, the soulless bastards who work for Selig gave a questionable ruling that guys who were free agent eligible but accepted arbitration from their previous team count toward the quota. In so doing, they pushed the total for the year just above 62, allowing the Yankees to continue to explore other options even after signing Sabathia, Burnett and Teixeira. As it turns out, the Steinbrothers decided that trio was enough.

    Also, more generally, this a traveshamockery as it’s 100% in the favor of large market clubs and once again penalizes small market teams.

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    • david says:

      Just to be clear, the old system sucked and needed to be fixed. Unfortunately, the “fix” is equally atrocious.

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    • Anon says:

      Might as well have a salary cap if you want all markets to have an equal chance. Even then, large markets can spend more in other places (ex. front office, scouting, development, drafting, internationally, etc.).

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  9. Anon says:

    If there are from 39 to 62 [Free Agents], no Club may sign more than three Type A or B Players.

    Is this a hard cap? If not, what is the punishment for signing more than 3?

    This rule is ridiculous. If a team wants to sign 10 type A free agents, good for them. Isn’t the point of free agency to have players go where they want?

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    • david says:

      It was a hard cap under the former system. No team ever signed more than 3 Type A guys in an offseason, although as noted above, the Yankees were given clearance to do so in the 2008/09 offseason.

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  10. Ben says:

    Shouldn’t it be based on what the player ultimately signs for, not what his former team offered? Is it to make sure that the former team actually “tried” to re-sign the player, so they must be compensated for not being able to retain a player they had and wanted back? So now, no matter how much a player signs for, as indicated in the article, a $13m player nets the same compensation as a $25m player. Maybe this should at least determine the order of these picks at the end of the round – the team losing the highest paid player gets the highest comp pick.

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    • rory says:

      Yeah, this part really doesn’t make sense. The whole point of the arbitration system is to allow teams an opportunity to retain their own players, and the compensation system exists to give back to the teams that were willing trying to do so. Under this system its not enough to offer a player compensation, if he declines it you also have to offer him a contract or you get nothing. That doesn’t make sense. Or is arbitration altogether going away? It also punishes my team if we are financially incapable of offering that kind of contract.

      Beyond that what happens if the deadline for making this “qualifying offer” occurs after the free agency period begins, like the deadline to offer arbitration is now. What prevents a team from having their utility infielder accept a contract elsewhere and then offering them a $13million contract once they can no longer resign?

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  11. Slacker George says:

    Curt Floyd was overheard griping to St. Paul: “I cut my career short for what? 43 years later, we still don’t have unencumbered movement.”

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  12. DavidCEisen says:

    I think Papelbon’s agent should be fired. It’s entirely plausible Papelbon could have made more money without the compensation process in place. Teams may have been willing to sign him for slightly more money if they didn’t need to give up a first round pick. This could have been part of the Phillies thought process as well.

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    • Yirmiyahu says:

      Ha. I think Papelbon’s agent was smart to accept the $50M offer before Ruben Amaro came to his senses or got fired. $50M is more than anyone predicted Papelbon would get, and is incidentally the largest contract for a reliever ever.

      Papelbon and/or his agent should also get credit for bucking the trend of young players signing long-term deals that give away some free agent years. It was a gamble, but going year-to-year in arbitration really paid off.

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      • Nik says:

        Its the highest in total dollars, but its not the highest per year nor the highest if you account for inflation.

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  13. Perceptron says:

    Do we know whether the current A relievers (Bell, Madson, Cordero, KRod, Saito, Dotel, Oliver, Capps) will simply be demoted to B status this year? Or are all reliever, both those A guys and all the B guys, simply going to dmoted to unranked free agents? I imagine the former is the better solution for this year, but it seems like several people here are acting like its the latter. Sure, a supplemental pick for Madson is not as good as a first rounder and a supplemental pick, but it’s not the Phillies would be completely shafted of any compensation in that scenario. Surely, Madson will sign for more money than Rod Barajas…

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    • Yirmiyahu says:

      It’s not clear, but my impression is that Type A relievers will still net a sandwich round pick (being demoted to Type B status, for practical purposes). But the info that has leaked out is inconsistent and incomplete. We’ll just have to wait till the CBA is officially announced.

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  14. Mr Punch says:

    It seems to me that a key piece of the reasoning behind the 12.4 rule is to induce lower-budget teams to make a serious effort to retain their (pretty) good players, instead of gaming the revenue-sharing system. It’s a double win for the players, compared to the existing system, but also a good thing for small-market fans (and for baseball generally).

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  15. sheath1976 says:

    Ryan Braun was just anounced NL MVP.

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