New Labor Deal Benefits SF Giants

In every deal, someone analyzes who the winners and losers of the deal are. In this quietly and quickly negotiated labor deal, there aren't major changes. But a closer examination reveals one clear winner for this year and beyond: the San Francisco Giants.

For years, the Giants have notoriously suffered under free agent compensation rules, earning a sometimes warranted, sometimes not, reputation for eschewing draft picks.  They went two years without a first round pick, and set a record for the latest a team had ever had to wait for its initial pick in 2005.

Now, with rumors abound about the possible end of free agent compensation, just as the Giants had a remarkable number of possible exiting free agents, it seemed like the system was about to leave the Giants on the short end of a stick when it was finally about to work out for the team.

On Monday, Major League Baseball officially announced the new labor deal.  Not only do the Giants breath a sigh of relief, but now the Giants are poised to become the winners of the new deal, on more than one point.

Free Agent Compensation Changes

Changes to take place immediately

1. Type C Free Agents are eliminated.

2. Compensation for Type B Free Agents become sandwich round picks instead of direct compensation picks from the signing team.

3. Salary Arbitration offer and acceptance dates move to December 1 and December 7.

Type C free agents don't really matter.  Type C agents are the players that rank within the 50th and 60th percentile by position type.  They wouldn't have demanded compensation if the Giants signed any (their former compensation would've been picks inbetween the second and third rounds), and the Giants would've been unlikely to offer any arbitration to their own free agents of that level, so those players would've been unlikely to gain the Giants any compensation.

The bigger impact in 2006 is the change in Type B compensation.  Formerly, a Type B free agent would've given the Giants a lower priority pick from a team.  Perhaps even more importantly, the Giants would've had to given up picks for any Type B agents signed.

The most obvious impact is that the Giants won't give up any picks for Type B free agents.  In a market made up of mediocre players, that's a lot of the market.

But more subtly, the picks the Giants may potentially get now may be better.  Type B compensation picks used to be lower priority.  It became not only possible, but very likely, that a Type B free agent signed could be as low as a 3rd round pick, especially if the team that signed a player from the Giants was in the Top 15 picks (which mean they couldn't lose their first round pick) and signed just one player of a higher priority.

While MLB did not specify which rounds the new sandwich round will be between, it's most likely to be in the place where Type C free agents used to be gotten: between the 2nd and 3rd rounds.

How might this affect the Giants?  Type B free agents may potentially now gain a higher pick than some Type A compensation picks.  Last year, the Giants got a Type A compensation pick from Scott Eyre signing with the Chicago Cubs.  Because, as listed above, they could not give up their first round pick and signed another top free agent ranked higher than Eyre, the Giants got their 3rd round pick.  Under the new system, the pick gained from a Type B player should be higher than that one.

The change in arbitration dates have a small benefit: with so many free agents, it means the Giants will know two weeks sooner which free agents they can expect to return, so they know how much outside shopping will have to continue.  It also means two less weeks of bellyaching and speculation over Barry Bonds' next move.

Changes to take place in 2007

1.     Type A free agents will be classified as the Top 20 percent of each position (rather than 30 percent), and Type B free agents will be classified as the next Top 20 percent (moved to the 21st to 40th percentiles from the 31st to 50th percentiles)

This change could have effects positive and negative both ways and help a lot of teams.  But with several pending Free Agents who are borderline Type A free agents, the decision not to change the right away could possibly give the Giants one or two more of the valuable Type A free agents (Which gain the team two draft picks), so clearly the move to hold off on this change for a year helps the Giants in their big free agent season.

But that's not all.  By having this change take effect next year, this helps the Giants more.  The post 2007 free agent market will be a big hitter's market, and could be a big deal for the Giants to take part in.  By shaving off 10% of the players who potentially could force the Giants to give up picks, the Giants may end up with an extra pick next year.

As good as this news is for the Giants, news gets even better.

Amateur Draft Changes

1. Clubs that fail to sign a pick in the Top 3 rounds will receive compensation the next year.  Picks in the first or second rounds that are not signed will now earn the team the same pick in the subsequent draft.  A 3rd round pick that goes unsigned will now earn a pick in a new sandwich round between the 3rd and 4th rounds.  Formerly, an unsigned first round pick would earn the team a pick at the end of the sandwich round.

Signability has been a keyword in the amateur draft for years, and a dreaded and misunderstood word for fans.  But when a team could lose a top pick, even the #1 overall, and instead get a pick in the late 30's or 40's the next year, if they don't give into a draftee's demands, it gives a player huge bargaining power and a team a good reason to not risk it.

Now a team that can't sign a first round pick will get the same pick the following year.  While a postponement isn't a good thing, it gives the teams more flexibility in negotiations and takes a ton of leverage from the draftees, and this could help drive down signing bonuses.  It could also give teams tentative to sign players who may demand a lot of money a better safety net in taking a risk on a high-talent, high-risk player, something most fans would like to see.

2.     The period of time before a player must be protected from the Rule 5 Draft is changed from 3-4 years from first minor league season to 4-5 years from year of signing.

This may be the most beneficial change in the Giants favor.  G.M. Brian Sabean's roster management was heavily questioned last year after he questionably added two players to the 40 man roster to protect them from being taken in the Rule 5 draft, despite the players having little success at low levels in the minors with injury questions.  The result was the Giants not having room for the free agents they needed in the majors, and a loss of 3 promising players, including potential utility man Angel Chavez.

As bad as that was, the Giants were facing major dilemmas this year.  Despite a number of free agents opening up spots on the 40 man roster, most of those will need to be filled by players for the major league team.  Meanwhile, the Giants had several players who would've been eligible to be taken in the Rule 5 draft that would be high potential players, but who would not be close to being ready to working in the majors (which limits the moves the team can make with the major league team).  Among these names are 2004 top pick Eddy Martinez-Esteve, 2003 1st round pick Craig Whitaker, and top stolen base prospect Marcus Sanders.  All three of these players have had injury issues the past year, and are risks to expect much from, but also risks to possibly be lost for effectively nothing.

Now, the change appears to just be postponing roster issues for another year, but that could mean a lot.  For all three of those players, one year may go a long way between determining who are real talents and whose careers will simply be victims of recurring injury problems.  It also gives the Giants flexibility for signing inexpensive veteran backup options to compete with unproven young players like Todd Linden and Kevin Frandsen, to provide the young players with legitimate chances to win jobs, but not condemn the Giants to underperforming rookies with no backup options if they go that direction.

3.     Signing deadline of August 15 for draft picks other than college seniors.

This change won't be as favorable.  The Giants have made very good use of the ‘Draft and Follow' system, one where the Giants could draft a high school player, but let him go to community college, and then still sign him ahead of the next year's draft.  Sanders and top California JC player Thomas Neal in 2006 were recent signings of this type.

However, this change will have a minimal effect, and just make teams focus on more players who will be willing to sign right away.  This could give some negotiating power back to players threatening to go back to school, but it'd also put pressure on players using time to try and push up a team's offer.

There are many more changes to the system, but most will not affect the Giants strongly either way.  There's no more ability for players to have a right to demand a trade in new contracts, and major league minimum salaries are rising.  The revenue sharing plan now also is a flat percentage for both high and low revenue clubs, but it dropped for both sides, so that's a win either way.  Most of the changes involve the luxury tax levels and contributions, unlikely to affect the Giants directly for many years.

But at the end of the deal, the Giants have come out ahead.  They still stand to collect a good number of picks this offseason, and have had one of their most pressing issues this offseason has been alleviated in the decision of Rule 5 draft protection.  The offseason is looking a lot brighter for the Giants, and it hasn't even started yet.

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