MLB players, owners announce five-year labor deal

Updated: October 25, 2006, 2:26 PM ET
Associated Press

ST. LOUIS -- Baseball players and owners proclaimed an unprecedented era of labor peace, finalizing a new five-year collective bargaining agreement Tuesday night before Game 3 of the World Series.

Highlights Of New Five-Year
Labor Agreement
Luxury Tax
 Major League Baseball
• Thresholds for luxury tax on team payrolls set at $148 million for 2007, $155 million for 2008, $162 million in 2009, $170 million in 2010 and $178 million in 2011. Tax rates on amount over threshold remain at 22.5 percent for first time over threshold, 30 percent for second time over threshold, 40 percent for third or subsequent time over threshold.

Amateur Draft
• Players selected in the June amateur draft who aren't college seniors must sign by Aug. 15.

Minimum Salary
• Major league minimum increases from $327,000 this year to $380,000 in 2007, $390,000 in 2008, $400,000 in 2009 and $400,000 plus a two-year cost-of-living adjustment in 2011.

Free Agent Draft Pick Compensation
• Draft-pick compensation for losing Type C free agents is eliminated. Compensation for Type B free agents is changed from direct (losing draft picks) to indirect (sandwich picks). Starting in 2007, Type A free agent redefined to top 20 percent at position (from top 30 percent) and Type B to 21-40 percent (from top 31-50 percent).

Free Agent Deadlines
• The restriction is eliminated that said teams could only re-sign their former players who became free agents by Dec. 7 (or Jan. 8 if offered salary arbitration) or else lose rights until May 1. Deadline for clubs to offer salary arbitration to their former players who became free agents is moved to Dec. 1 from Dec. 7. The deadline for players offered arbitration to accept offers is moved to Dec. 7 from Dec. 19.

Tender Deadline
• The deadline for teams to offer contracts for the following season to unsigned players on their 40-man rosters is moved to Dec. 12 from Dec. 20.
-- Associated Press

Lawyers struck the deal last weekend during negotiations in New York and then worked on putting it in writing. The agreement, which runs through the 2011 season, is subject to ratification by both sides.

The deal makes relatively minor changes to the previous agreement and doesn't alter baseball's drug rules.

"This is the golden era in every way," said commissioner Bud Selig, sitting in the middle of a dais at Busch Stadium that included five officials from each side.

"The economics of our sport have improved dramatically, and that's good. That, after all, made for a more wholesome atmosphere. We didn't have to quarrel about a lot of things," he said.

The current contract, reached in August 2002, was set to expire Dec. 19. After eight work stoppages between 1972 and 1995, baseball will be assured of 16 years of labor peace.

"I think you always have a better relationship when both sides are making money," Detroit manager Jim Leyland said before St. Louis beat the Tigers 5-0 to take a 2-1 World Series lead.

"That kind of always seems to work out in the end -- doesn't it? -- for whatever reason, when the owner's happy and putting a little in his pocket, and the player is happy and putting a little in his pocket. In our case, I guess in our game, a lot in both pockets," he said.

Colorado Rockies pitcher Ray King, a member of the union's negotiating team, thought back to the 2002 agreement, reached just hours before players were set to strike.

"Anytime you have peace, it's a good thing," he said. "I remember going back to when I was in Milwaukee, I was wondering if the bus was going to leave."

Peter Gammons' Take
Peter Gammons
Major League Baseball had hoped the new Basic Agreement could be finished Friday and announced before the World Series began. Hence Rob Manfred and the Players Association worked all Friday to try to get it done. They finally announced the deal Tuesday at Busch Stadium, just a few days later than planned.

There is little that is earth-shattering about the deal except that it was accomplished so discreetly, without threats or cries of poverty, press conferences or games missed. That's because the baseball business is awash in cash.

• To read more of Peter Gammons' blog, click here Insider.

The deal continues, with minor modifications, existing luxury tax and revenue-sharing rules, provisions that funneled money from large-market teams to their competitors. The payroll threshold for the luxury tax increases from $136.5 million this year to $148 million next year and then goes up each year until it reaches $178 million in 2011.

Under the current contract, the luxury tax has mainly affected the New York Yankees, who paid $11.8 million in 2003, $26 million in 2004 and $34.1 million in 2005. Boston paid $3.15 million in 2004 and $4.1 million last year, and the Angels paid about $900,000 in 2004.

The minimum salary increases, from $327,000 this year to $380,000 next season, and amateur draft pick compensation for some free agents who sign with new teams will be eliminated. Players selected in the June amateur draft who aren't college seniors must sign by Aug. 15, taking away the leverage of any threats to remain in school.

Buster Olney's Take
When some executives heard over the weekend that the new threshold will climb a whopping 9 percent to $148 million, they agreed that there is going to be a whole lot of money in the days and years ahead to sign free agents and lock up young players to long-term deals.

-- To read more of Buster Olney's blog, click here

In addition, the Dec. 7 and Jan. 8 deadlines for free agents to re-sign with their former teams were eliminated, and management agreed there would be no contraction under the term of the agreement.

"I'd been waiting for most of that time to see if we could ever get to the place where we reached an agreement prior to expiration," said union head Donald Fehr, whose first negotiations as union chief was in 1985. "And while I always understood intellectually it was possible and that was the goal, I'm not really sure I believed that it could happen."

With the new labor contract, baseball's drug-testing rules will also be extended through the 2011 season. When both sides agreed to toughened drug testing last November, they said that deal would run through the next labor contract.

Both sides said they would consider adding testing for Human Growth Hormone.

"If a urine test is developed and scientifically validated and all the 'i's' are dotted and 't's' are crossed, there is an understanding that we will adopt that test," Fehr said. "Blood tests we will talk about when one is validated. But as far as I know, and we check fairly frequently on this, there is not that testing available yet."

Negotiations have been going on behind the scenes for months.

"They were without the usual rancor. They were without the usual dueling press conferences. They were without the usual leaks," Selig said. "In other words, these negotiations were conducted professionally, with dignity and with results. These negotiations were emblematic of the new spirit of cooperation and trust that now exists between the clubs and the players."

Copyright 2006 by The Associated Press