MLB, MLBPA reach five-year labor accord10/24/2006 6:24 PM ET
ST. LOUIS -- Baseball Commissioner Allan H. (Bud) Selig and Major League Baseball Players
Association Executive Director Donald Fehr jointly announced today that MLB and the MLBPA have agreed
to a five-year labor contract that will allow play to continue uninterrupted through the 2011 season.
The termination date of the new Basic Agreement is December 11, 2011. By the end of the contract, baseball will have gone 16 years
without a strike or lock-out, the longest period of labor peace since the inception of the collective
"This is an historic agreement for Major League Baseball and is emblematic of the spirit of cooperation
and trust that now exists between the clubs and players," said Commissioner Selig. "We are in the midst
of baseball's Golden Age. More than 76 million fans attended our games this season, setting an
attendance record for the third consecutive year, and we produced $5.2 billion in revenue, which more
than quadruples our revenue total of 14 years ago. The new Basic Agreement assures labor peace into the
next decade and gives us the opportunity to expand the Golden Age and continue to grow the game in all
ways unimpeded by internal labor conflicts."
Fehr said: "I share the Commissioner's view that over the last ten years our game has experienced
enormous growth. This new agreement will permit that growth to continue uninterrupted. We were able
to conclude these new agreements before the expiration of the current contracts because the two parties
brought to the table, along with serious concerns, a respect for the positions and needs of the other. As
a result, the discussions were workmanlike and pragmatic, and, while difficult on some issues, the talks
were conducted in a mutual attempt to get the job done.
"I want to thank all of the Players for their involvement and support during this process, especially
those on the negotiating committee, without whom we would not be here today," Fehr continued. "Nearly
100 players participated in negotiating meetings, and many times that number in internal discussions. I
would also like to acknowledge the MLBPA staff for its efforts. Finally, on behalf of the players, I would
like to express our appreciation to the members of the Commissioner's negotiating team for all of their
Commissioner Selig added: "I appreciate the effort that representatives of both negotiating teams
devoted to finalizing the agreement in such a timely manner. I would also like to thank the club
representatives of Major League Baseball's negotiating team - Larry Dolan of the Cleveland Indians, Peter
Angelos of the Baltimore Orioles and Andy MacPhail, formerly of the Chicago Cubs - for their hard work
and for sacrificing so much time on behalf of the game."
Summary of MLBPA-Major League Baseball Labor Agreement
1. Five-year labor contract.
2. Termination date - December 11, 2011.
1. Net transfer of revenue sharing plan will be the same as the current plan ($326 million in
2006). Net transfer amounts will continue to grow with revenue and changes in disparity.
2. Marginal tax rates for all recipients are reduced significantly through the use of a new
central fund redistribution mechanism. Rates reduced to 31% from 40% (high revenue
Clubs) and 48% (low revenue Clubs) under old agreement.
3. All Clubs face the same marginal rate for first time.
4. Commissioner's Discretionary Fund will continue at $10 million per year, with cap of $3
million per Club per year.
5. Provision requiring revenue sharing recipients to spend receipts to improve on-field
performance retained with modifications.
Competitive Balance Tax
1. Competitive Balance Tax structure from 2002 agreement is continued.
2. Rates will continue at 22 ½ % for Clubs over the threshold the first time, 30% for Clubs
over the threshold the second time and 40% for Clubs over threshold the third time.
3. Clubs that paid 40% in 2006 will face 40% rate in 2007.
4. Thresholds reset to $148 million in 2007, $155 million in 2008, $162 million in 2009, $170
million in 2010 and $178 million in 2011.
The Debt Service Rule
1. The Debt Service Rule from 2002 agreement retained with modifications.
1. Clubs that fail to sign first or second round draft pick will receive the same pick in the
subsequent draft as compensation. Club that fails to sign a third round pick will receive a
sandwich pick between rounds three and four in the subsequent draft as compensation.
2. Period of time before a Player must be protected from the Rule 5 Draft is changed from
three or four years from first minor league season to four or five years from year of
3. Signing deadline of August 15 for draft picks other than college seniors.
Draft Choice Compensation
1. Type C free agents eliminated in 2006
2. Also in 2006, compensation for type B players becomes indirect (sandwich pick) as opposed
to direct compensation from signing Club.
3. Effective 2007, Type A players limited to top 20 percent of each position (down from 30
percent) and Type B players become 21 percent - 40 percent at each position (rather than
31 percent - 50 percent).
4. Salary arbitration offer and acceptance dates move to December 1 and December 7.
1. Players Benefit Plan continued with maximum allowable benefit under IRS rules.
2. $154.5 million average annual contribution.
3. Improved benefits for some retired players.
1. Major League: $380,000 in 2007, $390,000 in 2008 and $400,000 in 2009, COLA in 2011.
2. Minor League: $60,000 in 2007, $62,500 in 2008, $65,000 in 2009.
3. New minimum for first time roster players of 50% of minor league minimum.
4. Maximum cut rule applicable to split contracts reduced to 60% from 80%.
1. Eliminate December 7, December 19, January 8 and May 1 deadlines for free agents.
2. Tender Date - December 12
3. Eliminate right to demand a trade for all new multi-year contracts.
1. Home-field advantage in World Series to League that wins the All-Star Game.
2. Drug program continues.
3. Settlement of 40 plus grievances and disputes.
4. No contraction during term of agreement.
This story was not subject to the approval of Major League Baseball or its clubs.