It took 183 days, but Major League Baseball and the MLB Players Association have finally finished all the details of the latest Basic Agreement that will run from 2012 through 2016.

The agreement—possibly the most sweeping, ever—was reached on Nov. 22nd of last year. The labor agreement sees everything from two additional playoff teams, a Luxury Tax and other changes to the Amateur Draft, and HGH testing as part of the separate drug agreement, just to name a few.

Some details that were not detailed prior when a summary was released of the memorandum of understanding last Nov.

The agreement has an expansive section on International Play

On the Competitive Balance Tax (CBT), otherwise known as the Luxury Tax, changes will make it harder for those that break the thresholds repeatedly, by increasing the amount paid to as high as 50 percent. Here’s the breakdown:

(a) For a Club that has an Actual Club Payroll above the Tax

Threshold in the 2012 Contract Year, the applicable Competitive

Balance Tax rate shall be:

(i) 20% if the Club did not exceed the Tax Threshold in the 2011 Contract Year;

(ii) 30% if the Club’s Competitive Balance Tax rate in the 2011 Contract Year was 22.5%;

(iii) 40% if the Club’s Competitive Balance Tax rate in the 2011 Contract Year was 30%; and

(iv) 42.5% if the Club’s Competitive Balance Tax rate in the 2011 Contract Year was 40%.

(b) For a Club that has an Actual Club Payroll above the Tax

Threshold in the 2013, 2014, 2015, or 2016 Contract Year, the applicable Competitive Balance Tax rate shall be:

(i) 17.5% if the Club did not exceed the Tax Threshold in the preceding Contract Year;

(ii) 30% if the Club’s Competitive Balance Tax rate in the preceding Contract Year was 17.5% or 20%;

(iii) 40% if the Club’s Competitive Balance Tax rate in the preceding Contract Year was 30%; and

(iv) 50% if the Club’s Competitive Balance Tax rate in the preceding Contract Year was 40, 42.5%, or 50%.

Details on whether there will be an International Draft are also part of the agreement as an attachment. As a matter of upcoming dates on the calendar and activities that would have to occur for an International Draft to take place, the following is part of the attachment:

No draft of international amateur players may be implemented in 2013 unless the following conditions are satisfied by June 1, 2012:

1. A new agreement is reached with the Mexican League consistent with paragraph I.D.10 above.

2. The protocol agreements with the Korean Professional Baseball League, the Japanese Professional Baseball League, and the Taiwan R.O.C. are revised, consistent with paragraph I.D.11 above.

3. A league and/or additional DSL teams to provide playing opportunities for undrafted/unsigned players are organized to begin play no later than June of the year in which a draft covering international amateurs is scheduled to begin.

4. The country-by-country plans referred to in paragraph D.4 above have been completed for the countries of origin of at least 85% of the international players signed in 2011.

5. Appropriate understandings are reached with government officials in the Dominican Republic (and other countries as necessary).

6. Agreement is reached on a procedure for regulating representatives of international amateur players.

F. If it believes that the conditions listed in paragraph I.E above have been achieved by June 1, 2012, the Office of the Commissioner may give notice that it intends to commence operation of a draft (or drafts) covering international amateur players for the 2013 season and subsequent seasons. Written notice of such intent must be provided to the MLBPA by no later than June 15, 2012, and such notice must include a detailed explanation of the rules and procedures that the Office of the Commissioner intends to use for the draft. The MLBPA may veto the commencement of a draft (or drafts) covering international amateur players for the 2013 season and subsequent seasons by providing written notice of its objection to the Office of the Commissioner by July 1, 2012.

G. If a draft (or drafts) covering international amateur players does not commence in the 2013 season, and irrespective of whether the conditions set forth in I.E have been satisfied, the Office of the Commissioner may provide notice to the MLBPA that it intends to commence operation of a draft (or drafts) covering international amateur players for the 2014 season and subsequent seasons. Written notice of such intent must be provided to the MLBPA by no later than June 1, 2013, and such notice must include a detailed explanation of the rules and procedures that the Office of the Commissioner intends to use for the draft. The MLBPA may veto the commencement of a draft (or drafts) covering international amateur players for the 2014 season and subsequent seasons by providing written notice of its objection to the Office of the Commissioner by June 15, 2013.

The current CBA expires on Dec. 1, 2016.

There is much, much more that we’ll detail over several articles now that the document is fully available. You can see all 311 pages of it here:

READ THE 2012-16 MLB CBA IN ITS ENTIRETY

Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He writes for Baseball Prospectus and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).

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In a sign that MLB is economically stable and that changes in the latest CBA should allow that prosperity to continue, Fitch Ratings has announced that it has increased Major League Baseball's Club Trust Securitization's $300 million to its senior secured credit facility 'A-'. Additionally, Fitch has affirmed the 'A-' rating on the outstanding $842 million term notes (series 1 - 7 maturing through 2021) and the outstanding senior secured credit facility ($500 million total including the $300 million increase). Fitch gave its Rating Outlook as “Stable.“

Fitch gave several reasons for the ratings increase, which bodes well for MLB’s overall economic health:

• Solid Underlying League Economics: Debt service supported by large contractual revenue streams from investment grade counterparties. A new five-year collective bargaining agreement (CBA) that includes some additional strengthened core elements that promote financial stability and competitive balance. MLB continues to maintain a stable domestic fan attendance and viewership base and growing international fan base.
• League Oversight and Governance: League's demonstrated willingness to step in and aid 'distressed' franchises. For example the league assisted the Texas Rangers and Los Angeles Dodgers during ownership issues.
• Solid Legal Covenants and a Demonstrated Bankruptcy Remote Structure: Structural provisions ensure timely debt service. The MLB Club Trust structure utilizes a bankruptcy-remote securitization of pledged revenues consisting of long-term national broadcast partners in place through 2013. Noteholders benefit from the bankruptcy remote structure, which eliminates team related risks; however, they remain subject to all the fundamental operational risks of MLB.
• Long History of Television Contracts: Current television contracts run through 2013 with ESPN (Disney; rated 'A' with a Stable Outlook by Fitch), FOX Broadcasting Company (NewsCorp.; rated 'BBB' with a Stable Outlook) and Turner Broadcasting System (TBS) (Time Warner, Inc; rated 'BBB' with a Stable Outlook).
• Refinancing Risks Expose Teams to Potentially Higher Costs: The bullet maturities associated with the notes and bank renewals associated with the revolving credit facility expose the teams to potentially higher interest costs.

Fitch cited that a ratings action that could possibly push the rating down would be “a significant decline in national television contact rights fees,” which given the current market for media rights deals would be “unlikely.”

The transaction will increase the principal amount of the existing revolving credit notes issued by MLB Trust to $500 million from $200 million under the same terms.

A key part of the ratings change means that clubs will be able to access more money through the league’s credit facility. The increase to the existing revolving facility will also increase of the maximum amount of facility debt to approximately $75 million for participating clubs that are debt service rule (DSR) compliant and approved by MLB. Currently, most of the participating clubs are limited to approximately $55 million of facility debt per club.

MLB clubs will now be subject to the aforementioned DSR based earnings before interest taxes depreciation and amortization (EBITDA) during the most recent year. Under the new agreement, the rule for leverage will now be 8 times (x) EBITDA (and 12x EBITDA for any club which has incurred stadium-related debt to finance construction of a new ballpark or major renovation in the last 10 years). Under the prior agreement MLB's debt service rule of 10x and 15x EBITDA, respectively, was viewed as high. Fitch views the lower leverage thresholds and the oversight of the Commissioner's Office to enforce compliance with the DSR favorably.

Fitch added:

MLB's performance over the last few years during the U.S.'s uncertain economic conditions is a testament to the expected stability and demand for professional baseball in the U.S. and internationally. In 2011, attendance grew approximately 0.5% to 73.4 million after attendance declines in 2008 - 2010 following MLB's record high in 2007 of 79.5 million. Overall, 2012 season-to-date attendance is tracking around 6% higher than 2011. However, Fitch notes some markets that face a combination of severely weakened local economic conditions and lackluster on field performance have seen moderate declines while other teams have performed far better.

Additionally, Fitch notes stability in television viewership over the past decade as a key rating factor. Year-to-date viewership across nationally televised games on FOX, ESPN, TBS and local media broadcasts has been mixed; however, variations are typical early in the season given changes to match-ups year-over-year. MLB's national television contracts currently come due in 2013. Given recent positive trends associated with national television contract renewals in professional sports leagues and on the local level, Fitch expects positive renewals in MLB. Fitch will continue to monitor attendance and viewership levels throughout the season.

Fitch positively views MLB's economic model and financial policies, although a wide disparity exists between the revenues generated by the largest and smaller teams. A team's reliance on local revenues, which fluctuate significantly between small and large markets, and their discretion to spend unreservedly on player salaries can result in greater financial disparity among MLB teams. This disparity has the potential to lead to a less competitive framework for MLB. However, Fitch acknowledges that this disparity is partially mitigated by a revenue sharing transfer in excess of $400 million for 2011. Additionally, Fitch recognizes MLB's long history of viability in good and bad economic times and, more recently, the diversity of MLB clubs that have participated in the postseason since 2000 as important mitigating factors. Furthermore, Fitch notes, despite the range of financial disparity among participating clubs, noteholders are insulated from team level operations given their rights to national broadcast contracts to service debt prior to distributions to teams for operations.

While some teams are facing increased financial pressure due to weak economic conditions impacting attendance levels as well as corporate spending levels on sponsorships and advertising, those teams may be partially insulated in the near term by the high percentage of multi-year contractually obligated stadium-based income streams from luxury suites, club seats, sponsorship and advertising agreements and local broadcasting deals. Nevertheless, potentially lower renewal levels of key revenues at the league and individual team levels, should economic conditions worsen, would financially constrain the league and member teams. A key offset to softening stadium revenue growth include recently signed new and/or extended local broadcasting agreements that are expected to provide additional revenues to support underlying financial stability.

Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He writes for Baseball Prospectus and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).

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MLB has fired impartial arbitrator, Shyam Das

Major League Baseball has fired longtime independent arbitrator Shaym Das who had been selected to resolve certain labor issues as part of the Collective Bargaining Agreement. Das had been the impartial arbitrator for labor matters between the league and union since 1999. According to The Associated Press, MLB informed Das and the MLB Players Association of the decision last week. The CBA makes provisions for how arbitrators are part of several processes within the player/management relationship. Das ruled over several key rulings, most recently overturning the 50 game suspension of NL MVP Ryan Braun, which the league was extremely upset about going so far shortly after the ruling to leave the possibility of taking the case to Federal Court up in the air. The league opted not to do so, but the ruling set a precedence that played a role in rescinding the 100-game suspension issued to catcher Eliezer Alfonzo on September 14, 2011. As a statement from MLB on Monday said of the joint decision by MLB and the MLBPA to rescind the suspension, “Alfonzo’s grievance challenging his suspension raised issues that were nearly identical to those resolved in the Arbitration involving Ryan Braun.” The league then added that, “It is not anticipated that any other future cases will be impacted by the circumstances raised in the grievances of these two players.”

Players' union executive director Michael Weiner expressed disappointment Monday at Das's dismissal.

"Shyam Das has been served the parties with distinction and professionalism for 13 years," Weiner told USA TODAY Sports. "We think he's an excellent arbitrator.''

The process of firing of the independent arbitrator is part of the labor agreement between the league and union for the players. While the latest version of the Basic Agreement has not yet been released, the 2007-11 CBA reads:

At any time during the term of this Agreement either the Association or the [Labor Relations Department (LRD)] may terminate the appointment of the impartial arbitrator by serving written notice upon him and the other Party; provided that no such termination shall in any way impair the authority of the impartial arbitrator to render awards with respect to matters fully submitted to him. Within 30 days of any such termination, the Association and LRD shall either agree upon a successor impartial arbitrator or select a successor from an American Arbitration Association list, as set forth [in the CBA].

In terms of finding a replacement for Das, the (prior) CBA specifies the following:

“Arbitration Panel” shall mean the impartial arbitrator or, where either Party elects in advance of the opening of the hearing in a matter, a tripartite panel so empowered and composed of the impartial arbitrator and two party arbitrators, one appointed by the Association, the other appointed by the LRD. The impartial arbitrator, who shall in all instances be designated as the Panel Chair, shall be appointed by agreement of the Association and the LRD. In the event the Association and the LRD are unable to agree upon the appointment of the impartial arbitrator, they jointly shall request that the American Arbitration Association furnish them a list of prominent, professional arbitrators. Upon receipt of said list, they shall alternate in striking names from the list until only one remains. The arbitrator whose name remains shall be deemed appointed as the impartial arbitrator.

Das was involved in all cases in which a player that tested positive for performance-enhancing drugs appealed to the arbitrator, as outlined in the drug agreement. Until Braun, Das had never overruled a suspension by the league.

He was also involved in MLB’s attempt at contraction in 2001-02. Das heard testimony from the league and others in the case after the MLBPA filed a grievance to block the contraction of the Montreal Expos and the Minnesota Twins. Other cases included cutting Braves reliever John Rocker from 45 days to 14, and also cut his fine from $20,000 to $500 for scathing comments Rocker made to Sports Illustrated.

Das was not only involved in matters involving MLB and the MLBPA. Currently he is the arbitrator assigned to address the “Bountygate” case with the New Orleans Saints.

The AP provided a history of the arbitrators that have been assigned to resolve matters with MLB and the MLB Players Association as part of the story on Das’ dismissal. As reported:

Das took over as baseball's permanent arbitrator from Cornell professor Dana Eischen, who was hired in December 1997 but quit after ruling the following May against J.D. Drew's grievance seeking free agency.

Many of baseball's grievance arbitrators have had brief tenures, with the list including Lewis Gill (1970-72), Gabriel Alexander (1972-74), Peter Seitz (1974-75), Alexander Porter (1977-79), Raymond Goetz (1979-83), Richard Bloch (1983-85), Thomas Roberts (1985-86), George Nicolau (1986-95), Nicholas Zumas (1995-97) and Eischen (1997-98).

Joseph Sickles heard one case in 1976, and temporary arbitrators were used between Eischen and Das.

Seitz was fired after he ruled against owners in the Andy Messersmith-Dave McNally reserve clause case that led to free agency. Roberts was fired after deciding management colluded against free agents between the 1985 and 1986 seasons.

Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He writes for Baseball Prospectus and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).

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Kiss personal-service and “milestone” marketing clauses in MLB goodbye. Going forward, MLB and the MLBPA have agreed to stop allowing those aspects into contracts following  deals by Albert Pujols and Ryan Zimmerman, according to a report by Jayson Stark of ESPN.com.

In those contracts, both players were offered personal-service clauses – salary after the player retired. As detailed on The Biz of Baseball regarding Pujols’ contract:

After the 10-year deal expires in 2021 (or possibly earlier, depending on how his play goes), a new 10-year deal kicks in. The sides agree that after the expiration of the contract or Pujols' retirement as a player, they will enter into a 10-year personal services relationship and Pujols will be paid $1 million annually, or $10 million total. What is involved in the contract is not totally known, but we can assume that one possible route would be to use Pujols as a hitting coach, or possibly an emissary for the Angels in a PR capacity.

Zimmerman gets a five year, $10 million personal service contract at the end of his deal. Both Zimmerman and Pujols will be grandfathered in. No further provisions of that type will be allowed.

Also, the league and union for the players agreed that provisions that allowed for “marketing agreements” would no longer be allowed. This aspect was in the Pujols deal and prior with Alex Rodriguez. As part of the Pujols deal, he receives $3 million payment for 3,000 hits and a $7 million payment for 763 home runs.

As Stark reports, Michael Weiner, executive director of the players union, also confirmed the new rules, saying: "Both clauses raise questions under the Basic Agreement, and both parties felt they should not be a subject of individual negotiations."

While the latest CBA has not yet released to the public, the 2007-11 agreement reads on page 22 (page 10 after the Table of Contents):

(6) Other Forms of Additional Compensation

All other forms of compensation, including but not limited to the following, are not addressed herein and are to be determined according to the facts in each situation:

(a) payments for performing services for a Club in addition to skilled services as a baseball player;

Stark adds at the end of his piece:

One source also told ESPN.com that baseball is trying to close loopholes that teams might be able to use to avoid paying luxury tax, and both of these provisions fall under that heading because neither milestone bonuses nor personal-services deals are considered to be guaranteed money.

Maybe some of you are recalling the loophole that the Red Sox used on contracts with Josh Beckett and later with Adrian Gonzalez. In those deals, the Red Sox were looking to avoid having their salaries count against the Luxury Tax for the season in which the deal was reached. The loophole was that if you signed the player after Opening Day, the Luxury Tax computations rolled over to the following year.

So, what Stark speaks of in his piece today is not what this is about. That’s because that loophole was closed as part of the new labor deal. Stark touched on this as part of his piece on Cole Hamels (see blog post, Don’t discount Blue Jays’ great spring under the subheading “Strike Two – Luxury Lane Dept.”)

The rule now goes like this, according to sources familiar with the new labor agreement:

• If Hamels signs a long-term deal before Opening Day 2012 and his $15 million salary for 2012 doesn't change, he and his team would have the right to choose whether they want the luxury-tax computations to begin with his 2012 salary or with the rest of the extension, beginning in 2013.

• If he signs an extension at any point during the season, the luxury-tax stuff automatically kicks in starting in 2013.

But the moral of the story is, it doesn't matter when he signs. The Phillies can put off the luxury-tax pain until next year if they were to get a deal done this weekend, next weekend or on Labor Day weekend.

So, the league and MLBPA are firming up contract language, none of which are likely to make agents happy. Such is the cat and mouse game that’s been raging since free agency came about in MLB in 1974.

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Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He writes for Baseball Prospectus and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).

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