MLB teams above tax threshold will lose 2nd, 5th-round picks as FA compensation

Free agents will no longer have the burden of a high draft pick attached to their name.

As part of the reported five-year collective bargaining agreement reached between Major League Baseball and its Players' Association Wednesday, compensation for losing free agents has been altered. Teams signing free agents will no longer have to give up their first-round draft pick as part of the transaction, reports Jon Morosi of MLB Network.

Instead, compensation for signing free agents will be paid out based on where teams sit on the luxury tax scale, reports Jayson Stark of ESPN. If a team signing a free agent is above the tax threshold, they will forfeit second and fifth-round picks, as well as $1-million in international bonus money - a penalty that could be significant given the apparent changes to the international signing rules - reports Ken Rosenthal of FOX Sports. Teams below the threshold will only forfeit a third-round pick to sign a player who declined a qualifying offer.

Additionally, teams losing a qualified free agent will reportedly only receive draft-pick compensation if the player signs a contract exceeding $50 million in value, according to Rosenthal. Players also can no longer be offered a qualifying offer more than once, meaning a player who accepts the one-year offer would be ineligible to receive it again the following offseason.

The new CBA's tax will reportedly start at $195 million, according to multiple reports.

These changes will not affect the current class of free agents, according to Morosi, meaning that the likes of Edwin Encarnacion, Jose Bautista, and Dexter Fowler - all of them currently free agents who declined qualifying offers under the old system - will still have first-round draft-pick compensation tied to them this winter.

The new five-year CBA was reportedly agreed to Wednesday evening in Dallas.