Settlement details

August 31, 2002

LENGTH: The agreement starts with the 2002 season and runs through Dec. 19, 2006. LUXURY TAX: Teams whose payrolls exceed set thresholds will be taxed on the portions above the thresholds, with the money to be used for player benefits, including player benefit plan, or the industry growth fund, or developing baseball players in countries lacking organized high school baseball. The thresholds are as follows:

2002: No tax

2003: $117 million

2004: $120.5 million

2005: $128 million

2006: $136.5 million

The following tax rates apply:

1st time over threshold: 17.5 percent in 2003, 22.5 percent in 2004 and 2005, no tax in 2006

2nd time: 30 percent

3rd and 4th times: 40 percent Luxury taxes expire on the final day of the 2006 season, meaning that if the sides play under the status quo in 2007, there would be no tax Payrolls are for 40-man rosters and include averages of multiyear contracts; health and pension benefits; clubs medical costs; insurance; workman's compensation, payroll, unemployment and Social Security taxes; spring training allowances; meal and tip money; All-Star game expenses; travel and moving expenses; postseason pay; and college scholarships.

REVENUE SHARING: Base plan: Each team contributes 34 percent of its net local revenue, after deductions for ballpark expenses, to a pool that is redistributed equally to all 30 teams.

Central fund component: $72.2 million annually, taken from those teams that are net payers in base plan and redistributed to teams that are net receivers in base plan. The central fund component phases in at 60 percent in 2003, 80 percent in 2004, and 100 percent in 2005 and 2006. It is collected by taking a figure in which the numerator is $72.2 million and the denominator is total net local revenue after ballpark expenses of all payer clubs, and multiplying the figure by a payer club's total net local revenue after ballpark expenses. It is redistributed on a split-pool basis based on distance from the average. COMMISSIONER'S DISCRETIONARY FUND: A total of $10 million -- $333,333 from each team -- is taken from the central fund and may be redistributed by the commissioner. DRUG TESTING: All players will be randomly tested for illegal steroids in 2003 as a survey. If 5 percent or more test positive in any survey year, mandatory random testing for illegal steroids shall take place during the following two years. If 2.5 percent or fewer test positive in consecutive years, mandatory random testing shall cease. In any year in which there is not mandatory random testing, there shall be survey testing. The first time a player tests positive during mandatory random testing, he is placed in a treatment program. For subsequent positive tests, penalties range from a 30-day suspension to a two-year suspension. AMATEUR DRAFT: The sides shall establish a committee to establish rules for a worldwide amateur draft, which it will try to have in place for June 2003. Clubs have proposed 38 rounds, players 20. The committee will make the determination. The committee will consider, among other issue, whether teams should be allowed to trade draft picks and the negotiating rights to selected players. If a team fails to sign a first-round draft pick, it will receive a corresponding pick in the first round of the following year's amateur draft (example: if a team fails to sign the No. 2 overall pick, it would be awarded an extra pick immediately following the No. 2 pick in the following draft). If a team fails to sign a second-round draft selection, it will receive a pick in the sandwich round between the second and third rounds of the following year's amateur draft. Order of selection for the sandwich round shall be determined by inverse standings. CONTRACTION: Teams may not be eliminated through the 2006 season. The clubs may elect to eliminate two teams for the 2007 season, but must notify players by July 1, 2006. If the clubs elect to contract for 2007, the union would not contest before the National Labor Relations Board that contraction is a mandatory subject of bargaining. If clubs elect to eliminate teams they do not have to identify at that time. MINIMUM SALARY: First figure is for major leagues, second is minor league rate for players with split contracts appearing on a 40-man roster for two or more years: 2002: $200,000/$40,500

2003: $300,000/$50,000

2004: $300,000/$50,000

2005: $300,000/$50,000 plus two-year cost-of-living adjustment

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