NEW YORK (AP) — Details of the memorandum of understanding agreed to Thursday by Major League Baseball and the Major League Baseball Players Association, as obtained by The Associated Press.

FREE AGENCY

No change

FREE AGENT DRAFT PICK COMPENSATION

MLB and MLBPA agree to eliminate direct amateur draft-pick compensation, which had existed since 1976 and been in place for qualified free agents since 2012, pending an agreement on an international amateur draft.

A team losing a free agent would receive draft-pick compensation based on revenue-sharing status and whether a club had been over the luxury tax threshold. For a free agent who had spent the entire season with one team, there would would be four compensation tiers based on:

— $25 million in guaranteed salary or $18 million average annual value (AAV) (third round pick for revenue sharing payee)

— $55 million or $23 million AAV (Comp B pick for revenue sharing payee, third round for non-payee or team that did not pay luxury tax)

— $100 million or $30 million AAV (Comp A pick for revenue sharing payee, Comp B pick for non-payee or team that did not pay luxury tax, third round pick for team paying revenue sharing)

— $150 million or $40 million AAV (Comp A pick and third round pick for revenue sharing payee, Comp A pick for non-payee or team that did not pay luxury tax, Comp B pick for team paying revenue sharing)

SALARY ARBITRATION

No change

PRE-ARBITRATION BONUS POOL

A new bonus pool established for those not yet eligible for arbitration, who will split $50 million, which will count equally among the 30 teams for the luxury tax. Allocation based on WAR determined by a management-union committee, appearances on an all-MLB team and recognition such as best position player, best pitcher and best rookie. Would be split among 100 players.

SERVICE TIME

A full year of major league service will be credited to players who finish first or second in Rookie of the Year voting in each league by the Baseball Writers’ Association of America, as long as they are among the top 100 prospects and did not spend the full season on the big league roster. The top prospects who finish top three in Rookie of the Year or top five in Cy Young or MVP earn teams additional draft picks. The union has the abliity to eliminate this provision during the agreement.

LUXURY TAX

First threshold for penalties rises to $230 million from $210 million in 2022, then $232 million ’23, $236 million in ’24, $240 million in ’25 and $242 million in ’26. The second threshold remains $20 million above the first, the third $40 million above the first and a new fourth threshold $60 million above the first.

Penalties for exceeding the first three thresholds remain the same. For the first, a 20% tax on first-time offenders, 30% for exceeding in consecutive years and 50% for exceeding in three or more consecutive years. The second threshold jumps to 32%/42%/62%, and the third is 62.5%/75%/95%. The new fourth threshold carries rates at 80%/90%/110%.

AMATEUR DRAFT

An NBA/NHL-style draft lottery is instituted for the top six selections. Non-postseason teams are eligible. Teams receiving revenue sharing are ineligible to participate in three consecutive years, teams paying are ineligible in consecutive years. Ineligible teams can select no higher than 10th.

MINIMUM SALARY

Rises from $570,500 to $700,000 this year, $720,000 in 2023, $740,000 in 2024, $760,000 in 2025 and $780,000 in 2026.

For players signing a second major league contract or later, the minor league minimum rises from $93,000 to $114,100 this year, $117,400 in 2023, $120,600 in 2024, $123,900 in 2025 and $127,100 in 2026.

For players signing a first minor league contract, the minor league minimum rises from $46,600 to $57,200 in this year, $58,800 in 2023, $60,300 in 2024, $62,000 in 2025 and $63,600 in 2026.

POSTSEASON

Playoff field expands from 10 to 12 teams. There will be three division winners and three wild cards in each league.

The top two division winners in each league get first-round byes, and the remaining four qualifiers will play best-of-three game wild-card series. The third division winner will be the highest seed in that group, with other clubs sorted by their win-loss record. Top seeds in each matchup will host the entire series.

DESIGNATED HITTER

Extended to the National League, which used it previously in the 2020 pandemic-shortened season. The DH has been used in the American League since 1973.

AMATEUR DRAFT

Reduced from 40 rounds to 20.

UNIFORMS ADVERTISEMENTS

MLBPA agreed to let MLB add uniform and helmet advertising patches.

REVENUE SHARING

Level is unchanged. Luxury tax proceeds partially used to incentivize growth in local revenue among some teams.

INTERNATIONAL DRAFT

MLB has proposed an international draft of 20 rounds with slot values, similar to amateur draft covering residents of the U.S, Canada and Puerto Rico. If a negotiated agreement on a draft is reached by July 25, direct amateur draft-pick compensation would be removed for free agents starting with the 2022-23 offseason. If the sides do not reach an agreement by July 25, direct amateur-draft pick compensation would remain in place.

OPTIONAL ASSIGNMENTS

A new limit of five optional assignments per season before a player must pass through waivers.

ON-FIELD RULES CHANGES

On-field rules changes, including a 14-second pitch clock with no runners, a 19-second pitch clock with runners, limits on defensive shifts and use of larger bases, can be made with 45 days’ notice by a committee comprised of six management officials, four union representatives and one umpire. Previously, management was allowed to change rules with union consent or unilaterally with one year notice.

GRIEVANCES

The grievance over the shortened 2020 season is dropped. The 2018 grievance over the failure to spending revenue sharing proceeeds by Miami, Oakland, Pittsburgh and Tampa Bay remains pending.

LENGTH

Five years.

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