Understanding the new MLB CBA (Daryll)

Major League Baseball and the MLB Players Association this week came to agreement that will keep the labor peace until at least 2021. 27 years of uninterrupted labor peace, the longest in any of the four major pro sports. The question being asked by many pundits though is if it is a long-term solution or a temporary stopgap.

First of all, the news overall is good to avoid a stoppage when you look at some of the league contemporaries. The NBA missed half of its season back in 2011, with the NFL suffering the longest work stoppage in it’s history that same summer though no games were lost. The NHL went so far as to miss the entire 2004-05 season. Of course MLB lost the end of the 1994 season and post-season, a fact that Montreal Expos fans still blame for events that ultimately led to Montreal losing their MLB franchise to Washington DC as they led the Braves at the time of the strike. Not to mention Tony Gwynn was chasing a .400 batting average. More on Gwynn later.

The biggest issues facing baseball right now is how to help the financial disparity between the very rich and very poor affect the product on the field. The Los Angeles Dodgers had the largest Opening Day payroll of $223M with the frugal though competitive Houston Astros having the lowest at $69M. The eventual World Champion Chicago Cubs meanwhile were 14th on the list at $117M.

Read between the lines though and there is a different story. Both the Cubs and Astros effectively “tanked” for several years to build up draft picks, a strategy that worked but forced their fans to endure several years of bad baseball. This is a strategy that several teams seem to be following now, including the Atlanta Braves, Milwaukee Brewers, Cincinnati Reds, and Philadelphia Phillies. Other teams find themselves in the murky middle ground like the San Diego Padres and Colorado Rockies.

So baseball wants to find a way to avoid teams playing lousy on purpose, and as way to help bring teams revenues more in line from #1-#30. Here is what the new Collective Bargaining Agreement (CBA) put in place to this end:

  1. While the luxury tax threshold itself will increase, the penalties for going over that threshold dramatically increase. So for example, the threshold this year was $189M and the Dodgers overall payroll was $256M (up from the Opening Day number above). This year they would “only” pay $34M in luxury tax. If the new tax rules were in effect this year, they would pay close to $42M. This will help stop teams from blatantly obliterating the luxury tax threshold, which will rise to $210M by 2021.
  2. So how will they be able to spend less money? Well unfortunately someone has to come up with less in this deal, and that loss looks like it will be going to international prospects and free agents. There have been some wacky signing bonuses for players coming out of Cuba and other international spots like Yoan Monada’s $35M in 2015. The new international signing cap pool limit will be just $4.75M. This dramatically affects either how many players teams can sign or worse yet – the earning potential of the players themselves. Remember, these players are NOT covered yet under the MLBPA – so the union was protecting their own. The idea being that teams might pay some of their own better than reaching far into Latin America with their money. Also, Cuban free agents get dinged in this one as the minimum age for them not to be under the cap rules increases to 25 from 23.
  3. Poor Oakland. Under the previous agreement, teams in the top 15 markets didn’t get revenue sharing, but the A’s were exempt because of their cheap ownership and bad stadium. No more. Within 3 years they won’t get any revenue sharing money, making a poor team that much more poorer – but perhaps finally spurring actual action? Either a new owner or unfortunately for Oakland fans, perhaps finally a move somewhere else.
  4. No more “This Time It Counts” for the All Star Game. Overall, I definitely like this idea. More often than not, the manager of the All Star Game will not be the World Series manager, except for a few years the Rangers and Royals made back to back appearances in the American League. Now the home field for the World Series will be for the team with the best record in the season between the two. The players on the winning All Star Game now get cash rewards – so to say that it doesn’t count would also be remiss as players all love money.
  5. Tony Gwynn Rule. No longer will players entering the league be able to use smokeless tobacco. Gwynn, who died in 2014 from salivary cancer after using smokeless tobacco his entire career, would be proud of this as he was outspoken in trying to ban it near the end of his life. Existing players are grandfathered in but already many players and coaches have quit or tried to quit as it’s lopsided positive/negative analysis is understood. As Huston Street put it to the Associated Press, “I think the smokeless tobacco ban is both logical and I am thankful. I understand choice, but choosing to die sooner is not one I support.”
  6. Elimination of the penalty for players declining the minimum offers. I think this one will take some tinkering down the road, but essentially right now players who decline a qualifying offer from teams when they become free agents are penalized because any club that takes team forfeits a first round draft pick. Now this can only happen once to players, which should help players get paid fairly and find teams sooner in the off-season as teams won’t have to weigh other decisions besides if they want that player and are willing to pay him.

There is more to it of course, but to me these are the most important aspects. Baseball is very rich right now, from big TV contracts to the Cubs captivating America with their victory and that amazing World Series. While some issues like how to help teams like the A’s, helping revenue sharing be productive to all sides and of course being fair to young Latin American and  Cuban players seem to be “losers” in this current deal, I’m confident MLB will watch those issues and be ready for the next CBA to tweak for the next round.

Major League Baseball has slowly made a lot of change in the last 25 years, and I think moving forward there will be more changes to the game itself to help increase pace of play, continue to keep the game free of PED’s as the cleanest pro league around, and help make sure the sport’s domestic policy enforcement is not a policy of turning a blind eye. Players will also be healthier than ever, because another small piece of the new CBA is there every team is required to have a professional chef on staff. No more grilled cheese sandwiches!

 

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