The competitive balance tax has been an insidious force against the players. Back in 1996, in the wake of the ’94 strike, a new collective bargaining agreement was reached and healing between the teams and players could begin. As Jon Pessah wrote in his book The Game, “[Union head Donald] Fehr finally said yes to a luxury tax — the first time the union agreed to any form of payroll restraint since free agency changed everything in 1976.” I don’t think anyone anticipated what the luxury tax would become.
In that CBA, which covered 1997-2001, the luxury tax was to cover only the 1997-1999 seasons, sort of an experiment. Opening the door to the luxury tax in that 1996 deal wasn’t perceived as a major hit to the players. Pessah wrote, “This labor war was a huge victory for Fehr and the union…The owners never got their salary cap or any changes to free agency or salary arbitration.”
Fast forward to 2021, and it’s clear that most major market teams use the base tax threshold of $210MM as something of a soft salary cap. It’s a limitation MLB likes having in place, as it helps keep free agent salaries down. If MLB wanted the luxury tax removed, they could do so easily, as they did when it was decided the tax would not be collected in 2020.
Here’s the chart for tax rates (link for app users):
The tax brackets for 2021 are $210-$230MM, $230-250MM, and $250MM and beyond.
In their extrapolated 2020 payrolls, the Yankees, Astros, and Cubs exceeded that year’s $208MM base tax threshold. It’s notable that while MLB did not make these three teams actually pay tax in 2020, they still didn’t give them a free reset. That’s why the Yankees sit around $200MM right now – they’re in that third column of the chart, and they want to move back into the first for 2022. It’s all about the reset, not the actual tax amount if they slightly exceed $210MM in 2021.
The Cubs are trying to avoid the third-time CBT payor column as well, and they’ve accomplished that goal and then some in getting Yu Darvish, Jon Lester, Tyler Chatwood, Jose Quintana, and Kyle Schwarber off the books. They’re only around $170MM for 2021, a full $40MM shy of the threshold. The Astros are sitting around $196MM, so they have wiggle room as well. The machinations of these three teams, particularly the Yankees, assume that the luxury tax system will remain similar in a new CBA, and there actually is a reason to reset in 2021. If the union succeeds in drastically increasing the thresholds, which should be a major priority for them, all three clubs could have easily reset in 2022 anyway.
The one club that didn’t get the memo about treating $210MM as a soft cap is the Dodgers. The Dodgers pulled off their reset in 2018 and have stayed below the base tax threshold since, putting them in the first-time payor column for 2021 after the signings of Trevor Bauer, Justin Turner, and Blake Treinen. With a projected CBT payroll of $254.4MM currently, they’re looking at a tax penalty of about $13MM for 2021. If a third-time payor spent $254.4MM, their tax penalty would be over $26MM. In any case, exceeding $250MM places another tax: the club’s highest available pick moves back 10 spots in the next draft. That’s why the Dodgers will likely find a way to get below $250MM this year.
It’s worth asking: if you’re not the Yankees, Astros, or Cubs, why are you so scared of the $210MM boogeyman? None of the other 27 teams need to reset – they’re already in the first-time CBT payor column. That includes the Red Sox, sitting around $204MM and letting the Blue Jays pass them up. The Angels are around $191MM. The Mets are around $187MM. The Phillies are around $196MM. The Nationals are around $194MM. That makes five teams this winter that seem to have some deference to the $210MM base tax threshold. What would be so bad about spending, say, $220MM? The tax penalty would be $2MM, exactly the price of one year of Hansel Robles.
So the Reset Club includes the Yankees, Astros, and Cubs. And then five additional teams – the Red Sox, Angels, Mets, Phillies, and Nationals – belong to the Soft Cap Club. For the other 22 teams, the luxury tax simply has no bearing, which will only be underlined if the thresholds go up significantly in the next CBA. It’s possible the eight luxury tax avoiders have grand plans for the 2021-22 free agent class – check it out – and want to be first-time payors after they go big next winter. Otherwise, it’s hard to understand why a Soft Cap Club forms every offseason.
Won’t matter when they win the World Series.
It has worked out that way only a few times in these days where the team with the highest payroll wins a World Series. It does happen, but often developing young talent goes farther. Dodgers fortunately have both but it’s still hard to expect them to win every year.
Think the object shouldn’t be ceiling but floor. So many of these teams are acting as if they are homeless by not extending star players. Instead of keeping their homegrown talent they are allowed to let them walk away and field a team with no chance of winning. Bad for competition
This is a lazy article. Besides the obvious where the top-payroll teams are being criticized for not spending even more, there are other more relevant discussions to be had that are not touched at all.
In this age of analytics and paying for future performance instead of past, players are “priced” like securities: discounted potential cash flows and corresponding probabilities. The tax penalty is effectively a multiplier coefficient for the portion of the contract that exceeds the limit. Teams would rightly only enter contracts if they belive the player they are signing is at a discount at least proportional to the inverse of tax constant.
Stronger arguments can/should be made for teams that receive competitive revenue sharing not spending.
But there are always “top payroll teams.” It’s about the amount they spend, not how they rank against each other. This article is about how big market teams have set a limit matching the luxury tax threshold.
How can you say that big market teams have set a limit if there are teams that break it each year? It seems that you’re making a generalization in this comment that your own article contradicts.
I think the point here is that, while teams do pop over the tax threshold each year, they inevitably- always- have gotten back under it for a reset to avoid paying the steepest penalties.
As we speak, only the Dodgers are above the threshold, and they’ve just recently reset. Every other team that has been over has reset. The players have effectively given the owners a de-facto salary cap, while passing up the benefits of revenue sharing, a salary floor, etc.
I mentioned in another comment here that in 2017, the first year of the current CBA, five teams were above the threshold. Four of them reset after that season and only one stayed over- the Nats for just one more season. The Yankees, Tigers, Dodgers, and Giants all got under. The Red Sox reset a year earlier.
Always odd that it’s never mentioned about being over the luxury tax and the penalties for signing QO guys. If you sign a QO guy, and you’re over the CBT, you lose $500k of the $1M allotted international signing money and also lose a 2nd round draft pick (and a 5th, I think). For a team like the Nationals, who thrive in the international market, losing that $500k is a big deal.
That is a good point. From my reading of it, if you’re not a revenue sharing recipient, then you stand to lose your second-highest pick and $500K of international pool money regardless of being a CBT payor.
So being a CBT payor means also losing that fifth-highest pick and an additional $500K in international money.
I think it’s fair to say the marginal difference between the two is a consideration, but I’d be surprised if a team was willing to accept the default penalty but unwilling to accept the additional penalty.
Worth noting that international signing money for each team is not set at $1MM in total but generally in the $4.2-6.4MM range.
baseballamerica.com/stories/2020-21-mlb-internatio…
Plus there were only four guys who hit the open market with a QO.
I must be mixing up some rules. Thanks for clarifying.
The boogeyman was real for the Astros. They got worse draft pick compensation for losing George Springer than they would have if they weren’t tax payers. Because they were already down draft picks due to their cheating they would’ve lost more if they signed Realmuto or Bauer.
I still don’t think it’s that big of deal. So many of those 2nd round picks are flops. If the Astros can get a great player at a great price point, I don’t think it matters. Greinke and Verlander are coming off the books next year. Might as well go for it this year.
My pick would be to sign Odorrizzi for 3/40. Get a solid #3. If Rosenthal can be had for a 2 year day, do that too. I would like the Astros to buy the division and try to avoid making midseason trades this year.
It’s hard for a team to get a great player at a great price point with the additional costs factored in, because you have to believe if the player is that great and the price that great…someone else will beat it.
If the Cards were over the cap would arrenado’s full salary be counted towards the team overall payroll even through they got 50 mil?
For tax purposes, they will take the amount that the Cards pay him on the balance of his contract and average it over the years that he is under contract to them. AAV= average annual value. Include pro rated signing bonuses and performance bonuses.
No
This is exactly why the Astros won’t go over. Due to the sanctions they need that pick from Springer signing elsewhere to stay at the end of the second round right where it it. I don’t think you lose a 5th round pick, I think the penalty is that the second round pick you are awarded drops to the 5th round.
I think it’s trade. What would you rather have:
-Odorrizzi (3/40)
-Rosenthal (2/16)
-5th round pick
or
-2nd round pick
-2 players currently on the 40 man
It’s not crazy to say that the first option is superior.
That doesn’t fit the narrative
Nice piece. Boogie man is accurate term. It’ll cost Dodgers/yanks 30-40 mil year in year out to carry a 250mil payroll. Why not?
What’s head scratching to me is how the Cubs could build a powerhouse and then elect to pull their punches when they were still in the fight. There were questionable signings but to just close their wallet the last couple of years when the division was so weak (and still is), makes no sense. I mean, we’re talking about billionaires here folks.
Exactly right!! Head scratcher for sure.
the Cubs fall is intricately tied to their Wrigley remodel and their attempts to screw the city of Chicago over, then getting caught
They tried to screw the city over?
How many short term deals could they have signed over the last couple years to help? Or are you suggesting they should have just not cared that they’d be strapped with a player for years past their competitive window?
This whole idea that, “we’re talking about billionaire owners”, completely misses the point that these teams are run as a business, owners aren’t just throwing in their own money to appease fans.
Perennial contenders are built on strong farm systems. The penalties make it harder to maintain a good system. That’s why they reset. And you don’t want to go too far over in the other years because that makes it harder to reset without a fire sale.
I think the cap is a bit of a gentleman’s agreement. Get shunned by your peers when you go over…
Agreed. That “gentleman’s agreement” is also known as collusion.
Loose application of the term collusion. MLBPA Fehr agreed to CBT in 1996 and it has survived through current CBA. No one foresaw what it would mean years later, not MLB, not MLBPA. And definitely not the strategies of exceeding the thresholds in windows of contention and then periodically resetting every three years at a minimum. Likely going to see MLBPA push extremly hard to raise thresholds in 2022 CBA negotiations and remove “soft cap” mentality.
Of course MLB foresaw it, that’s why they fought so hard for it and kept tweaking it to get it to this level of effectiveness.
I don’t know how hard MLB actually fought for it. That’s a question for those who were there in 1996, whether such a restraint could have been resisted as Marvin Miller did for his entire tenure as union director.
The first “competitive balance tax” which was in effect from 1997- 99 was not like the current CBT.
They took the five teams with the highest payrolls
Take the mid point between the fifth and sixth highest payroll and that’s the threshold
The five highest teams paid 34% of the overage
So the CBT acted like a redistribution as well as somewhat of a deterrent
The team that paid the most tax under that original CBT was the Orioles, who paid over $4 million in 1997 and over 10M over three years. The Yankees paid just under 10M, and the Dodgers, Indians, Braves, Red Sox, Mets, and Marlins paid from 138K to 2,6 M.
Then the CBT went away until it was resurrected under the current structure in 2003 with a fixed threshold of 117M, escalating each year.
With the amount of teams that break that agreement, they’re REALLY bad at collusion….
Seems Bauer only used the Mets as leverage to get the Dodgers bid up — their relative inability to sign FAs seems less money related and more player/agent market driving. Not that I’m against that per se, but Mets look to be likely offenders next year assuming they extend at least 1 of Lindor, Conforto, and/or Syndergaard and return Cano. Cano’s contract being voided or reduced somehow would make them likely bigger spenders.
It’s an open market for free agents, so every team bidding for any given player is leverage against all of the others.
Thanks for explaining free agency.
Sure seems like the play to Trevors ego ”stay with us 2 years and jack up the AAV record by 9M”… vs take nice money but not record setting in year 2 and 3… it’s not hard
He signed a heavily front loaded 3 year deal. The Mets was more balanced. Way Different offers
To be fair to the Mets, they were trying to spend $40 million on Trevor Bauer.
And some teams each year could just have a legit profitability payroll budget between 180M and 210M. I mean, if we accept that smaller franchises can justify topping out at 120M, 140M, 160M, etc., it’s possible others become genuinely stretched at 190M and it only LOOKS like they are scared of tax.
In 2017, there were five teams that paid a luxury tax.
Yankees, Dodgers, Tigers, Giants, and Nationals.
The Red Sox had a reset year that season, and were over the two seasons before and the two seasons after.
Of those five, all but the Nationals did a reset in 2018.
The other four were headed for or already in the third time offender bracket. The Nats were over one more season and then reset.
The lux tax is the Boogeyman. An imaginary fear that hurts like an ant bite when it actually hits. Any team going over the 210 can afford the tax too.
Have you ever been bit by a fire ant? That really hurts…
I accidentally stepped on an anthill in a rainforest. Thankfully, it only resulted in a few temp red marks but I’d choose a root canal over that.
Yeah, that’s usually when I’d ask ‘why did you do that?’, and watch you start reaching for the ax.
Look that the third tier, third penalty. That’s absurd and clearly prohibitive for any operation in MLB. It is a definitive restriction.
The most obvious way that teams hide revenue is through ownership of their local RSN’s that broadcast their games. A majority of teams now have some ownership stake in their local RSN, from 20 percent up to 100 percent. They’re paying themselves, and the revenue to the RSN doesn’t count for revenue sharing purposes.
When owners start talking about setting a cap, that will be tied to baseball related revenues, and they’d have to come clean on the amount that they pay themselves vs the actual value of what they sell themselves. They’d probably have to have a forensic accountant to value their TV contracts based on ratings, market size, etc. Another reason why a salary cap is a very thorny issue.
Well if a team can be under the luxury threshold year in and year out and go to the World Series may be various team’s business process management is questioning do you have to spend 100 million dollars more than the Rays to be better than the Rays?
A lot about next year might be for nought as if there’s no CBA progress, teams might be inclined to wait.
Because the Rays get other teams’ money, to begin with. Why do the Rays need other teams’ money if they are that good at operating? Same question can be asked, but many only ask it the other way.
Everyone posits this straw man when teams like the Rays are benefitting from other teams finances, but take it away then…. if they’re so good at operating that they need 1/5 the salary of some other teams, they also don’t need their money. The argument goes both ways but it is only spun one way.
People act like these two theories are mutually exclusive and that couldn’t be further from the truth, therefore, It’s a baseless argument when postulating it from a handicapped advantage.
Excellent analysis. I’d like to suggest a somewhat similar look at the team salary reduction process of some of the non-competitive teams.
Why are there non-competitive teams? Possibly revenue inequality?
Better analysis is Ethan those teams are ran by incompetent boobs who are to proud to admit they are not quality baseball minds. That’s the case in cincy at least. Owners prop up GMs yet still call shots in their name.
Pirates Rockies Os and Marlins are in that boat too.
Flip side obviously Tampa but royals are fantastically ran. Oakland….Brewers
Financials are a bigger deal to fans than execs.
I think the last paragraph nails it. Revenue/Attendance is still going to be way down in 2022. There is also the 50/50 chance of a lockout beginning 2022. (If you talk to player reps, even higher than that….) But if they avoid lockout, and are able to anticipate higher attendance and revenue, which they should be able to, then the top spending teams, and even a surprise team or two will go hog wild in next year’s FA class.
I wish they’d just get rid of it and put in a hard cap. Then implement a floor so the players don’t lose out on any money.
The owners would love this. The players have fought it for decades.
Small market owners won’t like be told a minimum that they would need to spend. Players association will never go for a hard cap. They have way too much power unlike other sports like football. In theory good, but in reality too many hurdles.
If they do it right though the players won’t lose out. The average salary can remain the same, it’ll just be spread out more evenly among the teams. Obviously they’ll both need to rise along with revenues though, but that’s pretty straight forward.
That makes sense and it’s why the players in the NFL and NBA are okay with a cap but MLBPA still won’t go for it. Of course they now look very smart. The NFL and NBA players are giving back money due to revenue drops. Baseball players aren’t.
The players will never go for it because a salary cap, regardless of how high or how its structured, because it caps their salaries. In MLB there is no maximum salary; players can sign for any amount a team is willing to pay them.
Teams may treat the luxury tax as a cap, but they cannot negotiate from the position of impossibility; if the premier free agent wants to join the Dodgers, for example, the only limitation is the owner’s willingness to pay the salary, not a league-imposed cap, which would thus limit salaries.
The NFL and NBA are okay with the salary cap because their unions were weaker than MLBPA, and lost negotiations.
The MLBPA is, or at least was better at holding together as a union, but they unwittingly allowed the luxury tax to become a de facto salary cap, albeit a soft one that has gotten harder with each round of negotiations. At the same time, they cut themselves out of a cut of skyrocketing revenues, rejected a floor to go with the cap, and have seen a huge share of salaries go to the very top end of the scale.
They need to restore some balance to the system.
This isn’t true JD. The top-tier will always lose out. That’s why hard caps keep getting voted down. A hard cap makes the owners incredibly wealthy, and then many of the same people on here will be crying that the vicious owner-oppressors only have a cap to make extraordinary amounts off the backs of the players.
NBA andNFL players are also not comparable to MLB players. Just because it’s a sport doesn’t mean it will correlate. You say they’re okay with it, but are they? That’s your opinion when I’ve seen differently. I think they’re in a different position, with a weaker union.
Then the palyers unions in NFL and NBA must be very weak as the MLBPA is nothing to shout about, Tony Clark is over-matched no doubt and MLBPA is headed into a new CBA negotiation after 2021. Very likely a strike/lockout scenario given a successful negotiation tends to happen when two sides are evenly matched. MLB has been way ahead since Don Fehr reign.
JD perhaps finance isn’t your sport?
Players will never accept a hard cap
Never is a long time.
Indeed they won’t, but what they’ve effectively agreed to was a soft cap that keeps getting harder with each new CBA. They’ve gotten themselves a cap that’s not called a cap, but they haven’t gotten a share of increasing revenues, nor minimum salaries that keep pace with the revenues.
The players would like a share of new revenue, but any deal that includes such a provision would amount to a salary cap.
I would suggest a cap of about $250 million, with a dollar for dollar tax above that amount, and a floor of at least half that amount with a dollar for dollar tax below that. (so it’s not a floor- except it is).
To help out the players who aren’t getting paid in free agency, which isn’t the top of the scale players, they need to close the gap between minimum wage players and the elite. Higher minimum salaries and earlier free agency and arbitration triggers would do that, along with a salary floor, errrrr lower end tax.
A 250 million cap and earlier free agency would destroy mlb. A third of the teams in the league can’t afford to go much over 100 million when trying to win. Having to do that at all times they wouldn’t have their windows. And still the large markets would have double the payroll. They also need those years on player control. And if player hit free agency after 4 years it wouldn’t help them make more money. The rays and Cheapskates would just hold them in triple a until they are hitting .380 and have under 2 era. Be only way they could contend. Won’t keep teams from stinking either. For example would the pirates sign JTR or Springer to keep above the floor? No. They would just lock up their prospects that are willing to sign. Or buy out arbitration years to reach the floor. So it would basically be NY LA Chi playing the washington generals for 162 or 152. Then a mega city playoffs. Few small markets make it but not much of a chance. Kinda like now but worse.
What I suggest is:
Dollar for dollar tax above the cap at $250 million
Dollar for dollar tax below $125 million
50% tax on the overage above $ 225 million
More revenue sharing by letting revenue sharing payees keep gate receipts
Get rid of blackouts, allowing MLB.tv and DirecTV to broadcast games in local markets, shifting more revenue into the national fund (which is split 30 ways)
5 years free agency, 2 years for arbitration
Minimum salary scaled to $1 million starting at 600K and increasing by 100 K per season
Haha, good luck with this. What you suggest has about a 0% chance of coming to fruition.
What do the owners get for all of this? A slightly stricter threshold at a $40m higher amount? They’d laugh you out of the room.
“What do the owners get for all of this?”
Obviously, there is much more to the CBA than just revenue sharing, but this is where the problem of teams not being competitive has to be solved- on the revenue side.
What the owners want in the CBA
– Expanded playoffs (their biggest wish, which can be bartered)
– International draft (which can be agreed to with guaranteed
bonuses, not leaving players to the mercy of one team)
– Harder luxury tax (which is in here)
The owners also get a more competitive league, without half of the teams making no real effort to win. That boosts revenue at the gate and on television, and makes for a better game. If they care.
Most TV contracts are signed over a term of years, so there is no guarantee that it leads to higher TV revenue. I assume your thinking there is that your idea will actually make it so that the league is more competitive and this will increase tv ratings, which will lead to higher revenue contracts. Takes a few assumptions to get to your desired result.
You want a harder luxury tax…@ a $40m higher price point. I already commented on that.
I’d be interested to see if expanded playoffs increase or decrease viewership of both the regular season and early playoff rounds over an extended period of time.
I’d also be curious to see how they alter team spending. Would teams be more willing to spend a little to get a shot at the playoff revenue, or would they see that they don’t need to be as good to get in and spend less.
The immediate impact of being more competitive on the field is felt at the gate, much moreso than on TV. So the TV is a much smaller factor, but still a factor.
The CBA is obviously a give and take on both sides, but many of the things that will benefit players will also benefit owners of teams at the low end of the revenue scale. They will put more money into player contracts if a) they have more to spend through revenue sharing and b) it pays them more to put a winning team on the field.
When teams have to give up almost half of their gate receipts, they lose half of the monetary benefit of winning. Not so much with the TV contracts, because those are often 10 year deals that get paid no matter the team’s record.
True that most of what I suggested benefits players, apart from the harder tax, so I responded to your comment with other things that can benefit owners. Also, more revenue sharing benefits several owners while really taking from just a few at the very top of the scale.
There are also midpoints in all of these, such as
-scaling up the minimum salary over the length of the CBA
– setting arbitration at 2.5 years, with an exception at 2.0 years for players who make an all star team or qualify for a batting or ERA title
– granting restricted free agency after 5 years, with the right to match, and then unrestricted at 6 years
If a team has 15 players making minimum salary, increasing their pay from 600K to 1 million will cost them $6 million in a season.
One expansion fee is 1 to 2 billion
An Expanded round of playoffs is said to be worth 170 million
(split those 30 ways)
A salary cap, even if you call it a luxury tax, cuts a lot of spending at the top of the pay scale, and makes elite players more available to mid revenue teams
Things like a universal DH and payment of FA compensation are easy for owners to “give up”
Things like cutting back on the draft, or slotting bonuses, screwing MiLB or Int’l players mean little to the MLBPA
Those often are thrown into the deal
Your argument is wrong. In 2018 every team received at least 118 million from the reve he sharing. That means if they kept their payroll at 50-60 million, they were simply picketing the other 60. Every team in the league has the capability of a 100 million payroll: the owners are just greedy.
Spike 13
Players will never accept a hard cap
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That was a huge mistake, imo. They should’ve gone for a percentage of the revenues when they were winning. I don’t think there is any way that wage inflation has kept pace with revenue inflation.
Accepting the luxury tax was a mistake. And on top of that, allowing the tax to increase by only $2M per year, about 1%, was foolish. The MLBPA has blown it in multiple negotiations. This new CBA will be extremely contentious, and I hope the players prepare and stand their ground.
I hope the owners move on with new players and the old players can find something else to do that pays as much or cross the line.
Your comment that players are way overpaid – Can you delve into that more? Why do you think that?
Nothing about being over paid. I don’t care what they make. Give some guys a billion dollar contract. Making them a part owner for all I care.
I don’t think mlb would have trouble finding talent for 100 grand a year. Many would play for free just to eat good and free and travel for free or they just enjoy playing.
If the current players feel they aren’t making enough they can leave the mlb and make more money doing something else.
When the CBT was accepted by MLBPA, Don Fehr, no one could foresee how it would affect baseball nor how the CBT thresholds would be viewed as soft caps and strategies of competitive windows with three year reset periods. No doubt MLBPA will push extremely hard in the 2022 CBA negotiation to move the thresholds much, much higher than the current levels, in an attempt to remove these obstacles to overall wage increases in MLB.
“Players make way more then they should.” You said that elsewhere in this comment section.
Few people would pay to see you and I play major league baseball because our talent level is so much less than current MLB players. It wouldn’t be nearly as appealing.
I don’t understand the idea that the players should just take what the owners feel like paying them without complaint. They’re the best in the world at what they do, and there’s a premium to be paid for that talent. In a $10B-a-year industry, the players – just like the owners – want as much as they can get.
@BaseballGuy1 – “no one could foresee how it would affect baseball nor how the CBT thresholds would be viewed as soft caps”
That’s exactly what the MLBPA leadership should have foreseen. It’s part of the duties their jobs entail. And it doesn’t seem to be that difficult. Allow the owners to have a soft cap that increases only 1% per year while salaries increase around 5%, with significant penalties for exceeding the cap, and teams eventually will stop spending over that amount. The MLBPA has been failing its members, and those members have allowed that to continue, for decades.
I’m fascinated at how the new CBA will turn out, and I expect a work stoppage of some sort.
“The MLBPA has been failing its members, and those members have allowed that to continue, for decades.”
This is why I have a hard time feeling bad for the players on this. Especially considering some of the stuff we heard was bargained for in the last CBA. If the terms were dictated to them, I’d have a lot more sympathy, but this is a CBA that they agreed to.
Slight rant: If the MLBPA would focus on young players getting more money, it’d help everyone because those players would stop being seen as such attractive alternatives to veterans, but they continue to ignore this point when bargaining. I know unions are generally more about the older members, but in this instance, benefitting the younger members benefits the older ones as well.
Fair point, 1984. I think a $1M minimum salary should be a goal for the new CBA, with 2nd- and 3rd-year players getting some sort of increase from that (I can’t decide how much it should be, maybe another $250k-$500k per season). Put more money in the young guys’ pockets, and they won’t settle for Ozzie Albies-type extensions and give up the opportunity at the really big money so quickly.
I don’t necessarily care about the Ozzie Albies types. He realized that the amount of guaranteed money that the Braves were offering was enough to take care of himself and his family and he took that instead of gambling on making more later. He’s an MLB player with a comparatively high salary to the rest of the population, if he was really that strapped for cash, he’d have no issues taking out loans to bridge a few years until arbitration, but it wouldn’t be 30m+.
I don’t think raising the minimum to a level that would actually be feasible would stop some players deciding like Albies did, but I also don’t think we need to. Albies took guaranteed, “set for life” money in lieu of potential, “set for generations”, money.
I have little doubt that MLB owners will put forth proposals, and push them through the media, that are intended to break off a majority of union members who aren’t near the top of the scale. They’ll offer perks on the bottom such as minimum salary while clamping down on the luxury tax.
One problem here is agents, who make their money at the top of the scale. Minimum salaried players often don’t even have an agent. They’re getting minimum salary and that’s it. Agents aren’t going to bat for them. And yes, it would be good for the game. For all but a few elite players, whose salaries could pay a higher minimum wage for every MLB player.
I agree with this. You do have to blame the MLBPA for all the ground they’ve ceded.
Baseball, please figure out a salary cap system that works and is fair for all teams. I don’t care if they take into account state taxes etc but for the love of God, get a system that has all teams on the same playing field because they are nowhere close.
it is fair. teams can spend, just dont want to. a fluid ceiling and a hard floor is all you need. making smaller matkets spend more also means larger market teams have less options to choose from on the open market and may have to bid more against each other. makes things more competitive without a hard cap and also brings up player saleries. everyone wins expect the Pirates.
This. It makes no sense (except to the owners) to have a hard cap without a corresponding floor that forces the small-market teams to spend their revenue sharing money. I have a feeling the Dodgers are taking a chance with blowing through the CBT limits this year because they expect the entire revenue sharing system to be up for grabs in the CBA next year.
Problem with cap is it needs to be lower than what players union would agree too. A cap only helps competitive balance when every team in the league is reasonable able to spend to the cap limit.
So you cap spending at the limit of the lowest revenue team?
That just puts more money in the owners’ pockets.
A better answer is more revenue sharing.
I don’t care who gets what share of the money. Owners can bring in all international players and pay them $500 a month for all I care. Get locals from the mills and factorys to play for free. I would play for free, anybody willing to join me? Just saying for a cap to work to create somewhat of a fair playing field, every team must be capable of reaching that cap. If large market owners wants to give away more money for the benefit of the league then good.
You touch on something here that I think gets glossed over far too often in these discussions…for most of the systems that people suggest to ever work, it’d require the large market owners agreeing to higher (perhaps significantly higher) revenue sharing.
Teams will never be on a level playing field. The high revenue teams will never agree to it, and most of not all teams will not agree to stop hiding revenue from each other and the players so that a fair revenue sharing system can be implemented. There is basic transparency when it comes to ticket sales and the official broadcast contracts, but there are so many places that teams hide revenue from each other and the players, whether it’s because the team owners also own the broadcaster or they throw in licensing fees for contracts where the revenue would otherwise be subject to sharing or calculating revenue sharing.. We even have two teams owned by publicly-traded companies, the Braves and the Blue Jays, and still don’t know the real numbers. None of this is real enough for the public to make a judgment on who is making money, who is losing money, why that’s happening, how it affects competitiveness, and what needs to be done.
@marc I’m not sure how you don’t consider the Braves books open. Until the Braves became publicly trade nobody had any clue what teams made or didn’t. You can literally break down the quarterly outlooks for much of the Braves financials. It’s because the Braves we know teams didn’t lose money last season. They lost projected revenue huge difference.
In many cases, teams did lose money, not just reduced revenues. They simply took on financial debt to offset lack of revenues as expenses in many cases were the same, net of the payroll costs not incurred due to reduced player salaries actually paid. Those payroll costs not incurred, foregone by the players, were huge! Paid only 37% for 60 of 162 game season. Amazes me and many others that ever occurred.
What’s “fair” about a team like the Royals, who recently sold for $1B, having the same resources/cap on spending as the Mets, who sold fro $2.4B? Steve Cohen paid a nearly 150% premium on his team because they have greater access to revenues and higher-priced players.
If the Royals want “fairness” then their owner should cut Steven Cohen a check for $750M, then maybe the Mets would be responsible for subsidizing the Royals payroll.
(Of course those are only two examples because they are the most recent sold, but if MLB is going to force equal revenue onto teams, than all teams values should be calculated and then every owner pays an equal amount for their teams.)
Revenue sharing?
How much revenue should they “share”?
MLB is one business with 30 franchisees. They decide how much revenue to share between them.
If it’s “one business” then it should not cost one owner significantly more to purchase/operate their franchise than another owner, and be faced with the same revenue to do so.
The rays made the World Series last year.
Salary cap sports don’t have more parity than MLB.
All teams on a level playing field is the most overused, immature term for professional sports that one can use. The playing field is level through the draft, FA, Rule 5, and a multitude of other factors. Now we want forced pay equity for players (see above) and all teams to be in exactly the same position?
Okay I have a solution then… instead of letting your broke team into MLB, the answer is, NO, unless you agree that you are able to spend an amount deemed equitable for the “playing field” – oh shoot, too late, they already do that when the owners get accepted; they just then cry poor.
Bottom line – If you choose to OWN a sports team, you own the consequences of being competitive or not. Other teams should not be punished or brought down for the sake of bottom level financial teams. Go watch the NBA if you like that joke of a sport, but trying to turn baseball into the NBA on the premise that it is better is a terribly faulty premise.
id like the idea of a cap and trade system like with emissions. teams that want to spend more have to trade other teams for cap space. assume teams can only trade a certain amount of space and it’s not a hard top still but rather just slightly pump up the penalties. maybe incorporate a formal buyout system and a hard floor as well.
It doesn’t work as it currently is because a lot of owners dont care if they win or not. No one would go to Rays games even if they went 162-0 and the owner will still get revenue sharing so why wouldnt they just put out a payroll of $20M for the year and make more money for themselves? Even if people did go to Rays games, the Saint Pete Rays are not going to be able to keep up with the spending of the Los Angles and New Yorks of the world so they and most other teams are obviously at a disadvantage. I should say FANS of most teams are at a disadvantage, the owners rake it in.
This article is so pro union and the poor little multi-millionaires that play a game for a living. When I played minor league ball in the ’60s I signed for $300 a month during the season and felt lucky to get to play professional sports. I finally gave up, went to college and took a real job but never regretted the time spend PLAYING, even for small pay.
If we’re going to feel sorry for professional players let’s feel for the guys riding buses with low salaries their whole careers trying to make it, not the guy making millions because he didn’t get MORE millions.
I realize the owners are making big bucks but they also invested millions for that opportunity.
Lol and the poor owners have kept minor leaguers making the same wage you made in the 60’s. Give me a break the owners don’t entertain us they are invested in a business they understand investments will need to be made(players). Owners make hundreds of millions in a down year and I’m suppose to feel bad for them? Most guys that make the mlb don’t stay around long term and don’t make the big bucks your implying. Plain and simple owners have manipulated and worked together to suppress salaries for years hence why the Average AAV for player contracts has stagnated. I’d rather support the players we all love (multi millionaires) compared to the blood sucking owners who pull in billions in a normal year.
Players make way more then they should. A lot of guys would play for free after work just to play in front of a huge crowd and be on tv. The old days players just needed paid enough to keep them from doing other jobs. Then they needed to be paid enough to keep competition leagues from forming. I am not a fan of owners getting richer but they could easily cut salaries of player in half and other leagues couldn’t beat them and the players aren’t going to quit and work in the real world.
And those poor minor leaguers. What ones. The ones from other countries that get paid more in a few weeks than they would make in a year at home? The ones who got hundreds of thousands or millions in signing bonus? Even the late round draft picks. Oh it’s so terrible to get paid, get to see the country for free, eat for free, and get to play a game I live for a few more years while keeping the dream of playing in the majors.
The owners do not entertain us, they just put up all of the necessary funding to allow the players to.
If what the owners do is so easy and trivial, perhaps the players should start their own self funded league where they can keep all of the profits. Oh, yeah…it’s probably not that simple.
I don’t feel bad for either party and no one really should. But I also hate how one sided the conversation, especially on this site, usually is. It seems that a lot of people fail to grasp the importance of capital investment in order to make things function.
I genuinely appreciate your comment. It’s interesting to hear how a ballplayer from the 60s views it, and it matches up with what Marvin Miller encountered when he effectively started the players’ union. Your outlook on this was the prevailing outlook of the players and it was very, very good for ownership.
Enjoyed your article. Took me back to books I had read on Marvin Miller and Don Fehr. Also Michael Weiner who I thought did a good job. I do not see Tony Clark and current support cast as being nearly as strong a MLBPA group headed into 2022 CBA negotiations. That does not bode well for quick and effective negotations with MLB on the next CBA and lends itself to the likelihood of a strike/lockout scenario. Your thoughts on this?
I think the union saw that Clark was overmatched, which is why they hired Bruce Meyer to negotiate this CBA. I think Meyer might be able to hold his own, but we’ll see.
To be fair, the Mets are only under because they can’t seem to get anyone expensive to take their money.
Maybe that’s true of Bauer, but they chose not to put in the highest bid on Realmuto or Springer. I’m not saying that’s necessarily wrong.
Next year the Yanks will be around $135-mil before arb and pre-arb players. I think the reason they aren’t blowing through the threshold this year is because they are looking to spend some more next year while allowing some younger talent like Garcia to solidify themselves before making more splashes next year.
Maybe if the league wants teams to spend more (it doesn’t, but at least the MLBPA does and some compromises need to be made) they should make it harder for small market teams to compete on small market payrolls. If I’m the owner of a mid-market team who’s trying to build something, I might look at the Rays and A’s and say, why should I spend $200m on payroll when Tampa nearly won a title last year for $60m, or whatever? I’ll just do what they do. Tampa’s churn-and-burn-and-keep-it-cheap strategy is fine when there are one or two teams doing it, but it’s a mess when it’s everyone.
My solution is to make players free agents earlier, possible two full years earlier (so four instead of six years), which makes the Rays/A’s model very difficult to operate, but then also vastly increase the subsidy going from big market to small market teams, and instituting a high salary floor and low cap.
I like your ideas on earlier free agency and a payroll floor. I wonder if anything can be done as well to discourage tanking, like a draft lottery or limits on draft bonus pools for being below certain win total thresholds.
I’d also like to see restrictions on competitive balance draft picks and revenue sharing, especially for teams like the Pirates that collect sharing dollars and just pocket it.
There are multiple situations regarding faulty arbitration and FA status rules, as well as competitive factors that need to be resolved, and can be with one simple fix. You make the length of an amateur signing specific. Along with this, you increase minimum salary (both major and minor league) every year of that initial contract.
If a player is 20 years of age or older at the time of signing, the contract length is 10 years. This includes time spent in the minor leagues. If the player is younger than 20 at the time of signing, the contract length is 11 years. This gives an extra year for development.
To go with this, the dates of entry for amateur players will also be adapted to fit this mold. The draft will return to its original date of the 1st and 2nd days of the winter GM meetings. The signing period will last until January 1. The Rule 5 draft will continue to be held on the final day of the meetings. Winter Meetings will be extended to a full week period. The international signing period will be reduced to 60 days and will run from January 1 to March 1. This is to ensure that all rosters will be set for the entire year following the conclusion of spring training camps. Excluding trades, waivers, and professional FA signings, of course. This is set so that there are no half-season questions or scenarios.
First year minor leaguers will earn $30K minimum (regardless if they are put directly into AAA or are sitting at some rookie camp in Florida, Arizona, or the Dominican), and will receive a minimum raise of 10% every year through 5 years. Beginning with the 6th year of the contract, regardless of MLB service time, players will enter arbitration with a minimum salary of $100K (minors) and $750K (majors).
There will be no service clocks. As such. there will be no clock manipulation. There will be no more stories of starving minor leaguers. This system will be designed to force teams to be active with their younger players. If you take 8 years to develop a guy, you’re only going to get 2 years from him in the majors before he is a FA.(3 years if he was under 20 when signed) Whereas if he reaches the majors after 2 years, you can get 8 years (9 if under 20 when signed) before he’s a FA. The sooner you get a guy up, the longer a team will benefit…. but also the higher his salary will get during his time in the majors. The longer a guy remains in the minors, the more money a team will potential waste by not bringing him up or releasing him.
I also think that, if the luxury tax is over $200M… and the smaller market teams are receiving as much as $75M from the league as a competitive balance (as well as additional first or second round picks and a higher draft/international signing pools), the minimum MLB payroll should be around $130M. It’s ludicrous that teams such as the Marlins, A’s, and Rays are actually profiting from the shared revenue rules, rather than using it to ADD to their resources for payroll.
It’s going to be a huge mess. Rays spend money, just not on players. Scouting and development. Large markets shield their revenue from sharing. You don’t see many rich couples and poor couples as friends. The hourly rage folks simply can’t afford the fine dining and front row seats and european vacations. How does a team with 1 million fans and a 40 million tv contract compete with teams with 3 million fans and 200 million tv contract? It’s amazing some small market teams do. And now people want to take away their player control and their one extra draft pick. If you liked fixed outcomes watch WWF or Globetrotters.
Fixed outcomes? The Rays have had one of the lowest payrolls in the majors their entire existence, and they were just in the World Series four months ago. They’ve been competitive more often than not in the last 15 years. Same thing with Oakland. Payroll correlates with winning, but not all that closely.
Tim, maybe a contrary opinion, but I think that a better way to get a handle on spiraling salaries is to put teams on a relatively equal footing when it comes to drafting. The young, cheap, controllable 2-3WAR player can plug in anywhere–and for a big spending team, it’s one less expensive FA they have to chase to fill a hole. Penalizing teams draft-picks on top of monetary penalties may exacerbate the problem.
What I think the league must do is salary floor. Let’s say 110 million, whatever the team doesnt spend would have to be distributed as follow: 50% to the players with the lowest salaries and the other 50% to be used to invest in the most vulnerable neighborhoods (building parks, etc). This way they will make sure teams like Baltimore, Seattle, and Detroit are not just using the rebuild to save money. If they wont want to give.the money back, they will be taking bad contract plus prospects from other teams. Their rebuild would be quicker and the other teams would get money to get better. Now, let’s say Seattle takes Familia and Betances, and get two top 10 prospects; Seattle just spends money from one year but gets two prospects plus the possibility to trade eitherplayer for more prospectsat the trade deadline, then Mets get better by been able to sign Rosenthal and Oddorosi, these are just examples so you can see the picture.
One way to combat the decreased opportunities for veterans is to also have a minimum.
Teams like the Pirates, Orioles, Marlins etc need to step up and show their fan base they actually care.
Daviejoneslocker
Teams like the Pirates, Orioles, Marlins etc need to step up and show their fan base they actually care.
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Or, conversely, the fans have to tell the owners that they care, before the owners will spend. Over the past 5 seasons, the Indians (iirc) have the 2nd best record in baseball. But 22nd in attendance, with Oakland being #23, and TB #29.
Fans of the bigger teams, like myself, will argue that you are getting what you pay for.
You have never been to a rays or athletics game. You really have to like baseball to go. As for other ball parks attendance. I did a extensive study. Took years of research and cost a fortune. But the results were conclusion. It showed that cities with populations of 1.5 or 2 or 4 million could not only build larger ball parks but could also fill them, opposed to cities that had a population of only 500 thousand. Then I cross referenced with mlb attendance numbers and it proved my theory right. The teams with the biggest ball parks and highest populations also ranked in the top half of attendance.
I’ve been to an As game. I liked the place. And I liked the fact that all the fans there were rooting for the RS.
I like anywhere baseball is played but I can think of 28 or 29 other ball parks I would rather go to.
Can you share a link or some other information from this extensive study? It certainly seems reasonable that, “The teams with the biggest ball parks and highest populations also ranked in the top half of attendance.” If you have more fans in your city and more seats from them, of course more will come.
“The competitive balance tax has been an insidious force against the players.”
1-It is not insidious. That term implies that it is subtle. It was part of a much larger agreement that the union was well aware of, and everyone in here was aware of.
2-It is not really against the players. It’s part of a much larger deal, with a ton of offsets. It’s akin to selling your house, and you agreeing to leave the washer, dryer, and lawn mower, in exchange for not fixing a crack in the sidewalk.
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“It’s worth asking: if you’re not the Yankees, Astros, or Cubs, why are you so scared of the $210MM boogeyman?”
The reason for this is that it still counts to the 3-year ‘penalty’. If the rich teams are going to reset every three years, then why pass the cap, unless it is advantageous to you? If the RS stay under the cap, they then have 22-24 to exceed the cap. If they pass the cap this year, then they only have 22-23. If I were them, I’d stay under until the trade deadline. If I were in 1st, then I’d blow up the cap for one year. But I wouldn’t add JBJ and go to $211M.
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“If the union succeeds in drastically increasing the thresholds, which should be a major priority for the”
They were idiots. There is no around it. $210M – $189M = $21M. Even without using the trusty abacus, you have to know that is about 10%. Again, without using the trusty slide ruler, 10% divided by 5 years is about 2% pa. How did Tony Clark not know that might be enough, against revenue increases of 6% pa? It took me 10 seconds to figure that out.
Spot On. I had to scroll through three hours of comments to finally find someone who knows what he is talking about. The author of the original article sure doesn’t and he’s biased in favor of the union to boot.
It was blatantly and obviously biased in favor of the players. And it shouldn’t be.
IMO, I paid $28 for my ticket, and another $12 per 24 oz. beer. I don’t give a rat’s a$$ how the owners and players want to chop my $88.
Nor do I care how Walt Disney & Denzel Washington chop up my $12. And went I went to see Paul McCartney at YS, it never dawned on me that I should opine about how much Sir Paul got paid.
Every one of them is richer than every one of us. We shouldn’t care what they do with our money.
Players got it good. Over half of them would play for 5 grand a month. With benefits of clean water, good food, health care and traveling. Majority of players aren’t big enough or good enough to play nfl nba. Just keep the salaries enough that another league can’t form. When your team loses a player you don’t jump ship and start rooting for that team. Not many at least. It’s about the team brand, not the player. If they strike get all new players. Plenty old ones will cross the line eventually. Where else are they going to make this kind of money? I don’t care who is getting rich, players or owners. Players don’t have much leverage if owners get a back bone though.
Insidious – proceeding in a gradual, subtle way, but with harmful effects
That is exactly what happened. It was thought to be a minor thing, and its effects increased subtly over time until it became a major thing. The union was NOT well aware of the effects it would have. And I don’t know what “everyone in here” refers to, as this website didn’t exist in 1996. I was 14…
When you said ‘has been’, I assumed you were referring to the current contract. Nevertheless, the issue remains that Clark and company settled for a very low annual inflation..
From 2003 to 2016, the cap increased from $117M to $189M. That’s 61.5%, or ~ 4.7% per year. Had they maintained the same 4.7%, the cap would be $238M, instead of $210M.
My readings at the time was that the union was more interested in some quality of life type issues. And that’s fine, if that’s what you want.
But there should’ve been no doubt about what the cap was going to be.
I agree with that. The union allowed for some very small increases, especially in this most recent CBA, and the problems associated with that are something they should have seen coming.
The current CBA is definitely the biggest problem.
We can throw out the 1997 tax, which was just a redistribution scheme from the five highest payrolls.
Starting in 2003, the tax threshold went from 117 M to 189 M by 2016.
The increase in the current CBA is so little, from 195 M to 210 M.
It seems that players took their eye off the ball. When they were about to surrender to an international draft, which cost their members nothing but totally screwed poor latin kids, the reaction from MLB’s latin players was so strong that they backed off, but still gave up a hard cap on Int’l bonuses and gave up any decent increases in minimum salaries and tax threshold increases, thereby screwing their players at both ends of the pay scale.
Getting back to a significant bump in minimum salary and the tax threshold has to be their priority this round.
One big problem with the current revenue sharing system is that all teams, not just the payors, have to kick in 48 percent of all local revenues, which are then divided 30 ways between the teams. This includes gate receipts, concessions and sponsorship dollars as well as local TV revenue.
So, the smaller revenue teams benefit by getting more out than they put in, but their one short term incentive to win- gate receipts- are cut in half, while they receive their cut of all MLB local revenues. So, if they take in $50 million in gate receipts, they keep just $26 million.
The marginal cost of winning 90 games is more than they make in increased attendance. Bottom line is that it doesn’t pay to win, unless they can do it on the cheap.
Local TV revenues are fixed once the long term deal is signed, whether the team wins or loses. That’s where the greatest disparity in revenues is found in MLB, that doesn’t exist in the NFL because there is no local TV revenue, for example. So that part should work, in theory.
One way to incentivize winning would be to let revenue payees keep their gate receipts. That would double the amount they get from putting butts in seats.
As for tanking, studies show that the marginal value of draft picks is not significant after the gap from 1 to 2 and 2 to 3. So a lottery for the top 3 picks would remove any benefit from tanking. But then, I’m skeptical that teams really; tank for draft picks. They tank because they don’t want to spend money. Just my two cents.
Other way around. Big markets benefit from revenue sharing. Nobody wants to watch a 300 million LA NY Chi team stomp a 30 million team. And without the small market teams baseball loses fans. And bye bye teams being worth billions of dollars and billion dollar tv deals. These teams give out just enough crumbs to make someone want to own a team in a small market. Small markets share their revenue as well so it’s beneficial for them to be 90 win contenders to bring in an additional million fans. Only other option is for the Yankees and dodgers etc pay the pirates rays etc to come to play all road games, like ohio state or alabama bringing in kent state or appalachian state.
All teams benefit if they’re competitive. True.
I wouldn’t call 48 percent of all local revenues “crumbs”, but when the only financial incentive that small market teams have in winning is the marginal increase in attendance, and you take half of that revenue away, there isn’t much financial incentive left.
One million fans at $36 per fan average is $36 million.
52 percent of that is 18.72 million in extra revenue after sharing.
That’s not going to make them compete for top tier free agents, so they wind up churning players. They have to win on the cheap, as the Rays have done well doing.
Average fan spends like 70 bucks or something at game. So they say. But yeah that amount isn’t a huge incentive. Of course playoffs add more. And you sell more merchandise and such when good. Owners want to win. Every small market has made the playoffs and or spent 100 million. Problem is only a few of them can do it regularly. I said somewhere else it reminds me of ohio state alabama paying eastern western north kent appalachian state to play them.
You make more money with more teams. But when half your teams have 40 to 70 million tv deals and some have 100 to 200 plus million and shield their revenue you have problems. It’s worked so far. Eventually most fans are going to realize their team has no chance of winning. Get sick of rebuilds. Teams won’t be able to rebuild. And fans will get sick of nothing but Yankees sox dodgers giants games as the only televised games.
The most obvious way that teams hide revenue is through ownership of their local RSN’s that broadcast their games. A majority of teams now have some ownership stake in their local RSN, from 20 percent up to 100 percent. They’re paying themselves, and the revenue to the RSN doesn’t count for revenue sharing purposes.
When owners start talking about setting a cap, that will be tied to baseball related revenues, and they’d have to come clean on the amount that they pay themselves vs the actual value of what they sell themselves. They’d probably have to have a forensic accountant to value their TV contracts based on ratings, market size, etc. Another reason why a salary cap is a very thorny issue.
& how well I’ve been conditioned as a fan. I had to pause while reading the article, because I was excited the Yanks still had $10 mil “left” under the “cap”. Meaning a D-Rob reunion is possible. Ya know?
Man.
This accounting stuff is the worst part about being a modern baseball fan.
The Yankees being so hung up in not going over is absurd. It’s a relative pittance.
Look.
We build hundreds of jobs/year. It’s construction. Things happen. Every few years I’ll have to pay a fine to the Dept of Labor and Industry. It’s always BS, & I never want to.
But if I don’t, my A+ rating with the Better Business Bureau could suffer.
(lol…buncha gangsters, man)
I pay it.
In the big picture it’s really nothing. I even have someone else fill out the paperwork.
Should be the same thing to Hal.
Teams like the Yankees, red sox, Cubs, mets, should all be paying some tax. It’s just basically a little bribe to everyone.
Ducky Buckin Fent3 hours ago
Man This accounting stuff is the worst part about being a modern baseball fan.
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Then don’t attention.
Seriously.
I go to Yankee games on a hot July Friday, and settle in for a 24 oz ice cold Becks for $12. The moment I take that first sip, that $12 is no longer mine.
This is what Mark Twain referred to as ‘twice-tained money’. T’aint yours and t’aint mine. Free your mind from being worried if the millionaires or the billionaires are making out better.
Your duty is simply to enjoy the fruits of your labor. Let the concern of how your $12 is chopped remain with the union, the owners, and the press, apparently.
You are so right, @Joe Brady –
But it’s pretty hard to ignore. The number two-ten has loomed over the Yankees entire off-season. & I understand math, too.
Ya know?
If I read an article that explains the CBT I can’t help but pretty much understand the basics.
It’s just become an element of today’s fandumb. I can’t help but know that – for example – the Yanks could probably slip D-Rob & Hamels under the first CBT threshold.
It’s ingrained.
Ya know?
I understand, but you might want to think of it as a down payment on 2022. If Steinbrenner just gets cheap, and never blows past $200M, the I can see people being annoyed.
But if they are getting under the cap, so they can blow past it next year with Lindor, etc., then you might be better off for it.
Which is a rebuttal used by a lot of Yankee fans. I hear what you’re saying. But that’s the point of the entire article. Or…one of them, anyway.
Look.
Yanks are a good team. Both Fangraphs & Las Vegas consider them to be the AL favorite.
I revisited the top 50 free agent list.
Yanks could still use pitching.
If they went ahead & landed Shane Greene & Taijuan Walker this afternoon that would push payroll to just past the first CBT threshold. Their fine – as such – would be ~ a million bucks.
Now, I’m not going to be all cavalier over a million dollars. It’s not like that around here.
But.
Yanks have just simply run out of pitching in the playoffs with this core every time. Happened again last year.
Here’s the thing though; every playoff series is worth $20 mil in actual, immediate, free & clear, profits to a franchise.
So Hal is rolling the dice on this a bit. A one million dollar fine in order to try & make 20 mil? Or 40? More? Jeeez. That seems like a decent gamble.
Ya know?
I certainly understand the desire to trim payroll. But $210 is just so arbitrary. All over a contextually little fine. & time is continuing to move forward on our core. Another couple arms & the Yanks would start to create some distance between themselves & the rest of the AL.
All over a million bucks?
For a franchise valued in excess of 5 bil?
Seems penny wise but pound foolish.
Ducky Buckin Fent
If they went ahead & landed Shane Greene & Taijuan Walker this afternoon that would push payroll to just past the first CBT threshold. Their fine – as such – would be ~ a million bucks.
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It is not so much the small fine as the fact that it would use up one of the three years they can blow up the cap. And it also keeps them in the repeat offender status.
As a RS fan, I understand the reset. Business is business. But if they are going past the $210M threshold, it better not be to the $211M threshold. For the big guys, like the RS, NYY, LAD, etc., they should either stay under, or completely blow the thing up.
See, but that’s my issue – or whatever – with it.
No one has yet given me a good reason why large market teams need to worry about resetting. Ever. I always hear that they “have to”? Again. Why?
Until ’17 the Yanks payed luxury taxes as a matter of course.
Every single year. Year after year.
This is about one thing & one thing only; increasing profits. I’m fine with owners turning a profit. They certainly should be.
But what exactly is this supposed horrible penalty for exceeding the threshold four (or more) consecutive years? It’s just a fine. It isn’t like if you go over a fourth straight time MLB takes away your team name & logo.
“Yeah, we went over the tax. Fourth consecutive year. So until we’re back under we have to be the Whatever Whatever’s. Sucks but that’s how it’ll be until we reset the luxury tax. Go Whatever’s!”
Ya know?
It’s just a fine.
The only reason to treat it as a barrier is in order to make more loot.
Which is why I call it pound wise penny foolish. Because it may – indeed – be hindering your money grab.
I just want the owner of my favorite team to spend enough to keep the team competitive. Being a Tigers’ fan, that hasn’t happened since his ol man died and they’ve been selling us this “rebuild” crap, losing 100 games a year. So it’s important to me.
Many of the issues brought up here and elsewhere are important issues to fans. Like a ceiling and floor which we’ve hear time and again the the players will never approve a ceiling and the owner will never approve a floor.. I tend to agree. There never will be a hard cap unless there is something the players want more and they’re willing to bargain that away to get it. Same the owners and the floor. And it’s the same for many other issues as well. I’d be surprised if they both agreed to add the DH in the next CBA simply because they both want it but what would they give up to get it.
I’d hate to begin this up since it’s been brought up so many times but MLBPA does not represent any minor leaguers and doesn’t really care what they are paid. Although I think they should.
It takes two to tango and this care they barely want to to dance unless they get something out of it.
I see no reason for any kind of salary cap. It is the GM’s not the owners that are the issue here. My take on it is generically owners are either born into the team or good businessmen. They are not MLB savvy. It is the one-eyed man who is king in the land of the blind so to speak whose role these GMs assume. How can they fail – the GM perceives – if I push the owner to sign this guy regardless of price. Quality talent, uber-competitive teams can be fielded. without paying millions of dollars per win. The Ray’s prove that. Fieldman maybe going to the dark side however but I suspect Bloom maybe holding the course. The issue of teams refusing to spend money ala the Pirates is beyond my pay grade to resolve. however.,,.
The word is actually spelled “bogeyman”. Ok, back to your arguments.
I actually spent a few minutes Googling this and it seemed to me that both spellings are acceptable.
The Rays have competed with less payroll but have acted smarter. The CBT is about tax and revenue sharing, only one winner per year and spending for spending’s sake doesn’t promote success. Look at the Yankees with large payroll with no success in the last 11 years , perennially high quality baseball from a mid market team such as St Louis.
In business including MLBTR most have a have a cap on what is spent versus income, I find it off base that spending on players that may not perform doesn’t line up with trying to win year after year. If SDP dont win this year or in the next five and Machado is a anchor on the payroll what do they do? Pay him to pay poorly because he earns 30m , can they cut him and not pay him as in the NFL?
Plus often comments are made about MLB revenue , tv rights, attendance, this all relates to the fan having to pay, while players get guaranteed salaries irrespective of if their failings.(Pujols,Miggy,Davis)
Maybe teams would spend more aggressively if there was an opt out of contracts if the players didn’t play due to failing physical decline.
What would be the suggested change by MLBTR in the CBA to allow more spending but a fail safe if players dont fulfill contracts. I would enjoy and article on players in the past 10 years that have exceeded contract versus ones that have not performed to the financial terms of the contract.
This might give context and if the model is indeed broken and needs a new theory to be promoted.
Players have performed their contract by showing up and playing. Free agent players make as much as they do because owners agree to pay them that much. A player typically gets drafted, gets a signing bonus and spends several years in the minors making a few hundred bucks a week.
Then his salary in the majors is artificially suppressed by the terms of the CBA, then a couple years of arbitration, and finally, after six years in the majors, the ones that have proven themselves can negotiate the fair market rate. If the owners make a mistake, then why should the players not get the benefit of the bargain? They are not free to opt out if they over perform. They weren’t free to sign with any team for ten years or so before being able to sign with any team at market rates.
The NFL has a system where players get injured or don’t live up to their billing and their non guaranteed contracts are terminated. The flip side is that we have players holding out to renegotiate their deals. I’ll take the MLB system, of the two.
Besides, owners are making money, with few exceptions. Some of them are actually in it to win it, and they’ll pay market rates for the best players. And they make money doing it, however they allocate their baseball revenues.
A lot to cover here.
To say the CBT is “an insidious force against the players” acts like it was implemented unilaterally and sidesteps that it was part of a negotiated agreement by both sides. To ‘get’ the CBT, ownership made concessions they undoubtedly didn’t care for or, put another way, players bargained for concessions they wanted in exchange for accepting the CBT. That’s how an agreement works. To only highlight what one side likes least does a disservice to the entire collective bargaining movement. To say “if MLB wanted the luxury tax removed, they could do so easily” is as much a non sequitur as saying “if players wanted to give up free agency, they could do so easily.”
Second, in any discussion pitting players vs. owners, it’s important to note there is no such thing as the monolithic “owners.” MLB comprises large market and small market teams, as well as deep pocket and not-so-deep pocket owners. What might be acceptable to large market teams could be the death knell to small market teams. If the players and owners want MLB to thrive, an agreement must work for all parties.
Already we see this in play when Tim acknowledges only eight teams are restricted (my word) by the tax threshold. I would take issue however with his statement “for the other 22 teams, the luxury tax has no bearing.” I would argue the tax threshold (along with revenue sharing) are the strongest forces at work that allow small market teams to survive/compete, and therefore the luxury tax has considerable bearing.
With zero downward pressure on player salaries, teams such as the Dodgers and Yankees could spend, let’s say, $400 million on payroll and $50, 60 or $70 million or more on a star player. While I’m a fan of the free market, the arbitration process is such that salaries like that directly affect small market teams who can’t afford such amounts. That means a player like Francisco Lindor might be priced out of Cleveland well before his last arbitration round. And despite the wild success of Tampa Bay and Oakland, there is a very serious effect on the balance of play if wealthy teams can spend at will. You may not care about this if you’re a Yankee, Dodger or Red Sox fan but you should if you’re a BASEBALL fan and have any compassion for the fans of the “22 other teams.” Unless you want a smaller MLB, or TWO leagues of 8 and 22 teams, common ground must be found.
I don’t have all the answers. The movement toward analytics has made teams realize the importance of young players and paying for future performance versus past, meaning a trend against paying older free agents. I do think players are still entitled to their share of the pie, but I’m not sure how that is best apportioned. Shortening the time to free arbitration and free agency or raising the minimum salary to $5m, for example, disproportionately affects the small market teams, whose model currently rests on those less expensive players. Perhaps MLB and players could agree on what amount the players SHOULD be getting, and give it to the Players Association in a lump sum and let THEM decide the most equitable way of disbursing it is. I don’t know, but I do know that I’m very worried about the future of our game.
I still think “insidious” is an accurate word, The tax started out as what the union thought was a minor thing and it proceeded in a gradual, subtle way.
I also think the CBT is different because some people could look at a tax on teams, see that at one point the Dodgers were paying out $30MM a year, and think that on an individual level, some teams (members of MLB) would prefer to not have a tax.
When it comes to a CBA, I’d say there is a monolithic “owners,” since they operate as one entity in negotiating. What is acceptable to some players might not be to others, but it still makes sense to refer to the union as one entity.
I meant no bearing on an individual team payroll level – $210MM doesn’t have anything to do with how much the Blue Jays spend this offseason.
As to whether a restriction on big market team spending is necessary for competitive balance, that’s a huge separate discussion. You seem to be heading down the path of saying MLB needs a salary cap or something like it to have competitive balance. There would be a lot to be studied on that topic.
As to whether a restriction on big market team spending is necessary for competitive balance, that’s a huge separate discussion.
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One could argue that, with 7 different winners, in the last 7 years, and 14 different winners since 2001,,the cap has worked.
There are no victims in MLB.
These penalties are minor. The owners have mostly decided to treat the competitive balance tax as a cap. Why the players ever agreed to it is a mystery and why they didn’t push to increase it significantly in the last CBA is even more of a mystery as it’s one of the contributing factors to the decrease in player salaries for the third straight year. When one of the wealthiest teams in the game, the Red Sox, trade away a generational talent like Mookie Betts to reset their luxury tax, there’s a problem.
The free market works when we leave it alone. When we try to control it, there are always unintended consequences.
Controls on MLB’s “free market”
– Luxury tax
– Minimum salaries
– The draft. Not allowing players to become free agents out of college or high school.
– Arbitration
– Free agent compensation
– Qualified offer requirement
– Revenue sharing
Most, if not all of these things are brought in under the guise of “competitive balance”. They all have some merit (except FA compensation, IMO)
Left to the “free market”, there would be an even greater imbalance between large and small markets and their ability to sign top talent. So we head on down the slippery slope, and here we are.
Don’t forget draft slotting…used to be a rebuilding team could go big on amateur spending, which is of course much less money than going big in FA, and a rebuild could be accelerated this way.
Good point. Draft slotting, cutting the amateur draft to 5 rounds, and maybe 20 going forward. Costs the union members nothing, but set up MLB to finish off MiLB as an entity and stage a takeover of operations.
The MLBPA has been very quick to throw their future members under the bus, often in exchange for very little.
Caps not huge to me but the floor or lack thereof is what’s hurting baseball –
Whats the owners position (other than BS) on not having a 100 mill floor….We will lose money?, Um ok well than sell your team for the billion+ profit and we will find somebody else that will “lose their money”…Hint they dont, and the line would be around the block to buy to prove it
Im not anti owner by any means but they do collectively BS a lot …almost ties in perfectly with the title of this article… Ive said many times before ; the tax line is only used to massage casuals brains, although in their (small ) defense casuals are inherently dumb when it comes to free agent signings and usually just want to sign everyone and see what sticks .