No hard cap in new MLB labour deal
But penalties against teams for exceeding luxury tax go way up under tentative agreement
The notion of a salary cap in Major League Baseball has always been the Holy Grail for owners, a non-starter for players and the primary cause of death in the infamously rancorous negotiations of 1994, which led to a players’ strike and resulted in the cancellation of the World Series.
In the new, tentative labour agreement reached Wednesday, just hours before the expiration of the old one, there was again no salary cap, keeping baseball as the only one of the four major U.S. sports without one. However, with a series of new and enhanced drags on spending in the new agreement, the owners have come closer than ever to achieving their dream of a cap.
As details emerged from the new agreement — one that will extend an unprecedented period of labour peace for the sport — it was widely noted the threshold for the competitive-balance (or “luxury”) tax will rise in each year of the five-year agreement, going from $189 million (all figures in U.S. dollars) this past season to $195 million next season, then increasing to $197 million, $206 million, $208 million and $210 million in future years. The players pressed for, and won, those increases, arguing that rising revenues (just less than $10 billion annually) warranted them.
But those gains had a corresponding cost: The penalties for teams that exceed the threshold reportedly will rise sharply.
Under the old terms, even teams that exceed the threshold year after year would never pay a tax rate above 50 per cent. Under the new deal, that highest rate could reach 90 per cent.
Whether you call that a “soft” cap or not, it is the biggest deterrent to spending the game has ever seen — even if it only affects a handful of large-market teams.
Likewise, another bargaining issue in the new deal widely seen as a victory for the players — the lack of an international draft, which the owners originally pushed for — might not have been such a clear victory after all.
Instead of a draft, the owners reportedly got an annual cap of around $5 million per team on spending on all foreign-born amateurs.
What the owners wanted was an end to the massive contracts for primarily Latin players — think Yoan Moncada’s $31.5 million deal with the Red Sox in 2015 — and with the new deal, they appear to have achieved that.
That added regulation would not affect the system for foreign professional players, for instance Japanese players such as the Yankees’ Masahiro Tanaka and the Rangers’ Yu Darvish.
What is less clear is how the changes to the free-agent compensation system — which will kick in beginning next off-season — will affect the marketplace.
Instead of losing a first-round pick for signing a free agent who received a qualifying offer from his old team, the signing team’s penalty will be tied to its own payroll.
A team above the competitive-balance tax threshold would lose two picks — reportedly a second-rounder and a fifth-rounder — instead of one. Teams below the threshold would lose only a third-rounder.
In another critical detail, players can be given a qualifying offer — and thus saddling his signing with the loss of draft picks — only once. All told, the changes will give veteran players something closer to unfettered free agency than they had before.
At first glance, it appears the players conceded some economic ground — mostly at the expense of foreign amateurs — in exchange for some long-desired quality-of-life gains.
Beginning in 2018, the MLB season will start four days earlier, with four additional off-days spread throughout the season.
The deal was also believed to have included provisions requiring day games when teams face long flights afterward.
And the most universally popular part of the new deal will almost certainly be the elimination of the tie-in linking the outcome of the All-Star Game to home-field advantage in the World Series.
With next season’s All-Star Game in Miami — and the 2018 game at Nationals Park — home-field advantage in the World Series will go to the team with the better record at the end of the regular season, as is the case in the finals of the NHL and NBA.