Floor plan bad, but let the dance begin
Major League Baseball made its first economic proposal for a new collective bargaining agreement earlier this week and, while the official presentation will be a non-starter for the players association, it did include an interesting concession: a minimum salary floor.
According to Evan Drellich and Ken Rosenthal of The Athletic, commissioner Rob Manfred’s team proposed that all teams be required to spend at least $100 million (U.S.) on player salaries. For context, more than a third of the teams opened the season with a payroll below that.
In theory, a salary floor would force non-competitive teams to spend more on improving their product. The players won’t be opposed to that — discouraging clubs from tanking remains one of their top priorities — but the way Manfred and company are trying to pull it off isn’t going to fly.
MLB’s proposal might partially address the lack of competitiveness from some teams, but it would also discourage teams in the upper half from going on spending sprees. Unless MLB’s stance changes in the coming months, that proposal will inevitably lead to a lockout when the CBA expires Dec. 1.
While baseball doesn’t have a salary cap, it has a system that acts like one. In 2021, there were three tiers of competitive-balance tax penalties. The first included a 20-per-cent tax on overages above $210 million. The second had a 32-percent tax on salaries from $230 million to $250 million and the third had a 62.5-per-cent tax on anything above that.
MLB wants to lower the CBT levels while increasing the penalties, according to The Athletic. There would be a 25-per-cent tax on spending above $180 million and three additional limits with escalating fees. In return, a salary floor would be created but, based on current trends, it would lead to an overall decrease of player salaries.
A tax system only works if teams are willing to pay into it and, so far, that hasn’t happened. Even the wealthy owners don’t seem interested in being penalized for building a better team. The Yankees made a slew of trades before the July 30 deadline, but in almost every deal the other club footed the bill. The only reason the Yankees traded for Anthony Rizzo is because the Chicago Cubs agreed to take on the remainder of his salary.
The Los Angeles Dodgers are the only team that doesn’t care about the tax. They had an opening day payroll of $247 million, per Cot’s Baseball Contracts, and they recently spent even more to acquire
Max Scherzer and Trea Turner from the Nationals. By comparison, Pittsburgh had the league’s lowest at $45.2 million.
Opening proposals are rarely intended to be take-it-or-leaveit offers. They represent a starting point, a way to exchange ideas and begin a dialogue. That’s Business 101, so Manfred’s hard-nosed, perhaps even greedy, stance can’t be criticized too much right now, but that will change over time if his side doesn’t budge on the CBT.
A salary floor would force teams into action, but it contains far too many loopholes to eliminate tanking. For example, it wouldn’t stop front offices from artificially inflating their payrolls by acquiring bad contracts alongside top prospects from teams trying to get under the tax, which happens all the time in leagues with a hard-cap system.
Bad teams spending more doesn’t mean the extra funds will be used to win games and that’s the bigger issue. There were at least nine organizations that conceded the 2021 campaign before it even began. After the July 30 trade deadline, there are at least 13 no longer trying. The 17 “contenders” were just one more than the number of clubs that made the post-season in 2020.
A better approach would be changing the format of the draft. MLB currently assigns its order based on reverse standings from the year before. That means late in the season some teams are actively trying to lose. As evidenced by the National Baseball Association, a lottery system doesn’t eliminate tanking, but it does occasionally punish teams for taking such a blatant approach.
Alternatively, the league and MLBPA should consider setting the order based on the standings of non-playoff teams. Reward clubs that are going for it and just miss out on October by giving them the top picks. Another option would be revisiting last year’s expanded postseason format to keep more teams invested.
An even bigger issue for the players is how they’re being compensated. Service-time rules mean a lot of players don’t hit free agency until they’re approaching 30, some wait even longer. By then, clubs are hesitant to guarantee multi-year deals out of fear those players are on the wrong side of their careers.
The MLBPA’s proposal from earlier in the year addressed that, at least partially, by asking for more players to qualify for arbitration with fewer than three years’ service. The current setup has players earning close to the minimum for their first three years before raises start to kick in.
MLB’s opening pitch seems to be taking a lot of heat in the media because it’s another blatant attempt at suppressing salaries.
But this presentation was never meant to be accepted, it was designed to get the ball rolling and, while the package doesn’t work, there are elements that could be used in future deals.
The CBA expires in just over three months. Spring training and the season won’t be at risk for at least another two months after that, but the threat of a disrupted schedule will loom over the heads of the sport until there’s a new deal.
The fact that the two sides are having face-to-face meetings is encouraging. Baseball has been involved in enough negative headlines over the last several years, the last thing it needs at a time when it is trying to recover from the pandemic is another shortened year. Both sides should be doing everything possible to avoid that.