The formal process of the agreement to negotiate the next batch has begun. It was reported two weeks ago that negotiations have begun with the official launch. Today, the MLBPA made its first official proposal and released information to the media. Jeff Passan of ESPN, Evan Drellich of The Athletic and Bill Shaikin of the Los Angeles Times were among those who relayed the information. As expected, the union’s proposals included improved results for the players. The proposal also focuses on the financial allocation process, as the players hope to improve the economic inequality of the game without implementing a salary cap. The league will debate its proposal tomorrow.
Most of the details involve the modification of already existing steps, at the direction of the player. For example, the union is proposing to raise the minimum wage to $1.5MM, nearly double this year’s minimum of $780K. They also propose expanding the $50MM pre-arbitration bonus pool to $180MM. Super Two selections that currently go to 22% of players between two and three years of service will jump to 44%. The minimum tender in settlement would be $3MM. The service period required for free agency, currently six years, will drop to five years for players at least 30 years old. However, teams can keep such players for a sixth year by offering them a contract with a salary equal to the 125 highest-paid players in the league, which is the same figure as the current asking price. (Passan relayed those details in a later post.)
Those measures will directly benefit the players financially. They also suggest ways to help players indirectly, by improving skills that will be used by the team. The competitive balance tax cap will jump from $244MM to $300MM and non-monetary penalties, such as impact on draft picks, will be removed. Qualifying offers will be abolished, along with penalties for clubs signing free agents, although bonuses for low-income clubs that lose agents will be increased. The draft lottery will be expanded to continue the withdrawal of tanking. Rules to deal with abuse of service time will be expanded.
There would be a “competitive integrity tax” for any team that does not spend $150MM. This would be the opposite of a competitive balance tax, which already exists. Currently, baseball has a soft cap in the form of that tax. Some teams pass but face penalties, both in the form of payouts and the impact of picks being pushed later in the draft. There really isn’t a soft spot, as teams receive revenue-sharing payments that don’t necessarily have conditions attached.
The Athletics lost their profit-sharing status for a while and appeared to be spending some time recently because they didn’t want to go down that road again, but no other club has the same motivation. The A’s reportedly had to get their CBT number up to $105MM to avoid an appeal but several other clubs have managed CBT numbers below that with no results.
As mentioned, many aspects of the proposal include significant changes to the revenue sharing system. Under this proposal, the teams will actually send less money for the stadium but there will be a significant increase in terms of broadcasting revenue sharing.
Lower income clubs will receive at least $240MM per year but with conditions. Parties that do not use the profit sharing fee will face penalties. Teams that will use that money will receive bonuses if they play in the playoffs or have a winning record.
These profit sharing details are important because they may conflict with the salary cap. It is expected that the league will aim for the title, something they have been seeking for decades and have been pushing for. Some fans like the idea of a cap because of the economic imbalance in the game. Clubs with high revenue and high salaries have had a lot of success in recent years, and the Dodgers are a good example. These teams have come a long way recently in terms of broadcast revenue. Clubs in big markets are generally doing well while many smaller clubs have seen their broadcast deals. The league stepped in and now broadcasts nearly half of the league’s games. That setup can reach more viewers via live streaming but usually results in less guaranteed revenue, as it depends on how many people sign up.
With these revenue sharing items, the players seem to be trying to address the competitive balance in a way that doesn’t involve a margin. They directly address the disparity in broadcasting revenue and will generally give smaller clubs a much greater ability to spend. They also put conditions on the money, so that clubs with less money can simply pocket the money they get from other teams, which is a concern in the current situation.
More to come.
