Late last Wednesday, word trickled in that the MLB Players’ Association and MLB had reached an agreement on a new 5-year Collective Bargaining Agreement (CBA). The official document hasn’t been publically released yet, so I haven’t had a chance to review it in full. Mostly because I’m a huge nerd and like reading it. But I have been able to parse through what has been trickled out for public consumption through various news outlets and reporters. These are some of the key areas and how they may affect the course of how the Pirates do business.
ROSTER SIZE AND COMPOSITION
There was a lot of chatter that the 25-man roster was going to expand to 26 to give more in-season roster flexibility. Also there was talk that the September rosters would be restricted to 29 players or so, in order to combat the overuse of pitchers for one out to speed up the game. Neither of those things ended up making the final deal. The expansion to a 26-man roster would have helped the Pirates keep an extra pitcher around just in case of emergency, which seems to be the wont of Clint Hurdle.
The minimum stay on the disabled list has been shortened to 10 days, which should greatly help the Pirates. In the past few years, the Pirates have been reticent to put a player on the DL, instead content to nurse his injury along for a few days that eventually turns into 8 or 10. They have to play short-handed because of the hesitancy to place the player on the DL and risk him being healthy far earlier than 15 days. This will allow them to watch a guy for a couple of days and then retroactively DL him, knowing it will only be for another week, rather than two.
Minimum salaries next year will move up to $535K, then $545K in 2018, and $555K in 2019, with cost of living increases after that. For the Pirates this doesn’t really move the needle that much over the $507,500 minimum salary. Internally at TPOP, we’ll be adjusting our payroll estimates for minimum-scale players to $550K for math purposes. The Pirates, and all other MLB teams, still reap the benefits from cheap labor that typically outproduces veterans on bloated contracts.
LUXURY TAX AND REVENUE SHARING
While the Pirates will never directly be within shouting distance of the luxury tax threshold, it has been raised to the following levels of the CBA:
- 2017 — $195M
- 2018 — $197M
- 2019 — $206M
- 2020 — $208M
- 2021 — $210M
There are new tax penalties for exceeding the luxury tax threshold. If you exceed the threshold for the first time, it’s a 20% hit. A second time in a row is a 30% charge, while a third is a 50% charge. There’s an additional 12% surcharge on the tax if the offending team is between $20M and $40M over the luxury tax threshold. And if a team is greater than $40M over the line, it’s a whopping 90% tax.
For demonstration, the Dodgers were the only team in 2016 that would be $40M over the line at $250M in payroll on Opening Day. Their tax bill would $49.5M (90% of $55M). Additionally, if you exceed that $40M mark, your draft pick the next year falls by 10 spots. That’s a deterrent, I suppose. Many are hailing this as a pseudo hard cap that will curtail the big spenders. I don’t see it that way. Sure, if you blow by the mark by $40M or more it gets prohibitive, but just say you routinely run $12M over the line (or one additional solid starting player). At first blush, that $2.4M is no bid deal if you’re up in that payroll stratosphere. Even if you do it three more times, do you think a team will blanch at paying $6M for the ability to have an additional competitive advantage? Even if you bump this up to $19M, right below that magical $20M threshold, is $9.5M really a big deal to the Dodgers, Red Sox, Yankees?
If MLB was going to enact this quasi-cap, they should have also instituted a quasi-floor to salary. The Astros a few years ago had a payroll of around $26M. Total. That’s when they stripped it down to the studs and re-built in earnest. If you’re going to penalize a franchise for spending too much, a team should get privileges taken away for spending too little. And no, I don’t mean the Pirates, necessarily. But there should be some stipulation on revenue-to-payroll ratio for all teams in MLB, whether that’s only seen by central office MLB or the general public.
In terms of revenue sharing, the Performance Factor is being eliminated, which seems to indicate that large-market teams will be contributing less to the revenue sharing pool. Whether MLB starts to contribute other dollars to that pool, say from the share of BAM Tech they own, or some other pool, it seems as if revenue recipients like the Pirates may see less money.
INTERNATIONAL AND DOMESTIC DRAFTS
Sadly, there will be no international draft, as MLB appeared to have lost their nerve on this issue. It was disclosed that they were hot on it, but they caved about 10 days ago without an appropriate concession, seemingly, from the players. Maybe on drug testing, I guess, which will be more intensified over the season and offseason, but isn’t that just doing the right thing?
The international draft spending pool will range from $4.75M for large-revenue teams to $5.75M for small-revenue teams. It hardly seems fair that the Dodgers ($250M payroll) and the Pirates ($100M payroll) will only be separated by a measly $1M on international draft pools. However, it does cap spending which was the goal of the owners. There will be no more Yoan Moncada type of signings for $31.5M to the Red Sox and then they dole out an additional $31.5M in tax overage. You simply can’t exceed your pool, unless you can trade for draft allotment slots up to an additional 75% of your pool. Cubans and other internationals over the age of 25 will be exempt from these pools, but it doesn’t appear to affect Asian players at this time.
For the regular North American draft in June, it appears as if the pools will roughly stay the same, but the differences from the #1 pick slot to the #10 pick slot will be smoothed out somewhat.
This is the one that seems to benefit the players most. The Qualifying Offer is going to lose a lot of its value under the new CBA. First, players can only be subjected to a Qualifying Offer one time.
Teams that want to sign a QO player are now put into three bins. If you are a revenue sharing recipient (i.e., the Pirates) you’ll lose your 3rd-highest selection (not necessarily your third round choice, if you have additional early picks). If you are a revenue-sharing contributor (i.e., the Yankees), you’ll lose your 2nd and 5th-highest selections and give up $1M from your international pool. Teams in between will give up their 2nd-highest pick and $500K in international funds. This means there’s no more Top 10 protection from the draft to sign a player carte blanche. Teams are definitely going to pause before they sign a QO player, even more so than now.
Teams that lose a QO player that declined the offer will get a pick after the first round (when is still unclear) if that player signs for $50M or more. If he signs for under $50M, it will be a pick after Competitive Balance Round B. If you’re a luxury tax threshold scofflaw, you don’t pick up a pick until after the 4th round.
It seems as if more potential QO types of players will be traded in-season, rather than wait until the following draft for a draft pick that is being shoved down lower and lower in the order.
The whole CBA is very byzantine and clearly written by a passel of lawyers charging more than $300 per hour. On the whole, it certainly seems to favor large-revenue teams more than small-revenue teams, as the international draft pool is merely a set of token crumbs handed down to the Pirates and others. There’s so much money rolling in the door, though, that no small-revenue team is going to upset the apple cart.
But when the television bubble bursts (and it will), that next CBA could be quite contentious between the various factions of owners.