LarryTheGM Fixes The CBA Too- Step 2 Compromise- Two Part Series

Updated: Jan 13

In Part One of this Special CBA series, I laid out the challenging environment and how far apart the two sides in the MLB Collective Bargaining Agreement are.


“The challenge the baseball world has is the two sides have diametrically opposed goals

  • Players

  • want greater freedom and access to negotiate salaries before aging past their athletic peak and deemed not worthy of a long-term deal

  • want a healthy marketplace where most if not all teams are active

  • Owners

  • want security and predictability in costs to insure healthy profits

  • want to reduce financial risk by paying for only for performance without long term commitment”

In this Step 2 we are going to demand compromise and a willingness to allow each side to have wins.


Given all of the factors and the history, what would a fair-minded person say the biggest issues are with the current CBA system?

  • Older players have very low leverage in negotiations compared to the previous generation of players

  • Owners seem to not be sharing a “fair” degree of revenue with players. The CBT limit is not keeping up with the growth of revenue. A more equitable way of tying the CBT limit to revenue is needed

  • A system to restrict tanking teams from cutting payroll to the levels recently shown by some teams seems to be needed

  • Team control rules tend to make a player available for one real shot at free agency during a player’s prime earning window

  • Guaranteed contracts seem to be limiting the risk/ reward each side is willing to accept

  • Owners need to mitigate risk from massive long term contracts

What should be done to “fix’ the current CBA? For this, I am going to propose some solutions which may seem to radically favor one side over the other. For each solution, we will rate them

5- Significantly favors Owners

4- Moderately favors Owners or Favors some Owners but not all

3- Near Neutral both should be willing

2- Moderately favors Players or Favors some Players but not all

1- Significantly favors Players


For the health of the sport nothing should be off of the table.


Solution one- Implementation of an International draft. Salary slotting rules similar to the Domestic draft. Teams will be required to negotiate posting rules with international teams to enable the signing of their drafted players. The corruption riddled system will fight against this, but both the players and owners should want this. MLB will accelerate and improve international academies for drafted and undrafted 16-20-year olds. This draft may delay to 18-year old eligibility.


Rating- 4

A fairer system for international player acquisition

Owners would reduce risks of investing in the wrong international players

International players would benefit from a more transparent and less corrupt system

The sport would grow internationally more

The owners want this and implementation of this favors them marginally


Solution two- Implementation of a Stronger Luxury Tax Cap AND a Salary Floor

Tied to a pool of revenue both sides agree to and includes the MLBAM rights (~$1.2B in 2016)- like the NBA. If the Forbes estimate in Part 1 was correct that revenue in 2019 was $10B that would equate to $333M per team. Both sides would have to agree to use $10B as the baseline and the minimum for the system to work. In 2021, given the attendance numbers, it is unlikely revenue fully recovered yet. Given the updated media rights deals, the revenue is about to experience growth in the next few years.


The Luxury Tax Cap would be 67% of the $333M per team revenue- $222M.

Penalties

  • 100% for $ over capM

  • Lose draft picks

  • Less than 5% over- Third team pick

  • More than 5% and less than 10% over- Second team pick

  • More than 10% over- First team pick

  • More than 20% over- First team pick AND First team pick in international draft

  • More than 30% over- First and second team pick AND First and second team pick in international draft and additional penalties directed by commissioner’s office

The Floor would be half of the cap- $111M.

Penalties

  • 50% for $ under floor

  • Lose draft picks

  • Less than 10% under- Third team pick

  • More than 10% and less than 20% under- Second team pick

  • More than 20% under- First team pick

  • More than 30% under- First team pick AND First team pick in international draft

  • More than 40% under- First and second team pick AND First and second team pick in international draft and additional penalties directed by commissioner’s office

  • Floor penalties will be transferred to the MLBPA

Tying the CBT/ cap to gross revenue as in NBA will cause owners AND players to work together to grow revenue.


Rating- 3- Near Neutral both should be willing

  • A stronger cap will be perceived as a huge loss for players

  • Some Owners will LOVE the more rigorous cap

  • The Small Market Owners will HATE the floor

  • Players will gain more from the floor than they lose in the cap.

  • The ability and value to tanking will be eliminated from the loss of below floor- win for players.

  • Potentially a below floor team might take on a bad contract to get to the floor if the other team gave them prospects to do so. This would accelerate the potential development of the below floor team.

  • Possibility to transition to a HARD CAP.

(Numbers from baseballreference.com.)


If applied to 2021 only one team would pay the cap tax. The Dodgers would also lose their first pick in the draft.


Eleven teams would have been below the floor. The Pirates and Guardians would also lose their first picks in the draft.







Solution three- Three paths to Free Agency Defined. The current system to be sunset.

A. Player is 28.5 years old- this is a modification of the ludicrous owner’s proposal

B. Player was drafted or initially signed

  1. Domestically

  2. Eight years prior as a 21-year-old or older (college)

  3. Nine years prior as a less than 21-year-old (high school or junior college)

  4. Internationally

  5. Eight years prior as a 21-year-old or older

  6. Nine years prior as an 18-year-old to 21-year-old

  7. Ten years prior as a less than an 18-year-old

C. Player has six service seasons (a single day is a service season)


Players with more than 2.000 years of Service Time credit will remain in the current system


Rating- 1- Most players should reach free agency at least one year earlier. Service time manipulation, Super Two rules, and associated means to delay player promotion will be eliminated.


Let’s take Kyle Tucker as an example- currently a free agent after 2025

A. Born 1/17/97- after 2025 season

B. Drafted in 2015- 18 when drafted- after 2024 season

C. Played in 2018-2021- after 2023 season- This sets his FA date as 2023

D. 2.079 Service Time- new rules don’t apply

E. Tucker would be 26.7 years old when negotiating his first FA contract if these applied to him


This system would push the Astros to get a top prospect like Tucker to be pushed to majors faster.


11/23/21 Note - Several have stated this example makes them hate this solution. Tucker was drafted out of high school. In this system, high school players and 16-18 year international drafted players win. I would expect teams would adjust their draft strategies and scout these players more. I would suspect the draft league would be a requirement for high school players to get drafted and that all of the advanced scouting data (spin rates, movement, exit velocity and exit angle, etc.) would be available to help teams make sure they were getting better data on the younger draft-able players. I think the result would be the high school players that were drafted higher would be capable of full seasons faster than Tucker was (2020 vs. 2015 Draft). Therefore, if a Tucker plays all or most 2019 instead of having his ST manipulated, then the Astros should be willing to make a longterm deal to him after his third season (now) and avoid FA after the 2023 season. This is EXACTLY the scenario the MLBPA should be wanting and owners should be willing for this for players like Tucker.


I did a study on my original proposal with the Astros. I realized option B was driving 70-80% of the free agent dates. I made an adjustment to those parameters above. This reduces the benefit to the players but is far more likely to be agreed upon, and in fact, the MLBPA could "agree" to the 29.5 age proposal (but I wouldn't) with the modified option B and option C. I adjusted the impact to Tucker and added another example - Bregman.


Let's provide a balancing example from a college drafted player from that same draft and same round - Alex Bregman. Before he signed his contract, he would have been a free agent after the 2022.

A. Born 3/30/1994- after 2022 season

B. Drafted in 2015- 21 when drafted- after 2023 season

C. Played in 2016-2021- after 2021 season- This sets his FA date as 2021

D. 5.070 Service Time- new rules don’t apply

E. Bregman would have been 27.6 years old this year when negotiating his first FA contract if these options applied to him. It seems far more fair to have a player like Bregman with 5.070 ST to be hitting FA now.


A side note- the 28.5 rule vs. 29.5 may be important to some college graduates that do not get promoted as quickly as Bregman did. McCormick, Maton, Jones, and Urquidy would be impacted by the 29.5 vs. 28.5 rule.


Solution four- Adjustments to Arbitration timing


As discussed earlier, players will have service seasons which are counted with a single day in a season in the major leagues unless the commissioner declares a medical emergency that would allow minor league players to play up to 20 days without being credited a service season.


Players will play three service seasons under the pre-arbitration rules.

Players may have up to three years of arbitration seasons unless the free agency triggers apply from solution three above.


Rating- 2- Not a major change except the Super Two options will not apply.

Solution five- Expand to 32 Teams by 2024


MLB will go through the expansion process and expand by one team in both leagues.


League will either have Four 8-team divisions or Eight 4-team divisions


Rating 4- Both sides win but owners win more

Players win- more jobs (7%)

Owners win- more revenue, expansion fees, increased media


Solution six- Implement an expanded playoff


Each league will go from five teams making the playoffs to six teams


Wild Card round

  1. Top two seeds get a bye (Division winners with best two record)

  2. Six seed plays at Three seed (3 games- Third best division winner record)

  3. Five seed plays at Four seed (3 games- Four best division winner record)


Rating 4- Moderately favors Owners. Owners get additional postseason media content. This is already built into their contract with ESPN. It is happening.


Solution seven- Raise the minimum salary to 0.3% of CBT (~$570,500 now to ~$660,000 with this CBA)


The structure here is important too. The new luxury tax cap (CBT) is tied to revenue and the minimum salary is tied to the CBT. In the nightmare scenario that was 2020, BOTH sides would have been forced to constructively negotiate a plan (probably a multi-year one) to navigate the loss in revenue.

Having the minimum salary tied to overall revenue makes sense to both sides.


IF there is a desire on both parties to grow the minimum salary faster than revenue, this could be built in here too as shown.


Rating 2- Favors some Players but not all.


All Players benefit from their CBT growing with revenue (A Major Complaint of the MLBPA). Younger players win huge with the increase in minimum salary and ratioing it to the CBT. Some older players may see their contracts reduced because more money is going to the minimum players. Some older players may play at the minimum and they would benefit in this case.


Solution eight- Implement the DH in the National League. This seems to have greater consensus than it had even two years ago. Name the major sport that operates games with two different sets of rules depending on who the home team is. It is time to agree on bringing the DH to the NL.


Rating 2- Favors some Players but not all


Older players limited defensively are the winners here with potentially 15 new jobs available. Younger players or pitchers in the National League displaced by this new group of DHs would be the losers here.


Solution nine- Extend the eligibility requirements of the Rule 5 Draft one more year from 4/5 years to 5/6 years and add an additional option year to four. Solution three accelerates the need to promote players to the majors. To provide some balance, players will be tied for an additional season to the teams drafting or signing them originally with an additional year before Rule 5 eligible and an additional option year. This will allow teams more flexibility with expediting players to the majors.


As a reminder the Rule 5 eligibility rules are (per MLB.com)

  • All players on a Major League Baseball team's 40-man roster, regardless of other eligibility factors, are "protected" and ineligible for the Rule 5 Draft.

  • Players who were signed when they were 19 or older and have played in professional baseball for four years are eligible- this would change to five years

  • Players who were signed when they were 18 and under and have played in professional baseball for five years are eligible- this would change to six years.

Rating- 4- Moderately favors Owners


Solution ten- Increase the 40-man roster to a 42-man roster. Teams need more flexibility to protect their investments. With the increased options rule, teams will need at least two more roster spots. The players also win having more MLB jobs.


Rating- 3- Near Neutral both should be willing


Solution eleven- Fully implement the housing strategy for minor leaguers and increase minor league salaries 50%.


Rating-3- Near Neutral both should be willing


The league seems to finally understand the investment they make in their minor league players is minimal compared to the potential payoff. This does not really impact the current MLB players and the financial impact to owners is minimal.


Solution twelve- Revamp standard contract framework to implement standard contracts being fully guaranteed forward for a maximum of four years. A team can sign a player for 10 years still but only the first four are guaranteed. After year one on a certain date year five then become guaranteed. A team willing to terminate a contract must pay the current year plus the next year. Players could still negotiate opt out options in negotiations.

I saved the best for last. This is THE most radical and revolutionary solution. Both sides are probably not even ready for this idea. The players will recoil at this idea. I would remind them (review Part one again) that currently 75% of all contracts are ONLY for four years or less. The current environment essentially eliminates long term guaranteed contracts except for a select few each year.


With this agreement teams and players would be able to enter into long term deals together, build relationships to market and grow the sport together and owners would have some risk mitigation from career ending injuries.


Rating- 5- Significantly favors Owners.


This would be the key win for ownership in this CBA. The risk of long term deals would be greatly reduced. This would enable longer term deals again with less team risk. However, a team choosing to opt out would still have relatively expensive option to protect players.


Conclusions


So how did we do in addressing the challenges both sides have and what they really need?

As shown, some of these solutions favor the players and others favor the owners. Overall, this plan is extremely balanced and I believe would lead to decades of growth and health for the sport.


But how did we do in addressing the challenges both sides have and what they really need?

  • Older players have very low leverage in negotiations compared to the previous generation of players- benefit from the universal DH, 32 teams, 42-man roster, and contract framework

  • Owners seem to not be sharing a “fair” degree of revenue with players. The CBT limit is not keeping up with the growth of revenue. A more equitable way of tying the CBT limit to revenue is needed- this plan ties the CBT to the revenue and allows the players to have a "fair" share

  • A system to restrict tanking teams from cutting payroll to the levels recently shown by some teams seems to be needed- the salary floor and penalties will reducing tanking, the expanding playoff will put more team in contention

  • Team control rules tend to make a player available for one real shot at free agency during a player’s prime earning window- the additional paths to free agency will allow for a player to enter free agency a year or two earlier and possibly enable a second opportunity in free agency, the revamped contract framework will make the owners more open to early to mid-30s deals

  • Guaranteed contracts seem to be limiting the risk/ reward each side is willing to accept- the revamped contract framework limits risk for both sides

  • Owners need to mitigate risk from massive long term contracts- the revamped contract framework limits risk for both sides

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