Baseball Has a New CBA, Here’s a Look at the Highlights

Photo of Evan Altman Evan AltmanDecember 1, 2016

Major League Baseball and the MLB Players Association agreed Wednesday night on the terms of a new collective bargaining agreement that will govern the game for the next five years. While final details are still being ironed out, the major points are all set and we’re ensured of another season without a work stoppage. Though there’d been an expectation that the deal would be done ahead of the midnight deadline, cutting it to within four hours was a little close for comfort.

In the end, there was just too much money for all involved to put at risk with a lockout. Revenues and profits are rising, the game is healthy in local markets, and we just witnessed an incredible World Series that saw the Cubs finally break through. There was a somewhat ubiquitous joke going around that no CBA would just mean that the Cubs would remain champions in perpetuity, but I think everyone’s happy that’s not the case.

I mean, the Cubs could still maintain a stranglehold on the league, they’ll just have to actually win baseball games to do it. As for how they go about building a team in order to win those games, well, that has changed a little. Here’s a quick look at some of the factors in the new CBA:

Luxury tax threshold

Under the previous agreement, the luxury tax threshold was set at $189 million, with overage penalties ranging from 17.5 – 50% based on how many consecutive years a team had exceeded said soft cap. While the cap bumps to $195M for 2017 and increases to $210M over the next five years ($197M in 2018, $206M in 2019, $208 in 2020), the penalties associated with going over it have jumped dramatically.

As initially reported by Bob Nightengale, a first-time offense will result in a 20% penalty, which would increase to 30% for a second time and 40% for a third. Then there’s an additional 12% penalty for teams that exceed the cap by $20 – 40M, with a max penalty for going more than $40M over. That latter transgression could result in a total penalty of as much as 90% and will also knock the team’s initial draft pick down 10 spots, which, wowsers.

Looks like the Dodgers may want to rethink a few things.

Qualifying offers

Teams that sign a player to whom a qualifying offer has been extended will no longer have to forfeit a first-round draft pick, which is good news for the players in question. Keep in mind, however, that this does not apply to the current crop of QO players, like Dexter Fowler. And teams will still lose picks, they’ll just come in later rounds and will be determined by their revenue sharing status.

Rev-share recipients (more on this below) that sign a QO player would lose their third-highest pick (read: not explicitly third-rounder), while rev-share contributors would lose their second and fifth selections and $1M in international bonus money. Teams in between would give up their second pick and $500K in international money. Given the new restrictions on that international pool, those penalties are pretty severe.

Additionally, a player can only receive one qualifying offer, though I’m not sure whether that means ever or just from the same team. To keep it in Cubs terms, this was Fowler’s second straight QO. Players will also have 10 days instead of seven to consider what to do with the offer.

A team that extends an offer and then sees that player sign elsewhere for $50M or more will receive a draft pick that comes “after the first round.” If the player signs for less than $50M, the team that loses him gets a pick somewhere after competitive balance round B. And if a team happens to be above the luxury tax line, its draft compensation would only come after the fourth round.

So that’s perfectly clear, right? On one hand, it seems like a big win for free agents. On the other, I’m wondering whether teams are going to configure deals to keep them short of $50M. And I’m sure that the reduced opportunity for compensatory picks, coupled with the inability to offer a guy twice, will result in more trades of players whose contracts are expiring.

Roster size

There had been much speculation and discussion regarding an expansion to 26 players, but the decision was made to keep them at 25 and maintain September expansions.

International players

There won’t be an international draft, but spending on foreign-born amateurs is being hard-capped at an initial amount of $4.75 million (should increase incrementally over time). Jayson Stark reported that teams “can’t exceed that,” but I’m not certain whether that really is a max amount or just a threshold for tax penalties. The former would really curtail spending on international players, while the latter would pretty much mean business as usual. So I’m guessing it’s more the former.

Cuban players, whose presence and influence will likely increase in the coming seasons, who are at least 25 years old and have six seasons of experience in Serie Nacional will be exempt from the spending cap. There hasn’t been much clarity regarding players from other countries, but given the reference to “amateurs,” one assumes that those in professional leagues will not be impacted.

That means no changes to the NPB posting system (my understanding), so don’t go thinking Shohei Otani just got cheaper.

Miscellaneous

  • Big-market organizations like the Cubs caught a break with the elimination of the “performance factor” multiplier from revenue-sharing. Additionally, the Oakland Athletics will be phased out as a revenue-sharing recipient (from 75%, then 50%, then 25%, then nothing). Pretty minor in the grand scheme of things.
  • The minimum time for a DL stint will be reduced from 15 days to 10
  • League-minimum salary jumps to $535K, with $10K increases in the two subsequent years and “cost of living” increases in the final two years of the agreement.
  • There will be additional drug testing, and players will no longer accrue service time while suspended
  • New players will be banned from using smokeless tobacco, though current players’ usage will be grandfathered in. Several cities, Chicago among them, have already banned such products, so this probably isn’t as impactful as it would have been had it come five years ago. So War Bear gets to keep his big plug in when he’s away from Wrigley, though I’m not certain on how it’ll affect John Cusack’s vaping habit.
  • Starting in 2018, the season will open in the middle of the week. This stretches it from 183 to 188 calendar days, allowing for more days off and also room for additional international showcases. Jon Morosi reports that MLB officials want to follow the NFL’s model by holding games in London and Mexico in the future.
  • Finally, the All-Star Game will no longer determine home-field advantage for the World Series, a move that is long overdue but that bears a little irony for the Cubs. Following what I’ve thought from the start was a dumb, knee-jerk response to the tie in 2002, each Midsummer Classic since has “meant something.” Forget which team had the best record, let’s give an advantage to the league that wins an exhibition game!

What’s funny about that latter bullet is that the Cubs may have actually benefited greatly from the last year of its reign of stupid. I had been saying from at least this year’s ASG — and I wasn’t alone — that the Cubs would not be at a disadvantage even if the NL lost. Getting a road split followed by three straight home games, I reasoned, would serve them well. And that was before Kyle Schwarber returned to play the hero.

Whether it was the pressure of playing at Wrigley or just bad matchups, the Cubs dropped two of three games at home but took three of four in Cleveland. Still, this change was long overdue and I’m glad to see it included in the new CBA.

More details are sure to emerge in the coming days and we could very well get further clarification and nuance regarding the numbers and specifics above. Beyond the minutia of this agreement, though, the immediate impact is that the Winter Meetings will go on as scheduled and we’ll likely see a great deal more movement in terms of free agency. Good times, folks, good times.

***UPDATE***

I had mentioned that we’d be getting more clarification and that some of the details were subject to change.

International bonus pool

It now appears that the international bonus pools will vary based on team revenue, with the bottom 15 teams getting $6 million to spend and the top 15 getting only $5 million. Okay, so that sounds like a way to help out the “little” guys, which is nice. But when you combine it with the details of QO compensation/penalties from above, it sure feels as though free agents are still getting the short end of the stick.

Think about it: a team that is a rev-share contributor is going to be among the top 15 in overall revenue, which means a smaller bonus pool. In order to sign a QO player, said team would have to forfeit their 2nd and 5th draft picks AND $1M (20%) of their international money. That sounds like a really steep price, one that might force the wealthiest teams out of the market. Likewise, mid-rev teams having to forfeit their 2nd pick and $500K might be more reluctant.

That could significantly impact those players who turn down the qualifying offer, both by limiting the number of teams willing to sign them and perhaps suppressing the appetite for deals that exceed $50M. If you’re a big-market team, you’ve got the prospect of losing picks and money and then giving your competitors more draft picks. Maybe I’m missing something, but this looks like it hurts the players while giving clubs a reason to curtail spending.

“Amateur” players

Remember what I said about Shohei Otani and how he wouldn’t be impacted by this whole thing? Yeah, so it looks like I might have been wrong there. Rather than applying whether or not they make money playing baseball, the new definition of “amateur” is apparently rooted in age/experience, and not just for Latin players.

While there’s really no reason for the Nippon-Ham Fighters to post Otani any earlier than necessary, the new rules would prevent an MLB team from being able to sign him prior to the conclusion of the 2019 season. That’s what I think I’m seeing anyway. With only four years of NPB experience, Otani would need two more seasons to exceed “amateur” status. And even then, after the 2018 season, he’ll still be only 24 years old (turns 25 in July of 2019).

So, and I’ll stress again that this is my understanding of it, it looks as though the new definition — which I believe goes by age as of June 1 of a given season — would prevent Otani from making his MLB debut until AFTER the 2019 season. If true, this is all kinds of bad for pretty much everyone involved.

While these rules obviously weren’t put in place with a single, transcendent player (yes, I understand that he could end up being a bust, but you know what I mean) in mind, this is a case in which MLB is shooting itself in the foot in a big way. Think about the missed opportunities to market such a phenom, particularly in light of the international showcases they want to hold.

And what about Otani himself, who stood to land a contract that might have approached a quarter of a billion dollars. I’m sure he’s doing very well for himself in Japan and will continue to do so on a deal that runs through 2020 (I think). But wait, would that mean the Nippon-Ham Fighters, his NPB team, would miss out on the normal posting fee?

I’m fuzzy on exactly how all that works, but it seems that Otani could just walk after this contract ends, then take a massive MLB payday as a full free agent with no recompense for his old team. And even if his Japanese team does post him early, it’d be incredibly stupid from a financial perspective for him to sign with an MLB team. Everyone loses in this equation.

***UPDATE #2***

International bonus pool

Okay, so that’s very good and could alleviate some of the issues I was discussing earlier.






Photo of Evan Altman Evan AltmanDecember 1, 2016
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