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Cold Hard Facts: CBA Points

Updated: Mar 15, 2022

In some of the most unfortunate news from the last 24 hours, the MLB/MLBPA is likely going to hold off talking about the economic core of the CBA until JANUARY! So, I will talk about a few of the pain points of the economic core of the CBA today, on Cold Hard Facts.

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Salary Floor

I have seen two numbers floating around for a potential salary floor for the MLB. I have seen both $100mil and $150mil being the two numbers that the owners want to be between for a salary floor and where the owners want to be. I believe that the floor will be a thing starting with the new CBA and will be one of those things that grow over time. With the initial floor starting at $100mil.

I think that floor is needed for competitive balance. With the floor, we see teams spending on their homegrown talent, free agents not sitting all winter, and more urgency to get a deal done with a player you like.

With that, you take that to free-agency you see guys getting better deals, more competitive offers. We would see fewer 1-year prove-it deals and possibly more secure deals of 2-3 years. We can see guys grow their brands with their teams and become organizational legends. Bringing more guys in town for longer brings more fan engagement, more people buying that player's jersey because we know he isn't going anywhere for a long time, which leads to more revenue for the team and organization.

I think the floor is a must for this CBA, and both sides will have to agree on it.

Salary Cap

The salary cap is seen in the NBA, NFL, NHL, MLS, and other professional sports organizations. However, I don't see it working in the MLB. We see too many teams 28/30 exact who didn't even touch the luxury tax. I see the salary cap to prevent the Dodgers and Yankees from buying up all the top-shelf talent. However, the salary floor can prevent that as more teams will have to spend money to hit the minimum. The cap works in the NBA; it kind of works in the NFL, and I don't think it would ever work in the MLB. For that reason, I am out on the salary cap, and I think both the MLB and MLBPA are as well.

Luxury Tax

Speaking of the luxury task just a moment ago, as you were reading, let's dive into it. The luxury tax, in basic terms, is that your team, like the Dodgers and Padres, spent too much money, and they are going to have to pay the penalty for doing such. We see how it works for the Dodgers, but the Padres didn't work and likely will bite them in the butt in the future as they have a lot of money tied up in not many players.

The Luxury tax is here to stay as the MLBPA feels that they have been shorted over the years since 2012. According to Gabe Lacques and Bob Nightengale of USA Today, "In final proposals exchanged Wednesday, players requested a $245 million luxury tax threshold, with no progressive penalties for offenders; owners are offering a $214 million threshold, rising to $220 million in the final year of a five-year agreement." With a request to jump to $245MM, the MLBPA proposes a 16.7% jump over the '21 threshold, which would only begin to make up the ground they lost due to the non-existent or minuscule increases from 2012 onward. MLB, meanwhile, would like to increase the base tax threshold by 1.9% for 2022 and is proposing average annual increases of less than 1%."

To put the numbers into context for you, "A simple 5% increase per year beginning in 2012 would have put the 2021 base tax threshold around $290MM, yet it sat only at $210MM. Not coincidentally, only the Dodgers and Padres exceeded a $210MM payroll this year. " according to Tim Diekers.

The OWNERS need to give on this one and realize they have saved 80+mill over the years for no increases.

Potential Post-Lockout Spending Spree

A little bonus here for you if you are around. If you did, I would like to thank you. The minute the lockout ends, we will see money flying, contracts being signed, and guys getting paid.

There will inevitably be a floor, higher luxury tax, and with that in place, it's off to the races once the freeze ends. A guy like Freddie Freeman and maybe even Carlos Correra could snag an annual average of 35+mil if things fall the way I think they will.

Don't be surprised to see a guy like Kyle Seager get slightly overpaid because of the new structure. It's bound to happen to see guys get overpaid and fill out the payroll to reach the floor.

Whatever happens at the end of the day in terms of the CBA and economic core of the deal. We have to wait and see until January. I am excited and, of course, can't wait to talk about it with you. Until next time!

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