Competitive imbalance based on team spending has long been an interesting topic in MLB circles. How are teams like the Indians, Orioles, and Pirates supposed to compete with teams spending over $150 million when their owners are only willing to spend $60 million? Well, during a Monday meeting discussing the new collective bargaining agreement set to take effect ahead of the 2022 season, MLB proposed their answer to that question.
A $100 million salary floor with stricter luxury taxes to further discourage teams from surpassing the salary threshold. As of right now, the luxury tax kicks in when a team spends more than $210 million on their 40-man roster. Any team that exceeds the threshold for a single season must pay a 20 percent overage tax. If a team surpasses that line for a second consecutive season, that overage tax climbs to 30 percent. If they exceed the limit for three or more straight seasons, the tax skyrockets to 50 percent. Under the new proposal, the threshold would be lowered from $210 million to $180 million and the first overage tax would be raised from 20 percent to 25 percent.
It is unclear how teams that do not reach the $100 million minimum will be penalized, but it’s safe to assume those details will become more clear if the proposal gets closer to being approved. That being said… there’s zero chance this proposal gets approved.
The proposal has already received much criticism. Several media members are calling this deal “a proposal to cut player salaries disguised as a salary floor.”
While I believe the intention of the deal to be good, this would likely be the outcome. Several high-salary players would likely be forced to take salary cuts in order to make room for the rest of their team’s roster. Another unintended side effect of the proposal would be that several team owners’ could be unwilling to spend the $100 million. You think Peter Angelos, owner of the Baltimore Orioles, would be willing to shell out $100 million after years of spending less than $60 million? That would take a lot of convincing, and may require a second owner to come in and spend the remaining money. However, I find it unlikely that some owners would be willing to share their team’s wealth and revenue with another owner.
It’s also unlikely that the MLB Players’ Association (MLBPA) will approve of this deal. First off, the players have always adamantly opposed the idea of a salary floor, because it doesn’t pay any mind to their biggest worry — more money being spent on the players. Going back to 1980, MLBPA legal counsel, Donald Fehr, once said he believed that a “free market should be the only way to set value.” The general consensus surrounding the MLBPA nowadays is that a salary floor would suppress player salaries at the higher end. Second, the athletes have already expressed their discontent with the current collective bargaining agreement (CBA), and a big part of their discontent was the lack of money being poured into the players. Instead of instilling stricter luxury taxes, players would likely prefer more lenient salary taxes and raising the minimum for overage taxes to say $250 million, thus incentivizing the bigger market teams to spend more and more.
For obvious reasons, I don’t like that plan either. That would only increase the potential for talent gaps between the richest and poorest teams in the league. Major League Baseball’s poor teams already have difficulty retaining their top players once they hit the open market. That’s not a problem with the current MLB CBA, rather a problem with the team owners’ unwillingness to pour more money into their team. For example, Oakland Athletics’ owner, John Fisher, earns more money than 16 other MLB owners, but only spends more on his Athletics than eight other owners. While this makes more sense when looking at it from a business standpoint — why would he spend more money on his team if they don’t make enough money to earn his investment back? — it’s still disheartening that he’s unwilling to pour more of his wealth into the team to help them compete. That being said, the Athletics and Rays have shown that you don’t need to spend oodles of cash in order to compete in MLB, just a solid corps of players and a great coaching staff.
Now, the question becomes, is there a way to satisfy the desires of MLB (reduce competitive imbalance), the MLBPA (give teams incentive to spend more), and the owners (they want to spend less, or make more) in one proposal? And sadly, not as far as I can tell. I’ve been rattling this brain teaser in my brain ever sinceI got word of this proposal, but the current CBA seems to be the best way to keep all three parties as happy as possible. There isn’t really a better way to compromise. Perhaps adding a salary floor while raising the threshold for the luxury tax could satisfy the MLB and its Players’ Association’s wants, but the owners would be left in the dust, and since they control the money, they likely wouldn’t budge on that proposal.
This upcoming CBA will shape the MLB landscape for the remainder of the 2020s. As much as we, the fans, would like to see changes made to account for competitive imbalance and/or an increase to the luxury tax threshold, there doesn’t seem to be a way to change anything that benefits all parties involved. Unless different billionaires enter the fold and are willing to buy the poor teams and spend more money, owners will continue to look at their teams as business properties and will treat them as such. For all the hullabaloo swirling around regarding the upcoming CBA, don’t expect much to change.
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