How MLB and the Players Association can fix what they have broken

Trying to Create an Open Market

It was an open secret that the top priority for the MLB Players Association (MLBPA) was to raise the luxury tax threshold substantially. This is the limit on how much teams can spend on big league players without incurring severe financial penalties, colloquially referred to as taxes.

The idea is an obvious one: If the tax threshold is raised, more teams are likely to spend more money on free agents.

For 2017, for instance, that limit was set at $195 million. Its effectiveness as a deterrent seems evident in that only six teams were willing to go over it. Here is an excellent primer from USA Today:

"The Los Angeles Dodgers, who topped Major League Baseball by spending $244 million in 2017 player salaries, are one of six teams expected to pay a luxury tax this year… The other five other teams projected to pay a luxury tax, according to their final player payrolls: The New York Yankees ($209.3 million), Detroit Tigers ($190.4 million), Boston Red Sox ($187.9 million), Chicago Cubs ($186.5 million) and San Francisco Giants ($186.4 million). The luxury tax payrolls are based on the average annual values of contracts and earned 2017 bonuses. While only the Dodgers and Yankees are above the $195 million threshold, teams also must include about $13 million in benefits based on their 40-man rosters."

This year, the CBA imposes much harsher penalties, and now almost every team in the league is trying to get under the threshold.

Limit in Limbo

That limit, however, has been stagnant for far too many years. It was set at $178 million for the years 2011-2013, then raised only 11 million for the 2014-2016 seasons.

Meanwhile, the game exploded with cash.

Here is a quote from Forbes Magazine and an insightful piece by Maury Brown, from back in 2014:

"Beyond attendance. Beyond each club’s television, radio, and sponsorship deals, baseball has slowly but surely laid claim to a sizeable amount of revenue that is dispersed evenly—or centralized—across all 30 clubs that make up Major League Baseball. This is a fundamental shift from how baseball was run for the better part of three-quarters of a century when it was everyone for themselves. National television contracts with ESPN, FOX, and TBS have grown into sizable amounts. Prior agreements with the three have just ended that saw total annual revenues of $711.7 million, but beginning next season those will jump to $1.5 billion or an increase of $788.3 million annually from the deal prior"

It was not long into their latest agreement before agents and players realized they had low-balled the owners.

So when it was time to renegotiate in 2016, it seemed as if the primary goal for the MLBPA was to force the owners to raise the ceiling substantially. The figure most routinely thrown out was $210 million.

Of course, the owners knew all that as well, and that everyone is aware that MLB is making more money than ever. So they entered negotiations knowing they would have to raise the roof but want to limit the increase.