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.
Acceleration is the Key
The compromise they came up with was a graduated tax threshold that would increase to the expected top mark of $210 million only in the fifth year of the agreement. Most close observers, including this one, were shocked at the announcement.
Instead of jumping from the 2016 limit of $189 million to $210 immediately in 2017, it went up to only $195 last year and just to $197 this year.
As soon as the players agreed to that, they helped create much of what is going on right now.
But there might still be a fix. The CBA is not a locked document. Both sides have in the past routinely made changes to it while it was in effect.
However, it would be wrong of me to assert that I know all the intimate details of how and when this can be done, so I am far from certain this falls within that purview. Assuming it can be done, though, it should be, and immediately.
I think it is safe to assume that the teams all fighting for supremacy this year would like to gain a more competitive edge. But most of them are already at or near the current luxury tax threshold, including but not limited to the Red Sox, Yankees, Dodgers, and Cubs.
If each of them could spend another thirteen million this season, most of them would.
That alone might mean Jake Arrieta, Mike Moustakas, and Lance Lynn all have homes by now. That can, in turn, put downward pressure on teams that want to compete but are not willing to go all in, forcing teams with more modest projections to sign players or lose relevance.
The Giving Tree
However, as anyone who has been to an MLB game can tell you, concessions are not free. I have no idea what the owners would want for this acceleration, but the players must be willing to do what it takes to implement this single suggestion.
That also means not all these ideas can work at the same time. The players have only so much to give up, and some ideas might clash. Instead, this is more like a Julebord in which you are meant to choose your favorite Lutefisk dish and a couple of complimentary sides.
Okay, now let’s try a win-win: It’s time to expand the rosters.
I Have Two Rosters, One for Each of You
There are currently two rosters. The 40-man includes all the players eligible to play at the big league level, among other considerations.
However, to play in the MLB, a player must be placed on the more exclusive 27-man roster. It is perhaps most comfortable to think of them as an active list and an active-plus-reserves list. These two comprise the most valued members of any team and protects them as such.
Expanding both might serve the interests of players and owners.
The player’s side is easy to see. Expanding the 27-man to 29 or 30 automatically brings more players into The MLB. While some of those will be from within the organization, a few at least will end up free agents. This could work nicely with an accelerated tax ceiling.
And the owners would like to see the 40-man expanded to a 45.
Each year, MLB teams must either put coveted farm hands on this roster or leave them exposed to other teams; this is called the Rule Five Draft. The Yankees, first instance, recently lost highly valued catcher Luis Torrens to the Padres.
If the owners could keep more of their potential stars with an expanded 45-man, they might be willing to spend more at the MLB level.
One caveat here is that it might be time to implement a limit on pitchers, and maybe even pitching changes.
Teams have for far too long shown a propensity for sacrificing offense for defense, eschewing powerful but limited hitters for match-up pitchers. It might be time to insist on a cap on pitchers per 29-man roster and force more offense into the game.
Well, that wasn’t all that hard; try this one on for size.
All Ideas Will Be Considered
This idea comes by way of a reader, Matt McMillan; you can read his complete idea in the comments section of this article.
In the piece he is reacting to, I mentioned that baseball is very likely to add two teams, both on the West Coast. That, by the way, will also help the free agent market. But that help is apparently a few years away.
What I did not mention was that MLB is also desirous of moving a team back to Montreal. If the Rays do not get their financing together, they will probably become the primary target.
In response, Mr. McMillan suggested locating one of the two new teams in NYC. The idea has a lot of merits, but one big drawback.
There is, however, plenty to like about this top-down approach. Logic and experience tell us that the bigger the market, the more routinely is spent on free agents, the Mets notwithstanding.
How long have the Boston Red Sox, New York Yankees and both teams from Los Angeles been among baseball’s biggest spenders? The White Sox and Cubs seem to take turns, but at least one of the Chicago teams almost always has money to burn.
Also, New York used to support three teams; there are more people living here now than then. Maybe it is time to give New Jersey its own New York-named MLB club. As a bonus, they already have a temporary home in MetLife Stadium.
It cannot be that hard to pave over a bit more of Jersey and add a baseball stadium to where trains and buses already go. And concession workers would finally have year-round work. There is a lot to like about this idea.
Addition by Subtraction
But one thing to dislike is the suggestion that it be a new team. Baseball, like most modern sports, grows in pairs. And they are adding two teams to the West Coast to boldly change the travel requirements, as well as part of an equally bold restructuring plan.
So, they are not going to move one to the East Coast suddenly. Nor are they likely to add another two teams on top of those.
However, maybe The MLB could be convinced to move a franchise to NYC.
Montreal has only 1.75 million inhabitants, while New York City has 8.6 million. And when you include Newark and Jersey City—and the rest of the NY Metropolitan area—that number jumps to over 20 million.
As a comparison, Kansas City, Missouri has fewer than 500,000 folks to support the Royals. How many teams, then, can be supported by 20 million? I have to think, at least one more, is an acceptable answer.
For myriad reasons, it seems very unlikely that this happens any time in the near future, if ever. But while I don’t think it would help as much as the author thinks it would, I do think it would probably help the free agent market in a way Scott Boras would like.
And fans of the new New York Highlanders. Now let’s try to get to the root of baseball’s problem.
Under The Age
Perhaps the best way to force more teams to employ free agents is to create more free agents. That might sound counter-intuitive, but there is a method here.
In this instance, it means that the MLBPA should focus on changing the service time rules.
These rules govern how long a player must stay tied to his organization before he can become a free agent for the first time, among other things. I used this Fangraphs article, by the way, as my primary resource.
Under the current system, young players are under team control for seven years, for all practical purposes. But one of the essential requirements for maximizing a player’s earnings in this new era is that he be no older than 28 when he reaches free agency.
By then, players are physically fully developed and entering their primes. And of utmost importance is that they are still two years this side of 30. Note that it is the owners and their GM’s who have made 30 the telling age, or perhaps finally recognized it.
Most players, however, get caught in a time trap.
They are not ready to debut with their big league clubs until they are 22-24 years old; Aaron Judge, for instance, was already 24 when he made his first appearance in 2016. However, with seven years of team control, these same players reach free agency at or very near the age of 30, when their value is already in decline.
And that declining market value has only recently been set by the owners. Right now it seems as if the owners are wagging both ends of the dog on this one.
Yo Soy Free Agency
Now the MLBPA must respond by demanding that the best young players in the game be available for free agency well before the age of 30. The most important change the players association should seek, therefore, is a reduction of service time commitment from seven to four.
Think of the fluidity it might create. One problem with free agency is that what teams want is not necessarily available. Availability would become a problem of the past.
And it would be a mistake to think teams would just keep reloading with new farm hands. Good players don’t just come along every draft. If the Yankees had to start paying Gary Sanchez next year, they would — especially if that tax penalty threshold were raised.
And is it fair to Judge and others like him that by the time he is a free agent, his own team will tell him his value has already declined? The shoe would be on the other foot if he were to hit free agency at 28.
Shooting for the Stars
In fact, in an even more radical move, they might want to push for every minor leaguer to automatically become a free agent at the new seemingly magical age of 28. That is very unlikely to happen but sometimes pushing an extreme idea helps your interlocutor accept the less extreme ones.
Every aspect of the service time rules needs to reconsider, in this new paradigm of free agency. For instance, get rid of all notions of a Super-Two. That is the rule that allows teams to retain an extra year of service by bringing up a player later in the season.
It needs to become more simple: If a player plays on the big league club, it counts toward that year.
And increased pay for being called up should be on the table. Why not let it trigger a big-league minimum salary for the rest of that season?
Memory Lane
It is important to remember why these rules were initially instituted: To protect small-market teams. MLB did not want the KC Royals of the world to lose their best young players, such as Johnny Damon because they could not financially compete with the Boston’s and New York’s.
But now the game is flush with cash, more evenly distributed, with even small market teams controlling their TV revenue streams. And the tax cap will still prevent bigger market clubs from exponentially outspending them, which was the problem at one point.
Instead, look at what is happening to KC’s newly exposed crop of free agents. They are being deemed too old for long-term deals, if they get any deals at all, even by their own club. These guys won a World Series; that used to mean something.
But now that the Royals got all their young years so cheaply, including that WS title, they want to hide behind statistics to defend not paying them. These players deserved a chance to cash in when their ages still worked in their favors.
What started as protection has turned into a protection racket, so time to change the game.
The Law of Unintended Consequences
These are just a few ideas of varying degrees of merit. One that was left out was creating a minimum team payroll. I will give it just a few words here before ending.
The idea is very enticing but the more I think about it, the less efficient it becomes. I believe it was Marvin Miller who once said, MLB has a payroll floor: It’s called the minimum salary. If someone recognizes the quote, please correct the attribution.
Either way, if the idea is to get more free agents hired, I’m not sure how effective this would be. Owners and GM’s would likely just pay more to their existing players, rather than hire new ones. And if I cannot see a clear benefit, I am wary of advocating for it.
Their Own Worst Enemy
My cautionary tale in this regard comes from an old NBA labor dispute. The older players wanted more rewards for being veterans, so they established a graduated pay scale in that round of labor negotiations. This guaranteed veteran players would be paid more than rookies and other less-experienced players.
Logical, to be sure. But affecting their labor agreement had a sadly ironic effect.
Next: the Yankees Jacoby Ellsbury is Exhibit A for Why Free Agency Changed
Owners immediately took the opportunity to employ far fewer veteran players for much more cost-effective rookies. And with older, wiser players no longer in as many locker rooms, the owners and GM’s gave themselves a leg up in a variety of areas.
That story and its ramifications too numerous to delve into here is always on my mind when I make any suggestions. However, what once worked well for MLB is now broken, or at least breaking. And that is unacceptable.
Because, more than it is the temporary owners or even more transitory players, this game belongs to the fans. It is for them that any suggestions have to be put forward, now. And it is their loyalty that needs to be considered by MLB and the Players’ Association in the next CBA.