MLB, players avoid lockout by agreeing to new five-year CBA, pending ratification
A new collective bargaining agreement covering five years has reportedly been negotiated
Major League Baseball and the Major League Baseball Players Association have agreed to a new collective bargaining agreement (CBA). The league announced the tentative deal Wednesday night. Full ratification by both sides is pending.
The CBA is the negotiated agreement that governs almost every aspect of the working relationship between management (the clubs) and labor (the players). The new deal will span five years, as is standard. The previous CBA was set to expire at midnight ET Thursday.
This successful negotiation continues a long run of labor peace for baseball. While the expiration of the CBA typically meant labor strife for much of modern baseball history, the sport has gone without a labor stoppage since 1995 -- a span of 21 years of uninterrupted play than will now grow to at least 26 years.
In the negotiations a number of key issues were reportedly points of contention. While we don't know the official ins and outs of the new CBA just yet, some reports about the most notable issues have come out. Let's have a quick look at those ...
Will there be an international draft?
The owners reportedly were pushing hard to implement an international draft for the unstated purpose of limiting labor costs on the international market. The MLBPA wasn't on board with this, at least in sufficient numbers. As Jon Heyman reports, a compromise may have been reached with international signing budgets being capped at $5 million to $6 million per team, per year.
Are they getting rid of qualifying offers?
The qualifying offer system was also a hot-button issue. Under the previous CBA, if teams tendered qualifying offers (one year, $17.2 million for next season) to a pending free agent and the player subsequently declined that offer, then his former team was entitled to a compensatory draft pick once he signed with another club.
As for the club that signed him, it forfeited a high draft pick for the privilege of signing a qualifying-offer free agent and the draft bonus pool money associated with that pick. If the signing team picked within the top 10 overall picks, then it forfeited a second-round pick. Otherwise, the signing team forfeited a first-round pick.
Anyhow, that has been modified. Now, the teams that will be hardest hit are those that are over the luxury tax threshold. Jason Stark reports that teams over the luxury tax threshold will forfeit a second- and fifth-round pick and $1 million in international bonus budget space for signing another team's qualifying-offer free agent. Teams under the threshold will give up just a third-round pick. That's still a cost, but it's not as punitive as the current system. In another wrinkle, Rosenthal adds that a free agent can receive a qualifying offer only once in his career.
On the other side of things, teams that lose a QO free agent to another team will gain a draft pick only if the free agent in question signs a contract worth at least $50 million (source: Rosenthal). As well, the picks those teams get will be determined by their market sizes. For instance, the Yankees after losing a QO free agent would get a lower compensation pick than, say, the Brewers.
What about current free agents who turned down qualifying offers?
According to Jon Morosi, the new compensation system won't go into effect until next offseason. That means the seven QO free agents still on the market -- Justin Turner, Kenley Jansen, Edwin Encarnacion, Dexter Fowler, Ian Desmond, Jose Bautista, Mark Trumbo -- will still cost their new teams a high draft pick (assuming they don't re-sign with their 2016 teams). That cost will of course be priced into whatever offers they receive.
Is the luxury tax remaining in place?
It's going up. Most recently, payrolls of more than $189 million were hit by the "competitive balance tax." Here, via Ken Rosenthal, are the thresholds for the next five years under the new CBA:
- 2017: $195 million
- 2018: $197 million
- 2019: $206 million
- 2020: $209 million
- 2021: $210 million
As Joel Sherman adds, the tax rate on payrolls far above the threshold is also going up.
What happened with that 26th roster spot?
Sherman reports that that's not happening.
What about the schedule?
It's changing. According to multiple reports, Opening Day will now take place in the middle of the week so as to allow for more off days during the season. The season will expand from 162 games over 183 days to 162 games spread across 187 days or so. As Morosi points out, that's going to make it easier for MLB to schedule more series abroad.
What about revenue sharing?
It's not certain how much has changed with regard to the sharing of team revenues, but it does appear that the Athletics are going to get hit hard by the new CBA. According to Rosenthal, the A's are going to be phased out as revenue sharing recipients over the next few years.
This isn't terribly surprising, as it has been known for some time that the MLBPA and some large-market owners have been displeased with the way the A's have used the revenue sharing dollars that they've been receiving. A team doesn't have to plow it directly back into the major-league payroll necessarily, but it must in some way put it toward improving the product (increasing scouting staff, advancing in-house technologies, making capital improvements, etc.). Presumably, the A's weren't doing that to the satisfaction of certain vested parties.
There's plenty more to come, but one interesting side note is that, per Sherman, the use of smokeless tobacco by MLB players is going to be banned moving forward. Current players who use smokeless tobacco will be grandfathered in as exceptions.
No doubt, we'll learn more in the coming days -- the minimum salary will surely be increasing, for instance -- but for now we know that the major issues complicating this CBA have been resolved without any major changes.
The important takeaway is that we'll have another half-decade of uninterrupted baseball. Given that the game is riding a bit of a high right now, that's a very good thing.