PHOENIX — Spring training is just days away and many of baseball’s top free agents remain unsigned.
Free agent slugger J.D. Martinez, who joined the Diamondbacks via trade in mid-July, Eric Hosmer, Jake Arrieta and many others are part of a surprising group still looking for a team as the start of the new season is just around the corner.
The slow pace of the offseason have led some to suggest the dreaded “c” word: collusion. The idea of owners being engaged in collusion has been in the forefront of the minds of many around the game because of history and rumors.
Others, however, don’t think it’s a likely practice.
“Commissioner Rob Manfred is a very intelligent lawyer and I find it almost impossible to believe that he would allow any type of collusion, knowing the consequences would be dire for the sport,” ESPN reporter Pedro Gomez said.
The topic has many layers, but a main reason might date back to 2016 when Major League Baseball and the MLB Players Association agreed to a new Collective Bargaining Agreement.
The MLB has documented troubles when it comes to CBAs. The most recent major issue was the strike-shortened season in 1994, when there was a dispute over whether or not to implement a salary cap.
No salary cap was ever implemented, but in 2002, MLB and the MLBPA agreed to install a “luxury” tax, meaning a team can spend over a certain limit but it has to pay a penalty if it does.
In the current CBA, the limit raises each year. This year it is set at $197 million, but many feel the threshold hasn’t kept up with the growth of the game.
Nathaniel Grow, who is an Associate Professor of Business Law and Ethics at Indiana University’s Kelley School of Business and also contributes to Fangraphs, notes that in 2003, the first official year of the tax, the threshold was originally 90 percent of the average MLB team’s annual revenue. Today the threshold sits around 60 percent.
In 2003, the tax threshold was set at $117 million. According to Grow’s research, the average team’s revenue was $130 million, and the league’s combined revenue was at $3.58 billion.
Grow found that in 2014 the gap between revenue and the threshold grew $111 million, compared to just $13 million in 2003.
According to a Forbes report, in 2017 the league’s gross revenue surpassed $10 billion for the first time in its history, increasing more than $500 million since 2015.
At the same time, the penalties have grown more severe for teams, making it less attractive to sign big-time free agents that will take them over the threshold.
The threshold used to be high enough where teams could spend money and not bump against the penalty.
Originally, the penalty was 17.5 percent on the dollar for first-time offenders and increased to 30 percent, 40 percent and 50 percent each year as a repeat offender.
This year, the penalty was increased to 20 percent for first-time offenders, with a 12 percent surtax for going $20 million to $40 million over the threshold and a 42.5 percent surtax for going more than $40 million over the limit.
Offending teams also will have their Rule 4 draft pick moved back 10 spots.
“In 2016 the penalties went way up, so the luxury tax has become more like a hard salary cap as you have seen in the other sports,” Grow said.
Looking back on the deal, many people see mistakes that were made by the Players Association.
“The players collectively bargained for this situation almost exactly,” national baseball writer and author Rob Neyer said.
The players received several perks in the current CBA, including getting chefs and dieticians in the clubhouse and restrictions on start times on travel days.
Such perks seemed to have taken priority over raising the tax threshold or fighting against the penalties for going over the limit.
“(The) players union has not been as effective protecting its members’ financial interest as it has been in years past,” Grow said.
2021 is when the next CBA negotiations are scheduled take place, but it may not go as smooth as people would like.
“It’s widely believed players gave away way too much in the current deal,” Gomez said. “Getting those aspects back will be difficult.”
“Given the tenor of the comments coming out of the players union and given kind of the trajectory … my guess is this time around isn’t going to be as friendly of a negotiation,” Grow said.
Neyer believes that some people are striking an unnecessary “alarmist tone.”
“It seems incredibly premature to me for writers talking about strikes and lockouts or strikes or boycotts three years before the CBA.”
One thing, however, is clear: Discussions regarding the CBA and its effects aren’t going anywhere soon.
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