Now more than three months into the MLB lockout, team owners and the Players Association (MLBPA) still remain far apart on a new collective bargaining agreement (CBA).
While there was some progress regarding the universal designated hitter, a draft lottery and expanded postseason, the key issue remains money involved, and the competitive balance tax (CBT) is one of the biggest topics.
The players’ last proposal included a luxury tax threshold of $238 million in 2022 that rises to $263 million by 2026. The owners countered with $220 million from 2022-24, which then begins to rise to $230 million by 2026. Last year, it was $210 million and it would need to be around $225 million this season to keep up with inflation.
The CBT essentially acts as a salary cap in MLB by penalizing teams that go over it, so some owners in smaller markets are worried big market teams like the Los Angeles Dodgers will just keep continuing to outspend them, according to Evan Drellich of The Athletic:
In bargaining, owners have used the Mets, and their relatively new owner Steve Cohen, and the Dodgers as examples of teams they’re worried about outspending the competition, sources said.
From the Players Association’s view, a lower CBT will keep salaries down to all players despite the league’s rising revenue. MLB is the only major sport in the United States to not guarantee the players at least 46% of revenue, and their share has dropped from nearly 44% in 2016 to less than 39%.
It’s hard to know if the owners truly believe this would become a problem or if they just want to keep salaries down so they don’t have to spend as much because they keep their financial information hidden from the players and the public.
But if the Atlanta Braves — the only MLB team that is owned by a publicly traded company so their financial information is available — are any indication, then it would seem the owners are only trying to keep salary down.
Yes, there is a truth that some teams will never be able to spend like those in L.A. and New York, but last year 12 clubs had a payroll of less than $100 million and all but the Dodgers had a payroll at least $15 million below their proposed CBT of $220 million.
If they are seriously concerned about getting outspent by teams who want to win, they could try investing more into their own club.
Every MLB team receives more than $110 million in revenue sharing and beginning in 2022, each will be given at least $100 million from local and national television rights deals..
Owners view luxury tax threshold as ‘percentage increase’ from previous CBA
MLB’s hardline stance on the new luxury tax thresholds is related to a percentage increase from the previous CBA, rather than recognition of a rise in revenue or inflation as other sports follow.
The players’ problem with that is a CBT that does not account for revenue and inflation is essentially asking them to take a paycut.
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