Major League Baseball’s new CBA calls for a “runaway spending” tax (known as the “Steve Cohen tax”), the creation of a draft lottery and an expanded postseason (12 teams)—measures that in theory facilitate “competitive integrity” across the league. But former Miami Marlins president David Samson says those changes are not enough to alter the payroll disparity and tanking issues that exist in MLB. “It is clear that this collective bargaining agreement does not do anything to change the pattern of ownership behavior,” Samson said. “Teams are doing exactly what they were going to do under the old CBA, under this CBA.” He cited the Los Angeles Dodgers’ recent signing of Freddie Freeman (to a $162 million deal) and the Oakland A’s trade of all-star Matt Olson (who subsequently signed a $168 million deal with the Atlanta Braves) as examples of teams doing more of what they have always done.
JWS’ Take: The Major League Baseball Players Association (MLBPA) talked a lot about the need to eliminate clubs’ uncompetitive behaviors during CBA negotiations. New York Mets pitcher Max Scherzer explained to the Los Angeles Times in January that “the free-market economics of the game only work if we have a fully competitive league.”
The thinking is that too great of a payroll disparity between clubs inevitably leads to salary dumping and tanking. Samson noted that when an organization does not believe it can win, it often moves to reduce payroll and to rebuild its roster around younger, less expensive players (which is not good for veteran free agent players). “Once [Colorado Rockies owner] Dick Monfort realizes he can’t beat the Padres or the Dodgers and he’s losing money, [he is going to say] ‘What am I doing with Kris Bryant and a payroll higher than it should be?”’ As Sportico’s Barry Bloom noted, it was only last year that the club traded Nolan Arenado in an attempt to cut costs.
Reducing the payroll disparity should give more teams hope they can qualify for the playoffs, thereby increasing the number of potential destinations for MLB free agents. “Owners tend to spend when they think they are close to winning,” Samson said, “even if they’re not.”
The MLBPA successfully negotiated several competitive integrity-focused changes within the CBA. The “Steve Cohen Tax” was added to rein in payroll disparities, and the expanded postseason gives more teams the opportunity to qualify and an incentive to spend on players.
The union also negotiated amendments to the Rule 4 Draft Order to deter teams from tanking. Beginning in 2023, the top six selections in the annual amateur player draft will be determined by a lottery system (as opposed to reverse order of the league standings).
But Samson said a lottery system will not have the desired effect. Unlike in the NFL, “when [a baseball team] is rebuilding or retooling, [it] doesn’t say, ‘Hey, let’s get the No. 1 pick.’ Because in baseball, by the time the No. 1 pick is ready to play, [the] rebuild is practically over. It is not like the other sports. So, this whole concept of a draft lottery is misplaced.”
The Cohen tax, meanwhile, is unlikely to tamp down the payroll disparity that exists between the highest- and lowest-spending clubs, Samson said. Remember, MLB does not have a salary cap. “You see what the Dodgers are doing, what the [Phillies] are doing. They are willing to go over the [luxury-tax] cap and pay those penalties.” Per Spotrac data, the two clubs have committed a combined $385 million to new player contracts over the last two weeks.
MLB does not see aggressive spending by wealthy clubs as evidence the CBA changes are misguided. The league believes two weeks is far too short a period to make any definitive judgements on the agreement’s efficacy.
To be clear, Samson thought the MLBPA made progress with this CBA. “The players wanted more money to younger players, faster. They got that through the pre-arbitration pool. They got that through higher minimums.” And they managed to avoid any additional restrictions on player markets.
But if the goal was to improve competitive integrity and eliminate tanking, the players failed. “We’re two weeks into the new CBA,” Samson said, “and payroll disparity has become even more pronounced.”
The MLBPA rejected MLB’s attempts to stiffen the penalties associated with exceeding the first three luxury-tax thresholds (which the league sought for competitive balance purposes), so that veteran free agents would have the opportunity to rake in the largest deals possible.
The MLBPA also rejected a proposed $100 million payroll salary cap floor. As it stands, there are a handful of clubs spending less than nine figures a year on salaries.
The MLBPA said it rejected the floor because it was part of a package that included a lower first luxury tax threshold ($180 million, down from $210 million) and more than doubled tax rates overall, a non-starter for the union. As noted, one of MLB’s primary objectives was to avoid further restricting player markets.
The problem with tanking is that over time it erodes the middle class of players, throwing them overboard for young, cheap labor. In the end, “There will be young players and then superstars—which is the pattern that started to develop under the last CBA,” Samson said.