PEORIA, Ariz. — As we sit and wait for the two embittered sides to resume negotiations again Sunday, with each passing day failing to yield an agreement on a new collective-bargaining agreement moving us closer to more lost regular-season games, it’s difficult to find optimism.

The contemptuous relationship the between the members of the Major League Baseball Players Association and the 30 Major League Baseball owners and commissioner Rob Manfred, who has shown more than previous commissioners that he is their employee, seems to only grow with distrust.

Both sides accuse the other of being stubborn or greedy. The players believe owners treat them like commodities. The owners believe the players are never satisfied and lack loyalty to the organization paying them.

You can find reasons for each side to feel that way. It’s been that way for decades, but the divide seems to have grown with each side more dug in and unwilling to budge toward the middle ground.

But it’s important to remember what each side is fighting for in these negotiations. There are multiple issues that offer potential road blocks to an agreement and a resumption of baseball.

Competitive balance tax

Often referred to as the luxury tax, it was instituted in the 1996 collective-bargaining agreement to regulate payroll spending by teams. After MLB eliminated the tax from 2000-2002, it was brought back with the system that remains today.

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Essentially, any team that exceeds a predetermined payroll threshold is required to pay a tax on each dollar above the threshold as a penalty. The tax rate increases based on the number of consecutive years a team exceeds the threshold.

A team going over the CBT threshold for the first time must pay a 20% tax. If the team exceeds the threshold for a second straight year, it rises to 30%. And three straight years, it’s a 50% luxury tax.

Also the amount over the set threshold limit is subject to a surtax. If a team exceeds the threshold by $20-$40 million, it is subject to a 12% surtax. A team that exceeds the threshold by $40 million is taxed at 42.5% rate and a 45% rate if they are over $40 million the next year. Teams that are $40 million over the threshold have their first pick in the following MLB draft moved back by 10 places.  

The calculation for a team’s CBT figure is adding up the average annual value of each player’s contract on the 40-man roster, plus any additional player benefits.

From 2014-16, the threshold was $189 million and grew slightly each year.

  • 2017: $195 million
  • 2018: $197 million
  • 2019: $206 million
  • 2020: $208 million
  • 2021: $210 million

Only nine MLB teams have exceeded the threshold since it has been instituted, with some teams routinely exceeding it, specifically the Yankees, Dodgers and Red Sox.  

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What’s at stake?

The players believe that raising the CBT thresholds and changing the penalties will allow teams intent on winning to spend more freely. To them, teams that want to win should have more freedom to spend on players and not be penalized for investing into their team.

“We’re seeing it act as a salary cap,” Max Scherzer said at the MLBPA news conference. “No other way can be shown, point blank, plain and simple, than the San Diego Padres having a higher payroll than New York Yankees.”

The owners, particularly ones in small and midmarket cities, believe that raising CBT thresholds puts them at a disadvantage in building rosters and only benefits behemoths like the Dodgers and Yankees.  

“We have a payroll disparity problem and to weaken the only mechanism in the agreement that’s designed to promote some semblance of competitive balance is just something that I don’t think the club group is prepared to do right now,” Manfred said of increasing the CBT.

To note, the Tampa Bay Rays, who traditionally have one of the lowest payrolls in baseball, have been one of the best teams. Meanwhile, the Padres finished 79-83. Spending money doesn’t guarantee success, but limiting a team’s resources doesn’t help.

What the owners want:

They don’t want any change to the expected thresholds beyond past growth ratios for the CBT. But they are willing to bump it up for three seasons and then minimal increases in the fourth and fifth year of the CBA.

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Their proposed thresholds:

  • 2022: $220 million
  • 2023: $220 million
  • 2024: $220 million
  • 2025: $224 million
  • 2026: $230 million

What the players want:

They want to see a significant increase to the CBT that is more commensurate to the growing overall revenues generated, hoping it would serve as kick-start for a more robust free-agent market with more MLB contracts offered and salaries not limited for elite free agents. They’ve proposed thresholds of:

  • 2022: $238 million
  • 2023: $244 million
  • 2024: $250 million
  • 2025: $256 million
  • 2026: $263 million

Major league minimum salary

What’s at stake?

With data showing that most players start to regress in their production after age 30 and teams less willing to spend on older free agents, and players not reaching salary arbitration for three seasons and free agency for six seasons, there is a push to reward younger players with higher salaries.

The MLB minimum salary for a club-controlled player was $570,500 in 2021. It’s not an insignificant amount of money to the average person. But relative to revenues and profits generated by a team, it falls below standard. Also a player reaching the big leagues isn’t guaranteed the full minimum. It’s prorated based on time spent on the active 25-man roster. A player that’s been sent back to the minor leagues receives a significantly reduced salary.  

What the owners want:

They are willing to raise the minimum to $700,000 with it raised up to $740,000. They are offering a high minimum salary if the players are willing to accept a 14-team playoff as well.

What the players want:

They want the minimum to increase to $725,000 in 2022, $745,000 in 2023, $765,000 in 2024 and $765,000 plus the consumer price index in 2025 and a similar raise in 2026.

Playoff expansion

What’s at stake?

The Mariners improving their chances of ending their playoff drought is one notable possibility. MLB re-upped television contracts with ESPN, Fox and TBS through 2028 and part of those deals was the push for expanded playoffs, which have generated large revenues.

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What the owners want:

They would like 14 teams — three division winners and four wild-card teams in each league. The division winner with the best record receiving first-round byes. The other two division winners in each league would host an opponent of their choice in a three-game series. With the two remaining wild-card opponents from the remaining teams playing in a three-game series.

What the players want:

They’d prefer a 12-team format but are willing to accept a 14-team playoff. There is a general belief that expanding the postseason puts less value on the regular season. They don’t like the format of the 14-team postseason, believing it doesn’t reward division winners enough and offers some odd scheduling in the first round and long breaks for the top two teams.  

Pre-arbitration pool

What’s at stake?

In another effort to pay younger players, both sides agreed that pool of money provided equally by 30 teams would be used to reward the top producing non-arbitration eligible players. The differences is the total of money donated into the pool each season.

What the owners want:

MLB wants a pool of $30 million a season ($1 million a team) that remains unchanged in the length of the CBA.  

What the players want:

They want an $85 million pool (their original ask was $100 million) with an annual increase of $5 million throughout the CBA.