Baseball Avoids Work Stoppage

Okay, I don’t know how close baseball really came to a lockout as reported and discussed over the past 10 days. But assuming there was at least a remote possibility of a lockout, baseball dodged that bullet when owners and players agreed to a new Collective Bargaining Agreement Wednesday evening.

Ken Rosenthal was the first to break the news with the simple and succinct Twitter announcement, “Source: CBA is done”.  The new agreement will be in place for 5 years, and runs through the 2021 season.  While an official announcement was being prepared, the following details were reported (these came mostly from Twitter and the MLB Network, and may change when the official announcement is released):

  • There will be no international draft. Instead, a hard cap on bonuses for international signings will be in place. Each team will receive the same amount, estimated to be in the neighborhood of $5M. At least one exemption for Cuban players who are at least 25 years of age and have six years of Serie Nacional experience.
  • The “soft cap” on salaries was established for the Luxury Tax limit, and will increase for the duration of the agreement.
    • It will be raised from $189M to $195M for the 2017 season.
    • $197M for 2018,
    • $206M for 2019,
    • $208M for 2020, and
    • $210M for 2021.
  • New penalties for exceeding the cap have been instituted –
    • surpassing the cap the first time triggers a 20% tax,
    • 30% for a second year, and
    • 50% for a third.
    • Exceeding the cap by $20M-$40M incurs an additional 12% tax.
    • Exceeding above $40M incurs a maximum penalty that can reach a 90%.
  • Roster size will remain at 25 players. September expansion remains at a maximum of up to 40 players.
  • Baseball’s controversial Qualifying Offer was subject to several modifications.
    • After the 2017 season, teams will not lose their first round pick when signing a player who declined his QO.
    • A player can only receive a QO once.
    • A team only receives draft pick compensation if a player who declined a QO signs for at least $50M.
      • Most teams will receive a “sandwich pick” between the 2nd and 3rd rounds.
      • A team over the luxury tax threshold that loses a QO FA would receive a pick following the 4th round. 
    • Market size of the team losing the FA determines the draft pick compensation.
      • If the team losing the QO FA is among the 15 smallest markets, comp pick follows the first round.
    • Teams over the soft cap (luxury cap) will lose their 2nd and 5th round picks in the Rule 4 Draft, PLUS $1M of international signing money.
    • Teams under the soft cap will lose their 3rd round pick.
    • A player must still be on team for an entire season to be eligible for a QO.
    • The QO will continue to be determined by average of the top 125 salaries.
  • The Athletics will be phased out as a revenue-sharing recipient over the next 4 years.
  • Starting in 2018, additional off days will be inserted into the schedule by starting the season mid-week.
  • New MLB players will be banned from using smokeless tobacco. Those players already in the majors will be grandfathered in.
  • The “performance factor” element (a revenue sharing multiplier) of the revenue-sharing system will be removed, thus decreasing the amount the large budget teams are paying into the pool.
  • MLB intends to schedule regular season games abroad as early as 2018 (likely to be in London and Mexico City).

New details announced this morning during Hot Stove:

  • Home field advantage for the world series will go to the pennant winner with the better record instead of the pennant winner from the league that won the All Star game.
  • The 15-Day Disabled List will be reduced to a 10-Day DL.
  • The international signing rules will NOT apply to Japan and Korea.  The posting of players from those leagues/countries will remain the same.

By the way, I learned from watching Myth Busters that “dodging a bullet” is not possible. Busted.

43 thoughts on “Baseball Avoids Work Stoppage

  1. Matty K has to move Hellickson this July….no more QOs since he already had his first and last with the Phillies. Unless he wants to sign him for 3/4 years going forward.

  2. On the new luxury tax penalties, is it still tax only on the amount over the threshold, or on the entire salary amount?

  3. I was watching MLB network last night when they broke the news. At first I got my hopes up when I heard they might be removing compensation to sign a FA but then they were dashed not until next off season does that go into effect.

    I do like that they tied it to the luxury tax. I thought they could have run more with that i.e. not let a team who is at or above the threshold even use a QO and conversely they could have put a floor in and said if your team payroll was below say $50 million then you can’t put a QO on your own FA.

    The main details I’m sure will be in how they cap International signs. Good news for most I assume. And we should see a run on some FA signs this week. The hot stove can finally get hot.

    1. DMAR…a yearly $5M hard cap on international signings.
      But the key…what is the penalty for breaking it….if it is not loss draft picks but fines…..forgetaboutit…..for the usual suspects and violators all it means is business as usual.

        1. DMAR…I agree. Rule 4 slotted money with an international draft equivalent per pick allocation would have been fine with me.
          The $5M hard cap…analyze it by the Phillies reference.
          When they signed Jhailyn Ortiz for $4M plus…they came close that year.
          But have they ever come near that before or even last year.
          They usually end up in their max years in the past..a lot less than $5M….will they now go to that ceiling?
          That is the question I want this org to answer.

  4. does the penalty for exceeding the cap applies to both rule 4 and international bonus caps? it is not clear to me what will be the implication for exceeding the $5M cap for international signings. If hard cap means that no team can sign anybody if they reached the $5M, i expect some teams (like BOS) to go under and try to manipulate the signing $$.

    1. KuKo….IMO, Boston is the one team that will not do that….they already received the worst penalty to date for playing around the rules when they lost all their Latin international FAs last year…Phillies getting OF Simon Muzzatti..
      They cannot afford to have any negative perceptions going forward.
      And just not sure about the Rule 4 cap violators, when they publish the new CBA we will be able to see how that is written and enforced.
      Also…not sure how they have addressed the teams that are currently serving the two-year penalty under the old CBA…..does it carry forward?

      1. i assume that some matters will be grandfathered from the old CBA, thus, the teams will still observe the 2-year ban.

        as for BOS, i agree that they don’t want (if given the choice) any more negative publicity. however, being a big market team and competing with NY – BOS will continue to “bend” rules to their advantage to get the competitive edge. I’m not saying the BOS will cheat, but I don’t expect them to be the perennial good guys either.

        1. If Boston wins the World Series the”negative pub” they would receive from cheating the international signing CBA agreement will be easily forgotten by every fan, unless there is a real deterrent like ban from draft and free agent signing for substantial amount of time, cheating should not be rewarded like it has been the last 10 years so

          1. It isn’t the fans that Dombrowski may be worrier about, if they get caught bending the rules again. It is the league.
            Repeat offenders can be dealt with more harshly.
            That is one reason he was trying to get MLB to penalize the Padres and Preller over the Pomeranz trade and the medical data omission…..but he still pitched Pomeranz when they needed him to pitch in August and September. Suspending Preller was not enough…he wanted compensation in the form of a prospect or draft choice, and not money.

            1. I still think one draft pick is worth the worlds series, he’ll I’d give up a whole draft one year if the previous I won the World Series, right ??

  5. The 64-thousand dollar question (for me) is … how will the new CBA affect Shohei Otani ?
    The reason he didn’t get posted this year is because, at 22 YO, he would fall under the international signing bonus umbrella. Next year, at 23 YO and with five years of pro ball, he would not be subject to those restrictions (Under the old CBA).
    Does the new CBA mean Japanese players will be under the same rules that apply to Cuban players (At least one exemption for Cuban players who are at least 25 years of age and have six years of Serie Nacional experience) ???
    Will teams who busted their international bonus pool still have to sit in the penalty box for two years ??? If so, and Otani is under signing restrictions, the Dodgers would be out of the mix next year. Although, Otani most likely wouldn’t even want to be posted because his earning potential would be trampled by that 90% luxury tax.

    This new CBA could really put a dent into the Phillies plan to sign the Japanese superstar next year when they will have THE MOST payroll flexibility of all the large market (big spending) teams.

    1. sorry for the double post. It didn’t show up after I originally posted it the first time. I should have copied it before posting it, but I didn’t.

  6. Some new details announced this morning during Hot Stove (I’ve also added them to the body of the original article above):

    – Home field advantage for the world series will go to the pennant winner with the better record instead of the pennant winner from the league that won the All Star game.
    – The 15-Day Disabled List will be reduced to a 10-Day DL.
    – The international signing rules will NOT apply to Japan and Korea. The posting of players from those leagues/countries will remain the same.

    1. Thanks for taking care of the double post, Jim.
      Also, great to learn that the international signing rules will not apply to Otani next year. There’s going to be an all out bidding war for him this time next year.
      I just read Buster Olney’s piece on the Cubs’ plans for Otani …

      “Jay’s one-year, $8 million deal is low risk, and what the former Cardinal and Padre might provide above all else is positional flexibility, which will be important as the Cubs adjust for the use of Kyle Schwarber, Jason Heyward, Albert Almora Jr., Jorge Soler and others.

      The Cubs could have gone after one of the pricier bats in the market, but there is already heavy expectation that Chicago is holding its dollars for something bigger — the cost of restocking the pitching, for example, and perhaps a potential run at the multitalented Shohei Otani, the MVP of Japan’s Pacific League. A star pitcher and designated hitter, Otani will be the most sought-after player next winter, and rival executives believe the Cubs will be all-in on that pursuit when the contracts of Jake Arrieta and John Lackey are set to expire.”

      The Yankees are also looking to avoid long term deals so they can add more flexibility to their payroll. They prefer one year of Carlos Beltran instead of multi years of Edwin Encarnacion.

      I’m hoping the Dodgers resign Justin Turner. That would further strain their payroll.

      The Red Sox are at (or may be over) the luxury tax. It’s going to be next to impossible for them to compete for Otani.

      Romus may have his doubts, but the Phillies have purposely not spent any long term money this year in preparation for Otani in 2017 and Manny Machado in 2018. Middleton mentioned those two FA classes in his three part interview with Jim Salisbury a couple months ago. Otani and Machado are also the same age as the Phillies young core. This is the plan. Be patient.

  7. I think Manfred is pretty much in touch, all things considered (especially compared to his predecessor). However things shake down in the long run as far as who the new CBA favors or benefits most, the game is always stronger when the players are hungrier. Of course, none of them are going to starve.

  8. Now, I’m really confused. According to Jeff Passan, the new CBA just cost MLB (the Phillies) Shohei Otani until 2019 …

    “Here’s part of the new CBA nobody really likes: With new int’l signing age 25, Japanese star Shohei Otani won’t be coming to MLB until 2019.”

    Sounds like Otani will fall under the same rules as the Cuban players.

    Have to agree with Keith Law’s opinon of the new CBA change to IFA signings …

    Mark: From what has been published so far, what do you think are the best and worst changes in the new CBA?
    Klaw: Again, what we have seems to be incomplete and I’m trying to get some more details. If this bit Jeff Passan tweeted about the IFA age limit going up to 25 is true, then MLB just cut off its nose, lips, and eyelids to spite its own face. God forbid you spend some of your billions to pay better players.

    1. Hinkie……so what you are telling me….I have to have more patience now!
      Well one more year is not such a big deal I guess.
      We get Manny Machado in 2018 and ShoOt in 2019, correct?
      Do me a favor, make sure John Middleton doesn’t forget.

      1. Romus we wait from 1868 until 1980 for our first world title. I think we could be patient for another 5 years. or more.

        1. rocco…actually 1883 until 1980….whats 97 years to wait!
          Then another 28 years to 2008. It keeps getting shorter.

      2. The problem is … next year, the Phillies will have a huge advantage over all the other major players for FA’s because we will have so much more payroll flexibility. By 2019, the Phillies won’t have that same advantage.

        1. hinkie….you are assuming in 2018 they sign one of the biggies, correct?
          Which in turn, will take them out of the Otani sweepstakes.
          But in 2019, other than Nola, Franco, maybe Herrera, if they all blossom as expected, what are the big contracts they will need to offer from this current team.

          1. Not so much the Phillies will be loaded with big contracts. The problem is … iby 2019, teams like the Yankees and Dodgers will have much lower payrolls than they currently have. Otani’s arrival next year would have given the Phillies a much greater advantage.

  9. Notwithstanding an analysis of team’s wallets – why would one worry about what the Dodgers or Yankees have then, that year ? They WILL and HAVE ALWAYS HAD more than EVERY OTHER TEAM. Given their respective locations to the far east, history of signing Asian players, and proclivity to have their own tv/radio schedules/stations why in the world would one not handicap them as the going away winners on any international free agent. It is like saying the sun won’t come up tomorrow ?????

    My suggestion is to concentrate on Venezuela players, Korean players, the independent league players – anywhere else, because unless your brother in law is that HOF Japanese pitcher he is going to end up wearing Dodger blue, or pinstripes. Its over – face it…..

    1. The paid a lot (the most) and have a huge Asian population, but I’m not counting the Phillies out just yet, money talks but not everyone listens, after all what’s 10 million if you just got 200 million

  10. Could be a good think he won’t be over here until 2019, at that point they can sell us as a winning young team on the rise (hopefully) instead of a rebuilding team close to winning.

  11. HOLD THE PRESSES … The dream is still alive. According to Jeff Passan’s latest tweets, MLB may make an exception for Shohei Otani.

    Jeff Passan ‏@JeffPassan 8h8 hours ago

    Sources: While new CBA essentially prevents Japanese star Shohei Otani from coming to MLB before 2019, rules could be changed to allow it.
    6 replies 59 retweets 46 likes

    Jeff Passan ‏@JeffPassan 8h8 hours ago

    Official: “There are ways it could happen. I don’t think there is any reason if an international superstar wants to play here we stop it.”

    Jeff Passan ‏@JeffPassan 8h8 hours ago

    Could be via amendments to CBA from new posting agreement with Japan or other levers. Point is: Otani is a player worthy of tweaking rules.

    OTANI in 2018
    MACHADO in 2019

    1. Great news, Hinkie!
      From what I’m reading it sounds like the Cubs will be the team to outbid for Otani (assuming he’s allowed over next winter). If this guy is really worth that kind of coin, we’ll probably have to go head and shoulders above all other big market clubs. This is definitely a matter of selling the city and the franchise to his camp on top of a generous contract offer. We wooed game changers like Pete Rose and Jim Thome well on in their careers but could we make a fresh young phenom ours from jump street? All eyes and ears will be on McKlentak.

      1. We could be talking close to a half a billion dollars over 10-12 years. Actually this won’t be so much a McKlentak decision as it will Middleton.

          1. gearing up for the future outrage that the team just isn’t willing to do what needs to be done to win.

            1. Yes…right next to Tony Lukes or Chickies and Petes….Rocco and Romus’ Sushi…rots of ruck with that.

        1. 8mark … don’t pay attention to the doubters. You are right. The Cubs will be all-in on Otani. While the Yankees and Dodgers have more money committed to payroll for 2018, they will back-load offers. The Philles should front-load their deal. Offer him an obnoxious amount of money over the first three or four years. Otani will help recoup that obnoxious amount of money by drawing more people to CBP, more viewers to Comcast, opening more marketing avenues for the team, etc. He’s not just a great pitcher who happens to also be a pretty good hitter, He is an “event” or a party ready to break out every time he takes the field.
          The Phillies have all kinds of money and payroll flexibility to play with. They only have 2 million dollars committed to 2018 payroll and nothing for 2019 and beyond.
          This Christmas, I’m asking Santa for my Phillies Shohei Otani #11 jersey.

  12. You are dreaming Hinkie. It is a beautiful dream, and I hope I am wrong, but I don’t think they are even a player in the sweepstakes, let alone end up getting him.

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