Thursday, December 1, 2016

Thoughts on the New Collective Bargaining Agreement

Baseball fans breathed a sigh of relief as MLB and the MLB Player's Association came down to the wire but at the last minute agreed to a new CBA, thus averting any possibility of a strike or lockout for the next 5 years.  In some ways the changes to the CBA were less than anticipated while in other ways some very strong signals about the future of the game were sent.  Let's break it down with emphasis on how the new deal may affect the way the Giants conduct their business:

Competitive Balance(Luxury) Tax:  The threshold rises modestly to $195 M for 2017, escalating to $210 by the last season of the agreement, 2021.  The increase is perhaps not as dramatic as some teams may have hoped.  At the same time, MLB inches closer to a "hard cap" with increased penalties for exceeding the threshold which could reach 90% for teams that repeatedly exceed it by more than $40 M.  Brian Cashman of the Yankees had been particularly outspoken about how limiting to Luxury Tax is to their business plan.  Obviously, the Electoral College is not the only institution in the country where the biggest cities lose at the voting booth!  The Giants have as much committed money over the next 5 years as any team in baseball so this may significantly impact their flexibility on the free agent market and cause them to rely more heavily on their farm system over the next 3-5 seasons.  It may also impact how high they can go with a contract extension for Madison Bumgarner.

Roster Size:  After a lot of talk about 26 man rosters and limits on September roster expansion, rosters stay the same with 25 players for the first 5 months of the season and up to 40 for September.

International Market:  Commissioner Rob Manfred had lobbied hard for an international draft.  He didn't get it.  On the other hand, MLB got a "hard cap" on international bonus pools at $5 M for all teams.  Exemptions for Cuban players were tightened so now a Cuban player must be at least 25 years old and have 6 seasons experience in the Cuban Serie National to be exempt from the hard cap.  I expect these changes will lead the Giants to be more aggressive in the international market.  Q:  Will it be better to sign 1 or 2 players to $multimillion bonuses or 10 players at $500 K or 50 players at $100 K?  Verrry interesting that the MLBPA apparently found a "hard cap" on bonuses to be more palatable than a draft.  Is this perhaps a model for eliminating the domestic draft in 5 years?

Free Agent Compensation:  Teams will no longer lose any first round draft picks.  All teams will lose draft picks if they sign players who have rejected QO's but it will be a single 3'rd rounder for teams under the Luxury Tax threshold and a 2'nd and 5'th rounder for teams over the threshold.  Teams will only receive a draft pick if they lose a player who signs for over $50 M and the value of the pick will be variable depending on the size of the market the team plays in.  The Giants may be more willing to forfeit a couple of lower picks than a first round pick, but they are already going to be limited by increase penalties for exceeding the Luxury Tax threshold.  Don't expect to see many extra draft picks coming the Giants way over the next 5 years!

The Oakland A's get phased out of "revenue sharing" over the next 4 years.  Wow!  This is extraordinary!  How PO'd is the rest of MLB at the A's?  Just my opinion, but this totally exposes the hypocrisy of the A's and their frugal spending.  Obviously, the MBLPA didn't have much trouble convincing other owners that the A's are sandbagging the rest of the league and pocketing revenue sharing money instead of spending to improve the product on the field.  This is also a huge incentive for A's ownership to get off their butts and get a new stadium, and not in San Jose!

Incoming players to MLB will be banned from using smokeless tobacco while current players will be "grandfathered" in, allowing them to continue using.  This is a step in the right direction, but many current minor leaguers and even college and HS players chew.  If they can quit, why can't MLB players?  It will also be interesting to see how enforceable this rule is.

IMO, the big news here is the significant movement toward a "hard cap" on payrolls and perhaps the beginning of the end of the amateur draft.  The major impact for the Giants will likely be an increased reliance on the farm system and the international market for future talent.


  1. On the Cap: I think it's pretty fair to everyone. It keeps the Giants from having to bankrupt themselves to compete with the Yankees, Dodgers and some other 'big TV contract' teams. Plus, more important to me, is that it allows small market teams to compete, if not flourish.

    Take Cleveland. Regardless of record (good, bad or ugly) they just don't draw, averaging under 20K fans/game the past six years (that's all I went back). Yet last year San Diego did nearly 30K fans/game and they finished 24 games under .500 and last in the division and tied for last in the NL. That made the #15 team in attendance.

    The Angels, 14 games under .500 had almost 38K (7th in MLB!).

    I don't think Cleveland could compete against teams that, while sucking, draw far, far more in fans without the revenue sharing. It'd be like what happened with the As back in the 1970s. When FA hit, Finley couldn't (or wouldn't) pony up the money. The A's, one of the best teams in baseball was dismantled and became a joke.

    And I like that competition. It makes baseball more interesting than hearing about the damn Yankees all the time. So I tune in more rather than less.

    On the A's: Good. Because I agree they've been sandbagging MLB for a long-time with their penny pinching ways while living off the hand-outs. I mean, here they are, a LARGE market (albeit shared) team coming in at the bottom-five of payroll almost every year. And have only been out of the bottom-10 ONCE in the past decade (17th). And, yes, I know the Coliseum sucks. I know it hurts their attendance in a major way.

    But it's not 1979 attendance and I think a lot of people are turned off by the constant exodus of their best players when it looks to 'get expensive' and that sort of thing. You know, issues beyond their stadium sucks.

  2. No more All Star game winner getting home field advantage in the WS!!!!

  3. Change in the DL from 15 days to 10 is significant also.