Let’s talk about the big issue that MLB owners and players have so far avoided during this week’s crucial collective bargaining negotiations.
The competitive balance tax, better known as the luxury tax, is a hot topic as the league and players’ union continue to meet face-to-face every day this week in Jupiter, Florida. while owners want a tax close to the same as in previous years, but with significantly more severe penalties if exceeded.
The two sides have yet to address the subject of CBT this week, but players were unhappy with MLB’s latest luxury tax proposal because they say it would continue to incentivize teams to significantly reduce payroll . Under MLB’s latest CBT offer, draft penalties would be imposed on teams exceeding the $20 million threshold. MLB’s CBT thresholds start at $214 million (up from the previous $210 million) in 2022, and end at $222 million by 2026 in the final year of the next CBA deal. Players are deeply disappointed by MLB’s gradual increase in the threshold. The union proposed a luxury tax starting at $245 million in 2022 and ending at $273 million in 2026. The union is only seeking financial penalties if teams exceed their proposed CBT threshold – rather than draft penalties .
MLB’s CBT proposal will result in harsher penalties for Steve Cohen’s Mets. As it stands, the Mets’ 2022 payroll is around $265 million. This will be the first time since Cohen bought the Mets that their payroll will exceed the CBT. Under MLB’s current offer, the Mets would exceed the threshold by approximately $51 million and lose their 2023 first-round pick, further hurting their already mediocre farm system.
Cohen, as the new owner, is in many ways being asked to go with the flow and avoid ruffling 29 other feathers. But under MLB’s CBT proposal, the Mets would lose crucial picks that would otherwise help strengthen the farm system, an area Cohen has promised to significantly improve with his ownership regime. Under the CBT union’s proposal, Cohen and the Mets would simply lose more money, not more draft picks. For MLB’s richest owner — richer than the next three richest MLB owners combined — which proposition he would prefer is a no-brainer. He is likely in the minority among owners who would prefer the union’s proposal.
Until MLB punishes teams for being uncompetitive or prioritizing financial success over on-field success, bad teams will continue to get worse. Four teams have lost 100 or more games in 2021, the Pirates, Orioles, Rangers and Diamondbacks. This was only the third time in MLB history that four teams lost 100 or more games in the same season. But the trend is going in the wrong direction. Since 2018, there have been at least three 100-loss teams in the same season (three in 2018, four in 2019, four in 2021). From 2007 to 2017, there were 11 combined 100-loss teams over a decade of play.
Club owners found that tanking worked for the Astros, a strategy that began more than 10 years ago. Houston posted three straight 100-loss seasons from 2011 to 2013, earning them the No. 1 overall draft pick from 2012 to 2014. This led to six playoff appearances in the last seven years, including a championship in 2017 For some teams, picking at the top of the draft is more compelling than trying to win every year – especially because any fan backlash that may have occurred while their favorite team is tanking (including draft drops) attendance) largely disappears when this team starts to be competitive. Again. And when teams are in a tanking process that lasts for years, they can also benefit from smaller payrolls, which further suppresses player salaries.
And that’s exactly the strategy the Players Association would like to change. Teams and owners who are incentivized to tank, whether through greater revenue sharing or other means of revenue not including ticket sales, are the players’ union’s No. 1 priority in the ongoing social negotiations. Whether MLB decides to accept that teams not being competitive will negatively impact the game is crucial for the season to start on time – or for the season starting after July 4.
