The primary cause of the stalemate between major league baseball players and owners is MLB’s failure to agree to a reasonable increase in the Competitive Balance Tax (CBT) threshold. The owners “final and best” offer included a paltry hike of less than five percent, from $210 to $220 million in 2022, followed by no increase for two more seasons. With inflation at seven percent in 2021, that would make for an even harder de facto salary cap going forward, which is the one thing that players would never, ever agree to.
Four owners, representing the Angels, Reds, Diamondbacks and Tigers, are reported to be the four who voted against commissioner Rob Manfred’s recommendation to go even that far according to Evan Drelich at the Athletic.
We’ve written about the CBT issue and how that issue was the central cause of the 1994 strike that canceled the post season including the World Series. And how the owners bargained in bad faith and then tried to unilaterally implement a salary cap, and start the 1995 season with replacement players before a federal court injunction stopped them. Simply put, opposition to a salary cap is the hill that the players have been willing to die on for 28 years, and that hasn’t changed.
When the most recent collective bargaining agreement (CBA) was signed before the 2017 season, seven teams had payrolls above the luxury tax threshold, and all of them slashed their payrolls to get under it within two seasons. One of those teams was the Tigers, who kept cutting under owner Chris Ilitch.
Detroit Tigers’ Payroll, 2012- 2021
| Year | Major League Payroll (rank) | CBT Payroll (rank) |
|---|---|---|
| Year | Major League Payroll (rank) | CBT Payroll (rank) |
| 2021 | $ 80,866,200 (24) | $103,879,667 (23) |
| 2020 | $ 43,442,519 (21) | $119,860,487 (22) |
| 2019 | $115,118,500 (22) | $128,891,911 (23) |
| 2018 | $125,286,000 (19) | $135,349,421 (20) |
| 2017 | $199,750,600 ( 2) | $207,204,947 ( 3) |
| 2016 | $198,593,000 ( 3) | $212,044,266 ( 3) |
| 2015 | $172,792,250 ( 5) | $181,612,247 ( 5) |
| 2014 | $163,635,500 ( 4) | $187,003,795 ( 3) |
| 2013 | $148,693,600 ( 5) | $164,982,798 ( 8) |
| 2012 | $133,995,400 ( 5) | $145,231,588 ( 8) |
*Source: Cot’s Contracts by Baseball Prospectus
In 2021, just two teams had payrolls above the $210 million threshold: The Los Angeles Dodgers who had been under the limit for three seasons, and the San Diego Padres who crept barely above the mark with mid season acquisitions in a failed playoff bid. Of greater concern to players is the fact that six other teams had payrolls above $200 million, five of those within $3.5 million of the tax trigger without going over. It IS a de facto salary cap, and players want an increase considering inflation and the increase in baseball revenues.
The Athletic also reports that owners wanted to include players’ meal allowance in the tax calculation, which already includes performance bonuses and about $15 million per club in player benefits such as pension and health insurance, as well as the average annual value of contracts. MLB also tried to include stipends paid to players who participate in the All-Star Game, and the Home Run Derby sources told the Athletic. Anything to limit spending on players.
The proposal that the owners made was certain to be rejected, triggering a cancellation of opening day and regular season games under the owners’ self imposed lockout and self imposed deadline. The players last proposal was for a $238 million CBT.
With 26 of 30 owners voting in favor of a $220 million threshold with no increases for two more years, they need to get 23 to support a proposal for a higher threshold, more in the $225 to $230 million range, in order to get an agreement. Although a gap of $18 million may not seem like much on paper, there are a group of owners intent on limiting spending and all players who oppose such limits.
While the owners were leaking stories to the media about how close they were to an agreement, they were presenting an offer to the players that they knew was dead on arrival. At the same time, they threatened to cancel opening day and regular season games if their proposal was rejected. And here we are. Thanks, Chris!