CARLSBAD, Calif. – During the great panic of 2017-18, when jobless players were jumping on conference calls and asking one another what the hell happened to free agency, the Major League Baseball Players Association tried to allay fears by pointing toward the future. It wasn’t particularly satisfactory for those lacking employment, but the 2018-19 offseason, players were told, shouldn’t be like this.
The New York Yankees, the game’s financial behemoth, would dip below the $197 million competitive-balance-tax threshold – lawyer-speak for the luxury tax – to reset the penalty for their years of profligacy. Surely they would spend. And the Los Angeles Dodgers, who used 2017 to escape CBT jail, too, would leap back into the market ready to reinvest their hoard of local television money.
However reasonable those assumptions may have been, the early indications given by the Yankees, Dodgers and the team with baseball’s third-highest revenues, the Chicago Cubs, do not portend an offseason of free-flowing cash from the game’s financial titans. Perhaps it is simply early-winter posturing, and by the time Bryce Harper and Manny Machado and the rest of the free-agent class of 2018-19 is locked up all will be well again. Subterfuge, after all, is one of baseball’s time-honored traditions.
A cocktail of concern and curiosity joined the Coors Lights and neat bourbons in the lobby at this week’s General Managers Meetings, where agents stung by the spending freeze that wreaked havoc on players’ contracts last winter worried signs of another barren offseason were ahead. Others maintain hope this class would receive far more than last year’s free-agent sum of less than $1.5 billion – especially with Harper and Machado likely to exceed $600 million together. The philosophical chasm came down to a matter of trust about MLB’s intentions, long- and short-term. As one agent said: “Everyone is trying to use last year to get everyone in panic mode.” Leveraging the fear of February unemployment into below-market November contracts is a power move that reflects the drastic shift in clout from the union to MLB, particularly after the December 2016 signing of a new collective-bargaining agreement, which the league relishes, agents despise and the union tries to weather through gritted teeth.
Economic strife was clearly on the agenda for some, as free-agent season kicks off. Bill James — an adviser to the team with the fourth-highest revenues, the champion Boston Red Sox — opined on Twitter that major league players were as replaceable as beer vendors. Agent Scott Boras started his annual GM Meetings soliloquy by calling non-competitive teams a “cancer” on the game and trying to show that their relationship with sinking attendance the last five years is causative and not simply correlated. Boras, according to sources, has forged an increasingly strong relationship with MLBPA executive director Tony Clark, who fired back at James and ended his statement: “If these sentiments resonate beyond this one individual, then any challenges that lie ahead will be more difficult to overcome than initially anticipated.”
James may be little more than a proxy for a ratcheting-up of rhetoric. Clark knows it’s an imperative offseason not just for the union but for him. Historically, players have judged the union’s success on the fecundity of a free-agent market. Here is how the top end of the market, at least, looks to be shaping up: A pair of 26-year-old stars and none of the three highest-revenue teams clearly chasing them despite all three finishing the 2018 season below the CBT threshold.
The Yankees intend to approach the CBT with a mantra that, two sources told Yahoo Sports, goes something like: We didn’t get under it just to blow back past it. The Dodgers’ intentions are laid out even more clearly in a document for potential investors that outlines plans to stay beneath the threshold not just this season but for the next four, according to a Los Angeles Times report. Already the Cubs are projected to carry a $220 million-plus payroll, well past the $206 million threshold for 2019, and entering the Harper sweepstakes — or even signing a good relief pitcher — would push them into the second tier of luxury-tax penalties unless they can dump salary.
The Cubs are the exception, not the rule. The only other team guaranteed to exceed the threshold is Boston. What was introduced as a tax to maintain competitive balance clearly has become something different in the eyes of some teams.
“It’s a soft cap,” one large-market executive said.
“I know people say it’s soft,” another said. “It’s not. Our owners see the CBT number. They want us to stay under it.”
Even as the CBT threshold grows this year by $9 million, it does not come close to replicating the rapidity with which franchise values and particularly large-market revenues have risen. The threshold was $155 million in 2008 and $197 million a decade later, a 27.1 percent increase. Meanwhile, the revenues of teams, according to the annual calculations tabulated by Forbes, have gone up exorbitantly: The Cubs by 114 percent, the Yankees by 89.3 percent, the Phillies – ready to spend big, perhaps bigger than any team this winter – by 71.4 percent. Even the Tampa Bay Rays, who are likelier to have a rotation of five starters than exceed the threshold, grew by 58.7 percent.
With $219 million, the Rays are operating at about a third of the Yankees’ revenue. Their payroll may not reach that one-third mark. Currently, the Rays have six players with at least three years of service time. C.J. Cron is likely to be non-tendered, which would leave them with five making a total of around $18 million. The Rays, sources said, don’t expect to be excessively active in free agency this offseason, particularly for a team coming off a surprise 90-win season.
What most concerns players is the potential squeeze at both ends. Big-money teams not wanting to get hit with a tax on its payroll over $206 million — even if it’s relative pocket change. Were the Dodgers or Yankees interested in raising their payrolls to $250 million this season, the tax on their overage would be only $12.2 million. Which is about a third of what the Rays’ payroll may be. A handful of teams in the midst of rebuild – Orioles, Royals, Tigers, Rangers, Marlins – almost certainly won’t spend anything this offseason. Others – Padres, Giants, Diamondbacks, Pirates, Blue Jays – are in no-man’s land and could give themselves an excuse not to.
And right there, one-third of baseball’s winter-spending habits in question — about the same as it was last year, when the players picked up the phone to consult with their peers. There was anger and disappointment. “Every component part and the sum of all of the parts of the CBA conspire to damage the player,” an agent said. “It is an avalanche.”
Soon enough, we’ll know whether it’s arriving this winter. Whether the Yankees are sandbagging and the Dodgers ignoring those projections and Cubs back-channeling to free up some money for another star. We’ll know whether the Reds and White Sox are serious about spending and whether anyone not named Harper, Machado or Patrick Corbin is going to get even $75 million. We’ll know whether Tony Clark needs to put a line in the sand, and we’ll know whether commissioner Rob Manfred will respect it or walk right over it.
The GM Meetings are done, the players and owners meetings next and then the main event, the Winter Meetings, Las Vegas, Mandalay Bay, Dec. 9-13, 24 hours a day. Until then, it’s a lot of waiting. For the market to move and for some action to happen and for something else — not gridlock or fear or paranoia — to be the new status quo.
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