While Major League Baseball and the MLB Players Association have officially reached a deal on a temporary re-working of the collective bargaining agreement, the details are still filtering out. One key element of the coronavirus alteration is the role of the competitive balance (“luxury”) tax.
The CBT has played a notable role in structuring roster decisionmaking in recent years. Even those organizations willing to pay it from time to time have sought to avoid doing so in consecutive seasons. Repeat offenders pay heavier rates on their overages. Big-spending teams have come to recognize that dipping back under the bar to reset the luxury tax rate can make for massive savings.
We have learned some details of the modified system (see here and here), including the fact that there’s no CBT obligation if a season isn’t played. (Otherwise, it’ll be handled on a pro-rated basis.) But that doesn’t mean that, in the unfortunate event of a cancelled season, every team would start with a clean slate in the 2020-21 offseason. Instead, per Alex Speier of the Boston Globe (Twitter link), the pre-2020 CBT status would carry forward.
This news is directly pertinent to the three teams that incurred a luxury tax penalty in 2019: the Red Sox, Yankees, and Cubs. In the event of a season cancellation, they’d all head into the 2021 season without a reset. That could have major implications for the Boston and Chicago organizations, in particular.
While the Yankees were planning to blow past the $208MM luxury tax line regardless, the Red Sox and Cubs were not. The Boston club — a two-time repeat payer of the luxury tax — had already moved below the 2020 mark and was clearly planning on a reset. The Cubs were sitting just above the threshold when Spring Training was suspended. Calculation depends upon the contracts added or removed during the course of the season, so the Cubs expected to have a chance to reevaluate as the campaign progressed.
This bit of news may not end up mattering. If the 2020 season is played, the Red Sox will get their reset and the Cubs will still have a chance to adjust their payroll to dip under the luxury threshold — so long as there’s an opportunity to make trades, at least. Then again, the calculus would be quite a bit different than originally anticipated in a short-season format without a typical trade deadline period.
Why credit players service time but not teams luxury tax cap time?
Agreed but with the MLBPA expiring after 21, it was probably good will and an unannounced quid pro quo is likely in place. Also if the season gets canceled, they could revisit this as I don’t think the MLBPA wants Boston on the sidelines and not bidding on players.
well that’s stupid. way to pile on one team in specific *cough*RedSox*cough*
Red Sox are getting some advantages if their is no season… Betts trade looks like a fleecing with no season.
Yes but then my Red Sox have to endure another calendar year of lame duck baseball under the tax. I could have handled 2020 and a .500 record but 2021 too? That blows big time.
Poor Gary, with all his first-world problems. Boo hoo.
?? Are we Talkin Baseball here? Are we talking about the subject at hand, the tax reset Etc. You want to talk about world hunger or child prostitution or drug czars, or kidnapping for body parts, or Coronavirus? Serious world issues? I think we’re trying to get a little relief from that for a few moments.
Not understanding you clepto.
Typical east coast response. Center of the universe mentality.
Oh, boo hoo, 2 years of a losing baseball. A tear is going out for you. Try being a fan of a small market team, where those GMs don’t have an open checkbook to write checks….
You mean Small-market team, like the Oakland A’s or Tampa Bay Rays, both teams that always win, or Minnesota Twins or Cincinnati Reds who many expect to do well when play resumes?
It may have been ESPN that ranked the twins and the Reds in the top 10 for the coming season. Not too shabby for small Market teams.
And you know what.. tell those small-market teams to open their wallets and start signing guys. Get with it. Run with the big boys or shut up.
A small-market team should really have an advantage because they’re the only game in town and people come from all over to support that team. Become a kick-ass team. Start winning. Ever been to a Arkansas Razorback basketball game? The place is packed the Crowd Goes Nuts and people come from Statewide to watch. It’s the only game in the state.
You have just proven how very little you know about baseball economics. Nice job.
Your statements are void of any logic, and it’s obvious, you have not understood anything but big market teams. Get a clue.
I’m done. Appreciate the feedback.
Haven’t seen anyone mention Sox wouldn’t get to reset but would still shed a lot of salary (JBJ, Workman etc) and have more wiggle room to make a run in 2021.
Curious. If Razorbacks basketball games are always packed, why does the attendance vary so much from game to game? https://en.wikipedia.org/wiki/2018–19_Arkansas_Razorbacks_men%27s_basketball_team
Seems this year most of the home games are 13000 + according to the link you provided. That’s not packed enough?
You are citing the Reds as a small market success? They’ve literally had three winning seasons in the last 20 years.
What comes with many big market teams are big taxes. One day in my dreams I see a cost of living kicker added to the tax thresholds.
Not that much money when you think about it. Enough for one good player.
Gary, what gasu has proven, and you can’t seem to process, is that your long reach examples to support your failed logic is even wrong.
You don’t get it.
You have zero understanding of the economics of baseball.
No Mike I’m not citing the Reds a small-market success I’m saying ESPN has them listed I think in the top 5 or top 8 for this coming season. Past success I cite is Oakland and Tampa Bay have been winners.
Clepto, gasu proved nothing. Did you read my reply?
Clepto you’ve said nothing of substance but only poo poo my disappointment that the Red Sox are going to suck another year besides this year possibly.
When are you going to have a baseball take?
And by me not understanding the economics of baseball, are you saying the fact of the matter is that small Market teams will never compete? Okay got it, I’m now educated.
Now go ahead and tell me how I still don’t get it… without explaining what I didn’t get !! That’s how your conversations go? you say, “oh you’re wrong and stupid” then walk away? Wonderful contribution.
Hopefully no cancellation will happen so this will be a moot point BUT if it does… that really, really, sucks for the Red Sox. I mean don’t get me wrong trading Betts for what would wind up being 0 seasons would look even better — but not having all the work they did to get below the luxury tax count for resetting it would really suck and set them back a year roster construction wise. Instead of being able to sign FA for 2021 as a first time offender they would basically HAVE to go another year under the tax line in order to reap the benefits of shedding payroll. I suppose there are worse things but in any event if this were to actually occur it would really suck for them. In my opinion — just like contract status (players set to be FA will still be) the reset/or non-reset should be based on the 2020 projected tax amounts. In that case the Sox and Cubs would actually reset because their rosters are currently projected below the line. Whereas the Yankees wouldn’t reset because their projected over it. I understand this presents a new set of challenges because one could make the hypothetical argument that in season trades, etc. could’ve made Boston’s payroll go over the tax line (or though not realistic) the Yankees could’ve traded enough salary to go below the line. But still given that player contracts are all going to be counted (years remaining wise anyway) as though a season were played — I feel like the same approach should’ve been taken for teams luxury tax penalties.
Cubs are falling below the threshold with Quintana, Lester, and Chatwood eligible for free agency next year. If there’s no season played, the arb raises will be minimal and it’s possible they can work out a couple of extensions. They’ll need a couple starters but won’t have to blow through their budget to get some decent ones.
All American Johnsonville Dogs
Find at least 3 starting pitchers and a TOR arm, 2 if someone from the farm steps up.
Find a bullpen
Find upgrades, as necessary like CF or 2B
Even if arbitration prices don’t raise Bryant Baez Contreras Schwarber will be making roughly 40 mill. Plus the Darvish and Heyward contracts put them around 80 mill just between 6 players. Plus Rizzo at 16.5 mill, Kimbrel at 16 mill, and Hendricks at 14 mill that’s 126.5 or so mill between that core alone.
Which leaves the Cubs only 70 something mill to find a new rotation and pen. Plus any upgrades if they want to field a competitive roster.
Course trades could change this Outlook but even with money coming off the books it’s still not optimistic to expect the Cubs to field a ws roster.
They don’t need upgrades at SS or 2B… They can certainly do better in CF, but Happ really just needs a platoon guy that can hit LHP. As for rotation help, sure. But it won’t take a ton to replace these 3 guys – 2 of whom are clearly regressing, and a 3rd who is hit or miss.
stan lee the manly
That’s not how arbitration is going to work at all if the season is canceled. They still get a full year of service time and will most likely just use 2018 numbers to make the decisions on pay bumps. The lost season will have to be taken into account with overall counting stats so that’s not going to prevent owners from paying the players what they are due
Just say it wont reset
stop it with this negativity. its getting really annoying.
its just the sad facts
This is one piece of good news for the Dodgers in the doomsday scenario. If this happens they will be the overwhelming favorite to sign Betts.
Why? This changes NOTHING about Betts’ claim that he wishes to test the FA market; one has to assume he’s going to the highest bidder.
Yeah why would this have any impact on resigning Betts? I’m not trying to be negative/argumentative or anything — but I just don’t see why this would have any impact whatsoever on the Dodger’s chances to resign Betts… I’d assume his mindset is still exactly the same whether or not there’s a 2020 season. Unless I’m missing something?
I guess this has to be spelled out for you. First of all I said sign him, which implys as a free agent not an extension. A lost season knocks out more than half the leauge for Betts free agency due to lost revenues. This includes mid market teams that have shown signs of willingness to spend (Braves, Cardinals, Padres). Of the big market teams that can take a hit the Yankees, Red Sox and Cubs are in no position to sign him. Dodgers and Giants are the only realistic players for him in free agency.
Not really on your point AFK but I think the Dodgers really valued this year to see if “the fit” was right
I agree with a lot of your points but not seeing the fit live could also hurt a little if some team jumps in on a huge offer early…… Sf def makes a lot of sense as you eluded too
As you know we had plans on making Machado a Dodger for life years ago….we got to see the fit a half year early and thankfully that saved us- Not saying Betts is the same as Manny but LAD really wants to get that look this year before making a 10 year commitment
Only financially speaking though…yes you are correct we should have some advantages here including No comp pick etc etc etc
Stay positive, everyone. We are going to have some type of season this year even if it has to start in August.
The Sox worked hard to get under and reset. Good for them that they can start fresh for next season. If they lift the trade freeze at some point, maybe the Cubs can get under as well.
It is not as bad for the RS as it seems.
1-The NYY will almost certainly exceed the cap, so their ramp-up of penalties continues.unabated.
2-Assuming a full year of service time is granted, the NYY window of opportunity shrinks by one year. It does for everyone. But imho, when the NYY brought up Judge, Sanchez and Severino, they were looking like they had a good shot at a WS.
3-The RS will reset the penalty, and still have room to add a couple of players, maybe even close enough to re-sign Betts.
At then end of the day, if the season gets cancelled, which I doubt, all it does is to cancel the single season where the NYY had their biggest advantage since Theo joined us.