It seems there’s still a good deal of confusion out there surrounding just what will happen to player contracts given the disruptions to the 2020 MLB season. We’ll do our best to explain the situation in this post, based upon what has been reported to this point.
Background
In the wake of the suspension of Spring Training and the 2020 season, MLB and the MLB Players Association wisely engaged in immediate bargaining to address the massive and sudden changes to the expected state of affairs. The sides have already agreed upon modifications to the Basic Agreement governing league affairs. The full agreement hasn’t yet been released, but the key parameters are largely known (see here and here).
Related Matters
Numerous player salary determinations have been reached that do not specifically bear upon MLB contracts as typically covered here at MLBTR. The union has authorized stipends to certain players and the league has announced team payments to minor-league players. Other employees and contractors have also been addressed, if not fully accounted for on an ongoing basis: league staff, salaried team employees, and hourly employees. At least some teams have also provided some manner of financial assistance to independent contractors that have lost anticipated wages. There are numerous changes afoot to the 2020 amateur intake process (draft and international signings).
MLB Service Time
The key union bargaining priority, by all indication, was to preserve the anticipated player movement through arbitration and into free agency. That was secured in the aforementioned agreement, which assured players of the chance to accrue a full year of MLB service in 2020.
In the event of a shortened season, players will be awarded service time on a pro-rated basis. Players that accrue service for the entirety of the truncated campaign — those on the active roster and/or MLB injured list — would still get a full year of service. In the event of a canceled season, players will be credited MLB service in the same amount they accrued it in 2019.
The agreed-upon system is obviously far from a perfect approximation of what would theoretically have occurred had the 2020 campaign been played as planned (to the extent that can even be guessed at). But it does largely preserve what we’d have anticipated before the pandemic arose, at least in terms of the overall volume of service that will recognized. And while the distribution of service time will differ, it was surely necessary to utilize some sort of crude-but-objective mechanism.
As a practical matter, then, we will still see the same 2020-21 free agent class that had been expected — with Mookie Betts leading the way, even if the Dodgers never see him play a game in their uniform. Those that missed time in 2019 on the 10-day or 60-day MLB injured list will still get full credit for another year of service. Players will qualify and move through arbitration as normal, with Walker Buehler and Juan Soto among the potential Super Two qualifiers.
The major impact, in the event of a cancellation, will be on certain recently arriving big leaguers that had less than a full service in 2019 and on prospects who had expected to debut in 2020. Keston Hiura may actually not be hurt at all — with 114 service days last year, he wouldn’t have been a likely future Super Two qualifier and will still go into the 1+ service class. But Bo Bichette logged only 63 days in 2019, so he’d end up well shy of a full season if there’s no 2020 campaign. That would push back his eventual arbitration and free agent qualification by a full year. Top prospects such as Jo Adell wouldn’t have a chance to break into the majors in 2020.
MLB Player Salaries
Under the very same agreement that sorted out the service-time issues, the players gave up an immense amount of potential earnings in the 2020 season. In the event of a season cancellation, MLB players will receive just $170MM in total from teams — less than one-twentieth what their contracts would otherwise call for.
Should a partial season take place, players will earn on a pro-rated basis. Whether that’s based upon days of the season or games played isn’t entirely clear; that would make a difference if a compressed schedule is attempted. Regardless of the details, the main point stands: a player’s actual 2020 earnings will be quite a bit lower than expected if the season is shortened. But players would still earn a typical check for that portion of the campaign that is staged — if, at least, fans are in attendance. Since this post was originally published, a disagreement between the league and union has emerged. The league claims that the original agreement does not cover a situation in which games are played without spectators; the union contends that the pro rata system should hold regardless.
Future Earnings
There are some initial agreements already in place that will impact the near future. The word on 2021 arbitration salaries remains ambiguous. ESPN.com has reported that “The arbitration system will be adjusted to consider lessened counting statistics because of the shorter season, and salaries secured during the 2021 offseason through arbitration won’t be used in the precedent-based system going forward.” It sounds as if there’s an anticipation of a reduction in raises, though precisely how it is expected to work just isn’t evident.
There’s greater clarity with respect to the luxury tax. No penalty payments will be owed if the season isn’t played. If there’s a partial season, competitive balance payments will be prorated. But the luxury tax system will not automatically reset in the event that the 2020 season is canceled. We recently explored the ramifications of that here.
Of course, the competitive balance system operates primarily to constrain player spending by large-market teams … in a typical market setting. There’s little question that the immediate and long-term economic impact of the pandemic will have an even greater impact on free agent spending. Precisely how the coronavirus will impact the future is still largely unknown, both broadly and with respect to Major League Baseball.
As more is learned about the virus and the international response to it, that information will surely impact negotiations. The sides have much to discuss — not only about 2020 and 2021, but beyond, as the Basic Agreement expires after the 2021 season. At this point, there is no indication of an effort to reduce previously guaranteed salaries for future seasons, but they represent a major future liability to teams and could play an interesting role in the bargaining to come.
If there’s no baseball in 2020, I have to imagine that free agent values will be decreased. I wonder if some players will consider one season contracts to re-establish their value.
Regardless, those are great salaries shortened season or otherwise…
In the NFL a lot of player took short deals.
I can see mlb players taking 1 year high AAV deals in the offseason if there is still concern of the virus.
The only exception would be good aging players that want a 3-5 year deal to finish off their career and if they wait 1 more season teams might not want to hand out a long term deal to them.
On the other hand an agent could argue that a well rested player should be more healthy than they’ve ever been.
I guess the key is whether teams trust revenues to get back to normal or not.
I think it’s pretty insane that the Dodgers could lose Betts without him even playing a single game for them while giving up players/prospects
Luck of the draw I guess.
The same could be said for several teams
Mookie will play a game for the Dodgers and anyone who says otherwise is crazy
So are the Dodgers FOR SURE going to resign him if the season is cancelled?
Nothing is for sure but they would be in the best position to sign him.
@Afk711 how would they be in the best position to sign him?
Common sense. MLBTR even reported a few days ago on how big market teams will have a huge advantage in free agency if the season is cancelled. There is a reason there were only three real suitors for each of the 3oo million dollar free agents in the last 2 offseason. All logic points to the Dodgers, Giants and maybe a few sleepers like STL/ATL for Betts. His market will not be flushed with suitors.
@Afk711 That would all still be true if they hadn’t traded for Betts.
Everyone knew where Machado was likely to go 2 years ago…until the Padres gave him $300 million. If the Padres can do it, almost anyone can.
The Padres play in a big market believe it or not. We may not even see every MLB team hand out a 300 million dollar contract in our lifetime.
The Padres receive revenue sharing. That puts them in the lower half of teams. That means that over half the teams in mlb can afford a contract like that.
I’m crazy then. But just imagine if the Red Sox got Verdugo and Downs for David Price!
IF (granted it’s an IF) Price is healthy, AND given the base inferiority of the NL over the AL, AND given the pitcher friendly ball park, if the Dodgers got Price for Vedugo and Downs, it’s an absolute highway robbery…..for the DODGERS……..
Price isn’t good anymore bob and his contract makes him worse. Enjoy his whining.
David Price for 32 million is a a bad contract. Price for 16 million is very resonable. And he is more than happy in LA without the media hounding him every second.
Exactly. No one doubts Price has issues; but Verdugo and Downs don’t? One has a ceiling of slightly-of-better-than “meh”, with an attitude that likely prohibits him from hitting that ceiling; Alex will find the Fenway Faithful are not California Mellow, The other looks like a utility guy.
No Red Sox fan should be upset; I’m sure they got the best they could for the Betts/Price combo’s limited market. But the deal reads as a plus plus for LA, with or without Betts ,who’s just icing on the cake. And Mookie Betts is some kind of icing.
And won’t have to get into those stupid arguments with Eckersley.
Price at 5 mill a year wasn’t worth 5 years of Verdugo, full team control of Downs, and Wong let alone 16 mill.
If there is no 2020 season. Sox get 2 years of price. Certainly not worth what they paid, which could of netted an equally talented, possibly younger, pitcher with more team control.
Well its a good thing they alsp got that Mookie Betts guy in the trade. It wasn’t Down, Verdugo and Wong for Price.
What are you smoking? Plus plus for LA?
The Dodgers purchased 5-8 WAR from the Dodgers in that package and if they don’t get that 5 WAR out of Betts it’ll be a huge loss.
I wonder if the value of free agents is decreased a little bit, are the Rangers in the running for Betts? We already have the cash to go 35 mil a year on him, but if that drops to, say, 30 mil I hope Jon Daniels has us firmly in the running. (Unless Ray Davis and Bob Simpson say otherwise).
I dont think ownership has any intent of spending big, I think everything theyve said about spending big going into new stadium was just blowing smoke up our a–es, to keep us pacified that they cut payroll 25% over 4 yrs. I hope I’m wrong, but their misses in fa this past winter has just convinced me even more.
I just wished that 3 years ago when we started this ‘rebuild” that ownership would’ve told Daniels to do a full blown tanking type rebuild instead of just a half and half one. Say it takes 5 years to go through a tanking rebuild, we’d almost be done with it by now, and we’d have some amazing prospects. I don’t hate what JD’s done, but I don’t think we’re going to be contenders for a few more mediocre seasons. Heck if we don’t catch any big fish next off-season we should just trade away the few big names we have right now. It’s a weird time to be a fan of a mediocre club.
JD gets alot of undeserved hatred, cant blame him for circumstances he cant control. What’s he supposed to do when owners cut payroll 25% and 2 thin free agent classes recently. Cant go get free agents that arent there with money owners wont give u. Hes still same GM that aquired beltre, choo, santana, lee, got hamilton going into his prime, and got us 2 pennants
Exactly, and I really like JD, and I think he’s one of the top 10 gm’s in the game. If ownership would’ve let JD have the power to sign whoever he wanted in Free agency, I believe that Rendon would be a Ranger right now, and with the rotation also being set, people would think of the Rangers as a true WC contender in 2020. But alas our ownership doesn’t believe in winning, and therefore won’t let us field a good team. I hope the rumors of them selling the team are true, I remember Jeff Wilson was talking about them selling in 2021 because of the high stock of the new stadium and fairly good team.
Texas is always in the running vs. CA teams due to the huge difference in take home pay. The Dodgers are guaranteed 81 home, 9 SF, 9 SD, and 3 Anaheim games per year so 102 games taxed at 13.2%. Texas 0% looks pretty nice.
Granted at a certain point rich is rich and it doesn’t affect his lifestyle, but on a $300 million deal that’s like playing the last year or so for free.
“MLB players will receive just $170MM in total from teams — less than one-twentieth what their contracts would otherwise call for.”
That agreement could actually be detrimental to having a partial season. For many teams, cancelling the season would mean less loss than playing a partial season. Any season this year likely is going to hurt the owners financially much more than the players. And if they start, wherever they play, with empty stadiums, that just makes the financial hit worse.
Here’s a question. Nick Castellanos signed a four year deal with the Reds, but wasn’t the first season the only season with an opt-out option? So would the opt-out be in effect the first season he plays with the reds? Or does he not get an opt-out?
He should get an opt-out after 2020. He will not likely use if they don’t play though. He wouldn’t have been able to build more value.
That’s an interesting question. Strictly a guess on my part: if the season is cancelled but service time is still counted, I’d guess any sort of contract provisions like opt outs would also be honored as though there were a season (again, only a guess – I have zero inside and/or legal knowledge!).
Probably a moot point; I can’t imagine the next FA market will be as strong as last year, especially if you’re not a top five superstar, so I can’t imagine anybody opting out in hopes of a better deal.
Rangers29……..”Castellanos may opt out of contract after 2020 and 2021 seasons.”
legacy.baseballprospectus.com/compensation/cots/na…
Thanks Cat Mando.
only 1/20?
Im sure the players can just make up their time with sick and vacation days.
Another factor is the huge economic hit these franchises are taking. I really don’t think they’ll be anxious to lay out huge contracts until they recover.
@why, I agree. I think Mookie will sign a contract that is 20-30% lower (over the course of his 7-9 year deal) this offseason than he would have had the chance to lock up if Covid hadn’t happened now. Just guessing…..
While some teams may lose a year of control from young players.. not paying say Wil Myers 20M of his backlogged deal is probably worth it to teams like the Padres lol. Heck throw in Hosmer too.
Losing a year of control of Paddack, Tatis and Yates hurts BAD. They already lost a year on Tatis and Paddack by having them in the opening day lineup last year. Now they lose another one. Plus Yates, who was the best reliever in the game last year, could have been re-signed or traded for real quality at the trade deadline. Now he is just a free agent. They get no return and cannot negotiate an extension with him.
Having Tatis and Paddack in the opening day lineup last year was bordering on negligence.
On Yates, the bullpen would be sunk without him. Especially with Andres Muñoz needing Tommy John surgery and Jose Castillo likely to follow him. It was impossible to predict that the season would be cancelled by a global pandemic. Any GM that could have foreseen it would have traded EVERYONE that wasn’t controlled through at least 2022. And hey, at least the Padres can get an extra draft pick by QOing Yates.
In the last chat, I asked if any teams were in financial trouble because of the shutdown. No response… but mark p does like Seinfeld.
@Jeff Todd, for the sake of symmetry, you should have noted that players getting 1/20th of their pay in the case of full cancellation would leave owners with a collective $170 million loss on top of other expenses for front office, stadium rent, etc.
I’m assuming the teams had the upper hand in the CBA because it’s a pretty bad deal for the players.