The CBA’s Poison Pill Isn’t Very Poisonous
As the only league among the four major North American sports to operate without some form of a salary cap, Major League Baseball has always been in somewhat of a unique position. Without the traditional ceilings on team salary, the sport has always left itself open to financial disparity and all the articles and opinions that go along with it.
For 20 years, baseball has tried to curb big spenders through the use of luxury taxes. Six teams paid a total of $70 million in taxes this past year, and baseball decided to continue hammering away on high-payroll teams in the new CBA approved last December. While the financial penalties maybe caused teams to think twice before spending on the free-agent market, the luxury tax never directly affected a team’s ability to access one key pipeline of talent: the Rule 4 (or, June amateur) draft.
This all changed last December. As noted by Baseball America’s J.J. Cooper, exceeding the luxury-tax threshold will result in draft-related penalties beginning in 2018. The full list of sanctions is described on page 110 of the 2017-2021 Basic Agreement, but for those who don’t have that kind of time, they can be summarized in two points:
- If a team’s actual payroll exceeds $237 million in the 2018 season (increasing to $250 million in 2021), their highest draft pick will be moved back 10 places.
- If the offending team’s highest draft pick falls in the first six picks of the draft, their second-highest draft pick will be moved back 10 places instead.
For the first time, Major League Baseball has tried to affect a team’s ability to acquire amateur talent after spending large amounts of money. If a team wants to devote an outsized quantity of money (compared to the rest of the league) to acquiring established players, they have to risk the potential of their future by seeing a major source of young talent dry up slightly. However, if you look closely at the new penalties, you see less of a leash on high-payroll teams and more of an inadequate deterrent that will fail to provide any checks at all.