Paul Articulates - Choose wisely

A discussion amongst the writers at Mack’s Mets inspired this piece.  It applies to the looming Collective Bargaining Agreement (CBA) expiration.  That date is less than a month away, but we are already into a part of the off-season that is typically very busy for the front offices in baseball.  

There are free agents available, there are Qualifying Offers (QOs) on the table, there is a pending rule 5 draft.  All of these would necessitate urgent action – yet the rules are about to dramatically change, and therefore the consequences of urgent action are largely unknown.

Let’s get more specific: one of the priority proposals from ownership is the implementation of a salary cap.  The owners feel that a cap is necessary – the salaries of teams in MLB  continue to diverge, and theoretically this causes a competitive imbalance.  If not for this year’s World Series participants, that theory would be widely accepted.  

Another part of the proposal is a salary floor to force the less wealthy teams to spend more on their players.  The players’ union is very much opposed to this proposal, as they feel it will limit their earning power.  The battle lines are drawn, and the battle projects to be fierce and lengthy.

Meanwhile, up in the front offices, there is money to be spent.  Free agent negotiations are in process now as teams hustle to acquire their target players while they can.  

But what if you are a team that is near or above the proposed cap?  What if the offers that are tendered and accepted during the off-season prior to CBA agreement cause your team to be above the cap?  To date, the only consequence has been a luxury tax, and the owners go into each signing with eyes wide open on what that cost will be.  

The consequences for being above the cap are unknown right now, subject to negotiation details we are not privy to.  If the end result is just for teams to face a luxury tax until they get under the cap, then it is business as usual.  If they are forced to invalidate or rework existing contracts, the impact could be very painful.  

What if you couldn't even offer competitive extensions to your own players?  I’m not even sure that outcome could be enforced without legal challenges.

What if the cap were established, and teams that were over it on the date of establishment had a year or two or three to get under it?  That seems practical, but it would allow competitive advantage to extend beyond its intended expiration date.  Some teams could “game” that solution by splurging now on free agent contracts and driving their near term salaries well above the cap, knowing that they would have time to recover.  

I certainly don’t think the lower salaried teams would accept that approach without imposing stiffer penalties.  But that implies a three-way debate between players, high-end owners, and low-end owners.  What a mess!

According to Cot’s Baseball Contracts, there are five teams that are above the rumored $300M salary cap as of the end of 2026: The Dodgers ($432.8M), Mets ($359.4M), Yankees ($341.8M), Phillies ($322.2M), and Blue Jays ($317.2M).  With expiring contracts and before any additional signings, four of those teams could be under the $300M figure for the 2027 season.  The Dodgers, even with all their deferred money, would still be over at an estimated $388.4M.

What would you do if you were Stearns/Cohen?  Would you spend big right now on players like Skubal and King and let the chips fall where they may?  Or would you begin positioning for a future that is going to be dominated by teams with the best development systems and more players with controllable salaries?  

Choose wisely, because the impact of decisions made now may be with you for years.