Throughout the time MLB and the Players Association (MLBPA) have spent negotiating a new collective bargaining agreement (CBA), it’s become evident the luxury tax threshold and potentially expanded postseason are key subjects.
The union also sought increases for the minimum salary and establishing a pre-arbitration bonus pool. Team owners eventually closed the distance on starting salary, but remained far apart with the MLBPA on the competitive balance tax lines and money for players not yet arbitration-eligible.
Those obstacles ultimately stalled negotiations and led to the MLB’s self-imposed deadline for a new CBA passing without a deal.
While the next steps were unclear, the Players Association changing their stance on an expanded postseason could prove to be what sparks talks, according to ESPN’s Buster Olney:
Hearing from sources on both sides of the CBA talks that they are hopeful that a renewed discussion of the 14-team playoff field could be a potential breakthrough — for talks that need a breakthrough.
— Buster Olney (@Buster_ESPN) March 4, 2022
According to multiple reports, a 14-team postseason would amount to a $100 million television rights contract between ESPN and MLB. That figure is believed to be $85 million if the playoffs only expand to 12 teams — which had been what was unofficially agreed to in the latest talks.
Considering adding more teams is financially beneficial to team owners, the union could look to leverage that for luxury tax thresholds that are closer to their desired benchmarks. The MLBPA also would benefit some from expanded playoffs, as they receive a portion of gate receipts.
Luxury tax differences between MLB & MLBPA
In their most recent proposal to MLB, the Players Association sought a competitive balance tax line of $238 million for the 2022 season and increase to $263 million by the final year of the CBA.
The league countered at $220 million for the 2022, 2023 and 2024 seasons; $224 million in 2025 and $230 million in 2026. The luxury tax threshold was set at $210 million in 2021.
To keep up with the United States’ 7.5% inflation, the CBT for the 2022 season would need to be around $225 million; thus making an offer of $220 million is essentially asking the players to take a pay cut.
Team owners reportedly are not taking increased revenue or inflation into account when determining the luxury tax thresholds, and instead are calculating off the prior CBA.
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