The current collective bargaining agreement between MLB and the Players Association expires this December, so the two sides have been engaged in early negotiations on a new deal with the hopes of avoiding a lockout next season.
The previous CBA was agreed to in November 2016 for the 2017 season and beyond, and there has not been a lockout for MLB since 1994-95, which came at a time when there were four in-season work stoppages over a 22 year period.
Commissioner Rob Manfred recently downplayed the tension that’s built up between MLB and the MLBPA over recent years — in particular in 2020 — and believes the two sides have a relatively positive relationship.
Economic issues will be one of the main concerns among both sides for the new CBA, as they always are, and the league has already submitted a proposal that would have a drastic change on team payrolls moving forward if it is approved, per Evan Drellich and Ken Rosenthal of The Athletic:
In a face-to-face collective bargaining meeting in Denver on Monday, Major League Baseball made its first proposal covering core economics to the Players Association. The plan included a new tax on team spending, one that would both effectively lower the first luxury-tax threshold in the sport to $180 million, and charge teams who exceed that first mark a higher percentage than they pay today. One trade-off, people briefed on the league’s proposal said, would be a salary minimum of $100 million in the sport.
The idea of a salary floor is something that has picked up steam in recent years as currently 12 clubs have payrolls below $100 million, which hurts the on-field product of MLB.
The proposed plan would also lower the tax threshold from $210 million to $180 million, and the tax penalty would rise too. Currently, seven teams, including the Los Angeles Dodgers, have a payroll greater than $180 million for the 2021 season.
The idea of lowering the tax ceiling will likely be one that is rejected by the Players Association as it would limit player salaries and give more money to each team’s owners despite an all-time high in total revenue during 2019, the league’s last full season.
MLB is still the only professional sport without a hard salary cap.
Current MLB tax system
Under the current system, teams only need to pay a penalty tax when they go over a $210 million payroll, and that number has risen each year since 2017 when the last CBA was agreed to.
A club that exceeds the threshold the first time pays a 20% tax on every dollar over $210 million and it rises to a 30% tax if they are over for two consecutive seasons.
If they go over for three or more seasons, the tax becomes a 50% tax until the club gets below the threshold.
The Dodgers have regularly entered into paying a luxury tax, but also been mindful of trying to avoid doing so more than three seasons in a row.
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