Are We Re-Experiencing Collusion by MLB?

Is there in fact collusion going on in MLB?  With all of this backlash on the various trades, it is becoming more clear to me that if the MLBPA did not have Tony Clark as the union president, the union would clean the clock of MLB and it’s own lightweight, Rob Manfred.  Boston is not hurting in revenue or operating income, and can certainly afford the salaries and resultant luxury tax if they had retained both Betts and Price. But their owner, John Henry, stated that the goal was to get under the CBT threshold and reset the luxury tax clock.  Why?  That was also the stated goal for NYY and LAD a couple years back.  Why?  And the Chicago Cubs are fighting the same threshold as is Boston this year, and they want to make changes that are apparently being hampered due to salary restrictions.  Why?  Is there an unwritten rule amongst the owners after the 2016 CBA that teams needed to respect the threshold as a de facto salary cap?  While MLB cannot mandate (a word avoided by all of the big spending teams) that they reset the tax at least once every three years, they certainly seem to get teams to adhere to it.  Why?  Are we seeing a version of collusion part deaux?  Just exactly where is Peter Ueberroth? 

NYY, LAD, Boston, Chicago Cubs, Philadelphia, SF, and NYM are not small market teams and none should be trying to back away from the luxury tax if their team is helped. No team (business) wants to pay unnecessarily a tax, but if it is an investment in winning a WS, then these teams should not shy away from exceeding the CBT threshold, even for three consecutive years.   The tax should not be an impediment to investing in one’s team.  If the team can afford it, go for it.

That is why I believe that MLB is an accessory to this debacle (as Mark calls it).  John Henry would not be trying to trade Mookie Betts if there was not some outside pressure to get under the threshold.  If he could not afford it, he would never have agreed to the excessive contracts he has already inked for David Price, JDM, Chris Sale, Xander Bogaerts, and Nathan Eovaldi.  Mookie has never said that he wanted out of Boston, just that he wanted to test free agency.  Henry should have kept Mookie and then told his agent to come back with the best offer and we will see what we can do.  If he wanted to sign Mookie the ballplayer, he should never let the tax dissuade him, because he can afford it, UNLESS someone else is saying to do otherwise.

Since 2011, Boston’s operating income has been:

2011 – $25.4MM

2012 – $23.9MM

2013 – $25.3MM

2014 – $49.2MM

2015 – $43.2MM

2016 – $78.6MM

2017 – $86.0MM

2018 – $84.0MM

That is an eight year average of more than $50MM annually.  Boston was over the threshold in 2018 and still made $84.0MM in operating income.  We do not know what the 2019 operating income was, but by winning the 2018 WS, I would imagine the bottom line did not go down, even if the payroll went up (slightly).

The new CBT threshold began in 2016 and lo and behold, the operating income increased nearly 82% for Boston.  Both NYY and LAD were over the threshold in 2016 and 2017, and they felt it necessary to be under the threshold in 2018, and both teams did.  I do believe that the Dodgers had an extra incentive because of the debt service concerns and not knowing what MLB would do if they did not get under the threshold.  But NYY had no such concerns and that was a goal of theirs as well.  Now Boston’s owner says that the goal is to get under the CBT threshold to not exceed the threshold for the third consecutive year. 

Doesn’t it seem odd that each of the three supposedly wealthiest teams work feverishly to get below the threshold so as not to exceed it three consecutive years, but then come back and say they will be able to go over the threshold again after they reset the penalty?  Doesn’t it also seem odd that each team stated it was a goal, but they were under no MANDATE to do so?  I am generally not a conspiracy theorist, but it sure seems like someone from MLB is telling them to get below, without saying it out loud.  There is no way the Yankees, Red Sox, or Dodgers are worried about a tax if they believe they can win with players that exceed the threshold.

Tony Clark needs to give way to a more expert union negotiator because the MLBPA should be in a position to increase the CBT threshold exponentially, and install a salary floor, or teams need to lose their revenue sharing.  I am not a fan of the DH, but it is not going away, so the MLBPA should be able to insist that the NL institute the DH for the NL beginning in 2022.  Even with the larger FA contracts being let this year, there were only four that exceeded $100MM, and not one small market team was able to grab any of them.  This year followed a couple of weak years.  Even last year’s big money boys, Harper and Machado, settled for less than what was expected.  Mike Moustakas had to take back to back single year contracts.  Dallas Keuchel and Craig Kimbrel did not sign until June.  Scott Boras’ clients are happy, but how many others?  The players are in a good position to extract some favorable negotiations if they handle it correctly. 

Sure the larger market teams will be in a better position to compete annually because of their revenues, but it is time to tell the Pirates ownership to spend or sell, and to see what the Marlins can now do under new ownership.  The A’s and Rays are showing that they can contend without being big market high revenue teams.  The A’s could very well beat the Astros for the AL West crown, and while NYY is the heavy favorite to win the NL East, Tampa could very easily move ahead of Boston, especially without Mookie.  Toronto, Cincinnati, and Chicago White Sox are showing signs that they are ready to compete beginning in 2020.  KC won a WS in 2015.

If the tax is not onerous for the owners of the larger revenue teams, then why the need to get under the threshold?  This is where I believe that there is an unwritten rule telling teams that they need to adhere to the luxury tax (as close as possible) and for sure to get under it at least once every three years.  MLBPA can stifle this collusion by increasing the threshold so it is not a de facto salary cap, and minimizing the penalty.  If I were negotiating for the MLBPA, and I was advised that the owners want to stabilize the smaller revenue teams, I would counsel the union to advise the owners that they should do it in a way that does not impede player salaries.