More CBT, Universal DH, and JT

“Well, it’s a significant demarcation,” Mets president Sandy Alderson said. “I wouldn’t say that it’s a line that cannot be passed, but it’s definitely a significant consideration when you get to that level.”  Per Andy McCullough, The Athletic, “by instructing Alderson to mind the luxury-tax threshold…new Mets owner Steve Cohen has conformed with his 29 colleagues in baseball’s ownership class. The competitive balance tax operates as baseball’s de facto salary cap.”

I had not yet read the article authored by McCullough, but that is what I wrote on Wednesday.  It is not a unique thought.  Almost everyone who is following this Winter’s “Hot Stove” league can surmise by watching the FAs sign at glacier-like speed.  We can see teams making trades they may not normally make, just to make sure they stay under the “threshold”.  NYY did not want to trade Ottavino, but they needed to open some space for maybe another starting pitcher on a one year make good deal.  They could not have made it any more obvious by including a mid-level prospect, 23 year old RHP Frank German, with Ottavino for, wait for it, PTBNL.  German was a #23 prospect for NYY.

Steven Matz was certainly a legit moveable trade projection, but I have no doubt that he was moved to give NYM the necessary space to sign Trevor Bauer.  I do not know if Bauer will sign, but Steve Cohen and Sandy Alderson can now do so and still stay below the threshold.

The conspiracy theorist in me chooses to believe that the Dodgers have already agreed on a new deal for JT, but they need space.  Everyone is looking for relievers (right Philly? right LAA? right Toronto?).  We also know that AF hates losing prospects, but will if he needs to.  I have to believe that Joe Kelly is being discussed, and combined with some second tier prospect to move his $8MM contract to give AF the space he needs to announce the JT re-sign.  What prospect would AF be willing to pair with Joe Kelly to make such a deal?  The Dodgers loathe to give up starting pitching, but everyone wants starting pitching.  Andre Jackson?  Hyun-il Choi?  Or how about more “seasoned” relievers who might be able to start in a pinch.  Josh Sborz? Dennis Santana?  Or maybe AF values Sborz and Santana more than other teams do.  Or maybe the owners tell AF to forget it and just go over the threshold, and they can deal with the fallout with the other owners.  Oh, did I just suggest that there is collusion?  The owners would never do that, would they?  It is a conundrum, one which we will see come to fruition in the very near future.

For those who think the Dodgers do not consider the threshold, Stan Kasten had the following comments.

“The CBT is an element that does add expense, for sure. If we’re close, we’re going to pay attention to it. There are years where we blow right past it, and it’s not much of a factor. But every dollar is an extra dollar out the door that we need to try to recoup somehow. And a better business model is better from a lot of standpoints, including accessing financing, accessing debt, for all kinds of purposes.” 

Financing and debt restructure capabilities are determined by assessing Net Operating Income.  The Dodgers have significant debt, much (if not most or all) came with the purchase.  IMO, MLB owners should have assumed that debt just to get rid of McCourt.  But that is another storyline.  Excessive salaries drive down the Net Operating Income and credit lines begin to dwindle.  Interest rates are comfortable right now, but where will they be later in 2021.  Stadiums may be re-opening this season, but will they in LA?  If so, with what restrictions? It is all conjecture, but all companies hate the unknown.  Right now teams are taking a more conservative approach.  Who crosses that line first?

For the Dodgers to be able to trade for Mookie, they had to assume $15MM for David Price.  Price may in fact be worth it, but LAD did win without him in 2020, and $15MM could be used elsewhere.  I think he is worth 1.8 WAR salary.  They also have $31MM invested in a creaky Ace and nearly $30MM in two arbitration players.  They have an overpriced closer at $20MM actual ($16MM AAV).  They have a good (not elite) farm system, but IMO none of their top prospects are ready to contribute in 2021, except for Keibert Ruiz who will not contribute until September unless there is an injury to Will Smith or Austin Barnes.  There really is not much more the team can do except to hope for Lux to become the MiLB Player of the Year at the MLB level, and for Belli and Muncy to return to their 2019 abilities.  If that scenario unfolds, the Dodgers will be golden.  If not, they will get to the playoffs and then play it out one game at a time.  I still like their chances with the team they have.

How much longer does the NL have to wait to hear about the universal DH?  Or has MLB already told them what to they should do?  They have said not to expect the DH in 2021.  Do they need to say more?  As of right now, MLB wants to tie the universal DH with the expanded playoffs.  MLBPA says no to that proposal, and I do not see them changing their mind.  The universal DH is not something that the MLBPA gets too excited about.  They look at the DH keeping an older player in the game a little longer, but that does not move their needle for what the MLBPA is looking for.  MLB said they were proposing the universal DH saying it would prevent pitchers from injuring themselves, swinging the bat or running the bases.  Hogwash.  This was a ploy by MLB to get the expanded playoff format. 

On Dec.18 the owners proposed to adopt the universal DH, resolve two-time grievances from last season in the union’s favor and increase the guarantee the players would get for an expanded postseason, from $50 million last season to more than $80 million.  The MLBPA said no.  MLBPA realizes that the owners desperately want an expanded playoff format, but they are not giving it up for the DH, two grievances, and an additional guarantee of $30MM (without knowing the full take).

MLBPA will be holding this issue over until the next round of CBA negotiations.  They want changes in service time determination (none of this Kris Bryant and Walker Buehler service time manipulation), significant increase in minimum salary, decreased number of years required to become a free agent, and elimination of the draft pick penalties for those teams signing FA with a QO.  This is going to take serious negotiations from both parties willing to compromise, or there will be a work stoppage in 2022.  Now if the owners say that they truly acknowledge that their desires are to save the pitcher from potential injury, and they want to install the universal DH in 2021 without anything in return, I am sure MLBPA will accede to their wishes. 

IMO, it is not fair to wait until ST to decide to allow the universal DH. But then again, when are the owners concerned about fairness?  If the owners were genuinely concerned about the pitchers getting injured, after the shortened season of 2020, and pitchers getting nowhere close to a full season of throwing competitively, perhaps the owners should discuss with MLBPA expanding the roster to 28 for 2021, and that the two additional players must be pitchers.  But do the owners really care more about the health of the pitcher, or the additional salary they will need to expend for 2021.  If MLB goes a full 162 game season, the roster size could go back to 26 in future seasons pursuant to the next CBA.

The owners can also get rid of that ridiculous three batter minimum rule that the players, on field managers (and coaches), and undoubtedly most (if not all) of the baseball operations executives want to eliminate.  It appears that Manfred is the one who is pushing for this because he believes that it shortens the game time.  Of course we all know what would shorten the game time, and that is less commercials.  Fat chance the owners would allow that to happen.  Do not tell me the owners are concerned with how long the game is if they are not willing to limit the commercial time between innings. Then it can begin to be believable.

Let’s get back to JT for a moment.  It is inconceivable to me that AF and the LAD owners are that concerned about how much to pay JT.  JT has spent seven years with the Dodgers and has been a rock for the team.  Over that time, JT has earned $72.6MM in salary.  Certainly not insignificant, but at the same time, with his 26.6 WAR, his monetary value to the team was $211.1MM (per FanGraphs). 

Yes, MLB and LAD are businesses, but the Dodgers got a magnificent return on their investment in JT. Most acknowledge that JT gave the team a very favorable deal in December 2016.  Maybe the team can reciprocate a bit and increase their projected investment this time around.  If there ever was a match between player and team, Adam Wainwright and Yadi Molina should retire as Cardinals, and JT should retire as a Dodger.  Next year we can revisit this scenario with Clayton Kershaw. 

Go ahead AF and LAD owners.  Prove the skeptics wrong.  Sign JT and go past the CBT threshold.  At least we will know that LAD does not consider $210MM a salary cap, de facto or actual.

DEAR LA,

I LOVE YOU FOREVER!!

THANK YOU!! pic.twitter.com/kSIAwJiOt9

— Enrique Hernández (@kikehndez) January 29, 2021

Thank You Kike’ for the last six years. They were fun. Good Luck in Boston.