The Collective Balance Tax, A Real Solution, and How it Effects the Diamondbacks
Why is this such a sticking point?
From 2003 to 2019, the last full season before the COVID-19 pandemic, league revenues grew 167%, from $3.88 billion to $10.37 billion, according to data published at Statista in an article from The Score. The base tax threshold rose 76% in that period, from $117 million to $206 million. The union requested the Collective Balance Tax threshold to begin at $238 million and include annual increases of $244 million, $250 million, $256 million, and $263 million during the final year.
MLB proposed increasing the tax rates to 50%, 75%, and 100%, regardless of whether the team was a first-time or repeat offender, plus added draft-pick penalties for going over the second and third tiers. Exceeding the top tier would also mean losing a first-round draft pick. That is a big jump from 20%, 30% and 50% like it was in the last agreement. Players have no interest in any of that.
- Not surprisingly, an Associated Press analysis of 2021 Opening Day salaries found that average salaries fell 4.8% compared to the previous full season of 2019 and 6.4% since average salaries peaked in 2017, the first year of the most recent CBA. In a piece written by Gordon Wittenmyer of NBC Sports Chicago. A more telling salary trend identified in the same AP report: is that the median salary (midpoint between the highest and lowest salary) dropped 18% since 2019, to $1.15MM and 30% since a record-high median of $1.65MM in 2015. In other words, the salary disparity between the top-paid players and the vast numbers of those paid less than $1MM is trending more dramatically than the drop in the overall share of industry revenue.
- The MLBPA wants the veterans to still get paid like they were young (like the 3 years $130MM contract Max Scherzer just signed with the Mets), and increase not only the minimum salary but also the players in their middle years to be compensated better. The league minimum salary in 2021 was $570,500. In the new CBA, the league has agreed to raise that minimum salary to $615,000 while the MLPA is looking for a minimum of $715,000 according to The Athletic's Evan Drellich. The MLBPA originally started their negotiations wanting a 36% increase on the minimum salary to $775,000. But in 2021 the average player salary was 7 times higher than the minimum salary at around $4.17MM according to an article published by Christina Gough for statista.com.
In general, a major-league career is short-lived compared to many other professions. In a recent study done by the New York Times the average service time in the majors is 5.6 years. As a fan, it is hard for me to either feel sorry for or get behind either party in this debate. We all know the owners are flush with cash, and even though I tend to side with the players, I also can't feel sorry for a person who even if they only make the minimum for the minimum amount of years (which would be $615,000 for 3 years) that is still over $1.5MM for 3 years. But what if I said that I could come up with a way that should make both parties happy and help the game? Keep reading.