The Financial Impact of MLB’s New Collective Bargaining Agreement and Post-Lockout Free Agency Review
After a long and tense few months for Major League Baseball (MLB) during the first work stoppage since the 1994-95 players’ strike, the owners and Players Association finally agreed to a collective bargaining agreement (CBA) after months of negotiation by a vote to approve the new proposal by a 26-12 margin. The new agreement will be in place until 2026 and will enact various modifications for the league both on and off the field. The new collective bargaining agreement will have a financial impact on teams as the minimum player salary has been increased from $563,500 in 2021 to $700,000 in 2022 and will further increase to $780,000 by the final year of the CBA in 2026, an increase in pay of more than 30% from the 2021 minimum salary. The luxury tax threshold has also been raised to $230 million; a $20 million increase from the previous threshold of $210 million. This will give clubs more financial flexibility as the higher threshold will allow teams to bring in more high-impact players without being taxed for going over the luxury tax limit.
Baseball’s style of play will also be undergoing changes as the number of teams able to qualify for the postseason has been increased from ten teams to 12 teams. The two extra spots will promote a more competitive style of play as there is an increased chance of reaching the postseason. The league has also decided to implement a universal Designated Hitter position (DH), something that has been debated for years since only the American League had the position and the National League did not. Additionally, teams will no longer be allowed to overly shift their defensive alignment to prevent hitters from getting on base, however, this will not take effect until 2023. These modifications will promote more offense and action leading to a more entertaining and enjoyable overall fan experience. The agreement also includes the physical base size to increase from the original 15 square inches to 18 square inches in 2022. The size of the base will not decrease the length of the base path but will prevent more injuries from occurring in the future.
As the lockout concluded MLB free agency reopened and fans witnessed a frenzy of moves since Spring Training was set to begin only a week after the new deal had been reached. Former Atlanta Braves first basemen Freddie Freeman decided to take his talents to the Los Angeles Dodgers. Atlanta acquired the lefty slugging first baseman Matt Olsen from the Oakland Athletics since contract talks with Freeman stalled as Atlanta did not offer Freeman the contract he desired. This was a shocking move considering Freeman had been with the franchise his entire 12-year career and directly following Atlanta’s underdog postseason run which ended with them raising the World Series Trophy in October as they defeated the Houston Astros. However, Freeman was not the only big name to take his talents to a new team. Former Astros shortstop Carlos Correa decided to sign with the Minnesota Twins on a three-year, $105 million deal with an opt-out clause each year over the course of the deal. This move came after the Twins and Yankees agreed to a blockbuster deal that sent former MVP third baseman Josh Donaldson, and shortstop Isiah Kiner-Falefa who was acquired by the Twins only days prior, in exchange for third basemen Gio Urshela, and former All-Star catcher Gary Sanchez. The Yankees also agreed to resign lefty first baseman Anthony Rizzo on a two-year deal for 32 million dollars.
The flurry of moves continued as former Cubs and Giants third baseman Kris Bryant decided to sign with the Colorado Rockies for 7 years at 182 million dollars, a surprising move as the Rockies were not one of the main teams rumored to be in the mix for the former MVP. The Boston Red Sox and shortstop Trevor Story agreed to a 6-year deal worth 140 million dollars. Story will likely be playing second base in Boston with Xander Bogaerts currently playing the shortstop position. Lastly, the New York Mets made a trade with the Oakland Athletics for starting pitcher Chris Bassitt in exchange for a package of prospects. Bassitt will likely be slotted in the third starters spot in the rotation behind ace Jacob DeGrom and newly acquired star pitcher Max Scherzer, who signed with the Mets right before the lockout on a three-year deal worth 130 million dollars giving him the highest average annual value in MLB history of $43.3 million.
The financial changes and adjustments to how the game of baseball will be played in with the new playoff format due to the new collective bargaining agreement, in addition to the frenzy of star players that have made their way to new teams through signings and trades should make this upcoming season one of the most intriguing yet. Fans should certainly pay close attention to their favorite teams as the season commences on April 7th.
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