Thoughts on MLB’s economic reform committee

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Whispers turned to anonymous leaks, which became Dick Monfort and Rob Manfred publicly complaining/shaming, and then an “economic reform committee” was unveiled by MLB. All of this was predictable, and because of that, it’s not too difficulty to suss out what it all means.

MLB is using the recent issues of Diamond Sports Group — which runs the Bally regional sports networks that Sinclair purchased from FOX after Disney grabbed everything besides those RSNs and the fascist cable news network portion of the company in their quest to own every IP in existence — as an excuse for the existence of this economic reform committee, and I’m sure that’s true to a degree: the owners will all be in some uncharted waters soon, and rather than end up in a situation like Bud Selig arguing with George Steinbrenner about revenue-sharing for years, or any number of 1980s commissioners trying to explain how cable was good for the owners’ bank accounts, actually, Manfred and Co. are trying to get ahead of the discussions about this brave new world.

However, it’s also pretty clear that this is a response to the league’s failure to squash the union in the previous collective bargaining agreement, and the unionization of the minor leaguers, and everything else that’s costing them money that they assumed, at the end of their decades-spanning quest to squeeze the life out of both parties, would have resulted in them being able to pocket more money, not less. Steve Cohen is an obvious target of all of this, given he was a Carlos Correa physical away from signing him to a 12-year, $315 million contract that would have thrust the Mets very comfortably ahead of the “Cohen Tax” threshold. It’s much more than a nickname: it’s a figure that’s set $60 million above the base luxury tax threshold, and three years above it in a row changes the tax rate to 110 percent. Which means that Correa’s salary would have basically cost the Mets double and then some. That’s $55.125 million annually once that tax level kicks in — Correa is obviously great, but it’s understandable that even Cohen might balk at the possibility of paying over twice his salary should his ankle prove to be a problem like his slate of physicals from three different teams suggest it will be.

Of course, the existence of this tax also suggests that Cohen is already taken care of: he can outspend everyone and then some, but he won’t spend infinitely, at least in theory. Evan Drellich, in his piece on the committee, wrote a bit about how this could be leading to MLB wanting to figure out how to institute a salary cap, but that’s a non-starter with the union, so good luck focusing on that for the next few years before negotiations reopen on the next CBA. Which is how I ended up writing at Baseball Prospectus that the real focus for this committee, in terms of actionable items, is on the Padres, as they’ve exceeded the luxury tax in order to compete, which also caused them to forgo collecting revenue-sharing dollars.

Other teams which are participating in this league primarily because they get revenue-sharing dollars just for showing up are obviously aghast and confused at this turn of events out of San Diego, and I’d imagine the wealthier owners with higher revenues don’t appreciate the fact that Peter Seidler has shown that the Padres — despite being eligible for revenue-sharing due to their market — are currently projected to begin the 2023 season $39 million over the luxury tax threshold (all salary data via Cot’s Contracts). The rival Dodgers are projected for just $11 million over; the Yankees, $55.5 million, the Phillies $18 million over, the Angels nearly $11 million under, the Red Sox $22 million under. If the Padres with all their carefully practiced and repeated small-market limitations can go $39 million over the threshold while still attempting to retain Manny Machado into the future during his option year, then the supposedly richer teams — the big bad spenders whose disparity in riches with the poor, poor small-market clubs supposedly influenced the creation of the economic reform committee in the first place — should clearly be spending even more than they do. The Padres are much “worse” for the rest of the league and their preferences than the Mets are, in this regard: hence, the conversations Manfred said need to take place, even if he’s not exactly being honest about what those conversations are actually about.

It’s not a coincidence that the committee names we know of involve owners from large markets (and also Monfort, who is the model of a guy who has more money than he’ll ever admit and is very good at not spending it). The Dodgers’ owner, Mark Walter, is chairing the committee. John Henry, Red Sox owner and unconvincing liar, is also part of the committee. These guys are not thrilled with the actions of the Padres, because it makes them look bad, too. Cohen also makes them look bad, but given his net worth, at least they can say he’s an anomaly. Explaining away the anomaly that is the Padres — what, are you going to say “how dare they try” in order to shame them? — is a lot more difficult, and is going to take more behind-closed-doors planning and shaming.

The next CBA goes through 2026, so I imagine we’ve got a whole lot of time before details emerge. But that they’re already working on these issues now is only somewhat tied to the whole deal with Bally and Diamond — these owners are upset for a number of reasons, and they want things to change for the next CBA. So they’re already starting up now in order to try to be prepared. Whether anything actually changes or whatever unity existed among these 30 under Selig and in Manfred’s early years fractures further remains to be seen.

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