MLB’s owners want to put a cap on contract length

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Late last month at Global Sport Matters, I wrote about how the Padres and Mets were “paving the way for the next era of MLB labor relations.” The idea was that the union was able to keep MLB from accomplishing all of its lockout-related goals in the new collective bargaining agreement, and now, on top of the league’s failure to squash the union and its power, they had this terrifying new era where minor leaguers were unionized, the regional sports network model was faltering, and clubs like the Padres and Mets were not following the unwritten rules of spending like they’re supposed to.

I concluded the piece with these thoughts:

The angst some owners feel now about the future of broadcasting is real, but most of the issues are imagined, or, at least, are about upholding imagined realities like that of the small-market team.

A salary cap could be bandied about, but the union would never accept one. If anything, a 110% tax on extreme luxury tax overspenders is going to be basically the same thing, since it will keep even Cohen from spending exponentially above the average. No, the real focus as owners rebound from their failure to crush the union in the last round of collective bargaining is going to be on figuring out how to keep whatever’s in San Diego’s water from spreading elsewhere – to keep other owners from spending in line with what they actually can, to keep free agent prices and competition down, to keep fans from wondering why their team can’t do what San Diego is doing. The league will use the broadcasting revenue question, the unionization of minor leaguers, Cohen’s existence, and whatever else they have to make themselves seem like they’re in danger of closing shop, in the hopes of restarting the long process that began with the Blue Ribbon Panel over two decades ago. MLB’s owners rarely have new ideas, just new versions of old ones, and whatever comes out of the economic reform committee will be used for the same purposes as what came before.

I mentioned that a salary cap would be brought up, but there’s zero chance of it happening, and it’s also unnecessary when there’s already a luxury tax threshold nicknamed after Steve Cohen that’ll likely keep him from bringing in someone like Shohei Ohtani at the cost it would take. MLB is seemingly aware of this, so they’re going to explore other avenues, too: it seems like they might have landed on one such path as an alternative to a salary cap, and that’s to put a cap on the number of years a player can be signed for. That comes straight from commissioner Rob Manfred, by way of The Athletic’s Evan Drellich:

“A reform that has been of interest to ownership for a number of years is a limitation of contract length,” Manfred said Tuesday evening at Sports Business Journal’s World Congress of Sports conference in Los Angeles. “Obviously players love it, it gives them financial security for a very long period of time. The difficulty — and I think players will come to appreciate this as time goes by — those contracts result in a transfer from the current stars to yesterday’s stars. At some point, that has to be true. And I think it is an issue that is important for us to stay focused on, because it creates inflexibility that affects the quality of the teams that you put on the field.”

Players Association executive director Tony Clark responded by describing this kind of cap as “an assault” on guaranteed contracts, and he’s not wrong. The union wouldn’t approve of such a cap, but I think the idea here from MLB’s perspective is that they’re aware that a salary cap is a no go, so they might start saying, “hey, it’s one or the other, you’ve gotta move somewhere.” Which could be an empty exercise, a waste of time, but that doesn’t mean MLB’s hope is anywhere besides eventually wearing down the union on the issue, like when the luxury tax was introduced in place of a salary cap in the mid-90s. The plan worked once, so of course MLB will try something similar in the present while they’re searching for answers.

I imagine this is what MLB is thinking: they can’t get the Padres to stop spending if they want to spend, but they can take away one of the mechanisms by which they’re able to spend, and that’s long-term contracts that reduce the average annual value of these deals. Xander Bogaerts signing for 11 years instead of 10 probably didn’t raise his overall salary figure all that much, but it did help to lower the AAV of his contract, which created room for extending Manny Machado for 11 years at an AAV just under $32 million, for extending Yu Darvish and Joe Musgrove, for keeping Juan Soto around for his $23 million arbitration hit, and so on. That might not sound like that big of a deal, the difference between what Bogaerts’ or Machado’s AAVs might have looked like if the Padres had to work within a 10-year framework instead of 11, but consider that their current CBA hit is over $280 million — at $290 million, they’d have to pay the “Cohen” tax. At those levels, every dollar counts, because the Padres can afford to play with the big boys, but they probably can’t afford to pay 110 percent on every dollar they’re spending and still be this version of the Padres. Remember, too, that Fernando Tatis Jr. is actually on a 14-year deal with an AAV of just over $24 million: if he could only sign for 10 years, do you think he’d be satisfied with $240 million? Or with his youth, would he have pushed through arb and then ended up elsewhere as a free agent? Either way, it would have kept the Padres from being able to organize things the way they have.

So, the idea to reduce the number of years would be to make it more difficult for the Padres to spend in the way they are now, or for teams in a similar situation to get any ideas about copying this level of aggressiveness. And if the Padres or whomever can’t go all-in like they have, then they might even be less willing to go for halfway measures, since the chances of their being successful are reduced, and now the allure becomes what it is for most of these teams: maximized profit rather than on-field performance.

Again, such a cap being instituted is very unlikely, but the why of it all is still worth exploring. MLB is thinking about how they can forcibly keep the Padres from being the way they are, or from any other “small-market” teams getting the idea that they should be more like San Diego than someone pretending they can’t compete. With the gate possibly taking on heightened importance again as RSNs become a dicier proposition and the bold future of broadcasting remains clouded in mystery, spending in order to make money might suddenly look more appealing than it has. And plenty of owners around the league don’t want that, hence these kind of statements from their commissioner.