Editor’s Note: The MULS Sports Law Society (SLS) Blog is pleased to welcome 1L Aaron Benz as our newest MLB writer. Mr. Benz, who is also an SLS member, played college baseball at Lawrence University, leading the team in doubles and RBIs while hitting .328 during his senior season.
In less than two weeks, the Major League Baseball (MLB) season will come to a close, and one fan base that hasn’t seen a championship in at least twenty years will finally get to see their champagne-soaked team hoist the Commissioner’s Trophy. As excitement builds for what should be an historic World Series, Major League Baseball (MLB) and the Major League Baseball Players’ Association (MLBPA) are quietly negotiating a new collective bargaining agreement (CBA) to replace the current agreement that expires in December.
MLB has experienced labor peace since the end of the 1994 players’ strike and there is no indication this will change. Although a work stoppage is unlikely, there are significant issues to be settled before a new CBA can be reached. One of the more publicized issues is how to handle international amateur players.
The Current System
The current system places a cap on how much teams are allowed to spend on the bonuses of international amateur players (bonus pool). MLB determines the ceiling for each teams’ cap based on their finish from the previous season and guarantees each team at least $700,000. If a team spends over the amount allotted to them, MLB imposes a penalty on that club. In theory, the current system implemented by MLB maintains competitive balance between the 30 clubs in the international market. Teams with the worst records get the most money to spend and teams with the best records get less. In practice, however, this system widens the gap between large and small market franchises.
This spending cap imposed by MLB is a soft cap as opposed to a hard cap. A hard cap would prevent a team from spending more than they were allotted, but a soft cap is much less stringent. Teams are currently able to spend well over their cap if they are willing to face a penalty, and this is perhaps the biggest issue with the current system. The teams in larger markets with more financial resources are able to absorb these penalties that would cripple a smaller market team.
To put this in perspective, in December of 2014, the Boston Red Sox had already overspent their cap by 111%, the Los Angeles Angels were 248% over their allotment, and the always-extravagant New York Yankees were a whopping 610% over their cap. At the same time, the Tampa Bay Rays were a modest 35% over their limit. The disparity becomes even more evident when actual dollar amounts are used. During the 2015-16 signing period, the Los Angeles Dodgers spent roughly $96 million in the international market; included in this total is the $48 million in penalties they accrued by going over their bonus pool ceiling.
On opening day 2016, the Cincinnati Reds, Milwaukee Brewers, Oakland Athletics, Tampa Bay Rays, and Miami Marlins all had payrolls lower than the $96 million the Dodgers spent in the international market. Clearly, the playing field is tilted in favor of the large market teams under the current system.
MLB’s International Draft Proposal
During the current CBA negotiations, MLB and Commissioner Rob Manfred have been pushing for an international draft to alleviate the problem facing the small market teams. The proposed draft would consist of 10 rounds held over two days, and would be very similar to the Rule 4 draft of amateur domestic players.
MLB would also open and operate facilities in the Dominican Republic. This would allow players to receive education and hone their baseball skills before becoming eligible for the draft. It would also solve the issues of handlers attempting to extract fees from teams in exchange for the player they represent signing with that particular club. There is also the performance enhancing drug (PED) issue surrounding these players.
Many come from countries where PEDs are not nearly as restricted as they are in the U.S., and they feel pressure to use PEDs in order to maximize the money they can receive from teams. If MLB were to open facilities in the Dominican, they could more closely monitor PED use among these players and lessen the concern by teams that the players they are signing are using PEDs.
The improvements in the international player system proposed by MLB are much needed and welcomed by advocates of competitive balance. There are flaws in the proposal as it currently stands, but it should be noted not all of the details of the proposal are known, and these flaws might already be addressed. When the full details of the CBA are released, a full critique of international draft can be levied (assuming it makes it into the final CBA), but for now, it should be viewed as a huge step forward for MLB that this issue is at the heart of the new CBA negotiations.
- Ben Humphrey, MLB international free agency primer, Viva El Birdos (Jul. 1, 2015).
- Buster Olney, MLB wants international draft in new CBA with players, ESPN.com (Oct. 17, 2016).
- Ken Rosenthal, Baseball’s financial disparity issue goes beyond just team payrolls, FOXSports.com (Jun. 21, 2016).
- Maria Guardado, MLB pushing for international draft in new collective bargaining agreement, report says, NJ.com (Oct. 18, 2016).
- Ron Wolschleger, MLB pushing for an international draft with new CBA looming, SB Nation (Oct. 20, 2016).