One of the most impactful changes that will most likely happen as part of a new CBA after the current one expires at the end of this year is no salary caps or salary minimums. But instead deferred salaries. There will be push not only from within, but also from outside the game. It’s getting political!!
The Dodgers will single-handedly bring about change. Of course, the Dodgers have the financial ability to outbid almost any other team for almost any player they want. That in itself is a significant imbalance. But on top of that, the trend of deferred salaries starts??? That just makes it unfair. Yes, any team CAN do the same, but clearly not to the extent that the Dodgers can/are. Yes, the Dodgers are still subject to luxury tax penalties because the average player salary is counted toward the comp balance threshold, but of course if you don’t pay salaries out of pocket, they can afford ANY luxury tax penalties. It just makes the top players MORE affordable.
Cities and states will put pressure on the league to tighten contracts as well. The main cause of this is Ohtani’s postponed contract. California is angry. They are in a position to potentially lose MILLIONS in taxes as a result of Ohtani’s deal. Shohei has deferred $68 million per year until the start in 2034. Starting in 2034, he will get $68 million per year for 10 years, which is $680 million in deferred revenue. if/when Ohtani is done playing in 2034, he can simply leave the state and not have to pay the California income tax of approximately 13.3%, which is a loss of tax revenue of over $70 million dollars!! And all while playing in a government-funded stadium.
It’s easy to see why such deferred salaries will come to an end (as nice as Bobby Bonilla Day is).
The simplest proposal, and one I have been advocating for years, is to include or allow “liquid contracts.” A fluid contract allows owners to spread a player’s salary as they see fit, but 100% of the salary must be paid at the end of the contract. This gives teams better control/flexibility over their finances from year to year, benefits player salaries and helps distribute top talent. You simply determine the number of flowing salaries a team can have active at any time.
EXAMPLE:
Player A signs a 10-year contract worth $200 million (round numbers for simple math) and an AAV of $20 million. Instead of being “locked” into setting amounts each year, the team pays what they want each year, either by preloading the contract, backloading it, or balancing the contract along the way. At the beginning of the year there is a minimum amount that a player must pay annually. Again for simple math, let’s say this is $1 million. The team submits initial payroll to MLB before Opening Day. The team then submits a FINAL salary for those players sometime later in the season, such as after the trade deadline. This gives teams the flexibility to better manage their payroll from year to year and deal with unexpected costs or unexpected windfalls. This would also allow teams to manage luxury tax penalties. This would allow teams to avoid the penalty for a year to reset and still keep their players.
This is a win for players, because by giving owners such unique flexibility, the players could command/demand higher salaries.
To ensure that EVERY team benefits from these contracts, and big market teams don’t just use this as a way to acquire even MORE talent, put a limit on the number of fluid contracts each team can have. say 3-5 per team. This way, a player (presumably a top player who would be ‘worthy’ of a fluid contract that could come with a higher AAV) could have more incentive to sign with a team other than the big market teams, and give smaller market teams the opportunity to make more competitive offers. This would help spread talent across the league.
It could get even more creative and incorporate potential draft picks into trades. If a team wants to trade for a player on a fluid contract, but they have reached their cap limit, they can trade one away, OR they can trade a first round draft pick to acquire an additional fluid contract. Generally it would be smaller market teams trading fluid players for bigger market teams, so this would help them rebuild faster. Players may see this as a bit of a limitation, but this can easily be offset by doing away with the qualifying offer, which requires teams to give up their draft pick in order to sign one. Being tagged with QA draft pick compensation has shown to DRASTICALLY reduce the earning potential of all but the very best QA FA. and allowing first-round trades to acquire additional fluid contracts would similarly work to protect small market teams.
I believe that simply reforming contracts like this would have a major positive impact on the game, and hopefully even prevent a lockout/strike.
This would benefit players because with
#collective #labor #agreement