The league's proposed new economic plan includes a $100 million salary minimum for teams, funded by clubs that surpass a new $180 million luxury tax threshold.
As the expiration of the current collective bargaining agreement between the league and the Players Association looms this offseason, Major League Baseball made its initial proposal to the MLBPA on Wednesday. The pitch reportedly included a new salary minimum of $100 million for each team, according to Evan Drellich and Ken Rosenthal of The Athletic. Coupled with that change would be a lowered luxury-tax threshold of $180 million, with a steeper penalty than teams currently pay now.
The current rules have three luxury-tax tiers that include steeper penalties the higher a team's payroll climbs. The first tier takes effect at $210 million, with a 20% tax. The new proposal would reportedly keep the three tiers intact, and add a fourth, lower tier that begins at $180 million with a 25% tax. The penalties would increase from there with each tier.
Though the details are not yet clear, money from teams that are taxed at the $180 million tier would be used to fund teams that spend below the $100 million minimum. There would also, however, presumably be some sort of penalty levied against the teams who fail to reach the $100 million threshold.
Per Cot's Contracts, seven teams started the year with 40-man roster payrolls below $100 million, which is the metric used for luxury tax purposes: the Pirates ($62.9 million), Cleveland ($63.2M), the Orioles ($76.5M), Brewers ($78.5M), Rays ($83.0M), Mariners ($92.3M) and Tigers ($97.8M).
Though further details are not yet known, Drellich and Rosenthal report that the reaction from the players to this proposal is not expected to be positive. It is expected players want luxury-tax thresholds to be raised, not lowered, to encourage teams to spend more money. Teams are extremely cautious about passing the luxury-tax threshold, treating it almost as if it were a salary cap. MLB is the only North American sport to not have a salary cap, something the players have historically been adamant against incorporating.
The players reportedly made an economic plan proposal in May that included an emphasis on getting more players to arbitration in fewer than three years of service time. Owners would presumably be against such changes. The current CBA is set to expire on Dec. 1.
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