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Details of MLB’s new collective bargaining agreement

Expanded playoffs, luxury tax thresholds, minimum salaries, and more

MLB: Lockout The Palm Beach Post-USA TODAY NETWORK

Major League Baseball is back with a new collective bargaining agreement, after a lockout that lasted 99 days. What we have is a structure that is largely the same as the previous system. There are a few tweaks, so let’s look at the details.

Minimum salary

The lowest possible major league salary is $700,000 in 2022, a 22.7-percent increase over the $570,500 last year. Minimum salaries tend to make big jumps in the first year of a new CBA, so this isn’t all that new. It’s the largest first-year bump in minimum salary since a 50-percent leap from $200,000 to $300,000 in 2003. The first-year increases from the last three CBAs were 16.2 percent (2007), 15.9 percent (2012), and 5.4 percent (2017).

What’s notable here is the larger increases throughout the contract. The annual minimum salaries:

2022: $700,000
2023: $720,000
2024: $740,000
2025: $760,000
2026: $780,000

Over the course of the previous CBA, the minimum salary increased from $535,000 in 2017 to $570,500 in 2021, a 6.6-percent increase. This CBA sees the minimum salary increase 11.4 percent over the life of the deal.

Minor league salaries for players on the 40-man roster also rose. In 2021, players on their first major league contract (last year on the Dodgers, that was Andre Jackson, Edwin Uceta, Zach Reks, and Gerardo Carrillo) had a minimum salary of $46,600 while in the minors. Others on subsequent major league contracts had a minimum salary of $93,000 in the minors.

The new minor league minimums for those on the 40-man roster, per Ronald Blum at the Associated Press:

2022: $57,200 for first-year players; $114,100 for those after
2023: $58,800; $117,400
2024: $60,300; $120,600
2025: $62,000; $123,900
2026: $63,600; $127,100

First-year players on the 2022 Dodgers include Jacob Amaya, Michael Grove, Eddys Leonard, James Outman, and Jorbit Vivas, who were added to the 40-man roster in November. Their minimum salary while in the minors this year would be $57,200.

Competitive balance tax

The thresholds were a sticking point during the negotiations, with the players union noting at various points that the tax was playing out like a salary cap more than originally intended. Here are the first thresholds for each year of the CBA:

2022: $230 million
2023: $233 million
2024: $237 million
2025: $241 million
2026: $244 million

This year’s threshold is a 9.5-percent increase over the $210 million threshold from 2021. The first-year threshold is almost at the exact midpoint of the two sides’ positions in December at the start of the lockout. Players initially asked for $245 million in the first year, and the owners offered $214 million.

Those December stances for the final year of the CBA had the owners at $220 million and the players at $273 million, with the final number of $244 million, slightly under the midpoint ($244.5 million).

There are levels of thresholds with increased penalties in $20 million increments, just like the previous CBA. But the new CBA added a fourth, more punitive tier, trying to curb runaway spending. The tax rates remain the same for the first three tiers, including increased rates for going over the threshold in successive years.

Competitive balance tax rates

Tier 2022 amount 1st-time payor 2nd-time payor 3rd-time payor
Tier 2022 amount 1st-time payor 2nd-time payor 3rd-time payor
First threshold (n) $230 million 20.0% 30.0% 50.0%
Second threshold (n + $20m) $250 million 32.0% 42.0% 62.0%
Third threshold (n + $40m) $270 million 62.5% 75.0% 95.0%
Fourth threshold (n + $60m) $290 million 80.0% 90.0% 110.0%
CBA from 2022-26 h/t Associated Press for 4th tier info

For 2022, those subsequent tiers are $230 million, $250 million, $270 million, and $290 million.

The Dodgers in 2021 had a payroll for competitive balance tax purposes of $285.6 million, which at $75.6 million over the initial threshold would have qualified for the fourth tier had it existed. With the players currently under contract for 2022, including Trevor Bauer, plus assumptions for the players eligible for salary arbitration and those with less than three years of service time, the Dodgers are at roughly $235 million for the CBT this year, with more moves to make.

Expanded postseason

Playoffs are increasing from 10 to 12 teams, and the introduction of a wild card series round rather than two wild card games. The top two division winners in each league get byes into the division series. The division winner with the third-best record is the No. 3 seed and plays the sixth seed in the best-of-three wild card round. Jayson Stark at The Athletic has more details:

In the wild card round, the higher seed hosts all three games.

Pre-arbitration bonus pool

Getting younger players paid more was a stated priority of the players union, and this was one of their biggest wins. In each year of the CBA, there is a $50 million bonus pool to be split among the top 100 players (late decided by a committee) who haven’t yet reached salary arbitration eligibility.

Travis Sawchik at The Score has more details on the bonuses:

This is something new, and saw the two sides very far apart in negotiations. In December, at the time the lockout started, the players asked for a bonus pool for this group of $105 million. Owners did not want to have any sort of bonus pool. This was one of the areas that saw only incremental movement by both sides, $5 million at a time in most cases until the final week of negotiations.

Option limits

Players general have three option seasons, but under the old rules within each of those seasons they could be sent down to the minors a theoretically unlimited number of times. Under the new CBA, players can now only be optioned five times within a single season.

Presumably once a player has been optioned five times in a season, he’d have to be placed on waivers before being sent down again, though full details haven’t yet emerged.

This was seen as a quality of life issue for the players, especially with increasing roster churn in recent seasons. Three Dodgers were optioned more than five times in 2021 — Mitch White was sent down 11 times, Edwin Uceta eight times, and Luke Raley seven times.

Other notable CBA tidbits

  • Universal designated hitter in both leagues.
  • A draft lottery, with the top six picks no longer solely determined by record. The bottom three records will each have a 16.5-percent chance at the first pick, with the rest of the odds split among the other 15 non-playoff teams. From “Revenue sharing payees would be ineligible to receive lottery selections in three consecutive years, while non-payees would be ineligible to receive lottery selections in consecutive years.”

We’ll delve deeper into many of these topics as more details emerge, but this is an overview of the new agreement for now.