New CBA further incentivizes Tigers to shed payroll

Chris McCosky
The Detroit News
Ian Kinsler

Detroit – Al Avila knew this was coming. He knew long before details of the new collective bargaining agreement began to trickle out last night that the Detroit Tigers’ payroll problems weren’t going to get a bailout.

He was asked repeatedly during the General Managers’ Meetings last month if an increase to the luxury tax threshold would at least temper his need to drastically cut payroll. His answer was steadfast: No. It will have no effect.

He was correct.

The Tigers’ total payroll stands, on the eve of the Winter Meetings, at $216 million. They were over the $189 million tax threshold last year. The tax threshold will be increased to $195 million for 2017.

So, the Tigers are still $21 million over. That’s enough incentive right there for the Tigers to start shedding payroll. But there’s more.

The consequences for the Tigers not getting under the threshold will be more severe under the new agreement.

Because the Tigers would be a second offender of the tax threshold, they would immediately be hit with a 30-percent tax on the amount they are over.

Additionally, if they are $20 million over, they will pay an additional 12 percent surcharge – a total tax of 42 percent.

Note, though, that Avila doesn’t have to get under the limit until the end of the 2017 season. He can still negotiate from a position of strength at the Winter Meetings. He doesn’t have to be in a fire-sale panic.

Yet.

MLB luxury tax increases to $195M in new deal

The new free agent compensation rules, the details of which are still be hammered out, make it almost a certainty the Tigers will trade right fielder J.D. Martinez and second baseman Ian Kinsler – both in the final guaranteed years of their contracts – before the end of the season.

Here’s why:

Under the old system, the Tigers would’ve gotten a draft pick near the end of the first round if they lost a free agent like Martinez or Kinsler. Under the new system, only the 15 smallest markets will be compensated with a first-round pick for losing an elite free agent (those who signed for at least $50 million).

J.D. Martinez

Bigger market teams – it’s not certain if the Tigers are still considered a bigger-market team – would be compensated with a late second-round pick.

If the Tigers were to stay over the tax threshold, they would be punished again. The compensatory draft pick for losing Kinsler or Martinez, if they are over the threshold, would be late fourth or early fifth round. Trading both Martinez and Kinsler would shed nearly $23 million off the payroll.

Clearly, Avila wasn’t joking. The Tigers need to fix their business model and get the payroll back in compliance, even with an increased tax threshold.

The owners and players’ union hammered out the tentative agreement on the new CBA Wednesday night, with three hours to spare before the old deal expired. The new deal still needs to be ratified and myriad details are still being finalized.

Here, though, are the key bullet points:

Luxury tax: Believed to be the final hurdle in the negotiations, the luxury tax threshold will increase from $189 million to $195 million this year and will increase incrementally through 2021.

2018 -- $197 million

2019 -- $206 million

2020 -- $209 million

2021 -- $210 million

The penalties for going over the threshold remain the same – 20 percent for the first offense, 30 percent after the second and 50 percent after the third – except there are severe penalties on offenders who exceed the threshold by more than $20 million. Those offenders would pay an additional surcharge of 12 percent.

International draft: The owners wanted to institute an international draft. The players were dead set against that. The compromise: the sides agreed to a hard cap of $5 million on the amount clubs can spend annually to sign international players. There are no exceptions. Teams cannot exceed the limit.

Schedule modification: This is a victory for the players and for the game itself. The sides agreed to lengthen the season from 183 days to 187 beginning in 2018. That will add four more off-days to the schedule. Also, it appears more day games will be scheduled on get-away days, especially when a team faces a long flight and a game the next day.

All-Star Game: As first reported by the Associated Press, the Midsummer Classic no longer will determine which league has home-field advantage in the World Series. Instead, the pennant winner with the best record will get the extra home game in the Series.

Disabled list: The minimum stint for players on the disabled list will be 10 days instead of 15, as it was under the old rules.

Chew ban: Smokeless tobacco will be banned for all new players entering the Major Leagues. Those presently in the league will be exempt.

Drug policy: From several reports, the league will increase testing and players on suspension will not accrue big-league service time. Also, the league might begin testing for HGH (human growth hormone) beginning next year.

Minimum salary: A slight raise in minimum salary was negotiated: From $507,500 to $535,000 this year, then to $545,500 in 2018, to $555,000 in 2019. There would cost-of-living increases in the last two years of the CBA. Minor league players who have been on a club’s 40-man roster for two years also get a boost: From $82,700 to $86,500 this year, up to $88,000 in 2018 and $89,500 in 2019.

Baseball without borders: The league is pushing to play games in Mexico and London as early as 2018, according MLB.com. It is uncertain whether that was agreed to by the union and will be part of this CBA.

Twitter @cmccosky