Categories: Phillies Beat with Destiny Lugardo

Part 1: How CBA issues impact Phillies players, management and fans

Some bleak news was delivered on Thursday regarding baseball’s ongoing work stoppage: Major League Baseball requested the assistance of a federal mediator to help resolve the owner-imposed lockout, according to Jeff Passan of ESPN. The players issued a response to MLB’s request on Friday afternoon:

Evan Drellich of The Athletic also reported that MLB will not make a counterproposal, despite telling the union that they will.

Spring training will almost certainly be delayed and the two sides have less than a month to hash out a deal to start the regular season on time.

Disagreements on multiple core economic issues are what’s holding up a new collective bargaining agreement. Most issues are of interest to Phillies players, management and believe it or not, fans. Here’s an overview of some of those issues that have the most impact locally.

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Collective Bargaining Tax

In 2021, the Phillies finished around $600,000 below the $210 million luxury tax. The players are worried that teams are treating the collective bargaining tax as a salary cap and they can look no further than the Phillies as proof.

“Here’s what I’m not going to do,” Phillies managing partner John Middleton said after the 2019 season. “I’m not going to go over the luxury tax so we have a better chance to be the second wild-card team. That’s not going to happen.” Former Phillies president Andy MacPhail offered a different take just a few months later, saying “It’s not an impenetrable barrier by any stretch. It’s my hope and, frankly, my expectation, that we’re going to exceed it this year.” Alas, there was some disconnect there and the Phillies never paid the tax in 2020, a year in which monetary luxury tax penalties were suspended because of the COVID-19 pandemic. You can argue that the team’s reluctance to spend past the tax on help in the bullpen and other areas cost them a playoff spot.

In all likelihood, the luxury tax is here to stay in the next collective bargaining agreement. Owners want a $214 million threshold that would rise to $220 million in five years while the players are proposing a $245 million luxury tax for 2022, which would rise to $273 million in 2026. If the tax rises significantly, the Phillies should be able to acquire two starting outfielders and at least one additional bullpen arm this offseason while comfortably staying under the threshold. Maybe they would have enough room for additional pitching or another splashy expenditure either in free agency or at the trade deadline. If the owners get their way, the Phillies would have around $30 million to spend before hitting the tax threshold. Assuming that at least one outfielder will cost around $20 million a year, the Phillies will have about $10 million to fill additional needs if they plan on once again staying under.

Of course, staying under the tax is a choice. Under the last CBA, teams that surpassed the threshold for the first time were taxed 20% on overages with various surcharges for those who exceed by $20 million or more and draft pick penalties for those who are over by more than $40 million. The tax rates rise as teams go over in consecutive years, but penalties reset once a team falls under the threshold by the end of a season.

Owners want to make the tax penalties even harsher while players want them to be more forgiving. The league, for example, wants a 50% charge on overages and a forfeiture of a third-round pick and international bonus pool money for teams that go over the tax.

MacPhail did add back in 2020 that “ … nobody can live over [the collective bargaining tax]. The penalties are too severe — not just economically, but it grabs you every different way.” If luxury tax penalties are even worse in the next CBA, you can bet that the Phillies will continue to spend up until the self-imposed tax limit.

Salary Arbitration

One of the stated goals from the union during this round of CBA negotiations is to get younger players paid earlier. MLB and the union did agree on a bonus pool for pre-arbitration eligible players, but there’s a $90 million gap between the two sides on how much money will be available.

The union wants to expand salary arbitration eligibility to all players with at least two years of service time. In the previous system, players who are in the top 22% of service time among those between two and three years of service become eligible for arbitration as part of the “Super Two” class. Every player between three and six years of service time is also eligible to negotiate their salary through arbitration.

Ranger Suarez could get a sizable raise if the MLBPA could expand salary arbitration. (Cody Glenn/Icon Sportswire)

Ranger Suárez and Sam Coonrod are the only two players on the Phillies roster between two and three years of service time. If the players do get salary arbitration for all players after two years and it goes into effect this offseason, both pitchers will receive a pay bump for the 2022 season. Suárez is an interesting case because he missed the “Super Two” cutoff by about four days. Under the old agreement, Suarez will make the league minimum in 2022, but if the “Super Two” class expands slightly or the players are able to secure earlier arbitration for all, the Phillies lefty could get a seven-figure raise.

Jersey Sponsorship

When Nike shelled out the extra cash to get the swoosh on the center of MLB uniforms, you just knew that advertisement patches were coming soon. The union has shown a willingness to let the league sell advertisements on jerseys, pending the acceptance of other player proposals. It’s more money for the league, but an eyesore to fans who love a clean looking baseball uniform.

So what will a Phillies sponsored jersey patch look like? We know little about where these patches will go on the uniform or who will be in the running for the sponsorship deal. GIANT and “Citizens” would probably be the betting favorites, but Tastykake sounds like the way to go. With our luck, we’ll probably get a weird crypto sponsorship that everyone hates.

In part two, we’ll look at the expanded postseason, the designated hitter and whether the regular season will start on time or not.