Anthony Rizzo
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Anthony Rizzo says teams are treating luxury tax as a salary cap

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First baseman Anthony Rizzo was eager to talk about a labor issue as spring training begins for the Cubs in Arizona. Per Gordon Wittenmyer of the Chicago Sun-Times, the three-time All-Star said of the competitive balance tax (more commonly known as the luxury tax), “I think the luxury tax wasn’t meant to be a salary cap, and teams are treating it like that. Are you sacrificing winning a championship to be under the tax threshold? Who knows? We don’t know that.”

Rizzo’s own team has been concerned with the competitive balance tax threshold, set at $208 million for the 2020 season. They’re currently north of $210 million, which would result in a small tax on the overage of about $2 million. A pittance, really. But the Cubs only signed to free agents to guaranteed major league deals this offseason: outfielder Steven Souza and reliever Jeremy Jeffress. The Cubs won the World Series in 2016, but slid backwards in the years since, losing the NLCS in 2017, the NL Wild Card game in 2018, and missing the playoffs last year.

Rizzo said, “You’ve seen it the last two years with us: We haven’t gone out [and signed big free agents],” Rizzo said. “But the few years before that we’ve gone out and signed megadeals.”

The Red Sox are another team guilty of viewing the CBT threshold as sacrosanct. After winning a championship in 2018, the Red Sox disappointed with a third-place finish last season, resulting in the dismissal of Dave Dombrowski. The club focused on shedding payroll, trading Mookie Betts and David Price to the Dodgers in order to clear about $50 million, dropping their total payroll to under $190 million.

Rizzo noted this, saying to Wittenmyer, “So you see one end of the spectrum, [the Yankees’] signing of the richest deal ever with Gerrit Cole; that’s what the Yankees do as long as I’ve been alive. And on the other end, trading away [Betts] to shed payroll when you have a team that just won a World Series. It’s weird.”

The CBT is not as complicated as it seems. Each year, a threshold is set as per the collective bargaining agreement. Last year was $206 million, this year is $208 million, next year is $210 million. Teams that exceed the threshold for the first time pay a penalty, but only on the overage. Teams exceeding the penalty in consecutive years pay increasingly more expensive penalties. Teams that exceed the CBT threshold by a lot also pay a surtax. Specifically, it’s broken down like this:

  • Exceeding CBT threshold frequency
    • Once: 20 percent tax on overage
    • Two consecutive seasons: 30 percent tax
    • Three consecutive seasons:  50 percent tax
  • Exceed CBT threshold amount
    • $20-40 million: 12 percent surtax
    • More than $40 million once: 42.5 percent surtax, Rule 4 Draft pick moved back 10 places
    • More than $40 million two or more consecutive seasons: 45 percent surtax, Rule 4 Draft pick moved back 10 places

Keeping in mind that every team is worth over $1 billion, even the penalties for being a habitual CBT offender are a relative pittance. The Red Sox are the third-most valuable franchise in baseball at $3.2 billion, according to Forbes. The Cubs are fourth at $3.1 billion. It’s more complicated than this, as that value is not entirely liquid, but the teams that have self-imposed austerity measures are not exactly scrounging around the couch cushions for quarters to help keep the lights on.

Rizzo is right that teams are treating the CBT as a salary cap. The penalty for going over is, for the most part, the price of a modest free agent reliever. But front offices have held the CBT threshold as sacrosanct despite the league setting year-over-year revenue records. With so many avenues for revenues to come in, teams do not need to build a championship-caliber club in order to be profitable. Thus, they can point to the CBT threshold and shrug their shoulders as they slash payroll, maximizing profits in the process. The results have been a stagnant free agent market for baseball’s middle class, unnecessary wholesale rebuilding efforts, and a degradation of the on-field product.

Rizzo said, “How much this game is making, it’s not [out of line] for us players to speak up. There’s billions, and then there’s millions. There’s a big difference between the ‘b’ and the ‘m’.”

Rizzo is one of a growing number of players now conscious of baseball’s labor landscape. The players made concessions in order to get largely superficial gains in the last CBA like travel accomodations. The owners rejoiced as they gained even more control over the sport as a result. The players have since recognized their error. I have been writing about baseball for nearly 13 years and this is the most labor-conscious I have seen the players. Greed and overreach on the part of ownership may be their undoing. One imagines the competitive balance tax and other labor-unfriendly rules are not long for this world after December 1, 2021, when the current CBA expires.

Agent highlights injustice of spring training for minor leaguers

Joshua Kusnick
Joshua Kusnick
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On Wednesday evening, agent Joshua Kusnick (pictured) tweeted about an injustice one of his clients, a minor league player, is facing at spring training. He wrote:

Have an milb client who showed up 2 weeks ago

He isnt being paid because spring training didnt start for milb 10 dollars a day per diem.

They have a 1200 deposit for the hotel. The player. Making 6k a year.

Player has no choice in staying at hotel Pays own way to field!

No gas reimbursement. If player has a car he must stay at hotel

This is insanity. Someone has to change this

As we have mentioned here before, minor leaguers aren’t paid during spring training. Despite this, teams place significant restrictions on their behavior, including how they travel and where they stay. Teams do provide a per diem for meals and will reimburse the player for his hotel stay, but that a player making so little is expected to take on the up-front cost of the deposit, as well as is quite unfair. According to Kusnick, the hotel will release the deposit when the player checks out.

I asked Kusnick to elaborate more on the issue facing his client as well as minor leaguers in general. He said, “These guys make less than minimum wage and they’re sold the lie that if they have a uniform they have a shot to get paid.” He emphasized, “It’s ownership’s oldest lie.”

Kusnick’s client, like many other minor leaguers, has to pick up a part-time job in the offseason to help make ends meet. His client gives lessons. Kusnick said, “It’s embarrassing to see pro athletes in America with part-time jobs in 2020 in an $8-10 billion industry.” He added that the players “have the anger but they don’t know what to do.”

Kusnick pointed out that his client got a bonus, and despite the injustice in question, his client generally has it better than most other minor league players in spring training. He urges us to think about the “undrafted free agent guys” who didn’t get a signing bonus, earning $6,000 per year and facing similar circumstances. “That’s not a fair shot,” Kusnick says. “It doesn’t make guys hungrier. It’s bulls***. It’s ownership selling bulls***. And they’re the kings of it. Ask Jim Crane.”

Asked about potential solutions, Kusnick suggested that the more prominent agents like Scott Boras use their “immense platform for good” to “establish real change.” He also suggested that minor leaguers could benefit from the MLBPA looping them in, especially “since they bargain away draft rights.” Kusnick doesn’t have faith in commissioner Rob Manfred even though he is “the only man who can do something now unilaterally.” An exasperated Kusnick tacked on, “Given the Astros situation, I’m not holding my breath.”

One thing is clear: Major League Baseball and Minor League Baseball benefit from minor leaguers’ lack of unionization and their leverage deficit, forcing them to take on undue burdens just to go to work. Kusnick’s client and others like him shouldn’t be taking on the up-front cost of lodging and travel (“no gas reimbursement”). They should be paid a livable wage during the season, as well as during spring training and in the offseason when they are still responsible for training, nutrition, working on mechanics, watching video, etc. There are rarely days off for those in the minor leagues. It’s high time they are taken care of by teams that can, without question, afford to do so. Major league teams, not their minor league affiliates, are responsible for the salaries of the minor league players in their system.

Kusnick insists we “keep fighting and bringing attention to these issues so maybe one day the public pressure forces change. Until then, fight the bastards at every turn until they notice you and do something, if only to shut us up. It’ll work.”