clock menu more-arrow no yes mobile

Filed under:

What MLB's new collective bargaining agreement means for baseball

5-year deal through 2021 is subject to ratification by the league and its players.

World Series - Chicago Cubs v Cleveland Indians - Game Seven Photo by Gregory Shamus/Getty Images

The hot stove season can resume as planned, with no interruption, now that MLB and its players have agreed to terms on a new collective bargaining agreement through 2021. For the most part, there weren’t many substantial changes to the old deal, which was set to expire on Dec. 1.

The agreement, reached on Wednesday night, is subject to ratification by both MLB and the MLB Players Association.

Over the last few weeks, some of the reported talks included the possible creation of an international draft, a 26th-man spot on the active roster all season, and an adjustment to expanded rosters in September. But none of that is in the new CBA, per multiple reports.

The main changes to the new CBA revolve around competitive balance tax thresholds, draft pick compensation for free agents, and revised spending limits for international amateurs. Some details have trickled out, and more is sure to follow in the coming days.

“The parties continue to draft the entirety of the tentative agreement,” Major League Baseball announced in a statement on Wednesday night. “Specific terms of the pact will be made available when the drafting process is complete.”

“I want to thank the players for working diligently for more than a year to negotiate an agreement that, when finalized, will benefit all involved in the game and leaves the game better for those who follow,” said MLBPA executive director Tony Clark.

Here is a summary of what we know:

Competitive balance tax

The current system, through 2016, called for an overage tax on any payrolls above $189 million, with the tax amount depending on the frequency of the offense, ranging from 17.5 percent to 50 percent.

The new CBA calls for the threshold to increase gradually over the life of the deal, beginning at $195 million next year:

For those heavily over the threshold — the Dodgers checked in at $298 million in 2015, for instance, and will be at roughly $250 million once the 2016 numbers are finalized — the penalties are even harsher:

Draft pick free agent compensation

The current system called for teams to forfeit a first-round draft pick when signing a free agent that declined a qualifying offer — a one-year tender at the average of the top 125 salaries in baseball — with the old team receiving a sandwich pick in between the first and second rounds.

That hampered players’ markets, with teams less willing to commit to players with such an onerous cost. Now, the system calls for much lighter penalties for signing teams, and even then, the teams have to be over the tax threshold, which means free agents are much closer to free than ever.

It is important to note that this free agent compensation system won’t take effect until next offseason, after 2017, per Jon Morosi of

That makes sense because 10 free agents were extended qualifying offers worth $17.2 million last month with the idea the teams would receive a first-round draft pick if the player signed elsewhere.

Two of those players — Jeremy Hellickson with the Philadelphia Phillies, and Neil Walker of the New York Mets — accepted the qualifying offer, and so far only one of the remaining eight has signed a new contract, with Yoenis Cespedes returning to New York on Wednesday.

International free agents

Rather than an international draft, it looks like the limits per team will be capped for signing foreign amateur players.

The current system calls for bonus allotments, with penalties for going over the limit. It is unknown if this new system is a hard cap or not.

Labor peace

There are still other details that will trickle out, like the minimum salary, and scheduling concerns. But perhaps the most important thing is, after four work stoppages from 1981-1995 that saw three different seasons shortened (1981, 1994, 1995) and one World Series (1994) cancelled, this new agreement through 2021 means that baseball will have relative labor peace for over a quarter century.