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The Mookie Betts trade confirms MLB has had a shadow salary cap all along

Why MLB teams are focusing on the last word of “competitive balance tax” instead of the first.

Mookie Betts smiling while running bases in a Red Sox uniform.

A quarter-century ago a World Series was canceled after a prolonged strike. The most divisive issue was the owners’ insistence on a salary cap and the players’ steadfast rejection of it. Now, baseball has a salary cap, though not in name. The Mookie Betts trade is the latest evidence.

Bob Boone was retired for a few years by the time the 1994 baseball strike happened, but the longtime catcher was around for more than his share of labor wars, including strikes in 1981 and 1985, and a lockout in 1990. During the ‘94 strike, Boone recalled former players union head Marvin Miller, who will be inducted posthumously to the Hall of Fame this year, saying that players wouldn’t even consider a salary cap.

“Miller has deemed that the [salary] cap equals sin,” Boone told The Sporting News. “Therefore we don’t talk about sin.”

“The players will never agree to this cap,” then-Yankees reliever Steve Howe told The Sporting News. “It’s not going to happen in 1994, or 1995, or 1996. If I have to pound nails for a living, I’ll do it. I’ve done it before.”

The strike wiped out the final third of the regular season in 1994 and forced the first cancelation of the World Series in 90 years. When the two sides finally agreed to a deal in 1995 — lopping off the first three weeks of that season, too — the salary cap was not part of the contract. But in the ensuing collective bargaining agreement, baseball implemented its first luxury tax.

In its current form, which has essentially been in place since 2002, the luxury tax kicks in when teams exceed a certain payroll threshold. Which brings us back to the Betts trade.

Boston massacred

The Boston Red Sox agreed to trade its best player in Betts, the 2018 American League MVP, along with David Price and a boatload of cash to the Los Angeles Dodgers in a reported three-team deal. All Boston got back was outfielder Alex Verdugo from the Dodgers and reliever Brusdar Graterol from the Minnesota Twins.

This was a salary dump, pure and simple.

It was plain for everyone to see. The Red Sox front office even openly stated its goal to avoid paying competitive balance tax. “This (coming) year we need to be under the CBT,” Red Sox owner Henry told reporters in September. “That was something we’ve known for more than a year now.”

Henry then dismissed his own comments in January, telling Dan Shaughnessy of the Boston Globe:

“But this focus on CBT resides with the media far more than it does within the Sox. I think every team probably wants to reset at least once every three years — that’s sort of been the history — but just this week ... I reminded baseball ops that we are focused on competitiveness over the next 5 years over and above resetting to which they said, ‘That’s exactly how we’ve been approaching it.’”

The rumors don’t seem so media driven now.

Once J.D. Martinez didn’t opt out of his contract after the season, it seemed inevitable that Boston would make a big move to achieve its stated goal. Their CBT payroll was estimated at roughly $229 million before this trade, per Cot’s Contracts, well above the collectively bargained threshold of $208 million for 2020.

Boston had the top payroll in the sport in both 2018 and 2019, and paid competitive balance taxes of $12 million and $13.4 million, respectively. They won a World Series in the first of those years, which is supposed to be the point of this whole endeavor, but missed the playoffs last year. Facing a potential tax bill of more than $10 million (Boston’s rate as a repeat tax payer is 50 percent of any overage), the Red Sox opted for the thriftier approach in 2020.

They aren’t alone.

Mookie’s new team

The Dodgers, who won 106 games last year and were the clear National League favorites before this trade, didn’t need to add Betts and Price. But they pounced on the opportunity to add an elite player in their bid to win a World Series for the first time in 32 years.

None of the Dodgers’ top prospects were traded to get Betts, though they did trade two major league pieces in Verdugo and Maeda. They didn’t even have to absorb all of Price’s considerable salary ($96 million over the next three years). Again, they are getting Mookie freaking Betts. You would do that trade eight days a week if you could.

But along with acquiring Betts and Price, the Dodgers also reportedly traded Joc Pederson to the Angels for young infielder Luis Rengifo. Other players are reportedly involved in that trade, but on first glance this deal appears to be financially motivated from the Dodgers’ side.

Yes, with Betts and reigning NL MVP Cody Bellinger taking two outfield spots, Pederson would have had to fight for playing time in left field with A.J. Pollock, but in dealing Pederson and his salary — between $7.75 million and $9.5 million, depending on the results of his arbitration case this month — the Dodgers will likely find themselves slightly under this year’s $208 million tax threshold, something LA has avoided the last two seasons.

Even the Yankees, among the game’s financial super powers along with the Red Sox and Dodgers, avoided the tax in 2018, after paying it for 15 straight years.

Baseball doesn’t have an actual salary cap. But with teams actively avoiding paying the competitive balance tax whenever possible, the sport basically does have a salary cap.

The Red Sox choice

The common refrain in defense of this trade from a Red Sox standpoint is that Betts was intent on reaching free agency. And why wouldn’t he be? Since his debut in 2014, he has the second-highest WAR in baseball, behind only Mike Trout’s astronomical figure. Betts does everything well on a baseball field, and he’d be entering his age-28 season in free agency after 2020, a perfect storm of performance and youth that could potentially set a new contract standard.

Boston, according to this defense, simply had to trade Betts in order to get something for him. Can’t let him walk away for nothing, after all. But the argument here ignores just what the Red Sox gave up. For one, if Betts walked away as a free agent, the Red Sox would have received draft pick compensation. The other, more compelling factor is a very good Red Sox team’s best chance to compete in 2020 is to have one of the very best players in the game on their roster. That’s not nothing.

I can hear Herm Edwards in my head, imploring, “You play to win the game.

The Red Sox got a lot worse in 2020, but the owners saved some money by reducing payroll. Ticket prices, however, went up.

The Red Sox sold Babe Ruth for cash to the Yankees 100 years ago, and it’s not hyperbole to put Betts in the same category. Ruth was one of the very best players in baseball in 1919, and to that point had accumulated 40 WAR in six seasons. Betts is one of the very best players in baseball, and through 2019 has 42 WAR in six seasons. Betts doesn’t have to be Babe Ruth for this trade to be a disaster for the Red Sox.

But if you’re a baseball owner, at the helm of one of the richest teams in the sport, if you can’t keep your best homegrown player in decades, one of the very best in the sport, what the hell is the point?