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MLB looks to limit free-agent contract length, dollars in latest labor proposal

The union slammed the league's latest proposals, saying they are "so obviously and extremely bad for players." AP Photo / John Minchillo

Forget eliminating Shohei Ohtani-esque, $700 million contracts in free agency. If the owners have their way in baseball’s labor negotiations, Alex Rodriguez’s $252-million signing from December 2000 wouldn’t be allowed in the future either.

Major League Baseball’s owners on Thursday proposed a $202 million limit on contracts for free agents who leave their current team — $50 million less than the amount A-Rod took to leave Seattle and sign with the Texas Rangers a quarter-century ago.

Last month, MLB revealed some pieces of how its proposed salary-cap system would work, but left many core elements a mystery. At the bargaining table in New York on Thursday, the owners filled in the blanks on subjects like free agency and the minimum salary. The players’ union then responded with just as much disappointment as it did a few weeks earlier.

Starting in 2027, MLB wants free agents who leave their teams to be limited to five-year deals worth no more than $202 million. Players who re-sign with their teams as free agents could come back for six years and $265 million — a means of encouraging players to remain with their present clubs.

The league also dangled changes that, in isolation, would be better for players compared to the status quo. It proposed eliminating the qualifying offer for free agents, a mechanism that can sometimes depress player markets. MLB also said it would raise the minimum salary to $900,000 for players in their first two years in the big leagues, and to $1 million for players in their third. Today’s minimum is $780,000.

And the league said it would allow players who are at least 30 to become free agents after five years of service, rather than the current six, something the players’ union itself proposed earlier in these negotiations.

“Today, in addition to proposing the largest ever increase in the minimum salary, earned by over half of MLB players, we accepted two landmark changes to free agency that have been in place for 50 years,” MLB spokesperson Glen Caplin said in a statement.

A lot more is included in the league proposal, including the elimination of deferred salary for future contracts. But all the proposals come with an important requirement: players would have to buy into MLB’s salary-cap structure, which the union is adamant it does not want to do.

“I will tell you with all honesty, I have never seen this degree of unity at this point among agents and players,” Bruce Meyer, interim head of the Major League Baseball Players Association, said on a conference call with reporters. “I think, honestly, the league has done us a favor. Because their proposals are, in fact, so obviously and extremely bad for players at all levels, that it’s actually been a benefit for our unity.

“Anybody who’s banking on Major League Baseball players cracking: it’s never happened. It’s not going to happen. That’s why we’re the only ones who don’t have a salary cap.”

MLB declined to make an official available for an interview.

Agent Scott Boras, who represents some of baseball’s highest-paid players — and negotiated Rodriguez’s deal in 2000 — said that the league’s proposal is like offering “a few pieces of nice furniture if you’ll move into a room that has a four-foot ceiling.”

“They’re trying to move back to an arcane salary structure of the nineties,” Boras said.

A key reason the league is willing to make many of the changes it proposed Thursday is also a key reason that players do not want them: in a cap system, how much each side earns is predetermined.

A cap-and-floor setup does more than establish a salary limit and floor, which for 2027, the league has proposed would be $245.3 million and $171.2 million, respectively. It also creates a defined split of revenue: the players, under the league’s proposal, would receive 50 percent of revenues, and the owners the other 50.

The union says that’s a reduction from what players make now. This year, the players association expects players will receive about 55 percent of revenues.

Regardless of the exact numbers, having a defined split means that any changes to things like the minimum salary, are not actually creating new money for players in aggregate.

“In a cap system, it’s a zero-sum game, so it’s literally just moving money around,” Meyer said. “They can propose any amount to any group of players, and in their cap system, it just takes money out of another player’s pocket, and that’s true of salaries, benefits, all forms of compensation.

“Their system is an overall limit on how much money players make, on an individual player level, on a club level, on a league-wide level.”

Publicly, MLB has hammered the idea that it is trying to help fans via the salary cap, which it says will increase competitive balance in the sport. The sides do not agree on whether baseball’s parity is broken, or how to best improve it.

“The biggest issue baseball fans want solved to strengthen the game is fixing the payroll disparity that leaves too many fans without hope of their team competing for a World Series title,” Caplin said in Thursday’s statement, echoing past remarks. “Every other major U.S. sport has tackled this problem, and every year more small market teams in those leagues have a chance to win. The salary cap and floor proposal levels the playing field, allowing us greater flexibility to address longstanding player priorities while sharing baseball revenue with the players 50/50.”

Meyer said Thursday that “it really kind of strains belief to think that, well, they really want the system, because, geez, that’s what the fans want.”

“They want it because it increases their profits, they want it because it increases their franchise values, neither of which gets shared in the cap system,” Meyer continued. “It protects owners who would rather not compete in every way from having to compete. That’s what a salary cap system is, it’s the ultimate excuse.”

A lot was jammed into MLB’s proposal.

For free agents, those $202 and $265 million figures — the limits for free agents signing with new and old teams, respectively — are based on the league’s proposed salary cap for each team in 2027. Free agents signing with a new team could make no more than 15 percent of the cap in their first year. Free agents who stay with their team can make no more than 16 percent.

Salaries couldn’t grow too much over the life of the deal: they’re allowed to increase by up to 5 percent of the first-year figure.

The longest extension any player could sign with a team is for 12 years, up to $500 million. But that amount of years and dollars would only be available to a player who has just arrived in the big leagues, and doesn’t yet have a full year of service time. Every year of service a player accumulates amounts to a year less they could sign for, and the maximum money available to them also decreases with each year of service.