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Brian Walton's news and commentary on the St. Louis Cardinals (TM) and their minor league system

Revenue Increase and MLB Hard Cap Could Aid Cardinals

In an ESPN Insiders article about the trade market for left-handed pitcher Jose Quintana of the White Sox, Buster Olney explains how the new, much-tougher “Competitive Balance Thresholds” in baseball’s new labor agreement are already limiting team spending behavior.

Clubs are positioning and preparing to avoid the stiffer penalties, which are being phased in for 2017 and fully ramp up by 2018. They include tax rates from 20 percent to 50 percent plus additional surtaxes from 12 percent to 45 percent as well as draft picks being moved back 10 places for the worst offenders.

As Olney puts it, the new CBA rules have essentially created what teams are considering to be a hard salary cap.

In other words, the penalties are so great that teams will do whatever is necessary to comply with the thresholds, which begin at $195 million in 2017, increase slightly to $198 MM in 2018 and ramp up annually to $210 million for 2021.

While that makes a player already signed to a below-market contract like Quintana more appealing in trade, it also means that those with current deals that are more bloated can become essentially untradeable at worst or severely limited in trade potential at best. One example Olney cites is oft-injured Miami slugger Giancarlo Stanton.

Machado-usa-200The impact began this off-season when a number of the traditionally top-spending clubs passed on marquee free agents. This behavior is expected to accelerate next winter, potentially limiting the future market for some big names heading toward free agency down the line such as Bryce Harper and Manny Machado.

The teams that will best be able to maneuver in this more-restrictive environment – whether to take on bigger contracts in trade or sign top free agents in the future – will be those who are not pushing the cap already, with the financial muscle to increase payroll, possessing a good farm system to supply low-cost talent and are opportunistic.

Doesn’t that sound a lot like the St. Louis Cardinals?

According to my rough estimates, the Cardinals should enter 2017 with a modest payroll increase to about $150 MM from last season’s $147 MM. As many know, the new 15-year, $1 billion television deal with FOX Sports Midwest goes into effect in 2018.

Just maybe, the team’s leadership understands these dynamics better than we do and are positioning themselves for next season and beyond?

Then again, for some, it is easier to just call the Cardinals “cheap” and move on to the next rant. Just don’t count me among them.

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