Now that Major League Baseball’s Collective Bargaining Agreement has expired, Alex and Bobby are taking some time to break down key concepts that will be on the table in the coming weeks and months and examine what’s at stake for each side.
This week, they do a deep dive on the competitive balance tax, looking at its initial aims to address parity and how its purpose has been twisted by both small and big market teams since its inception in 1997. First they talk with Maury Brown, senior contributor at Forbes, about how teams’ attitude towards the CBT has changed over the last two decades and what rising revenues across the league have done to undercut the measure. Then they bring on Lindsey Adler, Yankees beat writer for The Athletic, to talk about covering a team that has self-imposed-but-CBT-influenced limits on its spending and why they don’t exactly set baseball’s financial market anymore.
Follow Maury Brown on Twitter at @bizballmaury
Follow Lindsey Adler on Twitter at @lindseyadler
Links:
The CBA ABCs: Salary Arbitration (feat. Jerry Blevins & Kevin Goldstein)
Contextualize these discussions with our CBA crash course
Songs featured in this episode:
Paul McCartney and the Wings — “Let Me Roll It” • The Beatles — “One After 909” • Tommy Tucker — “Hi-Heel Sneakers” • The Strokes — “Modern Age” • Booker T & the M.G.’s — “Green Onions”
Episode Transcript
[INTRO MUSIC]
Tell us a little bit about what you saw and and and being able to relay that message to Cora when you watch Kimbrel pitching and kind of help out so he wasn’t Tipping his Pitches. So Tipping Pitches, we hear about it all the time. People are home on the stand, what Tipping Pitches it’s all about. It’s amazing. That’s remarkable.
BOBBY: Alex, I have some bad news for you.
ALEX: What’s that, Bobby?
BOBBY: Well, this podcast episode that our listeners are enjoying right now are CBA ABC series. Unfortunately, at 5:01am Eastern, our Collective Bargaining Agreement between you and I will expire and I will be forced to institute a defensive lockout against you. And uhh we won’t be allowed to talk for the rest of the offseason. So this is the last time that we’re going to have a conversation for the next couple months.
ALEX: Yeah, you know what, and frankly, we’ve done all we could uhm we’ve had the conversations that we’ve needed to have. We haven’t gotten anywhere, I’m honestly I’m I think I’m done with this episode frankly, I just wow, I’m gonna I’m gonna guess I’m gonna I’m leaving the bargaining table early. I wait, we can’t do anything else.
BOBBY: We’re not anywhere close, we’re not anywhere–your vision of Tipping Pitches would end the podcast within three years. It’s just the truth. Just you have to believe me what you want for this show, would drive listeners away.
ALEX: I don’t even know what the bit is anymore.
BOBBY: Yeah, I know.
ALEX: I’m too I’m too I’m too lost in this.
BOBBY: This makes me Rob Manfred, and makes you layers. I don’t know why I scheduled it to be that way I should, I was–
ALEX: Yeah, wow–
BOBBY: [1:51]
ALEX: –your, your management.
BOBBY; No as we know that you’re I should have done it so that your management because you’re the new GM of the Mets.
ALEX: Well, yeah, but I want to I want to grow the podcast and put more money into it. And you frankly are trying to tighten the belt a little bit and we just can’t reconcile that.
BOBBY; Congratulations on your sanding of Max Scherzer and Starling Marte and Mark Khanna and Eduardo Escobar. Mets have signed so many good players. I can’t even keep track Alex.
ALEX: Wow. can’t relate.
BOBBY: No no you can’t. Uhh so last week on the CBA ABCs. We discussed salary arbitration with Jerry Blevins and Kevin Goldstein, we would very much appreciate if you went and check that episode out. Uhh but if not, that’s okay because this week we have another great one,. The Competitive Balance Tax with Maury Brown, Bizzball Maury. And then Lindsey Adler, who covers a team that cares a lot about the Competitive Balance Tax. Uhh the New York Yankees, we are going to do a quick tee up for what the Competitive Balance Tax even is and how it got into the CBA then we’re going to talk to those two wonderful guests. But before we do that, I am Bobby Wagner.
ALEX: I’m Alex Bazeley
BOBBY: And you are listening to Tipping Pitches.
[3:04]
[Music Transition]
BOBBY: Okay, Alex, we’re gonna do a rundown of what even is the Competitive Balance Tax but first, we put out some new merch this week, Alex. Some nice merch that we did.
ALEX: I am very excited to see these new designs, I haven’t actually placed my order yet. I don’t I don’t think you have either. I haven’t seen it come through uhh in our in our seats.
BOBBY: I love oh, wait, I love how the way that we like acquire our own merch. Is just like going–
ALEX: It’s just buying it.
BOBBY: –through like anger and putting it on our own credit. As opposed to doing like any back end order or anything like that. We just buy it.
ALEX: Yes.
BOBBY: Warning.
ALEX: It’s priming the pump. You know, we’re ahh–
BOBBY: Wow, reducing stock.
ALEX: Yeah, exactly. I mean, I think that [3:53]–
BOBBY: To be honest [3:54]–
ALEX: –just doing quality control. That’s fair.
BOBBY: All right. So like we’re living the experience.
ALEX: Right, exactly.
BOBBY: It’d be like if an owner suited up and did spring training.
ALEX: Can you imagine who would be, who do you think the best owner would be?
BOBBY: It depends on how you define owner, right? Is it like the managing partner or whatever because technically that’s Derek Jeter for the Marlins. I think that he would probably probably be the best? I think that’s the only–
ALEX: He may, yeah.
BOBBY: Current Hall of Famer who’s owning a Baseball team.
ALEX: I don’t know can can Magic Johnson get out there? And–
BOBBY: I don’t think he even owns the Dodgers.
ALEX: I know I know. I don’t even know–
BOBBY: –Only ever owned like point 2% of the Dodgers.
ALEX: Right.
BOBBY: I don’t think that he’d be very good at Baseball.
ALEX: Well, Francisco Lindor would have some competition for Mr. Smile, I’ll say that much.
BOBBY: True. That’s just my gauntlet thrown down to Magic Johnson.
ALEX: Take that in Baseball.
BOBBY: [4:48] spring training. Uhh I’ve I’ve lost the bit so I will just jump back to plugging our merch. We have a brand new design from you guest designer Alycea Tinoyan [5:00], uhh elephant standing on a billionaire. I don’t know how else to to say this. It’s beautiful, go check it out on our website. We also have a new Unionize the Minors design in purple. And the big expansion from this launch, Alex, the creation of stickers–
ALEX: Right.
BOBBY: –[5:19] stickers, which launches a new Tipping Pitches merch challenge. It’s not just send us a picture of yourself wearing one of our shirts at a game, now you can send us a picture of us one of our stickers on a laptop, on a water bottle. Maybe you stick it on a stop sign. Maybe a stick it–
ALEX: Yeah.
BOBBY: on the MLB ballpark,
ALEX: Where is the most creative place? That you can slap a sticker?
BOBBY: You stick it on the door handle of MLB headquarters in Manhattan.
ALEX: Yeah, I I could pop right over there. I you know that elevator is like wide open to go up.
BOBBY: Is it really?
ALEX: I mean, it’s there. I don’t know that I could get in. But I could slap it on the elevator doors.
BOBBY: Put a sticker right over one of the uhh like the floor buttons.
ALEX: Right, yes exactly. They’re gonna have to see it. Rob Manfred is going to be confronted with this reality. Do you think that Rob Manfred is like routinely just going into Chelsea Market and going up the elevator to MLB headquarters? Like if I hung around there?
BOBBY: Yeah, I think so. He seems like a work in person kind of guy.
ALEX: I think so.
BOBBY: Why haven’t you done this? Now that I’m thinking about it. Why don’t you do that?
ALEX: Yes, I know. Well, Adam is still–
BOBBY: It’s like one of these like viral YouTube videos where you confront Rob Manfred.
ALEX: Right, exactly. Uhm this is, “Excuse me, sir. It’s my it’s my right to film you in public”.
BOBBY: “Excuse me, sir. Excuse me, sir. It’s my right to ask you what you’re trying to run my favorite baseball team out of my hometown”.
ALEX: I don’t even think it’s I mean, I don’t even think it is my right that’s probably private property, right? Like I think he could probably tell me to go fuck myself.
BOBBY: And that’s his first amendment, right? Uhh please go buy some stuff from our merch store. The uhh short link is tiny.cc/nationalize, where you can type it all at tippingpitches.myshopify.com. If you prefer to do that, the holidays are coming up so it’s a great gift to give to the Baseball fan or the labor lover in your life. Promo code, give it to him Alex.
ALEX: Promo code is “STRIKE”, probably should have been locked out but you know that’s not what we’re keeping for. STRIKE all caps, use that for 15% off your entire order. Also, our No Billionaires in Baseball hats. Now on sale copy yourself a beautiful baby blue cap that represents your uhh, your true reading interests for this sport. It it occurred to me uhm we have not recorded since the since the lockout. Officially went into effect or at least recorded our own podcast we have recorded other podcasts before our own. We were on uhh on both the locks locked on Angels Podcast and the Phillies Nation Podcast you should go uhh check those out if you want our our brief overview of what the CBA actually is. But uhh, but instant reacts, lockout, good, good, bad. How you feeling about it? Christmas Day?
BOBBY: I guess that the thing that stands out to me about the lockout going into effect in the last week is that, like, if you listen to this podcast, you know, we’ve been telling you that this is coming for years. And we’ve been virtually guaranteeing that the CBA was not going to be agreed upon before the December 1st 2021 deadline. So, you know, it wasn’t surprising to us when it went into effect. But I do think that it did catch me a little bit off guard the tone with which MLB came out at 12:01 Eastern on December 2. And basically when scorched earth towards the players union saying that they’re asking for things that are radical and that are going to completely blow up the economic structure of baseball, and they’re going to be bad for the fans and all of these things. It’s like, you know, I know that it’s all like posturing and it doesn’t actually affect what happens at the table the way that these two sides communicate to the public, but it did feel kind of uncanny. You know, it did feel like a little bit through the looking glass the way that we’ve been talking about this possibility for years and years and years. And then now it’s actually happening. And it just it just feels like no amount of virtual preparation or discussing it on a podcast could really prepare you for when the people who are supposedly having the best interest of the game at heart are coming out saying actually the players want to ruin the game, which is not what’s going on.
ALEX: It also feels to me like a somewhat dark parallel to a lot of the political conversations that we are already having about very real world issues in our country. You know, the the kind of the the vast divide that that exists between these two sides and a lot of the the name calling and kind of dramatization of these, of these issues that has come up, right? The radical left Players Association is going to destroy the fabric of this good sport. It’s a it’s a little tough to swallow, right? But obviously, as you said, I mean, I a lot of this is just PR speak that both sides are using to try and gain the favor of the public. So we’ll see how things actually pan out. We have no clue really what’s what’s going on behind closed doors, what’s going on in these negotiations. But we do know that they obviously went into this lockout pretty far apart on these very key issues that we are spending time discussing. So uhm that’s why we’re coming back with with revenue sharing next week to round to round this out. Because I know that you, I know that I have learned a lot from these discussions so far. And it’s really kind of helped me contextualize the what’s actually at stake in this fight.
BOBBY: If you’re a relatively new listener, and you maybe missed some of our previous conversations about this, whether that be last week’s episode with Jerry and Kevin about salary arbitration, or whether that be just any conversation that we’ve had about this in the last 15 months or so there’s a link to the there’s a link in the description to our kind of CBA Crash Course for every relevant conversation that you and I have had on the show in the last year and a half or so uhm in real time, as it was unfolding, and how this has been, how this has been an ongoing fight that was laying the foundation for what’s going on right now. It’s not coming out of nowhere, we didn’t know that it was going to happen. We have known what each side is wanting to prioritize for a long time now. So those are all if you’re itching for more CBA and labor discussion. Uhm it exists the Tipping Pitches back catalogue, and we’ve uhm collected it all into one place for you to easily listen. Okay, Competitive Balance Tax, Alex, what is it? Why does it exist? I’m sure most fans listen to this know what the Competitive Balance Tax is, you might not know the actual specific numbers and how they affect teams. Uhh the Competitive Balance Tax first appeared in the 1997, Collective Bargaining Agreement, the one that was negotiated after the strike of 1994-95. Uhm essentially, what it is, is it is a threshold at which teams who spend more than a certain number have to pay a tax that is then divvied up among the smaller market franchises. So the CBT and revenue sharing are inextricably linked, which is why next week’s episode, we will focus on revenue sharing and the different specifications for that, in the Collective Bargaining Agreement. The recently expired Collective Bargaining Agreement, we are not privy to the new one that is being negotiated, at least not yet. Please leave that to us–
ALEX: It’s it’s it’s it’s embargoed, sorry we can’t, couple weeks.
BOBBY: They send it around to all the podcasters who talk about it. Uhm no, so it was first appeared in the 1997. One in its current form, it didn’t, it didn’t show up in its current form until 2003, where there’s a specific number that teams cannot spend over. So we’ll talk about that, for the purposes of this episode, mainly. Uhm the recently expired Collective Bargaining Agreement specifies that the Competitive Balance Tax, it was an escalating number of 195 million in 2017. And then each year after that 197, 206, 208 and $210 million. So every dollar spent over that, you have to pay it for your team’s total payroll, you have to pay a percentage of those dollars into a pool, which then gets split amongst MLB players to fund the MLB Players Benefits Agreement, which is like, you know, their 401k is in their uhh–
ALEX: Pension.
BOBBY: –the health care and their pension and all that stuff that is the fund for that. So half of it goes to that, and then the other half goes to the clubs that did not exceed the Competitive Balance Tax, and it’s split equally among those clubs. So if only one team goes over, then uhm 50% of the of the tax that they pay gets split amongst the 29 other teams. Does that make sense?
ALEX: I think so, yes. It’s all it’s all very complicated, uhm which is why we brought on some people smarter than ourselves to to help us with that. Uhm but it’s been interesting to watch the Competitive Balance Tax evolved from its initial iteration over the years to what it is today, right? These penalties were obviously meant to curb the spending of larger market teams, right? Because, as you said, you’re taxed on each dollar you pay over the threshold. As a result, you’re really only going to spend those dollars if you can guarantee that you will get back your return on the investment in revenue, right? You’re not going to go over the Competitive Balance Tax for uhm a replacement level, second baseman you want it to be someone who is actually going to markedly improve your team or bring fans into the stadium, what have you. And so it’s served as a as a disincentive for these large teams to spend money with the thought that small market teams will then be able to reinvest this money in the onfield product, right? Close that gap between big market teams and and small market teams. And uhh has that has that happened? Is that Is that how it turns out? Because the sense that I get is maybe it’s not having the uhh intended effect?
BOBBY: Yeah, so really quickly, I’ll lay out the different penalties for going over year by year. So if you go over the first year, you have to pay a 20% tax on how far you go over. Now, if you go over buy more than 20 million, you have to pay a 12% surtax on top of that, but that is only for teams that are going way over. So let’s do the most simplest form. So if you go over by $10 million, let’s say. Say your payroll was $220 million, you then have to pay $2 million, a $2 million dollar tax, which is nothing to these MLB Owners, in theory. Then if you go over again, the next year, you then have to pay a 30% tax. So if you went $10 million over again, you had the exact same payroll $220 million, the following year, you’d have to pay $3 million into the luxury tax as a luxury tax. Uhm and then every year successfully after that, that you stay over the tax, you have to pay 50% of how far over you go. So your 10 million over again, you now have to pay $5 million, and that those bills start to add up a little bit uhm depending on what what kind of team you are and what kind of revenue you’re pulling in. And that’s why you’ve seen some of these teams get so excited about resetting the luxury tax. Famously, the Red Sox did this last year. If you’ve been paying the luxury tax every year for four or five straight years, you’re paying a 50% luxury tax. And then there are also different fees that are associated with going a certain amount over. So if you go 20 million over, you have to then pay a 12% surtax on the tax that you’re already paying. I know this is where it starts to get confusing. If you go over 40 billion over the luxury tax, you then have to pay and 42.5% surtax. So you’re paying a tax on your tax. The bill starts to add up for these teams but not in a way that really threatens their financial viability. I think it’s important to acknowledge that because this $210 million number that the Competitive Balance Tax landed at that was agreed to in 2016. So it was agreed that the that the Competitive Balance Tax of 2021 would be 210 million, this was agreed to five years ago. And as we know, MLBs revenues have gone up year over year, a lot pandemic year side, MLB teams are making more money than ever. They are now landlords, they now have sports books, they’ve sold MLB Advanced Media for billions of dollars, or bamtech. I should say they sold for billions of dollars. And they get to keep that money either way. But as we’ll talk about with Lindsey Adler later, there’s sort of like organizational philosophies as to why teams don’t want to go over year over year over year over year and keep signing the checks of the smaller market teams,. Particularly as you alluded to, when those smaller market teams are not always putting that product back onto the field. The owners might just be pocketing that revenue sharing check, which we’ll get into, of course, much more next week as we focus on revenue sharing. But I believe that there are multiple grievances being filed or had that have been filed over the idea that the tax that is being paid for the Competitive Balance Tax is actually being reinvested into the product.
ALEX: Right. And I think that point that you brought up about rising revenues is a really important one. And it’s why this is such a pertinent issue right now that is at the forefront of this current CBA negotiation. Because revenues have more or less been rising year over year at double the rate that the Competitive Balance Tax has been rising. That’s huge, that’s that’s a lot of money that is coming into owners pockets that is not necessarily going back uhh to the players, right?
BOBBY: No, no–
ALEX: That’s why–
BOBBY: –that’s definitely not going back to the players. Because as we’ve seen player average player salary has gone down in the last five years. Median player salary has gone down also the average players hourly salary is 4.17 million and the median player salaries only 1.15 million that’s decreased 30% since 2015, when this agreement was reached.
ALEX: Right. So players are receiving this declining share of the league’s revenue. They’re saying we deserve our our piece of the pie and what we’ve seen is that this Competitive Balance Tax has not brought teams payrolls together, which was its original intent was to narrow that gap between the biggest teams and the smallest teams. That hasn’t happened, the the gap in payroll between the largest teams and the smallest teams is the is the biggest among the three major sports, uhh compared to the NFL and the NBA. Those are teams that are really operating on really relatively small percentage–
BOBBY: Diss to the NHL right there, there’s only three major sports bodying anyone who listens who loves hockey.
ALEX: Now, it’s only because I don’t know the hockey numbers, no shade to to our NHL listeners. But point being is that this is it’s not doing what it intended to do, right? When Bud Selig negotiated these economic changes, which are really a cornerstone of his legacy as Commissioner, they’ve been uhh chipped away by owners in the years since. So we really wanted to get to the bottom of of why that is where things stand now and what a possible path forward is to address this address this growing disparity in teams.
BOBBY: Yeah, long story short, if you’re a small market owner, and you’ve decided I’m not going to run a payroll higher than $60 million, then a large market owner is going to say, Well, I’m not going to run a payroll above the Competitive Balance Tax if you’re not spending the money that I’m giving back to you because I had to pay the tax. So we’ve gotten to this point where owners have created and then solved a problem all within the context of the past six years of this CBA. And the benefits to the solution of that problem, really only go towards owners and not towards players. So now let’s go to our conversation with Maury Brown, who can break down some of the the long history of this as he’s been covering it, basically, since the Competitive Balance Tax was floated, and began to exist. Uhm I should say really quickly, before we go to our conversation with Maury. Uhm the Competitive Balance Tax was a compromise between the Players Association and the owners after the 1994-95 strike, when the owners wanted to institute a hard salary cap, and the player said no way, never go to hell. Uhm this was what came of it is this tax that would then help to, you know, narrow the window of spending so that all 30 teams could be competitive the way that allegedly they are in other leagues way that it creates more parody. Uhm because the big market teams are not allowed to just sign every good player the way that the Yankees did in the 90s. It’s really an anti Yankees thing as Maury will lay out.
ALEX: Yeah. And I mean, the reason it was a compromise is because the MOPA is I mean, we, we have talked about their successes and failures. But they still remain one of if not the strongest sports union, right? Which is why you will see every other league have a salary cap because the league has been able to undermine the the sports, the league’s players union, been able to pit the players against each other. And it is a testament to the MLBPAs relative solidarity that we haven’t seen that happen yet. Although as we as we all know, the the Competitive Balance Tax is not a salary cap in in name only. So shall we uhh shall we go ahead and get to our conversation with Maury to to break this down further?
BOBBY: Yep, let’s do it.
[23:31]
[Transition Music]
ALEX: All right, Bobby, we are now joined by Maury Brown, Senior Contributor at Forbes BB, BBWAA member, Writer for Baseball perspectives, FanGraphs, Baseball America. He’s had his work pretty much everywhere that writes about baseball. Maury, welcome.
MAURY: Thanks for having me.
ALEX: We are extremely excited to talk to you today about an extremely exciting, riveting topic taxes in Baseball.
MAURY: Yeah, it’s an interesting time. You know, uhm the sun doesn’t shine on the rear end of us. Uhm sports business people very often. uhh so about every five years, you know, that sort of thing happens.
ALEX: Yes. Well, you were just the guy we wanted to talk to. You uhm, you you ahh, you founded the business of Sports Network, which I think probably speaks exactly to the uhh to what we’re talking about for the past few weeks. And for the coming months, the business of Baseball. Uhm–
BOBBY: The nitty gritty is very welcome here more. Alex and I remarked to each other just a couple of days ago that we this podcast has basically become like an econ podcast and the last like six months. So uhh all of the nitty gritty details are very welcome on Tipping Pitches.
MAURY: Yeah, it is one of those things to where uhm, you know, let’s let’s not put people to sleep. But there’s a lot of interest, I mean, I will say this and and of course I’m biased. Uhm since doing this for about 20 years, I mean, dating back to the 2002 agreement. On fan interest is increased dramatically. I mean, obviously, the increase in social media has really driven a lot of that. But you know, people, of course want to know what’s happening. They want to know if there are players that are being targeted for free agency, maybe there are trades, and they certainly want to know whether games could be lost.
ALEX: Yeah, yeah, definitely. Uhm and the, and the Competitive Balance Tax has really evolved a lot since then. And you basically been uhm been covering it on and off for the last two decades, right? It was first ahh, it was first introduced in 1997, and then reintroduced in 2003. So to start things off, can you kind of just give us an overview of, of how things have developed on that front? In your your time writing about it? Uhm how have you seen it’s ahh, I guess the intentions of it change? Is it where things ended up today? Is that how were you expected they would end up?
MAURY: Uhm, yeah, no. Uhm, so, uhm, obviously, the, the initial foray into it in 97, was very much different. And uhm the one that we have had, largely since 2002, is the one that you really kind of want to focus in on. Uhm for one thing, it’s not a given. Uhm it can be, uhm, it has a expiration date at the end of every collective bargain agreement. Uhm and that is, of course, a lever that the players can use. But the expectation is that it will likely continue. I won’t say for sure, because nothing’s for sure. In this world, I think the biggest change that we’ve seen about it, right? First of all the intent, right, the intent was very clearly that there were clubs that were financially at a disadvantage from other large revenue clubs. And the idea behind it was is that that would tamp down at the top money would be distributed in a number of ways. People I don’t think know that a large portion of the penalties that are paid go back to the players in the form of benefits. But the idea, of course, here was that that would tamp things down at the top and create increased competitive balance and make it easier or make it less daunting for clubs that didn’t have a lot of resources to compete with the likes of the Yankees, Red Sox, certainly now the Dodgers. Of course, once you institute a system like that, it’s never likely going to go away. And what happens is, of course, is that the owners have nibbled around the edges, and have gained a significant advantage with this thing. So not only did they get thresholds in there, right? That they say, if you go above it, you’re going to get taxed this amount, and if you do it in consecutive years, you’re going to get hit with a higher tax rate. They instituted a system in the last deal that, of course, now has expired, to where there was basically a tax that said, depending on how high you went above the threshold, you could be dinged even further. And this really, I think, put a lot of pressure on clubs to not go above it. Certainly, it was designed to keep the Dodgers from running away with it. Has it worked entirely as it has been intended? I don’t think so. What I think has largely happened is that it gives cover, as the amount of money has flowed into the game, centralized money. I mean, there’s the local TV deals, and local sponsorships, and all that. And then there’s, of course, the centralized money, which is National TV, streaming, gaming, all that stuff. That’s a huge factor now, it really is. And so when you tie in that, and the fact that there’s now a slotting hard slot system at the bottom, you’ve got compression. And it’s, you know, it’s not a cap, but it’s a cap. I mean, it really is turned into that sort of thing.
BOBBY: Yeah, I I wanted to ask a little bit about the way that teams treat it like a cap. But do, in your time covering the Competitive Balance Tax that has it always been so, the way that it functions now is like teams teams to effectively treat it like a cap. We’re going to talk to Lindsey Adler, who covers the Yankees for the athletic and the way that they have treated the Competitive Balance Tax, particularly in the last five years, almost like a hard cap from another sport. But I wonder if you can kind of shed some light on the way that it was it was expected that smaller market teams would take some of that revenue sharing and spend it on players and that sort of expectation has not really lined up with reality, particularly since the 2016 CBA agreement.
MAURY: Yeah, and it’s funny you I I was just looking at a bunch of average salary numbers, and I don’t have it all the way up to current. But there’s a large swath I’ve got about, I don’t know, 12 years worth of data that breaks it down by service time. And you look at certain clubs, and I I hate to pick on certain clubs, but there are some very, very visible clubs that have really, I think, driven, largely what one of the proposals was from the players, which was to reduce the amount of revenue. So the Pirates should not be the Pirates. And and that I mean, they should not be hanging around the bottom of the standings. I know that a lot of people, I know that there’s one Pittsburgh calmness that screamed that there needs to be a cap on my question. And he compared it, of course, to the Dodgers and this unfair thing I said, so he’s easy to look at the Dodgers or to look at the Yankees or the Red Sox, I don’t see you comparing the Pirates to the Rays, or–
BOBBY: Yeah.
MAURY: –even the A’s, to a lesser extent, who I think have really, in recent years, really flaunted the system now, I mean, there is no excuse, I don’t think for any club, not to have competitive windows. Now those windows can be shorter or longer, right? I mean, the Rays are not going to be able to continually go at it non stop, like say the Dodgers would be simply due to resources, that and the fact that those resources also allow you to, you know, adjust for mistakes. I mean, it’s not a perfect world, your targets that you have, whether it’s in the draft or free agency or what have you. Nobody hits it a 100%, right? Nobody’s perfect. But though, that extra resources that somebody likes the Dodgers has allowed them to go out and go, well, this just fell through. I think, we can we can use Trevor Bauer as a great example.
BOBBY: Yeah.
MAURY: Trevor Bauer didn’t exactly work out like everybody I thought was gonna have it happen, right? If you’re a Dodger fan, they can go out and get Max Scherzer, even though they couldn’t resign him. So again, I think that the intent of the revenue sharing has largely turned into disincentivizing some clubs, not all. But but there are certainly some that are allowed to be bulletin board material for the Players Association. The Pirates are certainly one the dog or the Orioles appear to be another one.
ALEX: Yeah, it’s and and it’s definitely come to the forefront of the conversation over the last few years. It’s been a it’s been a hot topic in in certain off seasons, right? You think of the offseason after 2017 where the Yankees and the Dodgers both notoriously decided to, to reset the tax that was the, that was the ice cold free agency winter where February rolled around and, and hundreds of free agents remained unsigned. And so it’s clearly something that both both players and fans recognize is is an issue. I I another thing that sticks out to me is just how much revenues have grown over the last two decades and how the Competitive Balance Tax has not kept up with that, right? It makes, it there–they’re on a system now where there are set increases year over year, regardless of the revenues that Major League Baseball is raking in which as of late has been has been a lot. How, how do you think that there’s a way to kind of square those, those two competing notions, right? I know that owners aren’t going to voluntarily say, “Well, we’re making more in revenues, we’ll just insert them back into the teams obviously”.
BOBBY: Right, but some some owners have done that. So like they’re–
ALEX: Right.
BOBBY: –almost like giving away the game a little bit like the Dodgers and now Steve Cohen with the Mets. Like, they they’ve almost like proven that the Competitive Balance Tax number is like not really the right number anymore.
ALEX: Yes. Yeah, exactly. So do you I mean, how do you kind of, you know, rectify that, that gap between where the the money that Major League Baseball is bringing in right now, with these, these teams that realize they can just pocket this money outright?
MAURY: Yeah, I mean, this has been the prevailing challenge in a quote unquote, free market system. I mean, there is nothing that that defines that clubs have to pay a certain amount, you know, and other systems out there and other sports, say, you know, sports related revenue, you have to spend this much of it. Now that artificially inflates, you know, signings, right? I mean, you you spend money to spend it at that point may not necessarily be spent, you know, wisely. I think the the big thing, of course, is that you you mentioned that there’s been that growth. Something that I don’t think it’s largely talked about enough is that the owners are are not stupid people. And neither is really Rob Manfred you can dislike Rob Manfred for a number of reasons, but he’s not stupid. What’s happened over the last, you know, little more than this agreement, but largely within it has been this diversification outside of Baseball but attached to Baseball. So a great example of this is that it’s all gone near every club now is building a sports book attached to their ballparks. Now, that’s a separate business. But anybody that has two eyes can sit there and say, “Well, of course, people are going to the ballpark”. And then that’s ancillary money going in, that does not hit the ledger of, say, the Cubs or the Nationals who are two that are doing this thing, right? So there’s that there has been, of course, MLB advanced media, which the players have wanted to try and get more of a piece of the owner say, “Well, no”. I mean, that’s our thing–
BOBBY: Thanks for asking, but no.
MAURY: Yeah, thanks for asking, but no. And and so they they, you know, Major League Baseball has, is really considered the gold standard for live streaming. I mean, they were just very good at it’s one of the few things they were out in front of, normally, they react to stuff. But Bob Bowman, who has now left, you know, left the league. And ceiling, you know, and others were smart enough to go, I don’t know what this internet thing is, but yeah, go ahead. And they built, of course, a huge media company, and MLB Advanced Media, which has now been pulled out, you know, it’s underneath MLB’s Umbrella. It was a separate company, is now part of the league, they spun off another media company, and in what they called bamtech, which was completely separate from Baseball, no Baseball content. All they did was sell that to Disney, you know, for billions of dollars, none of that none of those monies go against the ledger. So when you hear somebody say, wow, you know, biblical losses, you need to sit there and take that in the context of it. So the players obviously see this, right, this is nothing, you know, it’s out there in the open, we’re talking about it, of course, they’re talking about it, the ability to try and get a piece of that pie is not easy when you’re of course collectively bargaining.
BOBBY: Yeah.
MAURY: I think they they I think that where they’re targeting now, largely is around because they understand it’s around the Baseball space. And what’s really changed and, and if you look at average salaries, it’s dropped 10%, since 2017, and that’s a sizable drop. Now, if I, I went through, and I took the average salary dating back to 1994, right? Which was before, a couple years before revenue sharing, and then when revenue sharing hit, and I adjusted all those numbers for inflation. And the players, of course, have increased the amount of the average salary, it’s I think, run about 36%. Okay, cool. And it the players, though, have never seen a drop like this in correlation with the increased number of revenues. So they’re going to try and get two things happening here. The investment in younger players has largely driven why that average salary has dropped. They’re now investing, they figure if I’m going to place risk, I’ll place my risk upfront. I’ll take try untried talents. Because our analytics are better, our scouting is better, and we’ll sign it. For the Rays, we were going to sign Wander Franco to a massive extension. So that has largely shifted the amount of money and the the Players Association is aware of this and sees it and is really trying to get players into a salary arbitration early. They’d like to go back to like we had largely in the 80s for a while and we had 15 years where all service level two guys went into sour arbitration.
BOBBY: Uh-hmm.
MAURY: Rob Manfred, of course, said this would absolutely kill low revenue making clubs, which of course, is clearly overstated. But that’s kind of the battle lines right now. They’re really trying to get some more money upfront, they’re trying to increase the of course, Competitive Balance Tax thresholds. But they’re really trying to get more money up front, which thing of course cascades into free agency players would enter free agency at five years of service time instead of six.
BOBBY: Yeah, and and you’re never going to get to even close to the Competitive Balance Tax threshold. If you have more than half your roster on 0 to 3, or even half of your roster in 3 through 6 and doing arbitration. You’re not going to get close to $210 million, with guys having to fight tooth and nail for $5.6 million, instead of $5.3 million. It’s not gonna come closer [39:13] the top end the competitive balance axes really for the largest market teams. But I wonder if you have any thoughts about a salary floor, and how that might make its way into the next CBA? We saw that it was floated from Major League Baseball, the Players Association outright rejected it because it would come with a much lowered Competitive Balance Tax threshold. So you know, you mentioned MLB, Advanced Media BAMTech. All of those diversified revenue streams. I read in an article that you wrote that the Braves because they’re, you know, income is public, they made $12 million, just from rent income in the battery in Q3 of 2021, which is a lot of money. And so, I’m wondering how you know, from a bargaining perspective, that’s a really the Competitive Balance Tax. How you get your arms around such unwieldy revenue streams? And whether or not you think that the players are going to have to give a little bit on the Competitive Balance Tax threshold in exchange for a salary for and if you think that’s something that they’re interested in doing?
MAURY: No, I don’t think they’re interested in the floor. I really don’t. Well, I I shouldn’t say that, if you talk to the old school, so when Marvin Miller was alive, who in thankfully now is in the Hall of Fame, and rightfully so. I talked to him on numerous occasions, and he always believed that a floor was halfway to a ceiling.
BOBBY: Yeah.
MAURY: The late Mike Winner was the same way. I never talked about it without fear. But I’m sure that he would probably feel the same way. And I don’t know whether Tony Clark feels that way, or Bruce Meyer, who’s leading the negotiations right now. But any kind of institution of hard constraints largely creates, once those things are in place, they the owners nibble around the edges. We see this with the NBA, the NHL, the NFL, you will see them continuing in subsequent negotiations to that. Now, on the flip side of that, I can say, well, it’s not like the owners have a nibble around the edges already. I mean, we’re talking about how changes to the luxury tax system has really benefited the owners, and again, the slots at the bottom. So the–they’re, they’re nibbling around the edges already. I I think that what’s going to happen here guys, is if I was going to see a path out of this thing, this idea of getting all service level two guys in isn’t largely going to happen. But I could see them increasing the percentage of them going in. Okay, cool. And at the top, they might be able to get something to where they can increase the thresholds. But the big thing about this, and this is what I was looking at what I was looking at the minimum salary, of course, the jumps, you see, I have it in a chart, and it just goes, you see go did that it’s like pretty flat, or it’s kind of gradual, and then this big jump, and then you know, pretty flat, and then big jump. And of course, they all align with when there’s a new labor. So these are really the only opportunities that the players get to try and do there because there’ll be some graduated system that sees incremental, you know, increases either at the top, or at the bottom with the minimum salary. But I believe that the players this time are going to try and seek a larger jump at the bottom. Yeah, they’re concerned about the top, but it’s almost artificial. I mean, we’re touching around that, right? So clubs are never going to come near that. It’s largely designed to keep the likes of the Dodgers thing, it keeps the Red Sox, you know, to a lesser center where the Cubs should be another one in there. To keep them from, you know, running wild and throwing competitive balance out but economic competitive balances out of skew, right? Okay, fine. But competitive balancing in the standings has been pretty good. I mean, out of the four major sports, Baseball is always the most competitive. And that could be due to game design itself, right? Baseball largely argued this all the time. Unlike other sports, where I can take a skill player and drop them in, LeBron James is a great example. I can take LeBron James and put him in, you know, the Cleveland Cavaliers and there they can and hit that the height of his, you know, career can win a championship and did. And then move them to Miami, you know, or move them around. And wherever he goes, that team suddenly becomes more competitive. You can’t do that in Baseball. I can take Max Scherzer or I can take Shohei Ohtani. You know, I mean, the Angels are a great example. I granted, you know, Trout was, you know, hurt and we had other players that didn’t perform. But the idea is, of course, that Baseball has to be better at the bottom. So, again, I don’t, you know, there’s no given that money in and of itself, is a guaranteed to create competitiveness, does give yourself a lot more flexibility in that. And then if we’re tamping down at the top, okay fine, right? I mean, okay, I guess that slows the Dodgers down a little bit. But will you know, the Brewers ever get near that? No, you know, we’ll even a team like the Astros or maybe even the Mariners who I think people don’t understand has more resources available to them, then, many might think due to their market size. Will they ever close to the to the luxury tax threshold? I kind of doubt it. Whether that is by design, like gives them an out there, hey, we don’t want to get near the luxury tax special, or whether they’re really financial constraints. And these are always the questions that we have, due to the fact that Baseball doesn’t open up their books unfortunately.
BOBBY: Yeah, the Mariners have never paid the luxury tax threshold. The only teams that have paid it are the Yankees, Dodgers, Red Sox, Cubs, Tigers, Giants, Nats and Angels.
MAURY: Uh-hmm. Yeah and if you look at some of those teams, right? That they’re they’re one a dunce–
BOBBY: Yeah, they like accidentally paid it for a year because they just needed to keep one guy–
MAURY: Right.
BOBBY: –and they knew they were gonna reset it the following year. Correct yeah.
MAURY: But the one the team out of that group to look at really closest is the Red Sox. Man they really have always been really smart. Well smart or very aware of where they’re at. They flirt with the threshold, in and out. Even when they don’t exceed it, they’re right there. And when they go above it, they’re largely, they pop down below it. And you mentioned this, right? And this is something for people that don’t know about this, right? If you pop up, if you go and consecutive years, your tax thresh, or your tax penalty increases, you pop back down and resets it. So teams have gotten a lot more savvy about that. They’re like, Yeah, well, we’ll pay the penalty one year, like Steve Cohen’s probably, or could be flirting with that sort of thing. All right, Steve Cohen, right? He needs to make a splash and he has some extra money. But but smart teams are the ones that really gain the system go up above it slightly, and then pop back down.
ALEX: Yeah. You you mentioned the Brewers. And obviously, I mean, Bud Selig, who was was the the Commissioner when a lot of these economic reforms were implemented, came from the the Brewers a small to mid market team. And and, you know, with these reforms that he kind of fought for the thinking was that he he was trying to kind of look out for the, the little guy, right? And close the gap between small market teams and big market teams. And when these reforms were first instituted, it kind of worked briefly, at least in terms of like, economic gap in the league. They actually, it it closed just a little bit, right? And then in subsequent years, and then subsequent subsequent CBAs. It, it grew again, and it’s striking to me kind of how the messaging around that has has changed. And teams have almost gotten fans on board with wanting to reset the luxury tax, right? The Red Sox, as you as you brought up, very famously, almost blatantly came out and said, Hey, we are trying to get under the luxury tax, right? Their team effectively tweeted out an acknowledgement of that. How, how do you think that that owners operations under this luxury tax this Competitive Balance Tax have changed? I mean, has it been that their, their awareness of how they can kind of skirt this, this, these rules? Have they just become more aware of that? Have they been able to to change their messaging and get more fans on board with just pocketing the the money?
MAURY: Well, yes. All of the above, minus the pocketing of money, right? Of course, they’ll say, Oh, we’re not pocketing–
ALEX: Right right.
MAURY: –they are right, you know, wink wink. I think that the messaging has changed a lot. You know, that idea that my team is really trying, and they’re spending. And you know, I mean, at its root, right? The idea that and this, this is agnostic of Baseball, it’s something across all industry, that the smartest, or the most talented people should probably be paid the most. And that’s how it works. Now, it’s not a guarantee, right in sports, but that idea is there. So if my team is spending, they’re trying. That is largely the idea and now the Orioles for many years and spent poorly and been efficient, you know, and effective. But again, it’s that idea that if you have smart people, and you do it, then they’re trying. And they’ll do that, and they like the idea that you pop back down, because that means well, you know, there they’re that if they’re paying this penalty, you know, then they’re really going to be screwed in subsequent years and they’re gonna tank or you know, they’re gonna reset. I think the thing that is, I think more disturbing about all of this is this idea of how we reset dramatically. This is not just dropping below. I mean, this is I’m shifting the topic now on you guys. So I don’t know where you’re heading here. But I do believe that one of the things that happens is that the top is only affected by a handful of clubs. It was, look, there’s no doubt in my mind that the luxury tax system was put in place just for the Yankees and the Yankees exclusively. Lesser extent the Red Sox, but the Yankees were just so willfully going about it, that they put the system in place to deal with that. Now, I don’t think we all saw that the Dodgers were gonna land on a you know, billion dollar TV deal.
BOBBY: Uh-hmm.
MAURY: And that changed the calculus for everything. But it it it has become one of these things where at the top. Okay, you know, fine, it’ll keep some teams from doing it. The players of course, don’t want this. players want you know, Hey, man, you want to go ahead and give you know, matchers are $43.323 million in AAV, knock yourself out. You know, it’s good for them, it sets the bar, it sets precedent. You know, it’s something that’s used to comp in the future. I mean, you hear about this right? So and so got the highest AAV, and that is used in negotiations and future years. So of course, the Players Association wants that for at the top. But I’m, if I’m the Players Association, I’m more concerned about a teams have gone through due to the draft system, and just, let’s just zip to the bottom. And then some of them don’t pop back up. I mean, if you’re the Mariners, okay, cool. You know, you haven’t made the playoffs for 20 years by God try something new. And if that means resetting, then maybe they have a valid excuse. But if you’re the Cubs, or if you’re the Nationals, and you win the, the Nationals win the World Series in 2019. And then we’re going to just do a fire sale. And it just, it’s a herky jerky system. It does it work? Yeah, sometimes somet–you know, but I think that it just makes for bad. It it’s just bad optics for the fans who try to figure out which way teams are going. It’s just very difficult to get fans back on board. Once your team is, you know, really bad.
BOBBY: Yeah, I think there’s this perception that when your team is bad, you’re making less money. But that’s just not true. Operating income doesn’t really change for teams year over year, other than just steadily rising, when they sign new TV deals, when the the national TV deals for the league are better when they sell BAMTech like these teams know come rain or come shine. If they put 25 players on the field every year, they’re gonna pull in $100 million just from TVs. It just from TV streaming rights, and just from selling tickets, because, you know, fans are still gonna come out because this is such a small commodity, their only 30 teams, their antitrust exemption, like fans still show up and the money still comes because of that. More last question here. If the Competitive Balance Tax were to stay a similar system, so it’s changed its structure a couple times, it used to be pegged to the top five teams, and now it’s only pegged to a certain specific number since 2003. If it were to stay, how it was structured in the last CBA, what do you think this is a very hard question. But what do you think is a more reasonable number than $210 million?
MAURY: It’s funny that you said that I, I think that you, you, the players will seek a higher jump, you go to 218. You know, and maybe have a graduate to to 222, or something along that you know. You know, a higher jump, but it’s more gradual over the life of it. I don’t think the owners will ever go for it. But that would be a way, you know, so there’s the two components, right? There’s the initial threshold, right? So you go, well, that’s a pretty sizable jump, when, when you look at other things, I think that the current deal was is that the the, the owner said that they’d go to to, you know, 14 or whatever, they they didn’t want to go up too terribly much.
BOBBY: Uh-hmm.
MAURY: So the players can say, okay, let’s, let’s, let’s make that jump pretty dramatically. But in exchange, will make it a lot more gradual over the life of the agreement. So maybe you get something like that, I don’t see a dramatic shift right now the sides are really dug in. And while we’ve heard some pretty radical things here, that I I don’t think that it’s going to be a radical change, I’ve shifted my, my thinking on that, I largely believe that this last agreement was kicked can kick down the road. And I I wonder whether this one might not be too dissimilar. I think that there’ll be some changes that are pretty dramatic, at the bottom at the top, but it will largely be the same system. Hey, you, we did touch on something here that I think is important, and–
BOBBY: Uh-hmm.
MAURY: –it’s something that really is going to come into play. So the new National TV deals kick in, and it’s a 22% increase. The other thing that’s in there, so you can sit there and go, “Wow, man, that’s a lot of dough”. I mean, billions of dollars are going to go in and centralized money. The owners are sitting there, and this isn’t getting a lot of traction, and I’m going to bring it up in my next piece. Regional Sports Network deals are probably going to go down. The Valley deal was largely seen as a boondoggle. And, and a big mess, right? They they spent a lot. And it’s might be a situation into where MLB, the NHL and NBA, get into a streaming deal and start taking care of local rights on the meteorites bubble is changing a lot. And owners are very much aware of this. So I think that that revenue stream is going to go down. The national deal is going to of course go up. So the gaming money’s going up. The Regional Sports Network stuff is going down. Streaming in and of itself, I think is going to be an issue because linear TV will your traditional cable packages right or come in a bundle. So grandma goes and buys you know, her cable package. She doesn’t give a squat about Baseball, she wants to watch Food Network or whatever it is, okay, but she’s still paying for it. And that that happens vice versa, when you lean on just your core fans, and you go a la carte, it changes dramatically, it’s going to drop significantly. So those are kind of things that are in there. So I think that the the luxury tax system at the top will largely be, you know, a a move in the thresholds. I don’t know if you know, the owners might seek something in terms of exchange for increased penalties. I don’t know how that goes. But I don’t think we’re gonna see some real radical shift. You know, who knows, but I I don’t see it right now.
ALEX: Maury Brown, thank you so much for joining us. This has been an illuminating conversation. Before we let you go, do you want to just plug where, where people can find you, where people can find your work?
MAURY: Sure. You can find me on Twitter @BizballMaury, that’s b-i-z-b-a-l-l-m-a-u-r-y. Or you can look me up in that fancy thing called Google and find me on for find find my work there.
BOBBY: Maury, thanks so much.
MAURY: All right, guys. Thanks a lot for having me. take care.
[56:05]
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BOBBY: All right. Thank you, Maury Brown. We hope that that gave a decent macro sense of what we’re talking about here with the Competitive Balance Tax. Let’s go to a micro conversation about the way that the Competitive Balance Tax has kind of worked. MLB is marquee franchise, the New York Yankees, with Lindsey Adler. Alright, Alex, we are now joined by Lindsey Adler to talk about the CBT on a micro sense. Lindsey, hello. Welcome to Tipping Pitches.
LINDSEY: Hello, thank you for having me.
BOBBY: I should say welcome. Yeah, welcome back.
ALEX: Yeah, actually, fittingly, I was I was just, I was just looking at the last time we had you on which I barely even remember that conversation. But I do know it was in the wake of the Marlins trading Giancarlo Stanton. And we brought you on to say, what’s, what’s up with that? So this feels like a fitting kind of coda to that.
LINDSEY: Yes, absolutely. That’s that’s real full circle moment, I would say.
BOBBY: Well, we are gathered here to talk about the Yankees love affair with staying $1 million underneath the Competitive Balance Tax thresholds. Lindsey, you recently started covering the Yankees just a couple of years ago. The Yankees went over the CBT threshold every year from 2003 to 2017. And only once since then, I was wondering if you could kind of provide a little bit of context in your time covering the team, talking to Brian Cashman, anybody else involved in these kind of salary decisions? And then also kind of like your experience with fans, which you have very often on Twitter and your mentions, after you write an article about the Yankees, and even sometimes when you don’t? Just the Yankees evolution on their philosophy towards the Competitive Balance Tax?
LINDSEY: Well, I think the Yankees are unique, because the fanbase is completely conditioned to not give a shit about the owners budget, because, you know, they came up with George Steinbrenner. Steinbrenner wanted to acquire every player regardless of roster size limits. And everybody kind of knows that the Yankees typically seem to print money. So the fan base, actually, they they have, I think, a very different perspective than from what you would find in a lot of other markets, because they’re like, I don’t care, it’s not my money, spend and make the team win. With the Yankees upset a lot, it’s like, you know, going over the Competitive Balance Tax threshold that just distributes money to our competitors, that helps them. I think there’s very much this sense of sort of excitement, and being able to operate the organization in a way that is more logically sound than the way that George Steinbrenner operated it. So I mean, I don’t think that I mean, as we see with a lot of organizations like, I mean, not to always go to the Rays, but like, Rays don’t need to have the highest payroll to be one of the best teams in Baseball every year. And there are a lot of times where, you know, it’s kind of like, what do the Yankees actually need to become the contending team that they thought that they were going to be in this window, and sometimes it is like, yes, they should just go out and get Gerrit Cole. And it doesn’t matter how much money they spent. And then other times, it’s like, you know, they are looking for. Sorry, I’m kind of sick, but COVID negative, undefeated–
BOBBY: Congratulations.
LINDSEY: –proudly. It it’s just an interesting thing. And I think it’s really interesting now in New York, seeing Steve Cohen really just blow through whatever we expect. A luxury tax threshold would be in a new Collective Bargaining Agreement if that is the deal. And so it’s like, it it’s actually kind of difficult to write because, you know, when I wrote about like the Yankees trading Adam Ottavino to the Red Sox last year, which was pretty much a salary dump.
BOBBY: Yeah.
LINDSEY: It it’s a weird balance because I understand that Yankees fans don’t give a shit about Yankees ownerships, budgets and profit margins and whatnot, but like that is a factor in how they operate. So I’m like, well, how do I say like, yes, they are making these decisions. And yet, we also understand that you as a fan base don’t like it, like those two things can actually coexist, like you don’t have to like what they are doing. So it’s, it’s weird.
ALEX: You wrote a couple weeks ago, a piece with Evan Drellich, about how how Steinbrenner basically came out and said, you know, I was, I was in favor of a of a proposal to lower the Competitive Balance Tax. At the same time, Brian Cashman is, you know, as he should be lamenting the, you know, the the limits, right? He is the GM, he is going to come out and say, “Yes, of course, we want to do everything we can to to become a better team”. And these feel like two kind of sides of the same coins. I mean, do you think that, like, are, are these actually internal conversations that are happening? Or is it more like optics, right? To come out and say, well, there’s a healthy debate within the Yankees of, of where we can go, how far we’re, you know, willing to come to the, how how close we’re willing to get to the Competitive Balance Tax, whatever? Or is it, is there really just kind of a unified message that they’re like, you know, we don’t we don’t want to spend the money? Like–
LINDSEY: I mean, I think that’s something that sort of like the you know, this is the way the Yankees are operating, you don’t you don’t have to like it. Like, that’s something that’s always a little bit difficult for me as well, because it’s like, actually, Major League Baseball’s, you know, the way it’s structured, it’s set to actually keep an organization like the Yankees from stepping. It is Baseball, actually, but, you know, by the guidance of the 30 owners. But like, structurally, it’s not like, it’s not like, the Yankees are just like, setting their own type of, you know, competitive balance tiers, this is within the, you know, now expired, rip Collective Bargaining Agreement. So it’s like, yeah, like, this whole system is actually kind of set up to make the Yankees out the Yankees. But I think it’s interesting when you think about it from a roster building perspective, because, honestly, when I look at the Yankees, so you know, I hear from fans a lot, like I can’t believe they missed out on this player at the trade deadline, or this player in free agency, and they’re talking about stuff that happened like a couple of years ago. And like, you know, I don’t always know that like, adding the kind of like exciting sort of mid tier players what the Yankees need when, when you look at it sort of like they need to be able to develop their own pitchers. They need to be actually getting the production out of like Gleyber Torres, and Gary Sanchez. So I think it’s like these competing ideas for like, the Yankees aren’t actually getting what they need to be getting out of there, like cost controlled players, in a lot of cases. And so then one thing you can do is clearly supplement that on the free agent trading market. But like, it’s just, I’m very interested to see what the new structure looks like, if and when we ever get a new Collective Bargaining Agreement and kind of how the Yankees approach it, because I really thought this year was going to be the one where they were going to go out and sort of, you know, go a little nuts. And they sort of still have the opportunity to do that once this lockout is over. But I was I was actually pretty surprised that they were so conservative during like the November bonanza. So I guess I’m just sitting and waiting.
BOBBY: Yeah. It it’s interesting that you cite not wanting to help their competitors as a reason of not going over the Competitive Balance Tax threshold because of being in the same division as the Rays and then being like a direct competitor. And basically, the further the Yankees go over the CBT threshold, the the more direct money the rays get to spend on a player that they can see and develop and make into you know, do what the Rays do. Develop into, identify something that another team did not see and make them better in the short term. And, you know, Maury cited that the CBT is it was basically introduced to be an anti Yankees rule? That like they were the team that was spending crazy in the 90s and in late 80s. And you know, that the smaller market teams, the people that Bud Selig, sort of like the small market Commissioner like wanted to protect. They wanted to prevent the Yankees and then eventually, like the Dodgers and Red Sox from spending more than everybody else, but it would it would seem to me that it’s sort of self defeating to like, admit that you can’t go over that, because you’d be helping your competition, which is already kind of beating you. Does that, does that make sense in a roundabout way? Like–
LINDSEY: Yes.
BOBBY: –it’s sort of like, I don’t know, it’s it’s a contradictory philosophy organizationally, you know?
LINDSEY: Yeah, it’s, it’s a lot of like traps to fall into when you’re trying to build your most successful roster. And I think I should preface this by saying like, I didn’t grow up a Yankees fan, like, I don’t have rooting interest in the Yankees, but like it, to me, it seems like it would be better for Baseball for the biggest organization, in their sport to operate, like the Yankees, you know, like the Yankees should be the Yankees and, you know, something like sense of the fan base, but also like, it’s just a little bit silly. But like, it’s so interesting to me that we’re like, coming into this, you know, time where they’re completely restructuring, or they they could completely restructure or just make mild tweaks of like financial structure of the sport. When there is so much focus on like, the Rays way, and the, the you know, the real player development and cost controlled model. And you talk to people within the Yankees organization, and I’m like, everyone talks about the Rays, the Rays are in everybody’s head, like, I think about the Rays constantly. People with the Yankees clearly think about the Rays constantly because you’re competing against them, and because everyone wants to emulate them. And it’s just like, so funny, where, you know, like, we think about the 90s. And we think about these enormous Yankees contracts. Now everyone’s like, looking at the way that like, the Rays operate and just turn and create all this like surplus value. And it it’s interesting to see it in the same division. And it’s interesting to see, year after year, the Rays kind of like carve up the Yankees when, you know, on a spectrum of like, organizational identities, you would think that they would be like, so far apart.
ALEX: You you mentioned this a little bit at the outset. But I’m curious, your you hear from fans a lot. I’m sure they’re often very polite in the way–
LINDSEY: Uh-hmm.
ALEX: –that they they’re conversing with you online, whether it’s in comments, whether it’s in Twitter, it’s a very healthy, healthy debate, I’m sure. But, you know, has the the messaging got through at all just as far as like, maybe it is a savvy business decision to not go over the Competitive Balance Tax, right? And I mean, we talked with Maury a little bit is that you know, that owners have gotten better in recent years of saying, well, we need to reset this, right?
LINDSEY: Uh-hmm.
ALEX: We talked about how the Red Sox very plainly came out and said, If you know, you know, this is, this is our goal this offseason. But you know, I mean, you were you were shaking your head as I, as I asked this question, so what is that response been like?
LINDSEY: No, they don’t, they’re not. I mean, they’re like the Yankees fan base is like, straight up homicidal at this point. It’s like a little bit scary. Like, they don’t they don’t really trust the Yankees plan is going to work. I think what’s interesting is like, there we go back to the Rays, but it’s like, you know, I’ve talked to Rays fans, and they understand the idea of trading, like Snell. And they, you know, put their faith into well, this seems like an extreme decision. I like watching this player, but I have faith that it’s going to pan out. And I I even feel like there has been a little bit of a sentiment shift from Red Sox fans on trading Mookie Betts I’m not sure if I’m just like hearing from Bizarro Pockets that have like, you know, come to accept it or whatnot. But no Yankees fans I don’t think I don’t think they’re in a position where they’re like accepting you know, quote unquote “intriguing moves” or I guess in this case like a lack of them as like a trust the process thing they’re like, You know what, we’re tired of seeing this team bomb out in October with Aaron Judge at the helm when this is supposed to be our window contention of contention. Like stop trying to be like fun and interesting and like signing Corey Kluber and just go get just just go get Carlos Correa or you know, whoever it is that day. You know, these these things change like there was so much like fan there’s so much fan fury when they sign DJ LeMahieu in 2019. And then they have so much like fan pressure to extend him last year and then after he played injured last year now they’re all like, dumped DJ this was like a horrible decision. So like these things change but no, I would say there’s not like a It’s not there’s not a lot of faith in the organization’s approach right now. Which it’s interesting to now go through a lockout where we’re really just in like, Okay, well now we really have to wait and see what the Yankees are gonna do and how everyone’s gonna feel and–
BOBBY: Yeah.
LINDSEY: –whatever, when and if hopefully we get to the other side of this.
BOBBY: Do you think that other teams willingness to go over the threshold will shift the Yankees organizational philosophy towards it because as we as it stands right now, the Mets are $54 million over the threshold, the Dodgers are still $24 million over the threshold. Even the Yankees are technically $12 million over the threshold before they make any trades or do anything projected. So do you think that like their, if their unwillingness was because they don’t want to sign the checks that help the Rays and the Brewers and such and such compete, someone else has already kind of doing that and the Rays are not going to run $150 million payroll, even if they get $100 million from big market teams, they’re just never going to do that, organizationally. Their philosophy is to to not do that. So do you think that with, with like the rest of the league kind of spending over the threshold, the bigger bigger market teams, the Mets just across town doing a similar thing. Do you think that that will pressure the Yankees to do it? Or is this kind of like a steadfast philosophy?
LINDSEY: You know, I’m pretty curious about that. Because Yankees have, really, I would say, what one thing has been consistent over the last few years that they they’ve set their process and their approach, and they’ve really stuck to it. And I think that sort of seeming in flexibility is one thing that is actually like, kind of upset the fan base like, I, I don’t really know how the Yankees could go into next year. I’m letting Steve Cohen and the Mets just like, go full George Steinbrenner on them, kind of. But also, I was surprised that the Yankees didn’t adapt their approach at all, once they saw the spending Bonanza in November, you know, they, I so I went into the offseason thinking that like there wasn’t going to be a lot of like player movement, because clubs don’t know what the financial structure is going to be. You know, I don’t know really how if you’re an owner, you like, quote, set a budget, if you don’t know what the penalties in the whole system is going to be like, next year. And so, but then obviously, some organizations were just like, “Screw it”, like, we’re just gonna go in. They have different circumstances and the Yankees, obviously, but we didn’t see the Yankees, like panic and jump in at any point. And so I don’t know, I mean, I would think, I would think that theoretically, they would, you know, want to think like, we have our process, and we have to trust this and we’re sticking to it. But also, it is really notable to me that a lot of the teams in the American League are improving and that, you know, they’re crosstown companions. You know, Uncle Steve is just like, spending like crazy. So I’m, I’m really curious. I I wouldn’t be surprised if it went either way. But like, I would almost lean toward like, they they have their process, and they’re sticking to it, but I don’t know.
BOBBY: Yeah. They’re just feels like–
ALEX: [1:13:01]
BOBBY: –wait, really quickly about the Mets and Yankees dichotomy. It does feel a little bit like the way that the Yankees front office and like ownership talks about it is like an old money versus new money divide. Like, it’s cute that you think that you can come in here and spend $270 million, but wait until five years from now and you’ve been doing this–
LINDSEY: Yes.
BOBBY: –for and paying the luxury tax bill for five years. We’ll see how you feel then. And–
LINDSEY: Yeah that’s that’s true, I think.
BOBBY: I I think that that has like kind of pervaded the league in a nefarious way. Alex, sorry, I cut you off.
ALEX: No, no, I mean, my I was just going to to compliment that it’s this interesting, like balance between, you know, a a business mindedness a savviness and like, ego, right? Like you, you are the Yankees and historically you have been the team to kind of set the market and so it’s been this interesting switch to watch them be the ones who are actually kind of sitting back a little bit and, and watching the market play out like it feels like we’re all kind of in unchartered territory here, right?
LINDSEY: Oh, yeah. I mean, I I don’t know if this is like, you know, poor perception on my part or what but like, I think it the, the industry is not like bending to the will of the Yankees. Now. You know, the the Yankees are operating in a system, it is not, you know, they are not the like, you know, the mass that draws the gravity to him or whatever it would be. So I think it’s pretty interesting, I think the idea of like, you know, the Mets being new money, and the Yankees being old money is pretty apt because like, truly like Brian Cashman has been in this job. You know, since I was a child, he’s been with the organization since I was born. Steve Cohen, I think it’s like, actually he’s a little bit endearing for him to like, clearly be figuring this out on the fly. It’s like, Oh, buddy, like you don’t really know what you’re doing but like you’re very passionate like–
BOBBY: Yeah.
LINDSEY: –you’re you’re very eager. And I do think that’s interesting and how it gives them different perspective because the Mets are kind of going like manic while the Yankees are trying to remain smart. And I don’t know, it it’s it’s Baseball, it doesn’t always have to be like, one approach works and the other doesn’t. But–
BOBBY: Yeah.
LINDSEY: –man excited is like kind of funny.
BOBBY: Yeah, I mean, it’d be one thing if, like the Yankees were running $175 million payroll, but they’re not.
LINDSEY: Yeah.
BOBBY: They’re like running a $205 million payroll. So they’re, it’s not like they’re not spending at all. It’s just, you know, there’s like, gradations to how we talk about all of this stuff, of course. But I just think that the Yankees are not not going over the threshold, because they, they’re claiming they don’t have enough money to do it, they’re claiming that it’s not worth it in terms of like, business value to go over, because the players will not guarantee that they will beat the Rays, or the Red Sox, or the Astros or whoever. So it’s like, year in and year out, it doesn’t make any sense to continue to go over the threshold the way that they did from 2003 to 2017. They’ve just shifted their philosophy and there’s like, it’s it’s kind of like, it kind of matters, how you talk about it. But ultimately, it ends up just like that saving the money? So I don’t know, I’m a little bit cynical as to how the way that they talk about it. Just because of how all other 29 ownership groups of Baseball operate and pretending like they don’t have enough money to to actually get close to the threshold, when the Yankees obviously do.
ALEX: Well–
LINDSEY: Yeah.
ALEX: –I I mean, what’s, sorry not to cut you off, Lindsey–
LINDSEY: Yeah.
ALEX: –but it’s like, it’s it’s funny that they come out and say this, because they’re just like, articulating the point but–
BOBBY: Yeah, it’s not worth it.
ALEX: –Competitive Balance Tax
BOBBY: Yeah.
ALEX: They’re like, no, if we go over, we’re gonna be funding smaller teams and their ability to compete and it’s like–
BOBBY: like yeah–
ALEX: –yeah–
BOBBY: –read the CBA that’s what it said.
ALEX: –you’re right. Yeah. No, that’s accurate.
LINDSEY: Yeah, I, I think calling I think a lot of fans like called the Yankees cheap. And I don’t think they are. They’re spending a lot of money every year not to win a World Series, which I think is like, it should be for fans like infuriating in its own, right? It’s, it’s like it. I mean, we can like quibble like, well, what the Yankees spending more and going to like a $5275 million payroll like, would that help them win the World Series? We don’t know that for sure. But we know that them having a, you know, 200, 210 to $220 million payroll has not gotten them to a World Series in the last 17, 18, 19, 20, 21, five years of contention. So like–
BOBBY: Yeah.
LINDSEY: –to me, I’m like, kind of like, guys, like I get like the fury here. But like, you can keep the fury and kind of like shift what you’re talking about. Like, they’re they’re still spending a lot of money, and they’re not winning, which is its own problems. So–
ALEX: I am, before we let you go, I’m kind of curious zooming out a little bit like from the, from the perspective of someone who relatively recently started covering a team that is so intertwined with these with this kind of battle with the luxury tax, right? Was there an adjustment you kind of needed to make? Or did it take some time to really wrap your head around, like the tax itself and how teams interacted with it? I mean, I know you kind of grew up around the Giants, watching the–
LINDSEY: Uh-hmm.
ALEX: –Giants, which is not a team that is unfamiliar with the luxury tax, but this is obviously really naughty stuff. And and Bobby and I have spent days researching this and and reading about it, and the numbers are swimming across my eyes at this point. So does it take some time to just like, adjust your eyes to like the, the light so to speak?
LINDSEY: I would say like money has kind of like lost all meaning to me. Like, I don’t get fazed by like, I don’t know, the Yankees, you know, declined the contract option on Brett Gardner or whatever. And he had like a one point. He remember he had, he had a, he basically had a buyout that, you know, I was like, oh, that’s nothing. I can’t remember if it was like, half million or like 1.2. But it’s like, oh, that’s nothing. And I was like, if I had that money, it would change my freaking life. And I think the scale at which we’re talking about is just bizarre. But I also think that the Yankees like without knowing their actual revenue numbers, like people just know that the Yankees are wealthy and that you don’t really need to know like, as a as a reporter, like, it would certainly be nice to know how much money the Yankees make, and from where and where they spend that money outside of payroll, which I think would be really valuable to everyone, but it’s like, I just know that the Yankees have a lot of money and that they’re spending a lot but their fans don’t think they’re spending enough and that there are times when it seems like they could spend more. It’s just like it’s It’s kind of like a monopoly money type of thing to me like the relievers making like 9 million it just like a year like doesn’t faze me when, like, I probably won’t make $9 million over the course of like two lifetimes. I don’t know. It’s I think the scale is just so massive that it’s just kind of like it’s it’s a whole different thing. I don’t, I mean, I think the way the Giants spend their money was wasn’t it like a few years ago, they had like the top payroll in the league, and it was just like, all all on like, crap players and Buster Posey. So like, you know, it’s just like, not much. I mean, Brian Sabean, Bobby Evans, those are just like very, very different Executives from you know, from covering Brian Cashman who has been doing this for so long. So I think actually, the thing that’s more interesting to me or more of a more of an adjustment than the like monetary figures in the scale is the fact that the General Manager has been doing this for so long, and that the fan base and the organization, they have such a different philosophy than like the way sports operate in the Bay Area, which tends to be very, like, nostalgic, and like, hold on to players father aging, whereas–
BOBBY: Yeah.
LINDSEY: –it’s very cutthroat here. And so I think it’s just like, it’s not really the money. It’s just the whole like, infrastructure of it. I would say that’s, that’s been kind of like hard to grapple with as someone who’s like fairly new to it.
BOBBY: Okay. Lindsey Adler, thank you so much for joining us. Do you want to let people know where they can find yourself?
LINDSEY: They can find me at theathletic.com/Yankees. I’m on Twitter @lindseyadler, l-i-n-d-s-e-y. And I’m in New York City.
ALEX: Oh, yeah. Thank you so much, Lindsey.
LINDSEY: Yeah.
[1:21:51]
[Transition Music]
BOBBY: All right, Alex, thank you to Maury, thank you to Lindsey. Thank you to everybody who listened to an hour and 20 minutes about the Competitive Balance Tax this very esoteric, legal structure within the Collective Bargaining Agreement of Major League Baseball.
ALEX: You know, what the both sides can agree on? I think what you and I can agree on with the with the listeners, but the owners even?
BOBBY: I’ll tell you what, not what is actually making up the content of the Baseball, and they can’t agree on that. MLB just lying about that.
ALEX: Yeah, no, I don’t even I don’t even want to touch that.
BOBBY: [1:22:34]
ALEX: What can we, we can agree on how fire these these shirts are, right? Come on–
BOBBY: No, boo, bestie.
ALEX: Come on. I and I feel okay, saying that. Because the the best design that’s out there is not actually one that I have made, right? But you are I actually had a hand in drawing.
BOBBY: I haven’t had–
ALEX: –pardon [1:22:55]
BOBBY: –any of them so.
ALEX: But I really love this shirt that Alycea did for us. It’s a really cool collaboration. And she really, I think blew me away with how she actually brought our brought our idea to life. So I’m excited to, I’m excited to cop one of those. We’re deeply encouraging you to do as well, if you want. Bobby, as you said, it’s a great holiday gift. But the deadline for that is fast approaching, if you want to guarantee delivery by December 25th. So make sure you get those orders in tiny.cc/nationalize. Use that promo code STRIKE 15% off. It’s it’s all there. We’re we’re taking care of you this holiday season.
BOBBY: Thanks for listening, everybody. We will talk to you next week with an episode about revenue sharing. Bye.
[1:23:45]
[Music]
[1:23:43]
[Outro]
ALEX RODRIGUEZ: Hello everybody, I’m Alex Rodriguez, Tipping Pitches, Tipping Pitches. This is the one that I love the most Tipping Pitches. So we’ll see you next week. See ya.
ALEX: Also, our more billionaires–
BOBBY: More billionaires. Yes, amazing.
Transcriptionist: Vernon Bryann Casil
Editor: Krizia Marrie Casil
Tipping Pitches 
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