What Does the New CBA Mean for the Astros?
The MLBPA Fought for Changes That Benefit Upper-Middle Class Teams Like the Astros. The Front Office Can Take Advantage of This
Guess who got back today?
Yes, it was them wild-eyed boys who had been away.
Yes, the boys (Astros players) are back in town (either West Palm Beach or the picture section of Astros.com).
On Thursday afternoon, the MLBPA voted to accept an offer from the owners. The owners voted to ratify the deal later that evening, and with that, the 99 day lockout was over. Baseball is back, and in time to have a full and complete 162 game schedule.
Perhaps this is a better song to express our emotions:
The new collective bargaining agreement will last for five seasons. CBAs are big deals because they set the rules of the road the baseball—both for front offices in their decision on how to acquire, develop, and deploy players—and on the field itself—for example, the new CBA will make the DH a feature of National League play.
And one can find many analyses of what the new CBA will mean for the major league baseball over the next five years, and which side “won” the fight over the CBA.
But this is an Astros blog and you are an Astros fan. So you might have a very myopic question—what does this mean for our team? How does the new CBA affect the boys in orange and blue?
I’m hear to answer that for you. I’ll look at several different aspects of the new CBA and what the implications are for the Astros.
The most important premise behind my analysis of the CBA is that the Astros are 1) a good team, and 2) an upper-middle class team in baseball’s current economic landscape. They have won a lot of games in recent years and, as the graph below shows, they have run payrolls near the top of the league, though obviously not as high as teams like the Dodgers, Yankees, and Mets.
While it is hard to make predictions about what will happen over the next five years, there is every reason for the Astros to continue to be a contender—they have excellent young talent like Yordan Alvarez, Kyle Tucker, Jose Urquidy who stay under team control until 2025, and veteran stars like Alex Bregman and Jose Altuve under contract until 2024. And there is every reason to think that Astros will continue to be a relatively high spending team.
So how will the new agreement affect our upper middle class set of contenders.
Expanded Playoffs
The new CBA will expand the playoffs into a 12 team format. Six teams from each league will make the playoffs. The two division winners with the highest winning percentages will receive byes to the Division Series, while the division winner with the worst winning percentage and three wild card teams will meet up in the Wild Card round. The Wild Card round will now be a best-of-three series.
This is probably the biggest change in the CBA that the casual fan will notice. On a personal level, I’m disappointed in this change, as it devalues the regular season more and make the playoffs even more of a crapshoot than it already was.
The good news about the set up for the Astros is that it makes them more likely to make the playoffs. In 2022, the Astros are significant favorites to win the AL West. But the extra playoff spot gives them a little bit more cushion should they fall below expectations during the season.
And the Astros should continue to be a good team into the near future. But they are likely to be challenged soon for AL West supremacy by the Mariners, who are starting to bring up prospects from their bountiful and top-ranked farm system. And of course, the Angels have the most talented player in baseball—in fact, they have two of them—and one season they may actually not have the rest of their roster fall apart due to injuries and poor development…theoretically. The extra playoff spot gives the Astros a greater chance to make the playoffs if they are passed by Seattle or Los Angeles.
But while the Astros are more likely to get to the playoffs, they are less likely to win the playoffs. The expansion of the wild card round means that most teams will need to win more games to win the World Series. And a three game series is essentially a coin flip and is more likely to be determined by chance than by the actual talent of the teams. More games with more teams with more chance makes it less likely that favorites win.
The other potential effect of the new playoff system is that it may lead to a realignment into a 2-division system. A two-division system would work more naturally with the a six team bracket, as the division winners could receive the byes, and the wild cards face off in the first round. This is mostly my own speculation, but realignment could come toward the back half of the current CBA.
Increased Luxury Tax Thresholds
Since 1997, the various collective bargaining agreements have included a set of luxury tax thresholds for payroll. If a team exceed the threshold, the team must pay a tax on that money to the league’s revenue sharing program, and receive penalties in the upcoming amateur draft. In 2021, the first threshold was at $210 million. In 2022, the threshold will jump up to $230 million. The threshold will increase annually in the new luxury tax and max out at $244 million in 2026.
It is worth noting that this is relative to previous CBA’s a large increase. As Maury Brown of Forbes wrote: “The 9.5% / $20m increase in the CBT threshold in 2022 is the biggest single year increase in CBT thresholds since the CBT was put in place.”
This luxury tax is officially given the euphemistic name of the Competitive Balance Tax (CBT is the acronym Brown used above). But MLBPA leader Max Scherzer gave it a better name during the negotiations—a soft salary cap. And this is why the level of the luxury tax thresholds became the most contentious issue in the CBA negotiations. Teams choose to spend up to the thresholds, but not above.
For example, take the Astros. In 2021, the Astros spent $208.8 million on their luxury tax payroll, according to Roster Resource.1 That’s just under the $210 million threshold, and that is not a coincidence. The Astros elected to stay under that threshold, and it affected several of the decisions the front office made last season (e.g. the structure Jake Odorizzi’s free agent contract; the additions of Joe Smith and Rafael Montero to the Kendall Graveman for Abraham Toro swap). The front office wanted to avoid penalties that would reduce their draft position (including the compensation picks they expect to receive when Carlos Correa signs elsewhere). And Jim Crane wanted to spend less money. The Astros were not alone; 5 teams spent within $10 million of the tax in 2021.
An increase to $230 million in the first luxury tax threshold gives the Astros front office more money to spend before the penalties kick in. The union fought for this large increase in the tax threshold because they believe it will lead upper-middle class teams like the Astros to spend more money in pursuit of winning games.
With that being said, it is unclear that the Astros will pursue a high dollar free agent now that the lockout has ended. The team’s payroll has gone down since last season, but it will start increasing in 2023 as its young stars become eligible for free agency for the first time. The contracts for Yuli Gurriel and Michael Brantley will end this off season, so the team needs to address those positions, and it will likely take a free agent to do so at least one, if not both, of those positions. I suspect the front office will be active this year at the trade deadline to address any holes before the stretch run and another expected playoff appearance.
The increase in the luxury tax threshold makes those easier for a team that is choosing to keep its payroll under that number.
Pre-Arbitration Bonus Pools
One key goal of the MLBPA in this round of CBA bargaining was to get more money to players earlier in their career. One way they achieved this was by the creation of a $50 million pool of money that will go to players who are not yet eligible for the salary arbitration process.
To my eye, this is the most innovative method the players side has developed to get more money to their members since the introduction of free agency. The amount that individual players will get is pretty small (the bonuses will go to 120 players, which is $416,000 per player on average) but it offers a big raise to those who were playing for the league minimum salary of $570,500 last season.
The actual effect of this change on the Astros will be small. It is a central pool of revenue, so the league will set aside these funds and cut the checks to players. And the “contribution” of each team is $1.67M. But the bonus money that players earn will be included in a team’s luxury tax payroll. So the front office will need to pay attention to these payments if they get close to the luxury tax thresholds.
Changes to the 2022 Season
While the lockout was resolved in time to play 162 games, it was not resolved before Rob Manfred canceled the first week of the season. So the season will start a week later than scheduled on April 7. For the Astros, that means they will not start with a six game home stand, but with a 9 game West Coast road swing. They’ll open against the Angels and then play the Diamondbacks and the Mariners.
The Astros (and the 29 other teams) will thus need to make up their first week of scheduled games. The league has not officially announced how they will do this, but the speculation is that the scheduled opening series (the Astros were supposed to host the Phillies) will now be played after the scheduled last day of the season (October 2nd). So if this is the case, the Astros will play the Phillies on October 3-5.
That leaves the other series scheduled for the first week against the Yankees. The Astros are scheduled to visit the Yankees for a 4 game tilt from June 23-26. One thought is the the league will make one of those days a double header and the Astros will “host” the game in Yankee Stadium. I would expect the league is looking for a mutual off day for the Astros and Yankees and will schedule a double header in Minute Maid Park on that day. My thoughts on the details are pure speculation, but there will be a need for double headers to get all 162 games in.
Though I have good news about those double headers. They will be real games; the CBA will return MLB to 9 inning games and end the 7 inning double header games. Not a moment too soon. And speaking of ideas that don’t make sense, remember the zombie runner. The guy who died (made the last out of the previous inning) but returned from the dead to stand at second base to start an extra inning. Again, the CBA will make that another relic of the pandemic.
The Impact of the CBA on the Astros
Overall, the Astros end up ahead of the game based on the changes in the new CBA. The most consequential change for the Astros is the increase in the luxury tax thresholds. The MLBPA fought for those increases so that upper-middle class teams like the Astros could more easily increase their payroll. The Astros might not do that in 2022, but the front office and Jim Crane will appreciate the extra room in 2023 and 2024.
The expansion of the playoffs is a mixed bad for the Astros. It increases their chances of making the playoffs in the near future when the Mariners are likely to emerge as a strong challenger as the best team in the division. But in 2022, when the Astros are a strong favorite to win the division, the expanded playoff makes it less likely than they can win the World Series.
The biggest negative for the Astros is the need to make up the series with the Yankees. If they play an extra game in front of hostile New Yorkers, it will be a disadvantage. But it is only one game and home field advantage in baseball is relatively small, so the effect is small.
The Astros have been given some advantages by the new CBA. It is up to the front office to take advantage of them.
The luxury tax payroll includes benefits as part of the calculation. There are other rules established that mean it is not a straight calculations of paychecks sent out.