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Stalled labor talks may be holding things up for the Royals

It is unclear what exactly the new rules will be

World Series - Cleveland Indians v Chicago Cubs - Game Four Photo by Elsa/Getty Images

The Royals have had a pretty quiet off-season, a bit surprising considering Dayton Moore typically likes to move quickly. However, it has been fairly quiet all around baseball, with only a few significant free agents signing so far. One reason for that may be the stalled labor talks that have led to owners threatening a lockout on December 1, when the current collective bargaining agreement expires.

According to reporting from Ken Rosenthal, the stalled talks stem from three big issues - the competitive balance tax, draft compensation for free agents, and implementing an international draft. It is not difficult to see why future uncertainty on those issues could make the Royals apprehensive about making any moves yet. Let’s take a look at some of the issues in contention and how they affect the Royals.

Competitive Balance Tax

Surprisingly, this issue is the least likely to have much affect on the Royals. The competitive balance tax is the penalty teams must pay for going over a certain threshhold in payroll. Last year, the threshhold was $189 million, and if teams went over the amount for the first time, they had to pay an additional luxury tax of 17.5% on any overage, with higher penalties for each infraction. Teams would like to adjust the threshhold amount and the penalties, which could impact free agent salaries for the Royals.

Revenue sharing may also be an issue, but it is not likely the formula would be changed. Rather, the large market teams are upset that some of the revenue sharing recipients seem to be pocketing the money rather than re-investing in player personnel, namely the Marlins and Athletics. Greater transparency or penalties may be added, which would not affect the Royals this year, as they have been in the middle of the league in payroll. It seems odd to say after decades of battling the inequities of baseball, but revenue sharing and competitive balance is not much of an issue with the Royals.

The Qualifying Offer System

The uncertainty over any potential changes in the Qualifying Offer system should give the Royals pause. Currently, certain departing free agents can be given a Qualifying Offer of at least the average of the top 125 salaries in baseball, set this year at $17.2 million. If the player rejects the one-year offer and leaves, his previous team receives a compensatory draft pick after the first round, and the signing team must forfeit their first round pick, unless it is among the protected first ten picks.

The Royals will likely need draft pick compensation next winter when they could potentially face free agency with Eric Hosmer, Mike Moustakas, Danny Duffy, Wade Davis, and Lorenzo Cain. Should any of those players leave, receiving draft pick compensation could help the Royals with their rebuild. But if compensation is going away, the Royals may want to instead trade those players this winter to receive some sort of compensation instead of seeing them leave for nothing next year.

However, Rosenthal reports that the most likely change would be to no longer require the signing team forfeit a draft pick, a concession to the players since it had the effect of dragging down salaries for some affected players. So the Royals would likely still get their compensation should they lose their star players. However, if the players don’t concede on their end, don’t look for the owners to give up this trading chip, leaving the system in uncertainty.

International Draft

This probably does not have direct ramifications on the Royals off-season this year, but it certainly does impact the Royals long-term. The club has made a lot of gains in its Latin American development, adding key players such as Salvador Perez, Kelvin Herrera, and Yordano Ventura. The club had to be less active internationally this year as a penalty for spending so much the previous season. It is clear the Royals have been willing to throw their money around in the Latin American market, although they have not been players at all in signing Cuban players since the signing of failed prospect Noel Arguelles.

Owners would like to see international players subject to the draft just like American and Canadian players, as a way to hold down salaries. Cuban players like Yasmany Tomas have commanded as much as $68 million guaranteed, while top draft picks are getting $6-8 million, at best. A reform of the international market could allow the Royals to be players for more of the top talent, particularly in Cuba. This could be key when they begin to rebuild and replenish their farm system.

Roster limits

To combat the perceived problem of bloated rosters in September, Commissioner Rob Manfred has proposed limiting September rosters to 28 or 29 in exchange for expanding rosters the rest of the year to 26. While this would trim a few September jobs from the MLB Players Union, it would give an extra 30 jobs to players during the other five months.

However, the roster situation is still in the air, which may leave the Royals uncertain on how to proceed with their roster situation. The Royals may have a bit of a roster crunch, with two players out-of-options in Billy Burns and Cheslor Cuthbert. Neither player can be sent to the minors next year without clearing waivers. So unless the Royals want to risk losing them, they will have to carry them on the roster, even though the outfield situation is a bit crowded with Burns, and Cuthbert won’t be needed as the starter at third with Mike Moustakas returning.

Adding a 26th roster spot may make it easier for the Royals to carry one or both of those players, which may reduce the need for some sort of trade. The Royals may also decide they want to use that extra roster spot for another bullpen arm, which could affect the way they build their pitching staff.

It has been 21 years without a work stoppage in baseball, the longest current labor peace in the four major North American sports. The sport is awash in cash, enjoying some of its best local television ratings in years, coming off one of its most visible World Series in decades. The sports has built a lot of momentum, and it would be foolhardy to see them squander the goodwill they have built up with fans since their devastating work stoppage in 1994. Hopefully cooler heads will prevail, and prevail quickly. Royals fans need a hot stove to get excited about.