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A look at the new labor deal and how it affects the Royals

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After 99 days of a deep freeze in baseball, owners and players were finally able to reach agreement on Thursday on a new five-year labor agreement that will ensure a full 162-game schedule this season. But what’s in the deal, and how will it affect the Royals? Let’s take it one issue at a time.

Minimum wage

The players will get an increase in the minimum wage from $570,500 last year to $700,000 this year, with increases to $780,000 by 2026. Players had asked for $715,000 because the minimum wage in baseball has not kept up with the minimum wages in other sports, but this is still a substantial 23 percent increase. Last year, 62 percent of players on opening day rosters were making minimum wage, and with teams relying so much on young players, this represents a good pay bump for a large part of the union.

Competitive Balance Tax

The Competitive Balance Tax (CBT) that imposes penalties for teams that spend over the threshold will go up from $210 million last year to $230 million this year, and it will eventually go up to $244 million in 2026. Players had complained that the CBT had fallen behind the increase in overall league revenues, and had been asking for a threshold as high as $245 million, while owners had proposed $220 million, with four owners against any increase.

The owners also did not get the harsher penalties for going over the threshold that they had asked for, but there will be a new tier levying an 80 percent tax for teams that spend $60 million over the CBT - a tier aimed at new Mets owner Steve Cohen who has signaled he intends to spend. For the Royals, this shouldn’t change much as they never approach the CBT.

Pay for pre-arbitration players

Players wanted to get more compensation for players before they are eligible for arbitration. The new deal provides for a $50 million pool to be given to players with less than three years of service time determined by awards and Wins Above Replacement.

This could have a huge impact on teams like the Royals that rely on young pre-arbitration eligible players. A player like Bobby Witt Jr. who would have made just the minimum under the old system could make several million in his very first year. But it may also incentivize them to work out long-term deals with such players to get more cost certainty.

Expanded playoffs

The playoffs will go from 10 teams to 12, with the three division winners and three Wild Card teams in each league advancing to the post-season. The top two seeds will get a first-round bye while the other four teams in each league play in the Wild Card round in a best-of-three format hosted entirely by the team with the better record. After the first round, teams will not re-seed, so the #1 seed will play the winner of the #4 vs. #5 game, even if the #6 seed upsets the #3 seed. If two teams finish with identical records, there will no longer be a one-game playoff, instead the league will use tie-breaker procedures to determine who gets in. The Division Series round will still be a best-of-five format.

Owners had pushed for a 14-team playoff, with ESPN willing to pay $100 million for such an expansion, but they’ll still get $85 million for the 12-team playoff. An expanded playoff gives the Royals a better chance of making the post-season - they would have made the playoffs in both 2013 and 2017 had the playoffs been expanded to 12 in those years. But it may not happen this year, as Fangraphs projects the Royals to have a 9.6 percent chance of making the playoffs under a 12-team format, up from 6.7 percent under the 10-team format.

Disincentivized service time manipulation

Players had grown increasingly frustrated at teams keeping star prospects in the minors for the first few weeks of the season to delay their service time clock and push back when the player could be eligible for free agency. Teams will now have incentives not to manipulate service time with extra draft picks if a player begins the season on the MLB roster and finishes near the top of voting for awards.

The odds of Bobby Witt Jr. making the Royals opening day roster were already pretty good and this would seemingly seal it. If Witt begins the year on the roster and is as good as advertised and finishes in the top three of Rookie of the Year voting, the Royals could be rewarded with extra draft picks. And the incentive to keep a player down may be reduced since he can still earn a full year of service time by earning accolades. You have to wonder how the BBWAA feels about all this (would they feel compelled to vote for a guy for Rookie of the Year if they feel like a player had his service time unjustly manipulated? Would people perceive they did, even if they didn’t?)

Six-team draft lottery

The 18 teams that fail to make the playoffs will enter a draft lottery, with the worst team having the greatest odds of getting the first overall pick. The first six slots will be determined by lottery, with the rest of the non-playoff team order determined by winning percentage in the first round. After the first round, the non-playoff teams will be ordered by winning percentage.

The playoff teams will choose in order of how far they advanced in the playoffs. For teams in each playoff round group, the order will be determined with smaller market teams picking ahead of larger market teams, then decided by winning percentage. So if the Royals make the playoffs, they could be rewarded with a better draft pick than a larger market club that advanced to the same round of the playoffs.

There are also limits to how many times a team can be in the lottery - a big market team can’t be in the lottery in back-to-back years, while a small market team can’t be in the lottery for three consecutive years. This could impact the Royals if they ever lose a lot of talent and bottom out like they did in 2018, by not allowing them to have a top six pick for more than three seasons in a row. But the Royals have said they want to take a more sustainable approach, so hopefully they won’t be in the lottery as much anyway.

Universal designated hitter

The age of pitchers hitting is over. National League teams will begin using a designated hitter this season, meaning the last Royals pitcher to get an at-bat was Carlos Hernández against the Chicago Cubs last August (he struck out).

This could open up a trade market for Carlos Santana as NL teams could use a bat, but we have also seen more teams rely on flexibility at the position, without a full-time DH. That, coupled with Santana’s awful second half will likely make it difficult to move the veteran and open up a spot for Nick Pratto.

International draft and draft pick compensation

This hasn’t changed yet, but owners would like to subject international amateurs to a draft process similar to North American players. Players have yet to agree, but can decide whether they want to accept an international draft in exchange for ending draft pick compensation through the Qualifying Offer system.

This might help reform the current system which is rife with corruption and exploitation and teams skirting the rules. Players, particularly those from Latin America, have objected, saying that countries like the Dominican Republic are not yet ready and will need time to get ready for an international draft. Some have claimed that subjecting Puerto Rican players to the draft has hurt development on that island.

Spending in the international market has already been curtailed through bonus pools implemented in 2016, so a draft likely won’t cut spending even more. And draft pick compensation was weakened as well in 2016 with teams no longer forfeiting a first-round pick for signing a player, and teams losing a player getting only a sandwich pick rather than a first-round pick. So the end of draft pick compensation could cost the Royals a sandwich pick if they lose a good player, but the international draft could help them sign top amateurs.

Roster sizes

Teams can carry up to 26 players, but they must carry 13 hitters and 13 pitchers. This was supposed to be a rule implemented in 2020, but the pandemic threw a wrench into those plans. In September, rosters can expand to 28 as they did last year. There is an expectation that teams will begin the season with an expanded roster as well, to accommodate the shortened spring training and allow pitchers to slowly ramp up their workloads, but nothing has been announced yet.

Options limited to five per season

You can call this the Edward Olivares rule.

But it wasn’t just the Royals, teams like the Dodgers and Rays became notorious for essentially expanding their roster by shuttling pitchers between the majors and minors all season. Teams will still have three option years on a player, but can only option them five times per season.

Possible rule changes - pitch clock, ban on shifts, larger bases

Owners wanted a faster process to make rule changes, so instead of one-year notice before a rules change, they will be able to give 45 days notice, and rule changes will be made by a “Joint Competition Committee” comprised of four active players, six members appointed by MLB and one umpire.

Baseball would like to adopt some rule changes to improve the pace of play and boost sagging offensive numbers, and reports indicate they could push for a 14-second pitch clock, ban radical defensive shifts, and enlarge bases. If baseball follows through on those changes, they would not take place until 2023. Larger bases could help the running game a bit - something the Royals have emphasized - by having the bases slightly closer together, and the bases would also have a different slope to reduce the times a sliding runner pops off the bag for a brief second to be tagged out. Banning the shift could help a few Royals hitters such as Salvador Perez.

Balanced scheduling

On Thursday, Commissioner Rob Manfred said the league will have more balanced scheduling in 2023 with teams playing at least one series against each team in both leagues. The details have yet to be revealed, but this means the Royals won’t be playing the Guardians, Tigers, Twins, and White Sox 19 times a season anymore, and it could bring more National League opponents to Kansas City that fans have not had a chance to see.

Other changes

  • Advertising patches on uniforms
  • The end of the seven-inning doubleheaders and extra-inning baserunning rule that were implemented for the pandemic
  • MLB will stage games in Puerto Rico, Mexico, the Dominican Republic, London, Paris, and Asia over the next five years