How does the new CBA affect trade values?
Now that baseball is back, and we have a new Collective Bargaining Agreement, there are a number of changes to the system. Do any of them impact player trade values? Let’s take a look at each of the major changes one by one and see.
Minimum salary raised to $700,000 (for 2022, and going up gradually from there): Minor effect.
The previous minimum was $570K, which we were rounding up to $0.6M in our model. So this change adds $0.1M to player cost for each pre-arb year. Each increase in cost reduces surplus value. Thus, at most, we’re talking about a reduction in trade value of $0.3M per player. That won’t matter much.
Pre-arbitration bonus pool: No change.
This is a new, $50M pool of money that will be doled out to the best-performing pre-arb players at the end of each season, which is great for these players. It does not impact trade value, however, since this money will be paid out of a central fund, not by the controlling team.
New Competitive Balance Tax (aka the “luxury tax limit”): No change (for now).
This has been raised from the previous $210M to $230M in 2022. That’s a big change, and another win for the players. But this mostly affects free agent spending for veterans. We could, however, envision scenarios where richer teams trade for expensive, underwater contracts to get a more desirable cost-controlled player, perhaps more easily than they could before.
Option limits: No change (for now).
This is an interesting new rule whereby a player can only be optioned to the minors up to five times per year. It’s been jokingly called the Louis Head rule (the Rays shuffled Head up and down between the big club and AAA multiple times in 2021). Teams like the Rays, who value depth and flexibility, particularly with marginal relievers, may have to rethink their strategy a bit on this front. The result could be that marginal players with options will be DFA’d more often if a team exhausts their roster moves. But until we see a real effect of that, we’re holding steady for now.
Universal DH: Too soon to tell.
It’s natural to think that, with the NL adopting the DH, it opens up the market for veteran bats with minimal defensive utility. But we’re also hearing a lot of chatter that teams don’t want to commit a full roster spot to a DH-only type, and may prefer to keep that lineup spot open for flexibility reasons. Keep in mind that, with a shortened Spring Training, lots of players will be rushing to get in game-ready shape, and that could result in more injuries, so teams may want to use that spot to give a lot of current players days off from field duty. In any case, we are going to hold for now unless and until we see real market data points to change that assumption.
Playoff expansion to 12 teams: No change (for now)
In this new rule, 12 teams will now make the postseason, up from the previous 10. Given that the season hasn’t started yet, there’s no way to tell which teams will be on the bubble, and thus perhaps be more inclined to be buyers at the deadline. As a general point, we do anticipate that the dynamic will shift such that more teams will be buyers, though. This could raise some trade prices for key players on bad teams.
Banning the shift: No change (for now)
This rule change is set to happen in 2023, so it won’t affect anyone this year. That said, we could definitely see it impacting performance once it’s implemented, such as:
*TTO hitters like Joey Gallo could see a benefit, as they won’t have to sell out for power as much as they have been. They can hit line drives to the pull side more often, with less fear that those will be caught.
*Pitchers who benefit from the defensive value of the shift will likely need to change their approach, so that they don’t give up as many hits to the pull side.
*Glove-first 2Bs like Kolten Wong, who have been undervalued by the market, may become more valuable as they have to cover more ground.
A lot more studies will be published that show the performance differences between shift/non-shift, and once that data becomes more established we will likely include it in estimates for future (2023 and beyond) performance.
Larger bases: No change (for now)
Another rule change for 2023. This is to encourage more baserunning and stealing, to increase fan interest. As fans, we’re all for it. But for our model, this is another wait-and-see issue. Baserunning has been a relatively minor factor in WAR and overall performance projections, but if it makes it easier for Cedric Mullins to steal 50 bases, we’ll adjust then.
Pitch clock: No change (for now)
Yet another rule change for 2023. We can’t see this one affecting trade value, but stranger things have happened.
Qualifying offer and draft picks: Some effect
If the union and the league agree to an international draft later this year, the current qualifying offer (QO) system will be eliminated. This, in turn, will mean more money for free agents, since teams will no longer have to give up a draft pick. It would also mean that the team that issues the QO, and would otherwise receive a draft pick, would no longer receive one. Given this possibility, and based on the evidence we saw in the Chris Bassitt trade, there is an effect on trade value, so we have reduced some estimates. Players who are in their final year of arbitration, and who, based on our modeling, were previously candidates for QOs, will no longer have that extra value attached. [Note: this has been updated.]
So overall, there’s not much here that impacts our model, as far as we can tell. The good news is, we have a full season to play with. As it goes along, we’ll be updating values more frequently and faster (as we’ve sped up some processes behind the scenes), and if anything in the model needs to be changed as a result of these, we’ll do so.
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