Atlanta Braves Are Moved Off the Market Exempt List

New revenue-sharing rules in the New CBA have changed how the luxury tax works… and revenue sharing as well.

Before we get to the Atlanta Braves part in all of this, it will be useful to turn a page of history back for a moment and see what baseball’s revenue sharing program is all about (old CBA, page 119ff).

Every team adds up their local revenues – presumably those directly related to baseball games (ticket sales, concessions, parking, etc) and sends 34%* of those monies to MLB. There’s some supplemental rules for getting some of the local TV contract revenues, too, plus nationally-based revenues.
That pile of cash is then divided evenly and returned to the 30 teams. This automatically means that if you had a below-average revenue stream, you get back more than you put in.

* – the CBA indicates 34% of the ‘Base Plan’. This source suggests the portion is 31%.

Figures are tough to get, but this 2008 CBS News report discovered that the Yankees paid out $76 million more than average in 2005 for revenue sharing purposes while Tampa Bay, Toronto, the Marlins, and Kansas City all received $30 million or more.

There have been changes to the program since then, but let’s cut to the chase: the Exemption List.

In the latest CBA, there was a list of 15 clubs established by ‘market rank’ that formed an Exemption List for 2013-16. Whatever monies those teams would normally receive as a result of revenue sharing – remember, all clubs get something back for what they put into the pool – is reduced.

However, it’s not all bad for those 15 franchises. The monies reduced for market share size reasons are actually refunded for the most part… if you’re not above the Luxury Tax limits.

Any Market Disqualification proceeds collected are then pooled and distributed to Net Revenue Sharing Payor Clubs… those clubs paying in more than they are receiving.

The Change

The change this week is that the number of Market Exempted clubs has been reduced from 15 to 13. The two teams bumped off the list are reportedly Houston and Atlanta.

What I believe I am reading from this is that the Braves and Astros may get back a bit more of their own revenue, based on how many teams exceed the Luxury Tax threshold… and with the new agreement, that number will probably be reduced as time goes on since the new rules have tougher penalties.

So I don’t think we’re talking about a monetary bonanza here, for neither team was in the penalty box for payroll anyway. That said, there is a ton of complexity to the document that would be much easier to decipher if there were real-world numbers to illustrate the clauses with.

However, there IS something that might be a bigger deal for next year.

Free Agent Compensation

More from Tomahawk Take

Another provision of the new agreement calls for teams that are not “market disqualified” to be compensated for the loss of a premium free agent with a draft pick after the first round.

Those same clubs signing a Qualifying-Offer-rejecting free agent will lose their third overall draft pick the next year for doing so.

Based on their previous state (being on that exempt list), the Braves and Astros would have faced the loss of their 2nd overall draft pick plus $500,000 in International Market spending.

Now it seems that they will not lose International money and the draft pick they’d lose is a more palatable 3rd-highest selection.

Luxury Tax violators get hit with the loss of their second highest available pick, the fifth, and a $1 million reduction in International spending for the next signing season.

Next: The Priorities

The upshot? The Braves and Astros will have a better incentive to go after better free agents in the future. Whether they will or not is obviously a case-by-case call, but it’s definitely a notable change.

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