The new MLB Collective Bargaining Agreement was ratified on Wednesday.
Owners, players, MLB officials and the MLB Players Association initially reached an agreement on Dec. 2 on a new five-year CBA.
The deal includes revised rules for free-agent and qualifying offer compensation, the international amateur market and luxury tax threshold.
In the previous labor deal, teams were fined for payrolls exceeding $189 million. In the new agreement, the luxury tax threshold will rise annually from $195 million to $210 million. Teams that repeatedly exceed the payroll threshold by a certain rate will be subject to increasing tax rates, which could reach as high as 90 percent.
Teams will still lose their first-round pick for signing a free agent that turned down a one-year qualifying offer. However, this rule changes after next season, at which time compensation will include a variety of picks and be based on whether the signing team is under the luxury-tax threshold.
MLB owners and the MLBPA disagreed on creating a draft for international free agents. Instead, while teams will be given the same amount of money to spend on the international market, they are free to spend it as they see fit. In the old agreement, there were restrictions on how much a team could spend in a given time frame.
Rosters will remain at 25 players after the two sides discussed whether to switch to a 26-man roster. The winner of the All-Star Game will no longer determine home-field advantage in the World Series. All-Star rosters will now also be expanded to 32 players.
In addition, smokeless tobacco will be banned for new major leaguers.
To gain more off days and afternoon games on travel days, the two sides agreed to start the season earlier in 2018, allowing for 162 games in 187 days (as opposed to 183 days).
There are some important factors in the new collective bargaining agreement which will directly affect how the Yankees conduct business going forward.
The Yankees have long desired to get under the luxury tax threshold and it looks like they have a very good shot of it for the 2018 season. If they continue to spend above the threshold, expect them to stay below the newly created tier, which stipulates that if a club spends $40 million beyond the threshold, they would be subject to a total tax of 92 percent.
The Yankees might now be more willing to sign players with a qualifying offer attached, considering they would not lose their first round pick. The changes could also push the Yanks to trade players on their roster instead of tagging them with a qualifying offer, because they might consider the value received in a trade to be better than the new draft pick compensation provided to teams losing the free agent.
In terms of the international bonus cap, the Yankees will not be able to spend as much as they did in a singular signing period, as they did in the 2014-15 period (about $16 million, plus the penalties incurred of about $14 million). However, they will now be able to spend $5-6 million (the final figure is still undetermined) each season without the ability to go over the cap.
Basically, this forces the Yankees to hone in on one or two players each signing period, instead of six in one and punting two subsequent periods.
Finally, one factor that benefits the Yankees immensely is the removal of the Performance Factor in the revenue sharing model. With its removal, the Yankees stand to save close to $100 million annually that they paid into the pool, which was then dispersed to lower revenue clubs.