IRVING, Texas (AP) — Negotiators for baseball players and owners have a verbal agreement on a five-year labor contract, a person familiar with the talks told The Associated Press on Wednesday night.
The person spoke on condition of anonymity because the sides were still putting the deal in writing. They hoped to have a signed memorandum of understanding later Wednesday.
The deal extends the sport’s labor peace to 26 years since 1995 and was reached about 3 1/2 hours before the expiration of the current collective bargaining agreement.
As part of the deal, the luxury tax threshold rises from $189 million to $195 million next year, $197 million in 2018, $206 million in 2019, $209 million in 2020 and $210 million in 2021, the person said.
Tax rates increase to 20 percent for first offenders, 30 percent for second offenders and 50 percent for third offenders. There also is a new surtax of 12 percent for teams $20 million to $40 million above the threshold, 40 percent for first offenders more than $40 million above the threshold and 42.5 percent for second or subsequent offenders more than $40 million above.
There will be a new penalty for signing certain free agents that could affect a team’s draft order. There is no change to limits on active rosters, which remain at 25 for most of the season and 40 from Sept. 1 on.
Management failed to obtain an international draft of amateurs residing outside the U.S., Puerto Rico and Canada but did get a hard cap on each team’s annual bonus pool for those players.
Negotiators met through most of Tuesday night in an effort to increase momentum in the negotiations, which began during spring training. This is the third straight time the sides reached a new agreement before expiration, but in 2006 and 2011 a deal was struck weeks in advance.
Talks took place at a hotel outside Dallas where the players’ association held its annual executive board meeting.
Tony Clark, the first former player to serve as executive director of the union, and others set up in a meeting room within earshot of a children’s choir practicing Christmas carols. A man dressed as Santa Claus waited nearby.
While there were no games to be lost at this point, baseball had faced the prospect of a hold on transactions and other offseason business only hours after the Mets finalized their $110 million, four-year contract for Yoenis Cespedes.
Baseball had eight work stoppages from 1972-95, the last a 7 1/2-month strike in 1994-95 that led to the first cancellation of the World Series in 90 years. In 2002, an agreement was reached just before players were set to strike.
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