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September 22, 2017

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MLB players and owners reach tentative labor deal

IRVING, Texas -- Baseball players and owners reached a tentative agreement Wednesday on a five-year labor contract that will extend the sport's industrial peace to 26 years.

After days of near round-the-clock talks, negotiators reached a verbal agreement about 3-1/2 hours before the expiration of the current pact. Then they worked to draft a memorandum of understanding, which must be ratified by both sides.

"Happy it's done, and baseball is back on," Los Angeles Dodgers pitcher Brandon McCarthy said.

One key issue was the level of "luxury tax" which is a tax paid by teams that exceed a set level of salary payments; effectively operating as a soft salary cap.

As part of the new deal, the level at which the luxury tax kicks in rises from US$189 million this year to US$195 million next year, US$197 million in 2018, US$206 million in 2019, US$209 million in 2020 and US$210 million in 2021, a person familiar with the agreement told The Associated Press. The person spoke on condition of anonymity because the deal had not yet been signed.

Teams exceeding those amounts must pay a percentage of the amount by which they go over.

The rate will increase from the current 17.5 percent to 20 percent of excess payments for first offenders, remain at 30 percent for second offenders and rise from 40 percent to 50 percent for third offenders. There is a new surtax of 12 percent for teams US$20 million to US$40 million above the threshold, 42.5 percent for first offenders more than US$40 million above the threshold and 45 percent for subsequent offenders more than US$40 million above.

A player can receive a free-agent qualifying offer only once in his career and will have 10 days to consider it, instead of seven.

A club losing a free agent who declined a qualifying offer would receive an extra selection after the first round of the next draft if the player signed a contract for US$50 million or more and after the competitive balance B round if under US$50 million.

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