Soon after the Astros or Braves are crowned World Series belt and title-holders for 2021, the focus of the baseball collective will shift to the labor negotiations that will be the catalyst for everything else that happens this coming offseason.
Said negotiations are predictably rife with minutiae and tedium, but they’re an essential part of Major League Baseball. If you care about baseball at the highest level, then you should probably develop a working familiarity with the process of negotiating a new collective bargaining agreement (CBA) between players and owners. As always, we’re here for those with nowhere left to turn.
What follows is a walking tour of the CBA and the fraught undertaking that will eventually lead to a new one. That new CBA will allow the game on the field to shift back into focus, but it could be a long and ugly time getting there.
Now let us gird ourselves with the necessary knowledge. We shall do so via the time-honored format of the FAQ, which has been reliable praxis since the era of the monastic scriptorium. Let us proceed with seven frequently asked questions, like it or not.
1. So what’s the CBA, exactly?
The CBA is the negotiated agreement between players and clubs (i.e., the team owners) that governs the working relationship between the two parties. It covers things as mundane as players’ meal allowances and travel protocols and as vital as minimum salaries, the structure of free agency, revenue-sharing specifics, and roster sizes.
In recent times, each CBA has covered a period of five years. The current one, for instance, was ratified in December of 2016 and governed the 2017-21 seasons. It expires at 11:59 p.m. ET on Dec. 1 of this year.
The first CBA covered the 1968 and 1969 seasons, and it was the first collective bargaining agreement in professional sports history. That was the handiwork of Marvin Miller, the pioneering head of the Players Association (i.e., the players union) and woefully belated Hall of Famer. It was Miller’s organizing skills, foresight, and training as a union economist that allowed him to make the Players Association a viable and effective union, and he did so in defiance of the odds and history.
During Miller’s time and beyond, each CBA negotiation has been a pitched battle between two powerful entities. While that power shifts by degrees between players and owners, it’s no longer a case of owners ruling by fiat, which is largely how things were in the pre-Miller days. As such, the skirmishes over the CBA often result in labor stoppage, in the form of either owner lockout or players’ strike.
Here’s a brief history of those labor stoppages:
- 1972: Players strike over a pension dispute. Lasted about two weeks during the season.
- 1973: Owner lockout during spring training over salary arbitration.
- 1976: Owner lockout during spring training over the evolving issue of player free agency.
- 1980: Players strike during spring training, largely over the structure of free agency.
- 1981: Players strike over free-agent compensation. Almost two months’ of games were lost during the season.
- 1985: Players strike over pension fund and salary arbitration. Lasted for two days in August.
- 1990: Owner lockout over salary arbitration and free agency. Began during spring training and pushed back Opening Day.
- 1994: Players strike largely over owners’ desire to implement a salary cap. The entirety of the 1994 postseason was canceled, and the 1995 season was significantly abbreviated. Play resumed only after a federal judge reinstated terms of the previous CBA.
As you may have surmised, we’ve enjoyed a long run of labor peace, but for a long time labor stoppages were the norm. Many of those labor stoppages were the direct result of failed CBA negotiations. We’ll soon examine why that may be the case this time around.
In relevant matters, the Associated Press reported Sunday that MLB is “almost certain” to have its first work stoppage since the 1994-95 strike starting on Dec. 2.
2. What are the major issues likely to come up in these negotiations?
Providing any sort of exhaustive list would be getting lost in a cornucopia, so we’ll stick to the biggest ones. Not surprisingly, how the games revenues are split between labor and management underpins all of those leading matters.
From the players’ standpoint, they’d presumably like to address their shrinking share of those league revenues (indicated in part by the declining average player salary), the occasional practice of service-time manipulation (i.e., when teams hold back a clearly ready prospect in order to delay his free agency or arbitration eligibility for a full year), and the “tanking” problem, among other matters.
Priority No. 1 will be increasing the players’ share of the money the league takes in, but that will not be easily accomplished. Teams’ increasing reliance on young, cost- and team-controlled talent has cascaded through other markets for talent and depressed all but the top-most wages. Given recent circumstances, the best way to lift all boats is probably to press to make younger players more fairly compensated. That means significantly raising the minimum salary (over and above the usual minimum salary increases that accompany a new CBA) and perhaps lowering the service-time threshold for arbitration and free agency. None of that happens without significant give-backs or a strike. The union, frankly, is running out of paths to give away the rights of draftees and minor leaguers, so perhaps their play — cynical though it may be — is to dangle approval of an international draft. If that’s not enough to lead a package of exchange concessions, then a strike is the likely way forward.
Related to the drop in the players’ share of revenues is that the competitive balance tax (CBT) — or “luxury tax” — on payrolls has come to serve as a soft cap. The owners aren’t going to weaken it given how well it’s accomplished the unstated objective, which is to reduce labor costs (it has nothing to do with promoting competitive balance). The form the CBT takes in the next CBA has the potential for another conflagration at the bargaining table. That’s especially the case since the increase in the CBT threshold hasn’t come close to keeping pace with revenue growth in MLB.
3. Any overarching concerns about how revenues are calculated?
The thoroughly contrived question is a reliable FAQ staple, and here’s ours for this episode. Why, yes, there are overarching concerns about how revenues are calculated. Clubs and the MLBPA probably have different ideas about what these are. Increasingly, teams are part of diversified owner portfolios that also include things like ownership stakes in regional sports networks and real estate-development interests in areas surrounding ballparks. The owners generally wall off these kinds of revenues, and when there’s any discussion about revenues to which players are entitled they try to narrow that down to gameday revenues only (i.e., ticket sales and parking and concession income) in addition to media contracts covering game broadcasts. The players, meantime, would likely argue that those accompanying revenue streams that owners see as independent would never exist without the baseball games they play. They of course have a good point about that.
The larger point is that before they can haggle over how revenues are divided, these two parties must haggle over what revenues even are. On top of all that, MLB teams almost without exception are not publicly traded entities, and owners are thus not obligated to disclose accurate financials. While the players likely have access to better numbers during the collective bargaining process than the public does, the numbers they see are very likely massaged to reflect the interests of team ownership. So that’s another complication.
4. What happens if players and owners can’t reach an agreement?
Then we’re probably looking at a labor stoppage. An owner lockout is possible once the current agreement expires, as it would ramp up the pressure to get something done and also hit pause on free agency. Alternatively, owners could lock out the players at the start of spring training, or the players might stage a walkout of their own around that time. A players strike seems more likely to happen after the season has begun, given that their leverage will be higher then. That implicit threat is why we’d probably see an owner lockout to force the issue well before we ever get to that point. It’s a fluid situation, but it seems unlikely that commissioner Rob Manfred and his bosses (i.e., team owners) will allow spring training to break ground without at least a preliminary, or not-yet-ratified, agreement in place.
There is precedent of both sides agreeing to extend the expiring agreement by one year in order to create a wider window for negotiations, but doing so back in late 1983 required a giveback to players on the part of owners.
The last CBA was set to expire on Dec. 1, 2016, and players and owners didn’t reach a preliminary agreement until the day before that deadline. Very likely, we were within hours of a lockout. Finally, the two sides were able to reach an agreement on a variety of matters. That it came down to the wire and that a labor stoppage was very much in play is concerning given that the issues facing the two sides in 2021 are likely much more complicated.
5. Haven’t the owners already made a solid offer?
No, they have not. The owners made an initial economic proposal during August discussions with the MLBPA, but it was not a compelling offer from the players’ standpoint. According to Evan Drellich and Ken Rosenthal of The Athletic, the league’s proposal would “lower the first luxury-tax threshold in the sport to $180 million” while upping the overage penalty. Additionally, the league would institute a “salary minimum of $100 million,” with the “money collected from teams paying tax” going to certain teams to help them meet the minimum.
On the surface, this would seem to address the ongoing tanking problem, in which rebuilding teams in essence lose on purpose — an exercise abetted by low payrolls. However, the luxury tax, which already functions as a soft cap, hardens under this proposal. The bottom line is that in terms of the players’ share of revenues, this constitutes a loss for them measured in the hundreds of millions of dollars. So, no, it’s not a serious offer.
Also during those August meetings, MLB per Joel Sherman of the New York Post proposed a revised service-time arrangement in which arbitration-eligible players split a $1 billion pool and all players would become eligible for free agency at the age of 29 1/2. This, too, is not serious. That pool is tantamount to a cap on arbitration salaries, and the players are highly unlikely ever to agree to such a thing (owners previously angled for a cap on arbitration awards in the mid-1980s to no avail). As for the free agency timeline, it would very likely hurt the best players — i.e., those who arrive in the majors at very young ages (think Bryce Harper and Fernando Tatis Jr.) — and thus put a drag on the top earners by pushing back their free agency eligibility.
6. Should we pay attention to press leaks during the process?
There’s a reason we know the specifics of those proposals above, and that reason is the owners’ side almost certainly leaked them to the press. Insofar as CBA negotiations go, this has been the approach since time immemorial. The owners seek to gin up support among fans and even media by such calculated and self-serving disclosures, while the union is content to cede the public-relations battle. The good news from all this, though, is that face-to-face talks have been taking place, and that’s the only sensible takeaway when the particulars of an owner-side proposal land in the press.
7. Which side is in a stronger bargaining position right now?
It’s probably the owners. As noted above, the union has already used many leverage points, save for granting their approval for an international draft and expanded playoffs (expanded playoffs, however, may entail a sub-negotiation over how those particular revenues are split). Given what’s likely an ambitious agenda for the MLBPA this time around, a strike may be the necessary path for them.
Let’s hope not, of course. As outside observers, we can do nothing more.