MLB lockout: primer on the collective bargaining agreement (CBA) MLB lockout: primer on the collective bargaining agreement (CBA)

MLB lockout: primer on the collective bargaining agreement (CBA)

The sport has been shut down since early December after MLB’s owners and the players union failed to reach a new collective bargaining agreement (CBA) after the previous one expired on December 1 2021. Both sides have made multiple proposals addressing plenty of issues, as the  economics of baseball remains at the center of the storm.

The question persists whether the regular season will indeed commence on March 31, or if a late start will shorten the season. According to The AthleticMajor League Baseball has informed the Players’ Association that it believes a new collective bargaining agreement (CBA) would be needed by Feb 28, to start the season on time.

Neither side has publicly ruled out a shorter spring training. During 2020 when the sport was dealing with the pandemic, training camp was around three weeks.

There are a number of fantastic resources out there if you want a true deep dive into the labor issues at the heart of the lockout. I have added links to these resources here, here and here. This article is covering the key details of the impasse to give you a better idea of where things stand as we traditionally should be entering spring training.

Competitive Balance Tax

Also known as the “luxury tax.” The CBT is a form of revenue sharing where teams that spend more than a set amount on player salaries in a given year are forced to pay into a fund that is redistributed to the other teams. In 2021 the first ‘tier’ of the CBT was $210 million, teams would incur a 20% tax on every dollar spent over the number up to $230 million.

The league views the luxury tax as critical for maintaining competitive balance. The players on the other hand see the tax as a tool to restrict high-revenue clubs from spending. The questions for both parties are at what threshold does the tax prop up the sport as intended, and when is it simply repressing salary?

Expanded Playoffs

A proposal from MLB to expand the number of teams that make the postseason from 10 (six division winners and four wild-card teams) to 14, including a third wild card. The players union countered with an offer of 12 teams. An increase in playoff games comes with a concern from the players of allowing too many teams in. However, if the players follow the blueprint created by the NFL or NBA an expansion in the wild card round would have some competitive benefits in the dog days of Summer and early Fall.. 

MLB Draft

Both MLB and MLBPA have proposed a lottery-style amateur draft system (similar to what takes place with the NBA) in which every team that didn’t make the postseason is technically part of the lottery which would be either 16 or 18 teams depending on the agreement concerning expanded playoffs. The lottery specifically, would determine the first three picks. All 16 or 18 teams would have descending odds for those selections in an effort to disincentivize tanking. After those picks are chosen, the rest of the picks would be distributed by record.

Arbitration process

A refresher: for a player to get to free agency, it takes six years. Once a player hits three years they become arbitration eligible, which gives players a chance to argue for a higher salary than what the team offers. In some cases, players can become eligible for arbitration after two-plus years, these players get designated as a Super Two. The arbitration process deals with compensation for players too early in their career to have reached free agency.

For now, the players are still asking for MLB to drop arbitration eligibility to two years. But it seems possible that if players can get enough money through other means (such as a pre-arb bonus pool, or raises in the minimum salary ) they could amend the eligibility proposal.

Analysis

Labor negotiations feel like falling in a dream down an infinite cavern,” 

Jeff Passan of ESPN recently said on the Baseball Tonight podcast with Buster Olney. And he's not wrong. 

I have presented four key negotiating points but a deep dive into Baseball’s labor laws and CBA negotiations could spawn many, many articles.

One of the key takeaways from the negotiations is how the player empowerment movement has not led to many gains for the players in baseball. With a boom in potential future (and current) earnings due to money pouring in from the sports betting industry and crypto there is no guarantee cut for the players moving forward. Owners have put themselves in a position to spend less in so many ways, especially on the amateur side, maximizing the statistical revolution that has occurred within the sport.

These negotiations, as things stand, are a missed opportunity. Arguments over the sports financial future - definitely important - paper over a bigger issue: improving the product on the field. The recent success of both the NFL & NBA playoff formats is food for thought. The just-finished NFL playoffs were the most watched for five years.

Baseball has been propped up financially by regional sports networks (RSNs), but that model is under threat as the public's viewing habits have changed. A paradigm shift needs to occur: a better broadcast model and a better game to pitch to it. Fans want stars, stats and action. It’s time for baseball to remember its soul and embrace those aspects that make it one of the greatest games in the world. America’s national pastime.

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