The Tenth Inning
 The Tenth Inning Blog
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It's too early to panic with the MLB owners' lockout

Major League Baseball’s owners initialed a lockout of major-league players when the owners and the Major League Baseball Players Association did not finalize a collective bargaining agreement (CBA) by December 1, the expiration of the old CBA. It sounds like a drastic move for the sport, but the reality is the lockout is just the next negotiation tactic in what will likely be a protracted process. The MLBPA put an aggressive proposal on the table in May and hasn’t budged off of it in the negotiations thus far.

MLB didn’t have to issue the lockout order right now. The two sides could have continued to operate under the old CBA, so that normal business operations could continue. However, MLB commissioner Rob Manfred rationalized that the lockout is part of the negotiation process and is designed to put pressure on the players to continue new CBA negotiations in earnest. In any case, it came as no surprise to the players association that the owners pulled the trigger on the lockout. The last owner lockout occurred 26 years ago. Essentially there has been labor peace in baseball since then.

The issues swirling around the negotiations are fairly complex; but when you boil them down, each side’s objective is rather simple. The players want a larger share of the revenue. The owners want to keep the status quo for the CBA—maintain the current revenue sharing percentages and ensure competitive balance among the teams. How both sides’ objectives are ultimately achieved is where the difficulty lies. The devil is in the details.

The union’s argument for a larger share of revenue is that baseball franchise values have sky-rocketed in the past few years, and they want consideration for contributing to that situation. The franchises are setting records for increased revenue, and the players want to increase their share of a larger pie. The MLBPA believes it got fleeced in the 2016 CBA, with respect to the allocation of revenue. Currently the owners have 57%, while the players get 43%.

The union has several constituents it is representing: the players with 0-3 years in the majors; the players eligible for free agency, the older players (usually 30 years or more), and the high-end superstars. However, their focus this time seems to be on the pre-salary arbitration players.

Following are some of the union’s demands, in addition to receiving a larger percentage of revenue.

The union wants to reduce the time required for two-year players to become eligible for salary arbitration. It maintains that the younger, high-performing players are being underpaid. Furthermore, they want players to be able to enter free agency sooner. However, the owners see this change as bad for fans because the better players on small market teams will leave sooner.

The union believes the 30-plus-year-old players are often not paid appropriately, since major league clubs are opting for younger, lower-paid players instead of signing older free-agent players seeking longer-term contracts and dollars that reflect their years of service. The older players are then forced to accept one or two-year deals at considerably less than market value.

Furthermore, the union wants the league to discourage teams that do “tanking” to lower their overall salary expense. The union sees this as a practice by the lower-end owners to improve their profits, because their rosters mainly consist of players under team control.

The union wants the league to institute a lower competitive balance tax, so that potentially more teams will exceed the maximum and be required to contribute taxes on overruns, which benefits the smaller market teams. The union believes that teams who receive a proportionate share of dollars from the competitive balance tax are not spending the money on player salaries, but instead are pocketing the money as profit. The union wants the league to require teams to spend the luxury money on the players.

As a backdrop to these MLBPA demands, the owners’ collective spending on player salaries has declined each year since 2017.

The owners are concerned about changes that would affect competitive balance. Small-market teams are especially hurt by earlier salary arbitration and a faster path to free agency. They tend to fill their rosters with younger players under team control at lowers salaries. Accelerating arbitration or free agency would cost them more and create more turnover of their players.

But what do the players have to offer in return for some of these concessions? Perhaps the only proposal is to agree to expanded playoffs that would involve fourteen teams. This would have a dramatic increase in revenue that benefits both sides.

Other items that could become part of the negotiation include an NBA-style draft lottery, a pitch clock, and universal DH.

In issuing the lockout now, the owners don’t want to make the same mistake as in 1994. During the negotiations then, the owners didn’t lock out the players, and the players went on strike in August that wound up cancelling the playoffs and World Series.

In reality, the lockout doesn’t become critical until teams start reporting for spring training. So, there are at least two months for the two sides to come to an agreement. One of the impacts, if it does take that long, is that it leaves a lot of free agents in limbo until right before they are to report. That’s because teams and players can’t communicate on trade or free-agent transactions during a lockout.

So, if you were planning to attend spring training in Florida or Arizona in March, it’s too early to think about canceling your trip.



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