By: Andrew Delzotto, Guest Contributor
While baseball continues to dominate viewership within its long-established regional markets, the fight for fresh eyeballs on the national stage remains contentious. As major professional leagues move to re-claim and improve their spots in the post-pandemic pecking order, the last thing Major League Baseball (MLB) needs is a good old fashioned work stoppage. The sport—one with a long and documented history of labor strikes[1]—happens to be facing the imminent expiration of its collective bargaining agreement (CBA) at the conclusion of the 2021 calendar year. With preliminary negotiations already underway, it is essential that MLB and the player’s union (MLBPA) find some common ground. Here, I preview the three issues that will either heavily influence the final agreement or provide the basis for the next installment of MLB’s avoidable work stoppages.
I. Revenue Structure
The pandemic shortened 2020 season placed a magnifying glass on the league’s existing revenue structure. Owners—citing the absence of fans in ballparks—assured the MLBPA and the public at-large that they stood to lose roughly $4 billion in stadium related revenue.[2] Thus, the players ultimately acquiesced to Commissioner Rob Manfred’s imposed 60-game season, which included full pro-rated salaries for major league players.[3] Although Manfred is the commissioner of and oversees the entire league, he is appointed by the owners. As casual fans starved for live baseball on their televisions in the midst of lockdowns nationwide, the players found themselves powerless to demand more games, which would equate to more money in their pockets.[4]
The players’ sentiment is best illustrated by the $500 million grievance filed by the MLBPA that alleges the owners negotiated and ultimately imposed the pandemic shortened season, via the commissioner, in bad faith.[5][DB1] While this grievance is pending the decision of a panel of arbitrators outside the scope of the CBA process, the questions raised are likely to underpin the negotiations concerning the league’s existing revenue structure. Under the current regime, owners are under no obligation to disclose accurate revenue and profit figures. Logically, the players will continue to cite the fact that as overall revenue and franchise worth evaluations have risen considerably, player salaries have lagged behind.[6] Due to the lack of trust between owners and players, the MLBPA is likely to demand greater transparency in terms of total revenue in addition to a larger piece of the profit pie.
II. Path to Free Agency
One way to put more money in players’ pockets is to overhaul the existing major league salary arbitration process.[7] As currently constituted, the CBA affords players the opportunity to file for salary arbitration after accumulating three years of major league service time.[8] The major problem with this model is not the process itself, but rather the reality that it leaves players eligible for free agency too late in their careers. The average age of first-time eligible free agents is about 30 years old, which both lifelong baseball scouts and casual fans both agree is right around the point when most players’ skills begin to decline – sometimes quite rapidly. The bottom line is simple: players want a quicker path to free agency so they can reap the benefits of an open market for their services.
III. Team Payroll Expenditures
While the players will certainly demand more money, they will face pushback from ownership due to the disparities in different cities’ market sizes. Simply put: the Yankees and Dodgers do not face the same type of financial constraints as the Pirates and Rays, who play in much smaller market cities. Thus, the competitive market for free agents remains constrained to a limited number of organizations with the financial power to spend consistently. However, a recent league proposal to institute a salary floor—which would force smaller market teams to assume a more aggressive role in free agency—indicates that owners may be willing to compromise on this issue.[9] The catch is that implementing a salary floor may require a tweak to the current revenue sharing model by divesting more national television revenue to smaller market clubs.
While revenue structure, a shorter path to free agency, and team payroll expenditures are three of the issues I anticipate will generate the most substantive debate, they will certainly not be the only issues. Other major points of contention may arise in discussions of the salary structure and treatment of minor league players, service time manipulation, an expanded postseason slate, and several on-field rule changes. If one thing is certain when the owners and players meet at the bargaining table, it is that we are in for some contentious negotiations that will have lasting impacts on America’s pastime.
References and Footnotes
[1] The most notable being the 1994-95 strike that alienated a large chunk of the sport’s fanbase; https://vault.si.com/vault/1994/09/26/fans-strike-back-a-call-to-action-from-a-baseball-aficionado-fed-up-with-those-greedy-owners-and-players
[2] https://www.foxbusiness.com/sports/mlb-2020-season-coronavirus-revenue-loss-ticket-sales-salaries
[3] Id. The 2020 Minor League Baseball (MiLB) season was cancelled altogether.
[4] https://www.cbssports.com/mlb/news/mlb-2020-season-timeline-of-how-testy-negotiations-led-to-rob-manfred-mandating-a-60-game-schedule/
[5] https://www.forbes.com/sites/maurybrown/2021/05/14/mlbpas-500-million-grievance-with-mlb-hangs-over-labor-negotiations/?sh=9515e38b6bb5. Many have raised questions concerning the accuracy of the monetary figures presented by the owners; https://blogs.fangraphs.com/parsing-mlbs-claim-of-a-4-billion-loss/.
[6] https://www.justbaseball.com/mlb/major-league-baseball-strike-possibility/ [7] Minor League player salaries and overall treatment—which has emerged as a hot topic of discussion as a result of treatment during the COVID-19 pandemic—is also likely to be addressed but is less inclined to drive the negotiations.
[8] MLB salary arbitration is final, binding, and includes special provisions for players with at least two but no more than three years of service time—as pursuant to CBA § E(1). However, the vast majority of players elect to negotiate deals with their respective teams instead of testing the arbitration process. https://d39ba378-ae47-4003-86d3-147e4fa6e51b.filesusr.com/ugd/b0a4c2_95883690627349e0a5203f61b93715b5.pdf
[9] MLB recently proposed a $100 M salary floor, that would—at least in theory—increase the demand for free agents and subsequently raise the overall free agency salary figures. https://theathletic.com/2777830/2021/08/18/sources-mlb-proposes-salary-minimum-funded-by-new-tax-on-teams-spending-180-million/?source=emp_shared_article