Spring training likely to be delayed as CBA talks sputter

Major league baseball players and owners met on Tuesday to discuss core economics, with players making small tweaks to their earlier proposals. The session lasted 90 minutes and discussions were said to be “heated” according to Evan Drellich of The Athletic.

After owners made small adjustments to their previous proposals in the last meeting, players offered to decrease their ask for a bonus pool for pre arbitration eligible players from $105 million to $100 million, and also modified an MLB proposal to disincentivize service time manipulation by offering teams a draft pick. They also took a stab at service time manipulation:

Drellich tweeted:

MLB has shot down every proposal put forth by the players to give service time credit, and this one probably won’t be any different.

Spring Training delay likely

With pitchers and catchers due to report in two weeks and talks moving at a glacial pace, a delay to spring training seems inevitable. In order to avoid a delay to the regular season, observers project that a new deal must be in place by no later than March 1st, which is now four weeks away.

When MLB commissioner Rob Manfred declared a lockout of the players and a freeze on all personnel moves on December 2, 2021, he said that the move was necessary and would help bring pressure to negotiate a new deal. This was, of course, pure nonsense and everyone knew it at the time.

Players objectives fading

Before talks broke off, the players association issued a pamphlet to its’ members stating four objectives for a new agreement:

– Incentivize competition (i.e. make small market teams spend on salaries)

– restore integrity to the game (i.e. stop tanking)

– remove artificial restraints on competition, (i.e. increase the CBT threshold), and

– get players paid earlier in their careers (increase minimum salary and move arbitration eligibility back)

In all that has been reported so far, there has been scant progress toward meeting these objectives. Even the players’ own proposals fall far short.

Roughly translated, the players wanted to stop teams from deliberately cutting spending on payroll while making little or no effort to win, a process otherwise referred to as tanking. They wanted to close the pay gap that has caused teams to fill their rosters with minimum salaried players, and they wanted to loosen up the restrictions in the luxury tax system.

The players’ stated objectives are reasonable, but not all of their proposals would necessarily help to meet those stated goals. The union has proposed a CBT threshold of $245 million, a 17 percent increase, with the current 20% tax rate. That would help to remove artificial obstacles, but it only allows big spending teams to spend even more and generally that only helps players at the top of the pay scale.

Players have proposed a minimum salary of $775,000, scaling up to $875,000 over five years. They should be asking for more to keep pace with MLB revenues and what players in other sports are getting for playing half as many games in a season.

The players’ proposals are most deficient in failing to demand a salary floor or a tax on lower payrolls, or stricter requirements on how revenue sharing dollars are spent. Simply demanding a reduction in revenue sharing funds doesn’t help any of their stated objectives, and it certainly doesn’t help to inspire or incentivize teams to spend who are currently not spending on payroll. This is a huge while elephant in the room.

Bad Faith

Following their imposition of the lockout, MLB owners made no effort whatsoever to restart talks for the next six weeks. The ball was in their court with the players having made offers while MLB had yet to make a serious offer. Manfred accused the players of making radical proposals by requesting exceptions to the six year service time for free agency, restoring the two year requirement for arbitration, and proposing to reduce revenue sharing.

At the same time, the owners’ proposals included scrapping arbitration altogether, changing free agency to an age based system that would often keep players under team control for seven to ten years, and more than doubling the tax rate on teams that dared to pay players more than the “competitive balance tax” threshold.

Owners demanded that players drop their three demands as a precondition to even making another offer. They wanted the players to bargain against themselves, and they knew that wasn’t happening. They were being disingenuous. They have stalled talks until the season draws near, when players’ pay checks were on the line.

Even since resuming talks, MLB owners have slow walked the process by making offers of paltry increases to the minimum salary and CBT threshold not even enough to offset inflation in either case. They made yet another proposal to scale back arbitration by eliminating super two eligibility in favor of a formula, and every small concession has been paired with other proposals that they already know the players would never agree to.

At least the latest offer from owners abandons their rather greedy plan to institute age-based free agency and the assault on arbitration, and it’s about time. However, those aren’t real concessions, as those proposals were entirely to the added benefit of owners, and were complete non-starters to begin with. But they’re still stuck on much harsher penalties in the CBT including loss of draft picks and increasing the lowest tax rate from 20 percent to 50 percent. As long as they remain stuck on those demands, there’s not going to be any baseball.

The owners have increased their minimum salary offer from $600,000 for first year players to $615,000, with $650,000 for those with one to two years of service and $700,000 for those with 2-3 years but are not yet eligible for super two status. Those minimums are still far and away the lowest among the four major sports. That affects the majority of players, as the most recent data on a full season shows that over 63 percent of major league players in 2019 were pre-arbitration and making the minimum or slightly more. Structurally, the tiered minimum salary system proposed is new but has not been picked up by the players in their proposals.

What about Bonus pools?

One proposal that has garnered interest from both sides is a bonus pool to be paid to the top performers who are not yet eligible for arbitration. It’s interesting that both sides have made proposals, but the owners’ offer of a $10 million bonus pool is like their offer of a salary floor- it’s tied to other ideas that are complete non starters. The players have proposed a $105 million pool, reducing that to $100 million in Tuesday’s meeting.

The trouble here is that, not only is the gap so wide, but no doubt the owners view it as a substitute for any other concessions on service time eligibility for arbitration, and it’s paired with converting the minimum salary to a fixed salary, so it’s also a maximum for players in that service class. Teams would be prohibited from voluntarily paying those players any extra money.

For example, the Tigers had about half of their roster earning near the minimum salary and they voluntarily paid eleven players a total of $100,200 more than the minimum. The extra money averages less than $10,000 per player, but it’s a goodwill gesture that often paves the way for more amicable salary talks in the future.

The players still propose reducing the arbitration eligibility threshold to two years, where it was for 15 years when arbitration was first brought into the agreement. And their latest offer still suggests cutting revenue sharing by $30 million. These are both non starters for the owners, but if they give them up without a quid pro quo, they’ll be bargaining against themselves.

Common Ground

Of the items that are agreed, things so far are leaning in the owners’ direction. The universal designated hitter is a consensus change, and some form of expanded playoffs- whether it’s 12 or 14 teams seems like a lock when a deal is eventually done. Players have agreed to wear patches or badges on uniforms and helmets, and that could net up to $6 to $8 million per team.

Both sides have proposed some sort of a draft lottery to remove rewards for losing, but that won’t change motives for not spending. They seem poised to remove payment of compensation for teams that sign the most elite free agents, but that only helps a few of the highest paid players. In fact, none of these things does anything to move the needle in terms of the players’ stated objectives.

Dan Halem, chief negotiator for MLB, reportedly threatened that regular season games would be lost if the owners didn’t get their way. The players have offered to expand the playoffs to 12 teams, but they should make it clear that there won’t be any expanded playoffs if they don’t play 162 games. That would hit the owners where it counts- in their wallet.

The way forward

The longer negotiations remain stalled, the more likely it is that the new CBA will look mostly like the old CBA. Owners seem most willing to make concessions on minimum salary, and the players should take full advantage of that. It helps the majority of players and helps to close the pay gap that has caused the great shift away from veteran players.

The bonus pool idea is a huge trap that the players should avoid. Not that it’s a bad idea, but it’s no substitute for moving the service time eligibility for arbitration back at least somewhat. That would also shrink the number of minimum salaried players. Owners are fairly dug in on opposing a move to the two year threshold.

A reduction in revenue sharing isn’t going to happen, and removing that should be the players’ biggest concession in their next offer. it was a bad idea to begin with. If they’re serious about preventing teams from pocketing revenue sharing dollars, they must demand either a salary floor in the form of a lower end payroll tax or simply inserting language that requires teams to spend those dollars on player salaries.

The players have already given up on creating any exceptions to the six year requirement for free agency, or any other method of preventing service time manipulation. It’s not an easy problem to tackle. They could add language that prohibits teams from keeping players in the minors for financial or service time reasons. The player would still need to prove up a grievance, but it’s a principle and it could help in an obvious case such as Kris Bryant.

The numbers gap in the CBT threshold proposals are not insurmountable, but owners demands to increase the tax rates by 150 percent and add more penalties need to go away. They already have a de facto salary cap and players should not be expected to make it harder, especially when they’re getting nothing on the lower end of the pay scale and teams can keep on tanking and not trying to compete, unless the players wake up.

Oh, and of course there’s still this $500 million grievance pending from the last time that MLB owners stalled negotiations instead of playing games in 2020. Needless to say, the two sides are miles apart on the value of settling that issue as well, though it is entirely separate from the CBA negotiations at this point.