The Economic Impact of Yesterday’s CBA Proposals

After more than a month of silence, talks between the league and the Players Association have finally heated up. Over the past week, the parties have exchanged proposals and counters, a welcome change from the negotiations’ previously slow pace; 42 days elapsed between the owners’ initiation of the lockout and their first proposal to the MLBPA. Yesterday, the two sides reportedly focused their discussion on players who have not yet qualified for salary arbitration, a key sticking point in the negotiations. Let’s go through each of those proposals and see what they would do to change the way young players get paid.
Before we begin, it’s worth mentioning that the two sides each recently dropped aspects of past proposals that the other disliked. The league had previously proposed changes to the arbitration system, including the elimination of the Super Two classification that allows some players to reach arbitration a year early, a non-starter with the union. The union had proposed an age-based free agency system that would shorten team control in many instances, which was similarly unpopular with the league. Each side dropped those long-shot ideas in this round of bargaining. Now, on to what was proposed yesterday.
First, both sides proposed instituting new salary minimums. The MLBPA suggested a new minimum salary of $775,000. The league countered with a tiered structure – $615,000 for players with less than one year of service time, $650,000 for players with between one and two years of time, and $700,000 for everyone else on a minimum salary.
“Players on a minimum salary” might not sound like a key part of the structure of baseball, but they absolutely are, as FanGraphs alum Travis Sawchik has covered. These players aren’t a huge part of the money, of course – “minimum” is a helpful word there. In 2021, teams spent roughly $3.842 billion on player salaries, per Spotrac. Minimum salaries accounted for roughly $289 million of that, or 7.5% of the total outlay. Read the rest of this entry »