Previewing Baseball’s CBA Talks

Following the completion of the World Series last week, all eyes in the baseball world will now turn to the sport’s next major showdown: the negotiation of a new collective bargaining agreement between the owners and the Major League Baseball Players Association. MLB’s existing CBA is set to expire at 11:59 p.m. EST on Wednesday, December 1, a deadline that many anticipate could trigger the sport’s first work stoppage since 1994. Indeed, while a strike or lockout is by no means guaranteed at this point, the possibility certainly appears more likely than it has at any point in the last two decades.

This post will provide an overview of the upcoming collective bargaining negotiations, briefly summarizing how the parties got to this point, what are likely to be the major issues to be hammered out in a new CBA, and what baseball fans can expect in the coming weeks (and, perhaps, months).

How We Got Here

In many respects, the seeds of the present discontent between the players and owners were sown during the negotiation of the sport’s last several CBAs, and perhaps most notably the soon-to-expire 2016 agreement. Although there was ample reason to believe that MLB’s financial model was moving in an unfavorable direction for the players, the union has been perceived by many as having failed to sufficiently prioritize the pursuit of significant economic modifications from the owners in 2016 (a claim that at least some in the union would dispute). Instead, to many, the MLBPA appeared to focus more on quality-of-life issues in the 2016 agreement, such as more humane travel schedules and clubhouse perks like private chefs.

As a result, those pre-existing economic trends continued to progress over the course of the term of the soon-to-expire CBA. The free-agent market has frequently moved at a glacier pace in recent years, while 2021 marked the third straight season that the average major-league player salary decreased, an unprecedented decline for the game.

These economic concerns were then compounded by the onset of the COVID-19 pandemic and the resulting abbreviation of the 2020 season. As FanGraphs readers undoubtedly remember all too well, MLB and the MLBPA were unable to reach an agreement for several months on the terms by which the 2020 season would be resumed, resulting in the union filing a (still pending) $500 million labor grievance against the owners for allegedly failing to negotiate in good faith.

Given the general rancor of those 2020 negotiations, as well as the still lingering bad blood between the parties, it is not surprising that many are anticipating a (potentially lengthy) work stoppage during the upcoming CBA talks.

What’s at Stake

While there are any number of different points the parties can be expected to discuss during their negotiations, the most contentious issues are likely to ultimately boil down to three words: money, money, money.

There are a plethora of ways that the MLBPA could attempt to improve the players’ financial position in the next CBA. For example, Evan Drellich and Ken Rosenthal have reported that the union’s initial proposal to management included increases to the minimum salary and luxury tax thresholds, as well as modifications to the league’s existing arbitration, draft order, revenue sharing, and service time rules.

Conversely, the owners will likely be looking to preserve as many of the economic gains they have achieved over the past several CBAs as possible. And while MLB likely realizes that it will need to make at least a few economic concessions to the players, the owners will certainly expect to receive something substantive from the union in return.

For instance, an expanded playoff is something that MLB will likely pursue during the negotiations, an issue that the union could potentially trade-off in exchange for some meaningful economic concessions from the owners. Meanwhile, one lingering item on the owners’ wish list during the 2016 CBA talks is getting the union to sign off on an international amateur draft. MLB has reportedly attempted to revive this concept during the current talks, although an international draft is probably marginally less pressing for the owners today since they were able to successfully implement meaningful spending limits on international amateur signings in the last CBA.

Beyond the economic issues, the two sides can also be expected to discuss a variety of on-field issues as well. For example, pace-of-play concerns will undoubtedly come up frequently in the parties’ negotiations. We are also likely to hear renewed speculation regarding a universal designated hitter. Meanwhile, it is also possible that pitchers’ use of foreign substances will once again become an issue, after this past summer’s controversial crackdown.

Realistically, fans can expect to see reports that the two sides are discussing a variety of different proposals over the coming weeks. For instance, it was reported back in September that the owners made a proposal to the union under which the players would become free agents after reaching the age of 29 1/2, while teams would be required to maintain a minimum payroll of $100 million per year. In exchange, the owners asked the players to agree to lower the luxury tax threshold to $180 million. As one might expect, the MLBPA reported responded “very negatively” to the proposal.

While some of these reports undoubtedly contain policies that will eventually make their way into the next CBA, many of these proposals will likely fall by the wayside during the course of the negotiations.

What To Expect

Ultimately, the most successful CBA negotiations yield a win-win situation for both sides, providing an agreement that satisfies both management and the union, while also ideally growing the pie for all involved over the term of the agreement.

Whether the owners and players can reach such a deal in the upcoming negotiations — and what path they will take to get there if they do — is anyone’s guess.

At the end of the day, it would not be surprising to see the players secure some modest gains in the next CBA. But considering that the union would appear to have relatively few meaningful, substantive concessions to offer the owners outside of an expanded playoff format, any substantial, dramatic changes to the game’s economic system are probably unlikely — barring an extremely lengthy (and potentially cataclysmic) work stoppage.

Considering how far away the two sides currently appear to be from a deal, it will likely take a substantial effort for the owners and players to agree to terms on a new CBA between now and December 1. As a result, there will undoubtedly be ample speculation in the coming weeks regarding what might happen if the owners and players do not reach an agreement prior to the expiration of the current CBA.

The most optimistic scenario would be that even if a deal is not reached by the first of December, the parties feel that they are nevertheless close enough to an agreement that they simply decide to let the current CBA continue to govern the sport in the interim while they hammer out the final terms of a new CBA. In this scenario, offseason transactions would be allowed to continue — although some teams may shy away from spending too much money until the final terms of the new CBA are finalized — and the 2022 season would be expected to start on time.

However, if the parties remain relatively far from a deal heading into December 1 — or if one side believes that it could gain considerable leverage over the other — then a work stoppage is certainly possible.

Such a labor stoppage would take one of two forms: either a strike by the players or a lockout by the owners. A strike would entail the players refusing to work until the owners met their bargaining demands; a lockout would flip the script, with the owners refusing to allow the players to play (or get paid) until a new agreement is reached. In either case, the implications would be the same — the sport’s offseason machinations (and potentially the upcoming 2022 season as well) would grind to a halt pending the resolution of the collective bargaining negotiations.

Of these two work-stoppage possibilities, a lockout by ownership is the considerably more likely scenario to unfold. This is because — as I previously discussed nearly five years ago — a strike by the players is most effective when it occurs in the midst of the playing season, thereby depriving the owners of their anticipated ticket and television revenues. Striking during the offseason would be a much less effective strategy for the union.

Instead, as I noted back in 2016:

Rather than allow the players to dictate the timing of the work stoppage, owners in the [NFL, NBA, and NHL] have learned in recent years that they are better off initiating a lockout themselves during the offseason in order to gain leverage over the players union, thereby increasing the likelihood that the labor dispute is resolved before it consumes too much of the playing season.

Indeed, locking the players out during the offseason would offer the owners several potential benefits. First, a lockout would likely impede any free agents from signing new contracts, while also indefinitely delaying the resolution of any upcoming arbitration cases. As a result, a lockout would leave a considerable number of players in a position of real uncertainty, which could lead some to agitate for the union to agree to terms on a new CBA more quickly, or on less favorable terms, than the MLBPA might otherwise prefer. Such agitation could also potentially create friction between different camps in the players union, driving a wedge between those players who are under definite contractual terms for next season and those whose salaries remain unsettled.

This possibility could make a lockout an even more powerful weapon for MLB owners than it has proven to be in the other sports, since a much larger percentage of baseball players have yet to have their salaries determined for next year than is the case during a typical NFL or NBA offseason (where early-career players generally have fixed-salary contracts that do not depend on arbitration to determine their annual pay).

Meanwhile, a lockout could also incrementally increase the pressure being on placed on the players the longer it drags on. If players are still locked out in February, they would not be allowed to report to spring training as usual, throwing off their typical training regimens. And should the lockout extend into the regular season, then the players would begin to miss actual paychecks.

This isn’t to suggest that a lockout would be without cost for the owners. Such an outcome would undoubtedly inflict some short-term PR damage on the owners, who would likely be blamed by some for plunging the sport into its first labor stoppage since 1994. And if the lockout continued into the regular season, the owners would begin to lose that aforementioned ticket and television revenue. Along these lines, Commissioner Rob Manfred has stated that avoiding a lockout is his top priority.

But in the grand scheme of things, an offseason lockout is likely to be much less damaging to the owners than would a labor stoppage coming in the middle of the season (especially considering that much of the sporting public doesn’t tune into baseball until the summer). Conversely, allowing the negotiations to drag on into the heart of the season without a resolution would risk handing the players considerable leverage, allowing the union to go out on strike during the midst of the playoff chase, when a work stoppage would inflict maximum financial pain on the owners.

How the players might respond to a lockout is a complex topic requiring a lengthy explanation beyond the scope of this piece (one that I discussed back in 2016). In short, though, the players would likely choose to combat the lockout in one of three ways: (i) simply continuing to negotiate with ownership, (ii) filing a potential labor grievance with the National Labor Relations Board, or (iii) dissolving the MLBPA and challenging the lockout in court under federal antitrust law (an option explicitly sanctioned by the Curt Flood Act of 1998, which partially repealed baseball’s long-standing antirust exemption for exactly such a purpose).

Suffice it to say for present purposes, each of these three options could provide some advantages to the players, but would also entail some potentially significant downside risk as well. Again, though, a full exploration of the potential implications of a lockout by the owners is beyond the scope of the present post.

In an ideal world, such a discussion will never be needed, as the parties will hopefully be able to reach terms on a new CBA before (or shortly after) the December 1 deadline. But considering the current reported state of the negotiations, we may very well find ourselves delving into the intricacies of federal antitrust and labor law for much of the offseason.

Nathaniel Grow is an Associate Professor of Business Law and Ethics and the Yormark Family Director of the Sports Industry Workshop at Indiana University's Kelley School of Business. He is the author of Baseball on Trial: The Origin of Baseball's Antitrust Exemption, as well as a number of sports-related law review articles. You can follow him on Twitter @NathanielGrow. The views expressed are solely those of the author and do not express the views or opinions of Indiana University.

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2 years ago

Thank you, very much, for an informed and informative, and balanced, post.