Collective Bargaining Agreement

Major League Baseball has officially instituted a lockout. The 2016-21 collective bargaining agreement between MLB owners and the players’ union expired at 10:59pm central time tonight. It has long been clear that Major League Baseball and the MLB Players Association would not have a new deal signed before the current contract ran its course.  With no agreement reached, the league’s owners unanimously voted to institute a lockout, according to a report from Jon Heyman of the MLB Network (Twitter link).

Commissioner Rob Manfred announced the lockout as part of a pre-prepared letter to fans (full text available here), Manfred wrote in part:

“Simply put, we believe that an offseason lockout is the best mechanism to protect the 2022 season. We hope that the lockout will jumpstart the negotiations and get us to an agreement that will allow the season to start on time. This defensive lockout was necessary because the Players Association’s vision for Major League Baseball would threaten the ability of most teams to be competitive. It’s simply not a viable option. From the beginning, the MLBPA has been unwilling to move from their starting position, compromise, or collaborate on solutions.”

Manfred went on to state that the MLBPA “came to the bargaining table with a strategy of confrontation over compromise” and “never wavered from collectively the most extreme set of proposals in their history, including significant cuts to the revenue-sharing system, a weakening of the competitive balance tax, and shortening the period of time that players play for their teams. All of these changes would make our game less competitive, not more.”

The MLB Players Association released a statement of its own (on Twitter). It reads in part:

“Major League Baseball has announced a lockout of Players, shutting down our industry. This shutdown is a dramatic measure, regardless of the timing. It is not required by law or for any other reason. It was the owners’ choice, plain and simple, specifically calculate to pressure Players into relinquishing rights and benefits, and abandoning good faith bargaining proposals that will benefit not just Players, but the game and industry as a whole. … We remain determined to return to the field under the terms of a negotiated collective bargaining agreement that is fair to all parties, and provides fans with the best version of the game we all love.”

As the MLBPA suggested, the league was not under a mandate to lock the players out. Even in the absence of a CBA, the offseason could have proceeded. As MLBTR’s Tim Dierkes explored a few months ago, the sides continued to conduct offseason business during the last winters (1993-94 and 94-95) that proceeded without a CBA in place.

There’s been little expectation MLB wouldn’t institute a lockout once this CBA expired, however. Locking out in the absence of an agreement has become the typical practice in other professional sports leagues, as management hasn’t wanted to afford players the choice whether to go on strike at a later date. The players eventually went on strike during the 1994 season, for example, spurred on by ownership’s imposition of a salary cap. The sides didn’t reach a new agreement that year, and that season’s World Series was ultimately cancelled.

MLB commissioner Rob Manfred implied the league would take this course of action a few weeks ago. Pointing to the ’94 strike and other sports leagues as justification, Manfred indicated a lockout would be on the table if no agreement were hammered out by December 1.  “I don’t think ’94 worked out too great for anybody,” the commissioner told reporters earlier this month. “I think when you look at other sports, the pattern has become to control the timing of the labor dispute and try to minimize the prospect of actual disruption of the season. That’s what it’s about: It’s avoiding doing damage to the season.”

With the lockout in place, teams will be prohibited from making any major league transactions until a new CBA is agreed upon. We’ve seen a flurry of activity — particularly via free agency — in the days leading up to the CBA expiration in response, as many clubs and players have wanted to pin down some certainty before a potential work stoppage.

A transactions freeze will be the most visible semblance of the lockout for fans, at least until the potential for game cancellations if no deal is agreed upon within a couple months. A ban on transactions is certainly not the only effect, however. Jeff Passan of ESPN explored some intricacies of the situation earlier this week in a piece that’s well worth a full read. A few of the less visible effects: injured players will not be allowed to communicate with team training staffs, players are no longer allowed to use team-run mental health services, and some foreign-born players may run into visa issues.  Don’t expect press conferences for newly signed players or interviews with GMs, either.

The lockout is unfamiliar territory for a generation of baseball fans; this is the first work stoppage in this website’s 16-year history. It’ll mark the first official work stoppage since 1994, snapping a run of nearly three decades of labor peace. The parties had discussions each day this week, but it doesn’t seem they made much progress. Evan Drellich of the Athletic reported this afternoon that the league refused to make a counter-offer on the service time structure and luxury tax thresholds unless the MLBPA dropped its efforts to push earlier free agency eligibility for players, a demand the union reportedly refused.

The league did give some ground on the competitive balance tax, with Drellich reporting MLB proposed a gradual increase of the lowest tax threshold to an endpoint of $220MM. However, that remains a fair bit shy of the MLBPA’s $240MM goal, and it’s not clear if the league’s proposed increase also involved a corresponding uptick in penalties paid for exceeding those markers.

There’s certainly plenty to be hammered out beyond the luxury tax. The service time system, arbitration and fundamental competitive structure of the league (including the number of playoff teams) will all at least be discussed over the coming weeks. That’s saying nothing of potential on-field rules changes like the extra-inning runner and the universal designated hitter. With so much yet to be determined, it’s generally not expected an agreement will be reached in short order.  The 2022 spring training schedule could potentially dictate when the lockout ends, with owners likely reluctant to forgo exhibition game revenue.

The Winter Meetings, originally scheduled for December 6 through 9 in Orlando, have been cancelled, reports Jeff Passan of ESPN (Twitter link). The commissioner is scheduled to conduct a press conference tomorrow morning.

Major League Baseball has proposed expanding the postseason field to fourteen teams in collective bargaining discussions with the Players Association, reports Jesse Rogers of ESPN. That’s hardly a surprise, as Commissioner Rob Manfred has publicly advocated for expanding the playoffs (reportedly preferring a 14-team setup) going back to last year, when the league and MLBPA agreed to a 16-team playoff during the shortened 2020 season.

Under the proposed format, the top seed in each league would receive a bye — as is the case with the NFL’s current structure. However, Rogers adds that MLB’s proposal would allow the other two division winners in each league to choose which Wild Card team they’d prefer to face in the first round, which would take the form of a three-game series. The division winner with the second-best record in each league would have its pick of any of the four Wild Card clubs in its league; the final division winner would pick to face one of the other three Wild Card teams; the two Wild Card teams remaining would face one another.

The league has long been expected to prioritize an expanded playoff field in collective bargaining talks. An increased number of postseason games comes with an associated uptick in gate and television revenue, an obvious appeal for ownership groups. The effects for players could be more mixed. While some players could stand to benefit from increased playoff shares, Rogers notes that the MLBPA is concerned that an expanded playoff field could reduce the incentive for teams to aggressively try to bolster their roster.

A broader playoff field increases every team’s odds of getting into the postseason, and front offices may find the greater odds a disincentive to upgrading their roster via free agency or trade. Small-sample postseason series have an inherent high level of randomness. It seems the fear among some on the players’ side is that teams could be satisfied to build a slightly above-average roster (which would stand a much greater chance of making the postseason in a 14-team field than under the current 10-team system) and hope that a hot streak can carry them deep into the playoffs.

MLB, on the other hand, contends that the first-round bye would offer such a significant advantage to the teams with the best record in each league that very good clubs would remain motivated to improve. Meanwhile, the expanded field could offer a greater incentive for teams with mediocre rosters to add short-term impact, since the proposal would significantly increase those teams’ chances of getting to the postseason at all.

Rogers notes that the expanded playoff proposal has been on the table for months, but he reports that MLB recently put forward a new suggestion: a lottery for the top three amateur draft choices. Rather than setting the draft order as the inverse of the league standings — as is the current setup — this proposal would introduce a weighted system that injects more randomness into the process. Teams with the worst records would still have a greater chance of securing higher picks, but any non-playoff team would have a chance at a top three selection.

That offer is in response to players’ concerns that the current system rewards teams that orchestrate long-term rebuilds with perennially high draft choices. Of course, it’s not entirely clear that a weighted lottery would serve as much of a disincentive for tanking, since teams would still have higher probabilities of top picks with worse records.

Rogers’ colleague at ESPN, Jeff Passan, shed some further light on CBA talks this afternoon. Passan reports that the league recently offered a slight raise over the luxury tax thresholds set in the 2016-21 CBA. That’s a turnaround from the league’s earlier efforts to tie a lowered tax threshold to a soft salary floor, an offer the MLBPA rejected. It’s not clear how high the league is willing to set the thresholds, though, and Passan adds that the league’s willingness to raise them might come with associated stiffer penalties for exceeding them. Unsurprisingly, the MLBPA expressed concern that’d counterbalance high-spending teams’ willingness to surpass those thresholds.

Passan further reports that MLB has expressed openness to a “minimal” bump on the league minimum salary, which sat at $570.5K in 2021. MLB’s offer also included the introduction of the designated hitter to the National League, an on-field alteration widely expected to ultimately be put into place. Passan offers an in-depth breakdown of the labor dynamics that is well worth a full read for those interested in the topic.

The current CBA expires on Wednesday at 11:59 pm EST. It’s widely expected that the league will lock out the players if no deal is agreed upon at that point, a move that would come with an accompanying freeze on major league transactions. (Players who were not on a major league roster last season could still sign minor league contracts with clubs, Passan notes). Jon Heyman of the MLB Network tweeted this afternoon that while there’s been “incremental” progress between the two sides of late, there’s “basically no hope” of a deal getting done within the next 48 hours. That reality has been reflected in the flurry of free agent activity we’ve seen in recent days, as many players and teams have been highly motivated to lock in deals before the expected MLB transaction prohibition.

In August, Major League Baseball made its first core economics proposal to the MLB Players Association. That would’ve involved a radical restructuring of the game’s economic system, first granting players free agency at age 29 1/2 (as opposed to after six years of MLB service) and replacing the current arbitration structure with a pool-based system attached to revenues.

This week, the league proposed an unexpected wrinkle in CBA talks. While the new proposal contains the same age threshold for free agency qualification, Evan Drellich, Ken Rosenthal and Eno Sarris of the Athletic report that this offer would tie pre-free agency pay directly to a player’s Wins Above Replacement tally. Under this structure, a player’s service time and career WAR marks (weighted to emphasize the most recent seasons more heavily) would set the player’s salary. While multiple websites calculate WAR totals in different ways, MLB’s proposal would base salaries on FanGraphs’ WAR tabulations.

Earlier this afternoon, Ben Nicholson-Smith of Sportsnet reported (on Twitter) that MLB had offered to replace the arbitration system with salaries based on an algorithm. Nicholson-Smith added that the MLBPA was not enamored with that idea, and the Athletic trio quotes one player representative as saying that such an offer has “zero chance” of being approved.

That’s not at all surprising. MLB’s proposal to set free agency at 29 1/2 years has always looked to be a non-starter for the players. The league’s top prospects typically reach the majors in their early-mid 20’s. Those who live up to their promise will often pass six years of service and hit free agency in advance of their age-28 or age-29 seasons. Marketing as many prime-aged seasons as possible is what often allows players to land contracts that push free agency forward, and the league’s proposal could tether that elite group to their original teams for longer than the current system does. (For example, neither of this offseason’s top two free agents — Carlos Correa and Corey Seager — would be eligible for free agency were the age set at 29 1/2).

Certainly, the age threshold would impact some players positively as well. Players like Aaron Judge and Willson Contreras would’ve reached free agency this winter as opposed to going into their final year of arbitration. A late bloomer like Cubs third baseman Patrick Wisdom would’ve been on the open market instead of making the league minimum salary, and he’d have likely made a few million dollars in 2022 coming off a 28-homer showing over just 375 plate appearances. Overall, though, the union likely sees the 29 1/2 year age threshold as too old to be more desirable than the current service structure.

Fixing player salaries to a statistical formula comes with its own challenges. Past performance will, of course, always be relevant to player pay. The existing arbitration system awards players salaries based on their combination of service time and prior salaries of statistically-comparable players. There’s a case to be made that MLB’s proposal would modernize that process.

Arbitration can lean a little more heavily than most modern teams do on traditional box score statistics like pitcher wins, saves, and hitters’ home runs and RBI totals. While arbitrators will also consider newer, WAR-like metrics, their comparative reliance on old-school stats has led to arb salaries for closers and defensively-limited sluggers tending to skew higher than teams have been willing to pay. On the other hand, arbitrators haven’t generally placed as much value as clubs have on glove-first players and high-leverage setup relievers. Basing pre-free agency salaries off WAR would probably help to close that gap.

That said, the MLBPA seems likely to take issue with tying salaries to WAR directly. As the Athletic scribes write, using that metric is particularly challenging with regards to relievers. Both the free agent and arbitration markets have valued bullpen arms more highly than WAR totals typically do. Advanced defensive metrics — a key component in WAR calculations — can be unstable on a yearly basis. Over the long run, those metrics tend to align with general evaluations of a player’s defensive acumen. Fixing salaries weighted heavily on single-season defensive metrics, though, seems suboptimal.

WAR naturally involves making imprecise adjustments for different parks, which could pose problems when teams adjust playing field dimensions. And WAR metrics differ on how to separate a pitcher’s contributions from those of his defense; FanGraphs, upon which MLB’s proposal would be based, evaluates pitchers essentially off their strikeout, walk and home run rates. That strips out ball in play luck but also creates some seemingly odd results. For instance, Aaron Nola — who threw 180 2/3 innings of 4.63 ERA/3.37 FIP ball — had a higher 2021 fWAR than Robbie Ray, who tossed 193 1/3 frames of 2.84 ERA/3.69 FIP pitching.

None of this is meant as an indictment of WAR models generally or of FanGraphs’ choices specifically. Most or all MLB teams rely on similar calculations in making player evaluations. That’s with good reason, since advanced metrics of that nature can offer insights into players not found by typical box score stats. Still, these limitations highlight the potential pitfalls of tying player salaries directly to this one statistic.

MLB’s proposal looks unlikely to make much headway ultimately, and both sides will continue negotiations as we near the expiration of the current CBA on December 1. Nicholson-Smith reports that the two sides are scheduled to meet next on Monday.

Last week, the MLB Players Association made its second proposal on core economics in collective bargaining discussions with the league, report Evan Drellich and Ken Rosenthal of the Athletic. The new proposal contained only minor adjustments compared to the PA’s first offer, which was made back in May.

Drellich and Rosenthal reported in August that the MLBPA’s first offer included an emphasis on earlier arbitration for young players, but other details on their vision remained sparse. The Athletic now shines more light on that initial offer, suggesting that an alteration to the draft order, a higher league minimum salary, elevated luxury tax thresholds, alterations to the revenue sharing system, and an unspecified change in how service time is calculated were all included in that opening proposal. The union’s initial proposal also included scenarios where certain players could qualify for free agency without reaching a full six years of major league service. Whether all of those goals remained in the union’s second offer is not clear.

Major League Baseball made one counteroffer in August — a radically different setup that would’ve included lowered luxury tax thresholds with an accompanying salary floor, an age-based system in which players first reach free agency at 29.5 years old, and a revenue-based pool system to replace the current arbitration structure. Given the massive differences in what’s publicly known about each side’s offers, it’s no surprise the MLBPA reportedly considered the league’s offer a non-starter.

Drellich and Rosenthal also shed a bit more light on MLB’s first proposal. The league’s proposed salary floor, which was to be set at $100MM, was a “soft” floor, featuring unspecified penalties for teams that don’t reach that mark in annual payroll rather than a firm mandate to do so. To address players’ concerns about rebuilding teams, MLB’s offer included a provision that would prevent teams from picking in the top five of the amateur draft in three consecutive seasons.

MLB’s proposal also included a provision to overhaul the system for teams to acquire international amateur prospects, per Drellich and Rosenthal. Currently, teams are annually allotted a hard-capped bonus pool to sign amateur players from outside of the U.S., Canada and Puerto Rico. While deals can’t formally be signed until the player turns 16 years old, teams and player representatives often come to verbal agreements a year or more in advance. According to the Athletic, MLB proposed to replace the current system with an international draft, the details of which remain unclear.

The potential for a collectively bargained international draft has long been bandied about. Were it to come to fruition, it’s generally expected that draft would be a separate entity from the current Rule 4 draft for acquiring domestic amateur talent. An international draft would foreclose the potential for advance verbal agreements  for incredibly young players, but it’d also obviously restrict those players’ abilities to choose their preferred destination.

It’s clear that MLB and the MLBPA remain far apart on core economic concepts, but Drellich and Rosenthal report that the sides have made progress in ancillary bargaining areas and are slated for in-person talks at next week’s general managers meetings. The current CBA expires on December 1, and Drellich wrote earlier this week it’s expected that failure to agree on a new CBA by then would result in a lockout and accompanying transactions freeze. Commissioner Rob Manfred and MLBPA executive director Tony Clark have continued to express hope they’ll reach agreement before that point, but the general tenor on the situation has seemed to skew more pessimistic.