Collective Bargaining Agreement

After MLB commissioner Rob Manfred announced the cancelation of the first two series of the regular season, a few key members of the Players Association conducted a press conference of their own. Union executive director Tony Clark, lead negotiator Bruce Meyer and two members of the player executive subcommittee — Max Scherzer and Andrew Miller — spoke with the media (including Chelsea Janes of the Washington Post, Kyle Glaser of Baseball America and Chandler Rome of the Houston Chronicle).

Broadly speaking, union leadership reiterated their desire to continue negotiations after today’s league-imposed deadline passed without an agreement. Clark stated that the union was willing to reengage with the league as soon as tomorrow and pointed out that the union never aligned with the league setting this afternoon as an inflection point in talks. (At his press conference, Manfred suggested the parties couldn’t resume discussions until Thursday). However, union leaders also doubled down on their solidarity and willingness to wait out the lockout in search of a deal they find palatable.

Clark alluded to the progress the sides had seemingly made in discussions yesterday as a reason to keep talks open, but he and Meyer each stressed that the union believes there are significant gaps to be closed on key issues. That’s particularly true on the bonus pool for pre-arbitration players — where there’s a $55MM gap in 2022 between the parties’ latest offers — and the base threshold for the competitive balance tax, which has an $18MM discrepancy. There’s also a $25K difference in the sides’ offers on the 2022 league minimum salary. All those gaps would enlarge over the course of the CBA, as the union is seeking more rapid expansion than the league has offered on each. (The gap on the CBT, for instance, would reach $33MM by 2026).

The league also introduced possible on-field rules changes to the mix late during negotiations. The commissioner stated the league had been pursuing a pitch clock and a ban on defensive shifting, and Bob Nightengale of USA Today reports (on Twitter) they’d also sought to make the bases larger, all of which would’ve taken effect in 2023. Clark expressed general openness to discussions on rules changes but added he was perplexed with MLB raising those issues so late in the process.

Bridging those gaps may prove challenging enough, but there’s also the added tension that comes with the league’s cancelation of games. Manfred flatly stated that it would be MLB’s position that players shouldn’t be paid for any contests lost, thereby raising the possibility of prorated salaries. Meyer disagreed with the league’s outlook, stating that the union will pursue “compensation” for those missed games if they’re not made up at a later date. MLB has maintained those contests are officially canceled, not postponed, but the union has expressed their belief those games could be rescheduled (with full player pay, of course).

How long the lockout will continue is anyone’s guess, but it’s clear that today represented a setback in hopes of finding an eventual endpoint. Clark frankly called it a “sad day for baseball,” and it seems possible that heightened animosity in the wake of the league’s actions could threaten whatever progress had been made yesterday. For instance, the union has previously suggested they’d refuse to agree to expansion of the playoff field in 2022 if regular season games were lost and player salaries prorated. That may perhaps be a fatal blow to whatever frameworks of a 12-team postseason were being discussed yesterday, to give a speculative example. What comes next is to be seen, but the near-term future of the sport is shrouded in uncertainty, having officially reached a point that Manfred had previously said would be a “disastrous outcome.”

An expanded postseason field, and the accompanying surge in annual revenue, is perhaps the most critical issue for Major League Baseball during the ongoing wave of collective bargaining talks with the MLB Players Association. MLB has continually pushed for an expansion to 14 teams, and while the MLBPA has acquiesced and shown a willingness to expand the field to an extent, their latest proposals have included a slightly smaller 12-team field (as a trade-off for myriad other potential gains/wins for the union).

ESPN’s Jeff Passan reported yesterday that in the event of a push to 14 teams, ESPN would pay MLB an additional $100MM in television fees for the newly created games and postseason content. That’s all the explanation needed for why the league views expanded playoffs as an imperative, but even a move to a 12-team format would be immensely beneficial. Andrew Marchand of the New York Post reports that even expanding to 12 teams would net MLB an additional $85MM in revenue from ESPN. Those figures are critical to keep in mind, as they provide context for the gains the union hopes to achieve through its own asks in negotiation.

The Players Association has previously suggested the possibility of a “ghost win” for division winners — that is, the winners of each division who do not receive a bye would effectively start a series up 1-0 over their Wild Card opponents. The Wild Card clubs would be tasked with winning one more game than the division winners in order to advance to the next round, with the union’s general belief being that this structure would incentivize teams to push to win the division rather than “settle” for a Wild Card.

ESPN’s Buster Olney tweeted that one potential iteration of a 12-team playoff field would give each league’s best two teams a first-round bye, while the remaining eight teams would compete in best-of-three series. Olney doesn’t indicate whether that’s a union- or league-proposed structure, but that seems to diverge rather notably from the union’s prior “ghost win” scenario. It’s possible Olney’s scenario is one way the league envisions a potential increase to a dozen teams, but there’s been no firm agreement on postseason expansion anyhow, so the specifics are still very much up for debate in negotiations.

One potential alternative, if the league considers the “ghost win” unpalatable, could be to stack home-field advantage for the better team, although it’s not clear whether the union would consider this enough incentive to win the division. Still, as MLBTR contributor Matt Swartz wrote in 2020, in a theoretical best-of-seven series played between two evenly matched teams, his own historical research has suggested the home team would win 59% of the time. Add the revenue and allure of hosting that series (gate, parking, concessions, surrounding developments), and there would indeed be some incentive; alternatively, however, some clubs might balk at the notion of reaching the playoffs and yet not playing host to a single contest.

There are countless permutations that could be explored, but the crux of the matter for the union — beyond wanting to ensure that they receive sufficient compensation for agreeing to the change — has been some wariness that an expanded playoff field will actually disincentivize teams from spending. Increasing the field to 14 teams, for instance, would’ve allowed an 83-win Reds team that slashed payroll last offseason and an 82-win Phillies team to enter the 2021 postseason. The general concern that teams might feel the expanded format can help them skate into the postseason without making meaningful offseason upgrades obviously has its detractors, but the union has regularly pitched it as a central focus.

In general, anti-tanking measures have been a key talking point for the MLBPA during negotiations, and The Score’s Travis Sawchik tweets that the league and union at least discussed the possibility of awarding monetary bonuses to teams small-market clubs who are making an effort to compete. The funds would be allocated at commissioner Rob Manfred’s discretion, and it remains unclear just where the parameters for receiving said bonuses would be set. Presumably, that’d be its own set of negotiations, though win totals and reaching the postseason make for natural benchmarks — at least in concept. The source of these additional bonus funds remains unclear, though Sawchik does add that revenue sharing would continue in addition to this hypothetical concept, so it’s not a straight replacement scenario.

There’s about three hours to go until the latest “deadline” from MLB. Manfred has termed any cancellation of regular-season games a “disastrous outcome for the industry” and made no indication of any possibility of rescheduling missed games. However, Chelsea Janes of the Washington Post reports that the MLBPA has been holding out hope that, in the event games are ultimately stricken from the regular-season calendar, the two sides can negotiate a means of making them up somewhere down the road in 2022.

Whether that’d come in the form of additional doubleheaders, the addition of some makeup games on would-be off days or in some other capacity isn’t known. MLB was, in 2020, staunchly against pushing regular-season games into October — although last year’s regular season included three games in early October. The logistics of trying to reschedule any missed games would bring about its own complicated set of negotiations, and both sides would surely prefer to simply agree to terms that facilitate an on-time start to the season. We’ll know just how feasible that is before too long.

Major League Baseball pushed its deadline for a labor deal to 5pm Tuesday, bringing about some renewed hope that a new collective bargaining agreement could be agreed upon without the cancellation of any regular-season games. Both the league and the union made some notable offers overnight, with the players showing a willingness to drop Super Two expansion from their proposal and the league dropping increased overage penalties for teams exceeding the luxury tax.

It’s frankly staggering that after a months-long lockout, the maintenance of the status quo in those regards feels like progress, but there are larger elements at play in other areas of negotiation. One key item that has not drawn much attention to this point but is currently a part of the league’s proposal, per Evan Drellich of The Athletic (Twitter link), is an international draft. The implementation of an international draft would be seen as a sizable gain for the league and would presumably require them giving something back to the players in return, though at present it’s not clear just how feasible its inclusion will be.

As with all elements of a proposal (from either side), it’s possible that the inclusion of an international draft is little more than a bargaining chip that will eventually be “dropped” under the guise of making a concession. Both parties have done this throughout negotiations, presenting items known to be nonstarters for the opposition before largely backing off as talks reached — and surpassed — MLB’s imposed eleventh hour. Super Two expansion and increased CBT penalties, for instance, have both been generally viewed as non-negotiable by the league and union, respectively, but remained key components of both parties’ proposals until late last night. Whether the league is seeking to wield the international draft in a similar capacity isn’t clear, but to this point there’s no reason to believe the two sides are close to agreeing on this front.

Talk of an international draft has been ongoing in various capacities for more than a decade, although it has not, to this point, been a prominent feature of the current wave of collective bargaining. International free agency used to be largely unregulated within the sport, allowing teams to spend as they pleased on amateur talent from other countries, with only U.S. and Canadian talents being subject to the annual Rule 4 (amateur) draft held each summer.

The 2012-16 collective bargaining agreement implemented stricter classification of which talents could be considered amateur versus professionals and also instituted harsh penalties for exceeding league-allotted international bonus pools. The thought, at the time, was that teams would shy away from exceeding their bonus pools for fear of being significantly curbed in future signing periods. Exceeding the bonus pool by a certain threshold in a year limited teams to bonuses of $250K (and later $300K) or less in subsequent periods.

What unfolded instead was somewhat the opposite. Multiple teams — the Cubs, Yankees, Padres, Dodgers, White Sox and Red Sox among them — showed no hesitation in absolutely shattering their league-allotted pools, either in order to make one-time runs at stocking the farm with enormous waves of amateur talent or to sign the highest-profile talents on the international market. That approach is what led the Red Sox to sign Yoan Moncada for a $31.5MM signing bonus that came with a 100% overage tax — effectively spending $63MM just to get him into their system. The White Sox did the same with Luis Robert, signing him for a $26MM bonus that came with a 100% dollar-for-dollar tax.

The 2017 collective bargaining agreement eliminated teams’ ability to do so — presumably much to the relief of smaller-market clubs that felt they had no hope of signing players in that regard. The union agreed to hard-capped international bonus pools, the overall size of which were tied to the team’s record (just as is the case with the annual amateur draft). In essence, the more games lost by a team, the larger the international bonus pool and amateur draft pool. The increased restrictions on teams’ paths to acquiring amateur talent is now seen by the players as a major component of what they believe to be an anti-competitive landscape in MLB that incentivizes clubs to stop spending money and embark on lengthy rebuilds in the name of rebuilding the farm system.

The specifics of a potential amateur draft remain unclear, but in theory, it could be seen as a means of further limiting the ability to spend freely on amateur talent and further incentivizing prolonged rebuilds — at least if the international draft order is tied to record (and particularly if it is separate from the amateur draft lottery being discussed by MLB and the MLBPA).

It’s also unclear just who’d be eligible for the international draft in its currently proposed state. At present, players who are at least 25 years of age and have at least six years of professional experience in a foreign league are deemed “professionals” and are exempt from bonus pools, allowing them to sign Major League contracts. Padres infielder Ha-Seong Kim and current free agent Seiya Suzuki are prominent recent examples of this. Players who are younger than 25 and/or have fewer than six years of pro experience — e.g. Moncada, Robert, Shohei Ohtani — are deemed “amateurs” and are only able to sign minor league contracts with signing bonuses. The 2017 CBA, as previously mentioned, hard-capped those bonus pools, which is why Ohtani’s bonus was “only” $2.3MM, as opposed to the enormous bonuses secured by Moncada and Robert.

It’s a bit surprising to see such a notable component being moved into the spotlight a bit with time for an agreement ostensibly dwindling, but its inclusion is nevertheless quite notable — whether it’s being legitimately discussed or simply yet another in a long line of leverage plays that has been brandished throughout a contentious set of negotiations.

The MLBPA has dropped their proposal to change the percentage of players with 2+ years of service who are eligible for salary arbitration, reports Bob Nightengale of USA Today.  Evan Drellich of The Athletic phrases it slightly differently, reporting, “The MLBPA is willing to drop proposal to expand salary arbitration if rest of numbers work out.”  Since 2013, the top 22% of those with 2+ years of service, known as Super Two players, have been eligible.  The MLBPA initially sought to make that 100% of 2+ players, moving steadily downward in their recent proposals.  MLB has considered changing the 22% figure to be a non-starter, despite agreeing to a change in this area a decade ago.

In what might amount to one of the players’ biggest wins in this CBA, MLB previously agreed to a new pre-arbitration bonus pool concept that will reward top performers before they reach salary arbitration.  At last check, the MLBPA had been seeking a $115MM pool.  Early Tuesday, Derrick Goold of the St. Louis Post-Dispatch (among many others) reported that MLB is currently offering $25MM for that pool.  So, there’s still a significant gap here to bridge.

Goold also notes that MLB is offering a $675K minimum salary for 2022, up from $570,500 in 2021.  MLB has proposed increasing that by $10K per year through the five-year CBA.  The lowest-known MLBPA proposal was $775K in 2022, ascending all the way to $895K in 2026.

On the important topic of the competitive balance tax, Bob Nightengale of USA Today says MLB is currently proposing base tax thresholds of $220MM in 2022, $220MM in 2023, $220MM in 2024, $224MM in 2025, and $230MM in 2026.  Notably, MLB has dropped its proposal to increase the tax rates for exceeding the thresholds.  At last check, the players were seeking CBT thresholds ranging from $245MM in ’22 to $273MM in ’26, so there is plenty of work to be done here.

It appears increasingly safe to expect a 12-team playoff field this year, as well as the universal designated hitter — although it bears repeating that even these generally agreed-upon items are all part of package proposals.  The league and union have not agreed on any items in isolation, but rather agreed on certain inclusions or exclusions as part of larger proposals that are gaining traction.  Some major components of a theoretical agreement that remain unsettled right now include draft pick compensation for signing free agents, how anti-tanking and anti-service time manipulation measures will look, whether the A’s will be restored as a revenue sharing payee, on-uniform advertising, an international draft, and how much lead time MLB will need to provide for on-field rule changes.

According to Drellich at 7:57am central time today, MLB is willing to drop draft pick compensation for free agents, and they want the first five picks to be subject to the draft lottery.  At last check, the MLBPA wanted the lottery to encompass the first seven picks in the draft, and perhaps more importantly were seeking penalties for teams that finish bottom eight to twelve in consecutive seasons.

Though significant work remains to be done in many key areas, each side has finally dropped its most extreme demand at the 11th hour: increased CBT penalties for MLB, and expansion of Super Two for the MLBPA.  As an MLB spokesman put it, “We made progress. We want to exhaust every possibility.”  Baseball fans have good reason to be hopeful a deal can be reached prior to MLB’s new 5pm deadline today.  Talks are set to resume at 10am.

1:27am: “There will be no deal on a new collective-bargaining agreement in this early hour,” reports ESPN’s Jeff Passan.  Passan says the two sides will meet again later today in hopes of finalizing a deal, with MLB’s deadline to miss regular season games moved to 5pm on March 1.  We can all call it a night, with the first real sense of optimism since the lockout began.  Indeed, Chelsea Janes of the Washington Post reports that the “union indicated a belief that MLB showed a willingness to get a deal today.”

12:32am: Negotiations between MLB and the MLB Players Association have been going on continuously since Monday morning, now stretching into the early hours of Tuesday.  For the first time since the lockout began on December 2, real progress is being made on a new collective bargaining agreement.  Jon Heyman of the MLB Network reports, “Current plan is to stay in the stadium and keep talking until a deal is done. Determination to finish this exists.”

The parties have already reportedly agreed upon one key point, settling on the expansion of the postseason t0 12 teams.  In a December 27 survey of over 17,000 MLBTR readers, about 28% preferred 12-team playoffs, with 62% favoring 10 or fewer teams.

However, Bob Nightengale of USA Today tweets that “several hurdles still need to be resolved” to wrap up a deal. Among those would seem to be where to set the competitive balance tax thresholds, the league minimum salary, and the amount of money to be allocated to the bonus pool for pre-arbitration players. Ben Nicholson-Smith of Sportsnet reported recently that the parties were “actively discussing” where to set the CBT (Twitter links), and added that a gap on the pre-arb bonus pool remains.

There haven’t been many reports on specific terms being discussed since Nightengale first reported a compromise on a 12-team playoff at 10:41pm CST on Monday. Key representatives on both sides continue to work, with 16 consecutive hours in the books. The thirteenth distinct meeting of this marathon bargaining session just began between representatives of each side.