Collective Bargaining Agreement

Major League Baseball and the MLB Players Association are apparently in agreement on a 12-team playoff in the upcoming collective bargaining agreement, reports Bob Nightengale of USA Today (Twitter link). As part of that deal, Nightengale adds that the league is likely to keep the penalties for exceeding the luxury tax in a similar level as they’d been under the previous CBA.

The league’s desire for an expanded postseason field has been evident throughout negotiations. MLB had pushed to expand from the previous 10-team field up to 14 clubs throughout discussions, but the union had resisted that possibility. It seems the league has agreed to settle for 12 during this round of negotiations, presumably via adding one more Wild Card team in each league.

Specific terms of the format being discussed are unclear. Hypothetically, it seems the likeliest scenario would see the top two teams in each league receive a bye through the first playoff round (similar to the format utilized in the NFL until that league expanded its own playoffs two years ago). That’d leave the division winner with the worst record and the three Wild Card teams in each league playing some kind of series to advance to the second round.

MLB reportedly offered more player-friendly terms on issues like the minimum salary and pre-arbitration bonus pool to try to get the union’s approval on a 14-team playoff. However, the PA continued to express concerns that broadening the field to that extent could reduce the incentive for teams to earnestly pursue upgrades to their rosters.

There’s a high degree of variability in the MLB postseason — just last year, the playoff team with the worst regular season record went on to win the World Series — and the union fears that under a 14-team system, front offices might be content to build marginally above-average rosters and let the chips fall where they may once the playoffs begin. That could have a trickle-down effect of diminishing free agency spending, one with which the MLBPA was surely uncomfortable.

In recent discussions on playoff expansion, the union has floated the concept of a “ghost win” in the first round for the division winner that doesn’t receive a bye. As Ken Rosenthal of the Athletic reported (on Twitter), that’d system involve the division winner playing the Wild Card team with what amounts to an automatic 1-0 lead in a five-game series. So under that setup, the division winner would only need to win twice in the remaining four games to advance. The Wild Card qualifier, on the other hand, would need to take three out of four.

It’s not clear whether that kind of format made it to the end of discussions on the issue. It also remains unclear how many games each first-round series would comprise. What is apparent is that the parties’ reported willingness to settle on a 12-team postseason marks a key step in their progress towards eventually hammering out a CBA. Postseason expansion has been one of the most important topics of these negotiations for years — with Commissioner Rob Manfred voicing support for a 14-team field as early as October 2020.

With three hours remaining until Major League Baseball’s stated end of February deadline for a new collective bargaining agreement that avoids disruption to the start of the regular season, there seems to be some progress in negotiations. The parties continue to talk deep into the evening, and various reports suggest the league has moved in the Players Association’s direction on a few key areas.

Jeff Passan of ESPN reports (on Twitter) that the league has offered more player-favorable provisions than it had been in the past on issues like the league minimum salary, the bonus pool for pre-arbitration players and the competitive balance tax. Passan cautions that there hasn’t been enough movement for a deal to be imminent, but it’s possible the sides make enough progress tonight that the league pushes back its deadline to avoid game cancelations to tomorrow so they could continue to negotiate.

As has been the case throughout negotiations, a primary goal of the league’s is to expand the postseason field. MLB has sought a 14-team field; the MLBPA has agreed to go beyond the current-10 team playoff format but has drawn the line at 12 teams thus far. The league has put forth two concurrent proposals to the union on the league minimum and the bonus pool, reports Evan Drellich of the Athletic (Twitter link). In the event of a 12-team playoff, the league is offering an approximate $675K minimum salary and would agree to set aside around $20MM for the bonus pool; if the union agreed to a 14-team postseason, the league would agree to a minimum in the $700K range with approximately $40MM for the bonus pool.

Bob Nightengale of USA Today tweets that MLB has also lowered its desired penalties for clubs that exceed the luxury tax threshold. Specifics of MLB’s latest proposal aren’t clear, but the league has pursuit heightened penalties for tax payors in prior asks. The union has been vehemently opposed to that possibility, fearing stronger penalties would cause the CBT thresholds to function more akin to a salary cap. Andy Martino of SNY reports that the league is still seeking higher penalties than existed in the previous CBA but has apparently moved closer towards the status quo than it’d sought in prior offers.

It’s unquestionably a positive development for fans anxiously awaiting any meaningful progress in CBA talks. However, it’s important for fans not to put the cart before the horse. Drellich adds that a deal is still “not close,” and it’s certainly not a given that the momentum will continue to roll towards an agreement in the coming days. A union source tells reporters (including Chris Cotillo of MassLive) the parties are “still very far apart on key aspects” needed to reach an agreement.

Indeed, the league’s offers on the minimum and pre-arb bonus pool are more favorable to players than their prior offers (particularly those tied to a 14-team playoff), but they’re still shy of the players’ targets. The union has been seeking a $775K minimum next season that’d rise by $30K each year of the CBA term. The MLBPA has sought a $115MM pool for pre-arb players, $75MM more than the league’s offer tied to a 14-team postseason.

It’s also unclear where specifically the parties stand on the CBT. The union has been seeking a spike to $245MM for the base luxury tax threshold next season, while the league’s latest known offer was at $214MM. It’s possible MLB has expressed some willingness to raise the lowest CBT number, but it’s doubtful they’ve agreed to jump all the way to $245MM. The union has also sought a slight expansion in the number of players eligible for arbitration; the MLBPA is seeking Super Two eligibility for 35% of players with between two and three years of service time, while MLB has steadfastly refused to entertain any jump over the status quo of 22% in that bucket.

Where things go from here remain very much up in the air. It doesn’t seem likely a new CBA will be finalized tonight, but it does at least appear there’s a chance they’ll progress enough to avoid the league formally declaring the cancelation of regular season games. Martino tweets that the sides are preparing for the possibility of negotiations carrying on “deep into the night.”

MLB’s self-imposed deadline to reach an agreement with the Players Association is today, and Evan Drellich, Ken Rosenthal and Fabian Ardaya of The Athletic report that the league took a “more threatening” tone to the MLBPA today and voiced a willingness to miss a month’s worth of regular-season games (Twitter link). The first meeting between the two parties today lasted only 40 to 45 minutes, tweets Michael Silverman of the Boston Globe, though the expectation is that negotiations will continue throughout the day.

The players have, unsurprisingly, taken that as a clear threat, tweets ESPN’s Jeff Passan, although there’s been no indication to this point that the union’s solidarity has begun to wane. The players have generally taken an exceptionally united front, even in the wake of what was seen as a discouraging counterproposal from the league late last week. There’s been little expectation that the league and union would be able to avoid the “disastrous outcome” of canceled regular season games (as described by commissioner Rob Manfred himself), so the only notable component of that threat is the number of games the league is willing to miss.

The Associated Press estimates that each day of canceled games would result in a collective $20.5MM of missed salary for the players, although it’s worth emphasizing that the union has envisioned just such a hardline tactic from the league for years and has been stockpiling funds to weather this type of storm. MLBTR’s Tim Dierkes reported over the weekend that the league’s strike find is “exponentially” larger than it has ever been (Twitter thread). The MLBPA has been holding back full licensing revenues for years to safeguard against this type of scenario, and the players also spun their licensing department into a separate company, MLB Players Inc.

In doing so, the players afforded themselves the ability to take equity in other companies. Jared Diamond of the Wall Street Journal profiled MLB Players Inc.’s deal with Fanatics over the summer, and they’ve also taken an equity stake in OneTeam Partners. The result is a considerable increase in the union’s funds, and while an exact dollar amount isn’t known, there are a couple pieces of information that can provide relevant benchmarks. An Associated Press report earlier this month indicates the union had as much as $178.5MM at year-end in 2020. An LM-2 Form filed to the U.S. Department of Labor suggests the number was $171.4MM for the 2020 calendar year. Either figure is dated by now, and the size of the fund only figures to have grown.

Notably, players can apply for monthly stipends in the absence of collecting their salaries. The union had provided a pair of $5,000 stipends for February and March, and Drellich and Rosenthal report that the figure will jump to $15,000 beginning on April 1 (when the regular season would be underway). Not all players will apply for that stipend, of course, but in theory even if they did, the 1200 stipends would cost the union a total of $18MM. Add in a pair of (again, theoretical) $6MM payouts for February and March, and it still only taps into $30MM of the union’s funds. Realistically, even based on the 2020 numbers and not accounting for 2021 licensing revenues, the union likely has more than enough capital to make it through the whole season paying out those stipends.

While it’s true that the sport’s biggest stars won’t bat an eye at a $15,000 monthly stipend and may not even file to collect it, that figure is crucial for the union members on the lower rung of the pay scale. Consider players who were just added to 40-man rosters over the winter and those who’ve not yet solidified themselves as big league regulars. Those players could well be looking at spending much of the season in Triple-A, and the $15,000 stipend would largely account for that minor league salary — in some cases, with Double-A and Class-A players who’ve been added to the 40-man roster over the winter, the stipends may even exceed their would-be minor league salaries.

The prospect of lost salaries doesn’t sit well with the union, but the game’s star players who are on lengthy multi-year contracts can surely weather the loss, and those who are most vulnerable are generally taken care of via the monthly stipends. There’s an undeniable middle class who’d be getting squeezed — pre-arbitration players who are solidified on the MLB roster — but those players are among the ones the union is fighting for most ardently, insisting upon increases in minimum salary and pushing for earlier paths into arbitration. Broadly speaking, there’s good reason to believe that even amid the loss of salaries, MLBPA solidarity is likely to remain strong.

Representatives from the owners and the MLB Players Association met today for an extended series of talks, a day in advance of the league’s self-imposed deadline to avoid the cancellation of regular-season games.  More negotiations are scheduled for Monday at 9am CT, following multiple sessions today that took place over almost a six-hour time period.

This marks the seventh consecutive days of negotiations between the two sides, as the clock continues to tick towards both the owners’ February 28 deadline and the start of the regular season on March 31.  Some Spring Training games have already been canceled by the lockout, and if a new collective bargaining agreement was reached by tomorrow, teams would face a whirlwind of a month consisting of both an abbreviated Spring Training, and essentially three months of lost offseason business crammed into roughly a four-week window.

Given both the lack of progress and some open frustration emerging during yesterday’s talks, it seems like a longshot that a new CBA will actually be struck by tomorrow.  As Chelsea Janes of The Washington Post notes, the unofficial nature of the owners’ February 28 deadline means that it could be pushed back if there is actual movement towards an agreement, and the players are likely to make such a case if some noteworthy progress is made tomorrow.

A league official told multiple reporters (including The Boston Globe’s Michael Silverman) that today’s talks were “productive,” as the two sides discussed both core economic issues and other CBA items not directly related to economics.  However, the league and the MLBPA are still “far apart” on many of these issues, according to USA Today’s Bob Nightengale (Twitter links), and today’s talks included “a lot of hypotheticals” under discussion and no actual proposals from either side.

One detail from the league’s side relates to the luxury tax threshold, as The Athletic’s Evan Drellich and Ken Rosenthal report that the owners have “indicated willingness” to raise the levels of the Competitive Balance Tax thresholds beyond their past offers.  It wouldn’t be a big raise, however, past the $214MM that the league submitted yesterday as the initial tax threshold.

Past reports indicated that the owners’ offers to eliminate the qualifying offer (and thus eliminating the draft-pick penalty for teams who signed a QO-rejecting free agent) was linked to the CBT negotiations, specifically with the league looking for higher taxation rates for teams who exceed the CBT tiers, according to Drellich/Rosenthal.  Presumably, owners see the elimination of the qualifying offer as a significant enough concession to counter the MLBPA’s demands for much higher luxury tax thresholds, though the union clearly doesn’t see the two matters as a worthwhile trade-off.

The topic of an expanded postseason has also been a key part of CBA talks, as MLBTR’s Anthony Franco explored back in December.  With the owners eager for more teams (and thus more games and more TV revenue) in the playoffs, the MLBPA has been trying to leverage this desire into making gains on other economic issues.  Most recently, the expanded playoffs also factored into the February 28th deadline, as the union has said that they won’t agree to a larger postseason field whatsoever if the owners withhold pay due to canceled regular-season games.

Rosenthal (Twitter links) has some details on the MLBPA’s offer for a new playoff format, which includes an increase in the number of postseason teams from 10 to 12.  The owners have been pushing for a 14-team postseason, though in both 12-team and 14-team scenarios, the union’s offer includes the concept of a “ghost win” in the first playoff round as a reward to teams who win their division.  For example, a division-winning team would only have to win one of the first two games of a first-round series in order to advance, while the wild card opponent would have to win both contests.

In short, the idea would to incentivize winning a division title, which would theoretically entice teams to spend more on player salaries in order to be more competitive.  The MLBPA has seen the concept of a larger playoff field as a possible drag on spending, as teams have less urgency or a bigger margin for error in reaching the postseason.  The league’s 14-team offer did propose awarding a first-round bye to the teams with the best records in the AL and NL, and the other four division winners would have the benefits of both hosting the entire wild card series in their home ballpark, and also choosing which of the wild card teams they’d want to play.

7:19PM: The MLBPA and the league have agreed to resume talks at noon CT on Sunday, according to multiple reports.

4:39PM: Today’s negotiating sessions between the league and the MLB Players Association have concluded for the day, after a pair of separate meetings between the two sides.  After each group conferred privately for an extended period of time, MLBPA reps presented a new proposal to the owners during a 15-minute session.  The ownership group then took time to mull over the offer before another meeting with the players that lasted roughly 45 minutes.

The union’s proposal was a “comprehensive” offer that addressed several core economic issues, according to ESPN’s Jeff Passan and Jesse Rogers (Twitter links).  Perhaps most importantly in terms of finding common ground on a new collective bargaining agreement, the MLBPA is now “backing significantly off” some of its most noteworthy asks in previous offers.  This includes changes to the players’ previous demands about the luxury tax, an expansion in Super Two eligibility, and cuts to the amount of revenue-sharing funds allocated to smaller-market teams.

Despite these concessions, the owners still “reacted badly” to the latest union offer, The Athletic’s Evan Drellich reports.  This led to an “outraged” reaction from the players and a “hostile” tone in the second meeting between the two sides.  As per Chelsea Janes of The Washington Post, the “players are currently considering walking away from the table” altogether, rather than take part in meetings that were slated for tomorrow and Monday. 

As reported by ESPN’s Enrique Rojas (Spanish-language link) and The Associated Press, the MLBPA is now seeking to expand Super Two eligibility to 35% of all players who have between two and three years of service time.  This represents a major decrease from the players’ previous ask of 75% of all players within that service-time window, and yet apparently it isn’t enough to change the owners’ stance.  The league has been steadfast in refusing any expansion to the Super Two structure — in the last CBA, the top 22% of players with between two and three years of service time received an extra year of arbitration eligibility.

Likewise, the league has refused any discussion of changes to the revenue-sharing structure.  The union initially sought a $100MM cut in revenue-sharing funds, and later dropped that demand to $30MM.  Today’s proposal altered that number further, as teams receiving revenue-sharing wouldn’t lose any money, but would still be incentivized to increase local revenue with the offer of extra money made available from MLB’s central fund.  However, the owners are still not willing to budge whatsoever on the topic.

Discussions about the competitive balance tax have at least led to some back-and-forth negotiations, albeit without much progress.  The players made a $2MM reduction for each of the second, third, and fourth years of luxury tax thresholds, breaking down the numbers as follows: a $245MM tax number in 2022, $250MM in 2023, $257MM in 2024, $264MM in 2025, and $273MM in 2026.

The league made only one change to its base tax thresholds, with a $1MM increase to the second year of the CBA.  The owners’ proposed luxury tax thresholds are $214MM in 2022, $215MM in 2023, $216MM in 2024, $218MM in 2025, and $222MM in 2026.

In regards to the penalties for exceeding those thresholds, Major League Baseball again made only slight adjustments from its previous offer.  In today’s proposal from the league, teams exceeding each of the three levels for the first time would pay a 45% tax on the overage of any dollar spent between $214MM-$234MM, a 62% tax on overages from $234MM-$254MM, and a 95% tax rate on the overage for anything spent beyond the $254MM mark.  Previously, the league wanted respective tax rates of 50%, 75%, and 100% for each of the three thresholds.

These are obviously still sizeable jumps over the overage tax rates in the last CBA (20%, 32%, and 62.5%), and the league has compounded the penalty by asking that teams that surpass the second and third tiers lose draft picks.  The MLBPA has been adamantly against the owners’ luxury tax asks, viewing the demands as essentially the creation of an unofficial salary cap.

As reported yesterday by Drellich and Ken Rosenthal, the league has been looking shorten the amount of time required before unilateral on-field rule changes can be imposed.  The previous CBA had a one-year grace period between a league’s proposal and (whether the union agreed to the rule changes or not) the implementation of said new rules, though the owners are now looking for a grace period of only 45 days.  The MLBPA has been resistant to this shorter window of time, and the league needs the players’ approval in the next CBA to agree to the owners’ ability to implement unilateral rule changes of any kind.

Returning to the issue of service time, the league has agreed that players who finish first or second in Rookie Of The Year voting will receive a full year of service time.  (Derrick Goold of the St. Louis Post-Dispatch was among those to report the news.)  This counts as a minor win for the players, even if the MLBPA has been looking at a WAR-based formula for multiple players who excel in their rookie seasons to receive service time.  The league had been looking instead address the service-time manipulation issue by offering extra draft picks to teams who have players with top-three finishes in the ROY/MVP/Cy Young voting during their first three arbitration-eligible seasons.

If there is any other minor glimpse of good news from today’s meetings, one CBA issue has apparently been settled.  The owners and players agreed to a new rule on minor league options, as USA Today’s Bob Nightengale reports that players can now be sent to the minor leagues a maximum of five times per season.

Unfortunately, progress has apparently been lost on the topic of a draft lottery.  Reports from yesterday’s negotiating sessions indicated that the two sides were at least coming close to settling the exact number of teams involved in such a lottery, though the owners attempted to make a larger lottery (as per the MLBPA’s demands) contingent on the acceptance of a 14-team postseason.  That same offer was floated by the league today and turned down by the players, who had previously expressed a willingness to expand the playoffs to 12 teams.  Given the amount of extra revenue involved in extra postseason games, it isn’t surprising that the union isn’t willing to make such a major concession to the owners without tying it to an issue of greater import than the draft lottery.

Saturday’s sessions mark the sixth consecutive day of talks between the two sides, yet this increase in negotiations has yet to produce much in the way of concrete progress.  MLB has stated that without a CBA in place by Monday, some regular-season games will have to be canceled, though the union has remained skeptical that the league truly sees February 28th as a firm deadline.

However, some Spring Training games have already been canceled, and it becomes increasingly unlikely that Opening Day will proceed as scheduled on March 31.  If the hard feelings reportedly generated in today’s meetings actually do result in a breakdown in talks, it will only lead to more dismay and frustration among baseball fans who are more than ready for the lockout to be over.