There was optimism heading into Tuesday’s deadline that a deal might emerge between MLB and the MLBPA. However, as has been the case far too often throughout this process, that optimism was based on rhetoric rather than actual, substantial progress. The two sides met for nine straight days in Jupiter, Florida and accomplished only what could be described as minimal gains. The union rejected the league’s final offer Tuesday afternoon and soon after, MLB commissioner Rob Manfred was standing before a podium smiling as he canceled the first two series of the regular season.
On the 91st day of the lockout, it is uncertain where things will go from here. The two sides will presumably meet again, although there is nothing scheduled yet. Below we are going to look at the key issues that remain between both sides, which are, at least on paper, the reasons why there is no agreement yet in place.
Competitive Balance Tax
There is no other place to start. If the gap could have been bridged on the CBT, common ground would have been found on the other issues and players would likely be headed to spring camps today. However, this is the biggest issue. The owners state that the CBT is in place to protect competitive balance. The players view it as a salary cap by another name. As you can see below, there is a wide gap in the two offers.
2022 - $220 million
2023 - $220 million
2024 - $220 million
2025 - $224 million
2026 - $230 million
2022 - $238 million
2023 - $244 million
2024 - $250 million
2025 - $256 million
2026 - $263 million
The CBT threshold was $210 million in 2021. The league is proposing an increase of $220 million for the first three years of the deal. That is an insulting offer given the amount of revenue the league takes in, especially when you consider that they would rake in additional profits through an expanded postseason which is also a key part of their proposal. Even if you set aside the idea that the CBT threshold should grow with revenues, it should probably grow at least with inflation (though MLB revenues, and for a time before the last few years, player salaries, grew far, far faster than inflation), and it’s not clear whether MLB’s proposal achieves even this. By comparison, the MLBPA’s proposal definitely outpaces any long-term forecast of inflation — so meeting in the middle seems reasonable, if only there was a desire to get there.
Per Mike Axisa of CBS Sports, MLB revenues have increased on average eight percent per year since 2002. Their proposed luxury tax threshold increase from 2022-26 is a 4.5 percent total increase, and the increase from 2021-2026 is under 10 percent.
There is no denying that the league is profitable and the owners’ negotiations on the CBT are about nothing more than putting more money in owners’ pockets while suppressing the salaries of the players. It’s important to remember that the owners and MLB don’t think of the CBT as solely a competition move, but something that keeps costs down while potentially enhancing competition, as Manfred said himself back in 2017:
“We have tried to deal with payroll disparity by limiting, through the use of taxes, the very highest-payroll clubs,” Manfred said, adding: “For the first time in the 25 years since I’ve been in baseball, everybody in the top quartile of clubs had payrolls that actually went down this year due to the increased penalties that were negotiated as part of this collective-bargaining agreement.”
Pre-Arbitration Bonus Pool
One of the few agreements that the league and union made was on a bonus pool for pre-arbitration players. However, both sides have different opinions of what this bonus pool should look like. Players were initially asking for a pool of $115 million but dropped that request over the last week to $85 million. The league’s final offer Tuesday was for $30 million. Notably, the league accepted an expansion of the pool to cover more than 100 players, so under any formulation, it would be a small bump in compensation for a number of young contributors rather than a massive windfall for a small handful.
Another point of contention is minimum player salaries. The league offered a minimum salary of $700,000 with increases to $740,000 over the life of the deal. Players are looking for $725,000 to start, with $20,000 increases in 2023 and 2024, followed by increases tied to the Consumer Price index.
While both of these are big issues for the union, there are paths for compromise. Should an agreement be made on the CBT, then both sides would likely find common ground on both of these issues. It’s interesting that as the league has shifted towards more cost-effectiveness by employing and playing more and more young players, there hasn’t been too much resistance to minimum salary shifts by MLB — even though even the increase from 2021 ($570,500) could increase total salaries by close to $100 million. (The owners started their offers with a minimum salary of $600,000, which probably would’ve been a “give” of around $20 million in salary.)
The league has also been pushing for an expanded postseason to 12 or, preferably (for them) 14 teams. The union was hesitant to give into this citing, that teams may feel less urgency to spend if more playoff spots are available. Those sorts of considerations aside, the owners stand to gain a lot more from an expanded postseason than the playoffs (estimates of additional money to MLB from ESPN for expanding the playoffs range from $85 million to $100 million, depending on the extent of expansion, and this doesn’t include extra money from ticket sales, concessions, parking, and the like). The league’s last offer from Tuesday was for a 12-team playoff; the players had included a 12-team playoff in their own proposals, seemingly ceding arguably their biggest bargaining chip.
It is easy to look at a potential $700,000 minimum salary and ask the question “who can’t live on that” but that is missing the point. Major League Baseball, for all its faults, is a growing business, even if you leave the devastating effects of the pandemic in the mix. Revenues continue to increase, and the players deserve their fair share of those increases — especially when the owners are adamant that players should share in the losses, as they did during the 2020 season. A lot of people will say that baseball needs a salary cap and there are some merits in that. It is also worth pointing out that salary caps are typically tied to league revenue. In other words, the more money the league makes, the higher the cap goes and subsequently, more money goes to the players. The league’s actions show that they aren’t interested in that kind of split, and the share of the league’s revenues going to players has been declining for a while now.
Where does baseball go from here? It is hard to say. The sport has been propped up by a diehard following for decades now but is often seen as lagging behind the other major sports. How much damage did Tuesday’s cancellation of regular season games cause? Plenty, and it is only going to get worse the longer this goes on.