MLB lockout stretch over moolah matters

Image: Jhemi, CC BY-SA 4.0

The Major League Baseball (MLB) is canceling the start of the 2022 MLB season and postponing Opening Day with the MLB lockout now stretching into March.

The ‘SportsNaut’ stated that the MLB imposed a lockout on December 2^nd, 2021 following the expiration of the collective-bargaining agreement (CBA). Both sides expressed optimism for a new CBA being signed before Spring training began. However, negotiations didn’t really pick up until January and MLB went 43 days without making a proposal after imposing the lockout. On January 25^th, league officials first expressed a willingness to cancel games.

The Major League Baseball (MLB) is a professional baseball organization and the oldest major professional sports league in the world. As of 2022, a total of 30 teams play in Major League Baseball – 15 teams in the National League and 15 in the American League – with 29 in the United States and 1 in Canada.

A collective bargaining agreement (CBA) is a written legal contract between an employer and a union representing the employees. The CBA is the result of an extensive negotiation process between the parties regarding topics such as wages, hours and terms and conditions of employment.

The ‘SportsNaut’ further stated that following minuscule progress in negotiations throughout January, baseball entered February working with a countdown. Pitchers and catchers were originally scheduled to report for Spring training by February 16^th. However, early talks in February went poorly and many became increasingly fearful by February 13th that the 2022 season would be delayed.

MLB delayed its Spring training schedule on February 18th and intermittent negotiations resulted in no real progress. Before MLB officials and the Major League Baseball Players Association (MLBPA) met in Florida (US) for a full week of in-person negotiations, the league imposed a February 28^th deadline for a new CBA to be reached or else Opening Day would be postponed.

The Major League Baseball Players Association (MLBPA) is the collective bargaining representative for all current Major League Baseball players. All players, managers, coaches, and athletic trainers who hold or have held a signed contract with a Major League club are eligible for membership in the Association.

Rob Manfred, Commissioner, MLB, said on February 10^th on possibility of the 2022 season being postponed, “I consider missing games as a disastrous outcome for the industry.”

By February 26^th, following six consecutive days of discussions and counter-proposals, both sides came away outraged with only minor gains made on small issues. While both sides continued discussions over the next four days, the MLB announced on March 1^st that it is postponing the start of the 2022 season, canceling the first two series on the schedule.
 

Why is MLB lockout happening?

Only Commissioner Rob Manfred and Major League Baseball have the authority to impose and end a lockout. It’s a strategic move used to create leverage in negotiations over the players’ union, putting a freeze on all major-league transactions and preventing players from being paid.

Importantly, no MLB lockout ever led to the cancellation of regular-season games until now. In the three instances when the league imposed a lockout, it only lasted for a few weeks to a month. This is unprecedented territory, led by Manfred.

• 1973 MLB lockout: No canceled games
• 1976 MLB lockout: No canceled games
• 1990 MLB lockout: No canceled games

 
Unsurprisingly, money is the entire issue. While players want to implement a draft lottery to prevent tanking and want a universal designated hitter, like owners’ push for expanded MLB playoffs, it all comes down to baseball revenue.
 

Sticking points

One of the primary sticking points amid the negotiations is the luxury tax, which the league officially refers to as the competitive balance tax (CBT). It was created under the guise of balancing the playing field between teams with top payrolls in huge markets (New York Yankees, Los Angeles Dodgers) and low-budget teams (Tampa Bay Rays, Pittsburgh Pirates).

• 2021 MLB luxury tax threshold: $210 million

 
Under current rules, a team that goes over the luxury-tax threshold the first time must pay a 20 percent tax on every dollar above the $210 million soft cap. If a club goes over it for a second consecutive year, the figure rises to 30 percent and later 50 percent after a third consecutive season. If a team goes $40-plus million over, it also must move back 10 spots in the upcoming MLB Amateur Draft.

In 2021, only the Los Angeles Dodgers’ payroll ($271 million) exceeds the final CBT. However, both the Yankees and New York Mets were projected to exceed it in 2022. In CBT history, only six teams ever exceeded the tax multiple times. A far greater issue, in the view of many players, is MLB teams are spending far less revenue on the actual team than before.
 

Salary drop

In April 2021 it was reported that MLB salaries dropped 4.8 percent in two years and it was reported in December 2021 that the total payrolls were reduced by $168 million from the 2019 season.

It’s reflected in payrolls from the 2021 season. Twelve teams spent less than $100 million on player payroll this past season. Furthermore, four teams (Miami Marlins, Pittsburgh Pirates, Cleveland Guardians, and Baltimore Orioles) spent less than $60 million.

• Owners’ proposed CBT: $220 million (2022), $220 million (2023), $220 million (2024), $224 million (2025), $230 million (2026)
• Players’ union proposed CBT: $238 million (2022), $244 million (2023), $250 million (2024), $256 million (2025), $263 million (2026)

 
While many owners have said operating an MLB team is not always profitable and can often end in financial losses, data suggests otherwise. The league earned $10.3 billion in revenue from the 2019 season, blowing past its record-setting marks a year prior.
 

Minimum salaries

One of the core issues relating to team spending centers on minimum salaries for MLB players. Major League Baseball has the lowest minimum salary of major pro sports (NFL, NBA and NHL).

Adding to the problem, teams often use service-time manipulation to keep players on the minimum salary as long as possible and delay them from becoming eligible for arbitration and free agency.

• 2021 MLB minimum salary: $570,500

 
While both sides agree minimum salaries need to be raised and are on the same page about a bonus pool for players who far exceed the value of their first contracts, there’s a wide gap in the proposals.
 

Tanking and expanded playoffs

Many players are also concerned about teams tanking, operating with the lowest payrolls and not fielding competitive teams. While it’s a method that has worked out for some clubs (Houston Astros, Chicago Cubs), it’s also viewed as a means of clubs not spending the revenue they generate on the on-field product.

Owners are open to the players’ proposal of a draft lottery, with the first seven picks determined by a lottery as the National Basketball Association (NBA) and the National Hockey League (NHL) use. If a team finishes at the bottom of the standings multiple seasons, it would move down in the draft order.

In order for a draft lottery to be imposed – something many around baseball believe will do little to slow down tanking – owners want the playoffs expanded to 14 teams. It’s viewed as a non-starter from the players’ perspective, considering the expanded playoffs mean significantly higher revenue for the league.

League officials proposed to start at a higher minimum salary, however, it came with a 14-team postseason. With the additional rights to playoff games worth far more in revenue for MLB than the increased minimum salary, the players’ union declined and stuck by a 12-team playoff.
 

When will the lockout end?

Opening Day, originally set for March 31^st, is out of the question. With players needing at least three weeks to prepare for a season, a CBA must be agreed to in a matter of weeks for the new schedule to begin in mid-April.

Considering the lack of progress after three months of a lockout, it’s increasingly possible the first pitch isn’t thrown until May or later. While the worst-case scenario – canceling the 2022 MLB season – is unlikely, it looks more possible than it did a few months ago.

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