This is the second of a three-part series in which the lockout is examined from all angles: how both sides got to this point, what the players hope to accomplish, and just how exactly can they accomplish it. Part One can be found here.
Today, we examine, in great detail, just exactly what the players are asking for.
Back in November, the union presented players with a work stoppage guide, which covered some important questions they may have as they prepared for a looming lockout. Included in the 36-page document were four main tenets the union was focusing on in their bargaining position with the league.
My goal is to present these “key bargaining priorities”, along with the proposals the union is making in an effort to achieve them—at least the ones that have been publicly reported. Then, I’ll attempt to analyze positives and negatives to these goals, the league’s reception to them, and just how likely they are to make it into the next CBA, whenever that may be agreed to.
Incentivizing Competition
For years—ever since the Cubs and Astros really, as mentioned yesterday—a large majority of teams have taken to rebuilding in an effort to sustain windows of competitiveness. Fans don’t like it—but often seem to accept it—because it means having to follow bad baseball. Owners presumably like it because it’s cheap. Players, on the other hand, dislike it for the exact antithetical reason—teams who are comfortable with losing for long periods of time feel no incentive to compete, or to subsequently spend on major league payroll. In fact, losing is almost incentivized, but how exactly?
Since the inception of the draft slotting and pool system in 2011, losing has become more in vogue, and it’s not necessarily difficult to see the correlation.
Remember when Steven Cohen, owner of the New York Mets, made his comments pertaining to the Kumar Rocker fiasco back in August?
“Education time – Baseball draft picks are worth up to 5x their slot value to clubs,” Cohen said. “I never shy away from investments that can make me that type of return.”
Cohen said the quiet part out loud—effectively capping bonuses for the best players have made the picks themselves exponentially more valuable. Subsequently, the most efficient and effective way to derive this value is to lose. With losing becoming the new winning for many teams, players are trying to disincentivize that strategy.
While removing the draft slotting system all together is not being discussed, it appears likely that there will be an NBA-style draft lottery in the next agreement, as both sides have proposed it—they just have to come to a compromise on its structure.
Owners have proposed leaving the first three picks up to a lottery and not allowing teams to pick in the top five in three consecutive years. The hope is that these actions would curtail the losing to a point, as ineptitude would no longer ensure high draft picks. While the league views this as acquiescing to the desires of the other side, the players want to take it a step further.
They are suggesting a lottery for the top eight selections, further reducing the likelihood of a top pick after a bad season, while also not allowing teams to pick in the top five in consecutive years.
Also, they have proposed basing a draft order on a 60-40 formula, where 60 percent is weighted based on win-loss record, and 40 percent on market size—while the details aren’t clear on what this means, it’s part of the proposal.
Finally, they desire to include incentives for Revenue Sharing Payees that finish in the postseason or above .500—likely in the form of extra draft picks. This is obviously an attempt to keep small market teams interested in staying in the race as long as possible, even if they aren’t able to finish in the playoffs.
While this aspect is likely to come to fruition, the other change players are seeking is much more hot button, as the league has totally dismissed it out of hand and refuses to bargain against it—the elimination of $100 million of revenue sharing funds allocated to small market teams.
I must admit that at first this made no sense to me—if the union is trying to increase spending, why would they take money away from teams that supposedly need it? However, the more that came out and the more I thought about, it started to make some sense. Think about it like this:
Revenue Sharing Payors (big market teams) are like parents who promised their college graduate children (small market teams) a place to stay, but only if they contributed. However, from the union’s point of view, the child has taken full advantage of this agreement, freeloading off their parents and never buying any groceries or paying rent (lack of free agent spending). So, in effect, the union wants the parents to throw their mooching children out into the street so they can learn to fend for themselves instead of taking advantage of an agreement that was made in good faith.
Swing it around to baseball again—think about the Pittsburgh Pirates (remember them, you come here to read about them). While we don’t know this for sure, we can at least safely assume that their revenue sharing receipts could cover their current 2022 payroll commitments, and it’s possible they covered their 2021 payroll as well. Is it fair that the union doesn’t want revenue sharing to be funding rebuilds in this way, as that’s not the spirit of the agreement? Therefore, they want to remove some money from the system, forcing teams to grow up and fend for themselves—finding ways to make up for that revenue, and maybe even then some. Is that a better, healthier system that fosters more competition? The union seems to think so.
Now, to go back to the metaphor to illuminate the potential flaw in that thinking—did the children graduate with a business degree they can use tomorrow, or did they major in left-handed puppetry? Basically, if Revenue Sharing Payees are receiving money because they truly need it to compete, is the union cutting off their nose to spite their face?
In my opinion, there may be a better way to approach this—currently, the CBA speaks very little to how teams can and can’t use their revenue sharing funds. Actually, it only says what they can’t do with them, leaving what can more open to interpretation. If the union instead approached the league in an effort to clarify this language and make the requirements to payroll spending stronger, they may gain more ground. They would probably even find allies in big market teams, who don’t like seeing their revenues misused either.
It’s worth mentioning that CBA already requires Revenue Sharing Payees to report exactly how they plan to use their funds, so I’ve always been kind of curious how the union can be so adamant that there are shenanigans afoot.
In its current iteration, strike this one up as a loss for the players, unless they figure out how to dress it up a little.
Ensuring the most talented players are on the field
This is solely about the practice of service time manipulation, plain and simple. The players have been annoyed for quite some time by teams who refuse to field their best players from the start of the season in an effort to gain an extra year of service time, or longer into the summer in an attempt to avoid future Super 2 status. However, it has become a forgone conclusion—especially since losing the Kris Bryant grievance in early 2020—if the system is one in which individual days are counted that this is something they won’t fully be able to stop, but they’re still looking to make adjustments.
The main tenet of their proposal is to retroactively credit service to a player who was held down to start their career if that player attains certain accomplishments, such as All-Star appearances or MVP votes. Details weren’t released, but it likely would look something like this—if a player was within a certain amount of service under a full year, that service the player lost out on before could be applied retroactively after the year in which the accolade was earned. Players can argue service time calculations and have in the past been credited extra, usually for demotions around injuries, so it’s not totally without precedent. Also, mechanisms exist like this in other sports, like the NBA supermax contract, so again, it’s not without precedent.
Currently, this is one of the players’ proposals the league has rejected and is refusing to budge on.
Reducing artificial restraints on competition
In the players’ point of view, teams use spending restraints such as the Competitive Balance Tax (CBT) or the Qualifying Offer as drags on spending, and that spending could be increased either by the loosening or outright eradication of the practices.
The CBT has been on a wild ride in these negotiations, but it appears to be going in only one direction now.
As part of the owners’ very first proposal back in August, the league included the framework for a $100 million soft floor, which they felt was an effort to increase spending and placate players; however, the catch was that the floor came with a $180 million tax threshold, along with increased penalties for exceeding it. The players dismissed this immediately, for a number of reasons:
- If it walks like a duck…the union has long opposed anything that looks like a cap, and this structure was certainly the starting of one.
- While the players would support a floor if they could guarantee it wouldn’t come with a cap, they know this would be the next logical step, so they fight against the instillation of a floor.
- They are fighting to significantly raise the threshold, but this was in the total opposite direction—$30 million lower than where the current $210 million threshold sits.
- Such a significant decrease, coupled with greater penalties, would mean even more tightening of budgets around the CBT.
Typically, with bargaining proposals, the first go around are considered wish lists, in which the sides throw in everything they want in the hopes of getting as much as they can. So, as was rightfully pointed out in the comments of this site, this was not some virtuous effort by the owners—this is something they would prefer, and they aren’t going to be making proposals right out of the gate that cost them more money than they’re spending now.
It appears, as it stands now, the league has backed away from this aspect of their proposal, and are hewing closer to where the players stand, at least directionally. The owners have proposed raising the limit to $214 million in the first year and eventually ending up at $220 million at the end; however, these increases would again come with greater penalties than currently exist. This is a mere 1.9 percent increase to start, with increases that wouldn’t even exceed 1.0 percent after that. While the league can technically claim they offered increases, they may not even cover inflation, and they are akin to the increases from the last two CBA’s that got in the union into the mess they’re in now.
On their end, the players probably bit off a little more than they can chew. They have proposed a $35 million—16.7 percent— raise to $245 million to start, along with the total elimination of non-tax penalties (I personally believe this would mean repealing the connection of draft picks and international slot money to the CBT, but without clarification I cannot be sure).
Much like the draft lottery, if both sides are at least on the same page, I’d assume that at the least levels won’t be going down in the next agreement. I’d assume the same for a floor as well. As to whether increases are closer to $4 million or $35 million, that’s yet to be determined.
Speaking of being on the same page, the league has agreed to the idea of getting rid of the link between free agent signings and draft-pick compensation. The players feel if teams can sign impact players while keeping valuable picks, not only will more teams compete for them, but they will be willing to sign them for more than they previously may have. If it comes to pass, it will be interesting to see if it plays out that way, as draft picks have been tied to at least some classes of free agents since 1981.
Getting players their value earlier in their career
This was listed last in the pamphlet, which I don’t know was simply a coincidence or due to a ranking in order of importance by the players. It sure doesn’t appear to be the latter, as there are at least four different asks under this tenet, with a lot left to talk about. For ease of understanding, I’m going to break it down over the life of a player’s contract—pre-arbitration, arbitration, free agency—in hopes that it all makes sense.
Pre-Arbitration
Currently, players’ contracts are the property of their teams for six years of service, three of which (pre-arbitration) their pay is at the complete mercy of their teams. Remember many words back where we discussed that teams were focusing more of their attention on younger players? Well, this is a big part of the reason—they are cheap—but the players are hoping to do something about that.
First, there is a desire to raise minimum salaries, and like several ideals prior, the league and the union are at least on the same page here. Currently, the league is offering a $600,000 minimum for a first-year player, $700,000 for a second, and $825,000 for a third. This would be somewhat of a drastic change, as up until now there is one minimum—$570,500 as of 2021—for all pre-arbitration players.
This would lead to at least somewhat more money for more experienced players. For example, Kevin Newman, a player with two plus years of service in 2021, made $598,000. A $825,000 minimum would represent a 38 percent increase in his salary, whereas the major league minimum went up 1.2 percent from 2020 to 2021, which mirrored recent raises to the minimum. In their proposal, MLB also suggested replacing Super 2 players with “Elite 2” players—individuals who would receive more in their third year ($2,500,000) for All-MLB selections.
Can you guess what’s coming next? This wasn’t high enough for the players liking; however, there were no reports on how much higher the players were asking for. Part of the hope of the union is that since rising tides haven’t lifted all boats, salaries can be pushed up from the bottom. If the union is looking for minimums in the $1 to $3 million dollar range, let’s say, that not only serves as a larger platform from which to build on, but it also lowers the opportunity cost teams are faced with when replacing a veteran with a younger version. Essentially, teams are willing to pay around the minimum for a slightly less productive and experienced player if it means cutting costs, but would that value proposition be the same if the prospect now had a salary of $4 million? That’s one question the union would probably like answered, as the calculus certainly makes some sense.
More important to the union than even raises to the minimum are bonuses for pre-arbitration players, and lucky for them, this is something the league is also open to.
The union is suggesting using a pool of revenue from possible expanded playoffs (we’ll get there) and luxury tax proceeds that were being used elsewhere to fund bonuses for players who receive benchmarks such as All-Star games, MVP or Cy Young votes. After his All-Star appearance in 2021, Bryan Reynolds (who would have almost qualified as an Elite 2 player, by the way) received a bonus of $10,000 for his efforts. So, this is the idea, but I’m sure it would be of much greater value than that. This works as a kind of a commission, much like incentives in extensions and free agent contracts; however, they aren’t really prevalent (at least reported) in pre-arbitration deals, so it certainly jibes with the union’s goal of getting younger players money as they earn it. And again, the league isn’t opposed to this, so look for something akin to this system in the new agreement.
My only question though, and it’s important one—where, realistically, does the union anticipate the funds for this pool coming from, if part of their plan is luxury tax dollars, especially if they want to increase the tax threshold? Sure, expanded playoffs could be fruitful, but Reynolds may have made less, not more, for his All-Star appearance if it meant it had to come from luxury tax proceeds.
Arbitration
Next in the life span of a contract is arbitration, in which players between three and six years of service (and sometimes two) get the opportunity to have some say in their contracts—or at least someone outside of their own team does.
In an effort to increase the number of players entering arbitration and to get players paid quicker, the union wants arbitration to start at two years of service instead of three, a level that last existed in 1987. Currently, the league and union are not seeing eye-to-eye on this issue at all.
The league, among its proposals, is offering to throw out arbitration all together, in favor of a system where a predetermined pool of money is distributed to players with over three years of service time. This is seen as an olive branch, a way to divorce the players from the arbitration system that can often be acrimonious. As part of their proposal, the league was offering to pay players based on performance, as valued by FanGraphs version of WAR, or fWAR. There were several problems with both of these aspects, and the proposal never seemed to get off the ground.
To the players, despite its shortcomings, arbitration is a valued system, in which it’s their first shot to have their value determined on the market and benchmarked against their peers across the game. Replacing that with another system in which their salary is predetermined—in part by an equation, no less—and leaving them without recourse salary wise for an additional three years of their career was seen as a nonstarter.
On top of this, the league seemed to make a grave miscalculation—arbitration is one of the first big negotiations made by the agent on behalf of the player and taking that away would likely not sit well with many agents. Many players seek guidance and advice from their agents, especially in labor dealings, and the league undercutting that relationship in such a way could certainly lead to some unintended consequences.
Currently, the league is steadfast that it will not allow the players’ idea of arbitration to take root, mainly in the name of competitive balance. While the goal seems like a reasonable one for the union, they should probably at least proceed with caution before fighting too hard on this.
A reasonable concern would be the unintended consequences of this desired outcome—instead of more players being paid earlier, there would simply be more players that are non-tendered as their salary is set to increase, which creates an even bigger pool of free agents, creating more supply and driving prices down.
Free Agency
Here is another inroad the players are trying to make progress on that the league is reportedly refusing to entertain.
Originally, the league included in their $100 to $180 million band proposal what they considered a sweetener for the players—free agency for all players at 29.5 years old. It seems they may not have actually been much into that idea, as that’s the level the players are asking for now and the league is refusing to play ball after the union rejected the other parts of their proposal.
As with a lot of aspects of these talks, everything seems to keep coming back to how teams are valuing players. As the framework basically dictates it, most players are currently hitting free agency for the first time at 30 years of age or older, right when the teams’ models are telling them they are no longer worth the investment. So, in an effort to hit free agency at a more opportune time, players are trying to reduce the service time required to hit free agency on top of adding a new wrinkle—age requirements—as well.
Here is where the union’s proposal stands now:
- First Year of the Deal: No change
- Second and Third: Players would reach free agency at 6.000 years of service or 5.000 years of service and at least 30.5 years of age, whichever is earlier
- Fourth and Fifth: Players would reach free agency at 6.000 years of service or 5.000 years of service and at least 29.5 years of age, whichever is earlier
(The AP is the only outlet reporting the years, with the 2022-2023 offseason considered the first year, 23-24 and 24-25 being second and third, and 25-26 and later being the final level. This obviously doesn’t quite match the structure laid out in other reports, but hopefully it at least provides an idea of the players’ thinking.)
While the entire mission seems like a reasonable one on it’s face, there’s a big hang-up with the thinking of the union that must be discussed.
Travis Sawchik of theScore wrote a very informative and illuminating piece on what he felt should be the union’s goal in these negotiations—better compensating younger players, even if that means shifting focus from their top earners.
I could probably cover a ton of what was in this article, but I wanted to focus on one main piece here:
Every age cohort from 22 to 28 was underpaid last season by that accounting. Combined, that 22-28 age range accounted for 56% of WAR but 25.8% of pay. (For reference, in 2003, 22- to 28-year olds accounted for 48.1% of WAR, further illustrating how younger players today are accounting for more production.)
While declining in numbers, 30-somethings are generally far better compensated. Consider that age-31 players were overpaid by about $237 million in terms of performance value, while age-33 players were overpaid by $199 million. Players aged 31-34 accounted for 23.4% of performance production but 46% of pay.
So, while the union has the right idea when they tell their membership “The system needs to be modernized so that players can be compensated for the value they create, WHEN THEY CREATE IT.” (yes, they used cap locks—they meant business), what of the other end of the spectrum?
The union’s emphasis perhaps has left them hoisted on their own petard—league trends have left them no choice but to fight for more pay for younger players, but their explicitly stated reasoning can easily be used as a weapon against them. When they say “players”, they of course mean pre-arbitration and arbitration eligible players, but it would be intellectually dishonest to suggest one subset of players be paid for value “WHEN THEY CREATE IT”, while simultaneously hoping the owners don’t look in the direction of players on bloated contracts limping to the ends of their careers.
While it’s a valiant cause, it’s possible the players are fighting an uphill battle with this one.
*****
I will be finishing up this series tomorrow, looking at what the players need to do in hopes of achieving some of these wins after seemingly suffering so many loses the past two agreements.
