Earlier this week, Ken Rosenthal reported that negotiations between the Players Association and Major League Baseball were slowing down. This sent the twitter-verse into a tailspin: Would there be a lockout? Didn’t Rob Manfred say that a deal would be done before the World Series is over? Does this mean a strike is near? Would this doom the World Baseball Classic? (Show of hands: who here even thought of the World Baseball Classic when this topic came up? Yeah, me neither).
Short answer: The PA and MLB would have to collectively lose their minds in order for a strike to occur.
Collective bargaining agreements run for about 5-7 years and create the framework for a labor relationship between workers and owners. These agreements have the force of law. The National Labor Relations Act (passed in 1935) makes some issues unlawful to bargain over (e.g., organizational strategy) but labor and management are free to negotiate over issues like pay, benefits, and discipline/discharge procedures.
For decades, academics have studied the causes of strikes in the private sector. Strikes are most likely during times of slow growth because one or both sides has to give up a benefit they previous enjoyed. Strikes are also likely when one side distrusts the other, there are deep internal divisions within one party, previously unresolved issues are not being seriously negotiated, or when future economic growth is uncertain. At the end of the day, one side needs to be convinced that losing money today is a better option than what they are being offered at the table. During the middle of an expansion it is hard to come to that conclusion.
Due to an influx of advertising money into baseball, clubs have been making money hand over fist. For the past ten years the biggest question for front offices has been if leagues revenues would increase 5 or 10 percent a year. Since 1995, gross revenues have increased 321 percent, averaging around 16 percent annual growth. That’s a staggering growth rate that is not showing trends of abating (although maybe the NFL’s rating declines are a harbinger of bad news).
Compare this situation to previous strikes in professional sports:
The 2011 NFL strike was triggered when owners wanted a larger percentage of the league’s revenues. This would require player’s to take a smaller portion of the pie. The players didn’t believe that the league was losing money and resorted to striking when they could not get a deal at the table.
The 1994-1995 MLB strike was over a salary cap and revenue sharing agreement. A salary cap limits the amount of money available to players compared to a free market, but owners believed that it was essential for small clubs to compete. The context of these negotiations is also important: players believed owners had colluded in the 1980s to keep player contracts below market-levels. Furthermore, the league had previously attempted to unilaterally institute a salary cap, a move that was later struck down by an arbitrator.
If you are an NFL fan, the 1994-1995 MLB strike should concern you: hostility toward the commissioner, deep distrust between players and owners, and very little revenue growth. Sound familiar? Perhaps my analogy is wrong, everyone loves Goodell…
2011 NBA lockout/strike: Owners wanted to decrease players’ share of revenues from 57% to 47%.
2014 NHL lockout: owners wanted to decrease players’ share of revenues and change free agency rules.
…and so on. Negotiations are hard when money is scarce. They are relatively easier when there is a lot to go around.
But what about the news that negotiations are slowing down? Keep in mind that both sides will need to sell the final CBA to their constituents: Rob Manfred can’t have the owners think that he gave away the store. The rank and file will need to believe the PA didn’t shake hands too soon. As the deadline nears, both sides will working the press so their constituents believe the final deal is a good deal. Public posturing (“things are slowing down” “we think we can avoid a work stoppage”) is normal because both sides want to shadow bargain in public while forging ahead at the table.
While negotiations are over dollars and cents, there is also a bit of theater involved.
As we are getting close to the CBA deadline (December 1), both sides are finalizing their packages of issues. In fact, bargaining within one side can be more contentious than bargaining across the table. For example, raising the veteran minimum without increasing the (soft) salary cap can result in suppressing veteran players’ contracts. Or increasing the number of years a player is under team control will benefit older players looking for a final deal. There are divisions between big and small clubs over revenue sharing or how the draft operates. Balancing these interests is difficult and each side will need to finely hone both what they think they can get from the other side and what their side will accept.
Baseball’s CBA covers your bread-and-butter issues like the veteran minimum, rookie pay, how to dispute a suspension, uniform policy, travel expenses, revenue sharing, the draft, and several other issues. In short, CBAs outline the “web of rules” that governs the workplace. The big issues up for negotiation this year:
- An international draft. This could be a contentious issue because it increases the supply of labor (and drive down player wages). Teams want an international draft whereas the PA wants to control the number of players into the league. The compromise that’s being floated is that players must be 18 in order to enter the draft. This would slow the rise of superstar teens while still allowing clubs to draft international talent.
- Players want a higher share of revenue. As outlined by Nathanial Grow (Fangraphs), players’ salaries have not kept up with growing television contract money. Bumping both the vet minimum and rookie minimum seems like a logical way to win a bunch of votes in a contract ratification process. Since many teams are running up against the luxury tax, it also appears likely there will be enough owners who are interested in raising the overall amount before hitting the luxury tax (high salary cap = more money in circulation = higher player salaries).
- Qualifying offers. Teams that sign a player who turned down a qualify offer currently forfeit a future draft pick. This arrangement has the benefit of compensating teams who lose players to free agency but also raises the costs of signing some veteran players. The players believe this arrangement tilts the board unduly in favor of the team losing talent and is weighing down free agent contracts. This seems like a straightforward issue where the PA and MLB can tinker with the draft implications of signing a player who turns down a qualifying offer.
Various other issues are floating around as well: a 154-game season, expanding rosters to 26 players, punishing the Oakland Athletics for not trying to play professional baseball anymore, and no doubt other issues as well.
But the bottom line is we’ll see baseball on February 18th.