2016 Reds / Baseball - General

Is MLB Headed for a Strike?

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.

Longer Answer:

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:

  1. 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.
  2. 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).
  3. 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.

 

18 thoughts on “Is MLB Headed for a Strike?

  1. Many issues to deal with, but none really that can’t be negotiated through. An International draft, or one draft with the international players included with the first year draft players could work. Upping the veteran and rookie minimum salaries is fine. The QO/Compensation rules now are a prickly issue on the players side. That will need some tweaking. Maybe a 2nd round pick forfeiture instead of a 1st round pick might be the compromise. A 26-man roster is probably going to pass. The injury rate is probably going to necessitate it. However, that is 30-new jobs created with a swipe of a pen. I don’t see the Owners giving up revenue on a 154 game schedule, all the contract concessions seemingly might go the players union way.
    But you know, MLB could have a very balanced schedule with a 160 or 164 game schedule. That would include a small increase in interleague play though. For examples sake lets take the Reds and NL Central. Other NL teams in the East and West Divisions would play the NL Central teams 6 games apiece. 10 x 6 = 60 games. Now the Reds and NL Central teams would play all the AL teams 4 games apiece, two games at home and two away. 15 x 4 = 60. That is a subtotal of 120 games. The only games left are the ones within your own division. So the Reds would play the other 4 NL Central teams 10 apiece. 10 games would make it a 160 game schedule. 10 games though makes it more balanced to schedule the same number of home and away games than an odd number would.
    Now every team would have practically the same schedule. Very even and balanced. Each team plays the other League the same number of games vs. all the same teams. Each team will play the other divisions within their own league the same number of games. And each team will play the same number games vs. teams within their own division.

    • Two-game series are travel nightmares, and the PA would never agree to it. Playing 10 games against division rivals would create 2 x 4 of the 2-game series, plus 30 against the AL, or a total of 38 2-game series. Not gonna happen.

    • I’ve thought about something similar before, but have tried to keep it within the guideline of 3-game series.
      12 games in division – 12 x 4 = 48 (2 3-game series at each park)
      6 games in league – 6 x 10 = 60 (1 3-game series at each park)
      3 games interleague – 3 x 15 = 45 (1 3-game series, home field alternates yearly)
      48 + 60 + 45 = 153 total games

  2. There is no issue here that necessitates a strike, period. Heck, there is not one issue that the owners can even agree on, and they have folded over a salary cap for years. Just renew the darn thing.

  3. 154 game schedule is an interesting thought. The season is already so long and it would allow for less wear and tear on the players. It could either shorten the season or provide more off days. I wonder how much revenues would be impacted for the teams if they lost four home games. I personally would eliminate the inter league games to accomplish this

    • Most the conversation I’ve seen about the 154 game season has it tied to expanding the WildCard play in to a best of 3 series. I think the change with the WC play in will come sooner rather than later whether or not the regular season is changed.

  4. It wouldn’t seem that there should be a strike (or more likely actually) a lockout ahead. However, I recall reading some while back that there had been a number of multi year contracts negotiated in recent years with a substantial signing bonus set up to be paid in annual installments over the term of the contract. The gist was that this sort of arrangement protected a player in lockout/ strike situation because the annual signing bonus installment would be paid regardless.

    • Those signing bonuses also help players who reside in low tax states and play in high tax states. If structured as an irrevocable bonus, you’re generally taxed in your state of residence and not where you play. If you live in Florida and play for the Yankees that a 10-15% tax savings…..on a few million bucks that’s real money.

      • This seems to actually make more sense than being a work stoppage hedge. From what I read the stoppage protection angle was essentially to support short term cash flow without having to break any piggy bank sort of investments etc.

  5. A year ago it was written and said that expanded use of the DH was all but a done deal. However recently it hasn’t been mentioned at all that I have seen.

    I wonder if changes to DH are slipping in under the radar.?

  6. Labor unions are at their best when they look out for the little guy. I don’t see many little guys in the MLBPA. Do they represent minor league players at all? They are the ones who seem to be exploited as below-living-wage-workers. I don’t begrudge the MLBPA the right to negotiate their slice of the pie, but maybe they should work toward a smoother (not so top-heavy) pay scale among members… they should be working toward pushing Minor league annual salaries toward $75K/yr. The pay is so skewed toward players who have reached free agency… you would think that a BIG portion of the union are in years 1-6 of service time, but the union seems to protect the stars right to stratospheric contracts more than, say, young all-stars stuck at MLB minimum.

    • The MLBPA doesn’t directly represent minor league players. An increase in minor league salaries takes slices of the pie away from their dues paying members so its not a concern for them. Also, by giving the owners the benefit of cost control for 7 years you limit the supply of free agent eligible players and therefor increase the demand-price. The MLBPA does its job incredibly well.

    • But some of the fringes they’ve negotiated really do help the “little guys”. Guys with one day of MLB service get healthcare insurance for life for their self and family. The basic pension vesting also starts on day 1 and 41 service days qualifies for the pension ($12K minimum a year payable starting at age 62 up $185K a year for a guy with 10 years service). There also a 401k plan. All 40 man roster employees share in the distribution of royalties and endorsement monies earned by the MLBPA.

      40 man roster guys on option make a minimum of $80K a year after their first season (which is $40K) regardless of the level of the minors they are optioned to.

      However, yes, they could do more for the minor league guys.

      Google MLB benefits plan. There are several good presentations and explanations.

  7. Baseball continues to get worse every year. I’m already nearly done with it because of the ever changing of rules, inflated salaries,cry baby athletes who need to grow up, and other things such as owners who manipulate the system to take advantage of taxpayers so they can have more revenue pocketed. It’s time for the consumers to cut back and let these teams do what they please. Consumers are responsible for the mess it’s in anyway. Avoid going to overpriced games, quit paying g for the media , just ignore it all together and then let the ayers and owners argue over the college time bargains act.
    The mlb has gotten so bad over the last 20 years, and it is continuing to even get worse. Continue with bright ides such as interleave play, replays, changing of rules like being unable to slide into baseballs, not being able to run over the catcher, pitch limits, etc, etc. Majority of players are nothing more than grow little kids anyway.
    Why not have a,strike and see if you can’t destroy a game that was once great but is now mediocre at best. Go ahead and just do it.

    • You listed a number of flaws, yet attendance has never been higher ( even adjusted for population inflation). Players are paid enormous sums because the game generates enourmous sums. Owners demand stadium deals because they can….as any business owner would.

      The notion that players are cry babies is absurd. They possess incredible skills that come with enourmous pay. With enourmous pay comes power and influence. Joey Votto likely has more power than Bryan Price because he’s paid 20x’s more and is not easily replaceable. Had Joe Morgan made 20x’s more than Sparky Anderson then Morgan would’ve possessed far more power and influence. Great players are tremendous assets and are treated as such.

      Baseball has problems, but your list of greviances conflicts with the incredible rise in revenue and value over the past 20 years

      • Patrick: your complaints are the same things I’ve been hearing since at least 1980 or maybe even before that. People aren’t going to stop going to games en masse nor are they going to ignore the game. That’s why they call us fans. I’m going to continue to go to games because I enjoy them. I don’t find players of today to be crybabies any more than pampered athletes of any era. As Chuck pointed out, they make a lot of money because of the revenue generated. If it is that frustrating for you, maybe it is time you looked for something else to follow. I’m going to continue to follow the sport I love. It’s not perfect but it still is the one I’m willing to pay to see on a regular basis.

        • Couldn’t say it better myself. I’ll add that if he really is fed up with MLB, there are a myriad of options in MiLB and independent leagues. There is some good baseball being played. If you don’t want to pay the MLB prices and see the MLB players, there are other options. I will watch pretty much any baseball but MLB is the best because it features the best players in the world.

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