Originally Published: November 29, 2011 10:46 p.m.
The NFL and NBA - and mark it down: soon enough the NHL - will have to be envious of Major League Baseball.
Without threats, rancor or ultimatums, owners and players announced last week they have agreed to a new five-year Collective Bargaining Agreement. The league that once upon a time couldn't avoid a work stoppage at the expiration of a CBA, will have enjoyed 21 years of peace and prosperity by the time the next agreement expires in 2016.
Commissioner Bud Selig and Players' Association Executive Director Michael Weiner used the words "historic" and "remarkable" in reference to the current working relationship between the owners and the players. Remarkable indeed, after the sport experienced eight interruptions - five strikes and three lockouts - during the latter third of the 20th century. So what changed in the sport's labor-management relations?
There are three critical components that are necessary to conduct a successful labor negotiation, one that leads to an agreement which benefits both sides.
First, the parties must have trust and confidence in one another. Second, it is imperative that the parties understand they need each other in order to be successful. And third, each party must respect what the other side does and stands for.
After the acrimonious strike in 1994 that wiped out the pennant race and the World Series, MLB and the union decided enough was enough. Both sides recognized that continued labor strife would be counterproductive to their respective interests. Thus, they embarked on a course to rebuild their relationship, ultimately leading to what Selig has referred to as the "golden age" in baseball. Both sides have profited handsomely from labor peace and the new CBA guarantees that financial prosperity will continue.
The new agreement is also about Selig's legacy. What the commissioner wanted, he got - restrictions on draft and international free-agent signing bonuses; the introduction of HGH testing; limitations on the players' use of smokeless tobacco; playoff expansion; realignment; the continuation of the so-called luxury tax; and strengthening of the revenue sharing system.
But like any good negotiation, you need to give in order to receive. In exchange for player concessions to their wish list, the owners agreed to a potpourri of items that will benefit the players, including increased minimum salaries; additional health and safety measures; the virtual elimination of free agent compensation; an increase in the percentage of two-year players eligible for arbitration; and additional insurance benefits. What we have here is negotiation at its best. For every item the owners wanted, the players received a quid pro quo, and vice versa.
Initial reactions to the new CBA from club executives and the media were mostly negative. Critics are predicting gloom and doom for small market teams and an end to competitive balance, primarily due to the restrictions on bonus payments to amateur draft picks. What those critics fail to point out is that the limitations apply to all clubs, making it just as onerous, if not more so, on such teams as the Yankees and Red Sox to exceed the draft bonus pool as it will be for small market clubs.
Beyond limits on overall signing bonuses, there are other provisions in the new CBA that are designed to benefit small market teams, including increased signing bonus pools based on a team's prior year's finish, additional draft picks for lower revenue clubs, and the right to trade draft picks in some circumstances, a first for MLB.
As with any new agreement, there is no definitive method to determine its impact on teams until it has been in effect for a period of time. We may discover that the new CBA places unfair limitations on small market clubs and competitive balance in MLB, the league with the greatest parity in all of sports, will be adversely affected. Or we may find out the critics were wrong, that the new CBA may have struck a balance between the burdens and benefits on all clubs.
One thing is certain. Negotiators for MLB owners and players produced a new CBA without a work stoppage. In 2011, that was the exception among professional sports leagues. The NBA required a 149-day lockout and the NFL a 130-day lockout to reach a labor agreement. That makes MLB the new poster child for labor peace.
Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is an Assistant Professor of Sport Management and Sport Law at Eastern New Mexico University, teaches the Business of Sports at the University of Wyoming, and is a contributing author to the Business of Sports Network. Jordan can be reached at firstname.lastname@example.org.