How times have changed in Major League Baseball (MLB). No, we don’t mean the game on the field, although recent rule changes have sparked fan debate and lit up social media. The big change, one that has fattened the bottom line for everyone involved in the game – owners, players, media outlets and everyone else who generates revenue from the sport – is labor peace.
Between 1972 – six years after the formation of the Major League Baseball Players Association (MLBPA) – and 1994 there were eight work stoppages in the sport, five strikes by the players and three lockouts by the owners. However, since 1995 MLB has had labor peace and not coincidentally, the sport has flourished.
In the past 21 years, the parties have successfully negotiated five Collective Bargaining Agreements (CBA) without an interruption in play. During the same period, the other three major league team sports – the NFL, NBA and NHL – have shut down a total of five times.
The latest CBA, a 5-year deal that began after the 2011 season, expires on Dec. 1. And yet we haven’t heard a peep of disagreement or discord in the negotiations on a new labor agreement. In this case, no news is good news. The last labor interruption in MLB began in 1994. It wiped out the pennant races and the World Series, and spilled over into the 1995 season. Both parties suffered tremendous financial losses and those memories run deep. It behooves players and owners to keep the game on the field and out of the courts. Neither party has voiced concern that a shutdown of the industry is imminent, nor should they. A new deal will get done, even if it isn’t announced by the Dec. 1 expiration date.
So what will the new agreement look like? A lot like the last one. The current CBA made a number of significant changes, including adding restrictions on free agency and creating bonus pools for signing draft picks and international players. A second wild card team was added in each league, rosters were increased by one for doubleheaders and blood testing for HGH was instituted.
The players, understandably, would like to see fewer restrictions on free agency. The last CBA introduced the concept of a qualifying offer. Teams can offer their own free agents a one-year, guaranteed contract for the average salary of the 125 highest-paid players. This year that figure was $17.2 million. Players are free to either accept or reject the figure. If they reject it and sign with another team, the signing team loses its first pick in the amateur draft, provided they don’t have a top-10 pick. The player’s former team receives a supplemental pick after the first round of the draft. The increasing value of draft picks - who constitute cheap talent if they make it to the majors - has made a number of teams reluctant to sign free agents.
You can expect tweaks to both the free agent and international bonus pools. Many teams feel hamstrung by the budget cap, which is based on the order of finish in the previous season.
The higher a team finishes in the standings, the less money they are allocated. Teams that finish lower in the standings are allowed to spend more on draft picks, which, along with picking earlier in each round, effectively rewards losing. That’s essentially how the Cubs built the game’s best farm system and a powerhouse Major League club, one that finished with the best record in baseball this year and won the World Series.
Another possible change is an increase to the competitive balance tax, commonly known as the luxury-tax. The current threshold sits at $189 million. Teams whose payroll exceeds that figure are subject to a “tax” based on a sliding scale. The roster increase for doubleheaders may become permanent and the cap on September rosters – currently 40 – may be reduced. What you are unlikely to see is a reduction in the playing schedule. There is too much money to be lost by all parties for that to be palatable.
More importantly, you won’t see a work stoppage. As difficult as it was to learn the lesson, both parties now understand that it behooves their constituents and the sport to keep the games on the field.
Kobritz is a former attorney, CPA, Minor League Baseball team owner and current investor in MiLB teams. He is a Professor in and Chair of the Sport Management Department at SUNY Cortland and maintains the blog: http://sportsbeyondthelines.com The opinions contained in this column are the author’s. Jordan can be reached at firstname.lastname@example.org.