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The Lockout Update You Don’t Want (But You Get Anyway)

A Saturday stream of consciousness on the state of the labor negotiations.

MLB Owners Meetings Photo by Julio Aguilar/Getty Images

Thursday, February 17, 2022.

We should have spent the day getting updates from Jupiter, FL along with photos and videos from some of the early workouts from Cardinals Spring Training.

Instead, the players remained locked out of Major League Baseball and we got reports from a fifteen-minute meeting between the Player’s Association and the owners.

Yes, the lockout continues. Spring Training is already definitely delayed.

A week from now, if no deal is in place (and we should not expect one), MLB will almost certainly be looking at missed regular season games.

Let’s start there because that’s probably what you care about the most. Then we’ll waste word count on what little we know about the ins and outs of the negotiations.

What’s the deadline for a new deal before games will be delayed or canceled?

It’s closer than you think. Opening Day is scheduled for March 31 when the Cardinals (as always) go on the road to Pittsburgh to play the Pirates.

Recent reports from MLB insiders indicate that teams believe they need a full 4-weeks for Spring Training. That’s an increase of a week over what players received in 2020 when COVID shut the sport down and a rash of injuries followed.

Walk backward four weeks from the scheduled Opening Day and you reach March 3 as a possible drop-dead date. The problem is that the game can’t reach an agreement and then transition to full squad training the next day. Players will have to make their way across the country to their spring sites. International players will have to secure visas – a process that can take some time. There are a dozen other logistical issues that factor into this equation. And while teams can work on many of these issues, the league-mandated rules about player interaction during the lockout mean some can’t be worked out until an agreement is reached.

Today (I’m writing this on Thursday) I read a report that suggested it would take another full week from when a new CBA is installed for Spring Training to actually begin.

So, back up again. If March 4 is the date training needs to begin, the CBA needs to be in place a week before that – February 24th.

As I sit here typing this, that’s one week from now.

MLB has one week to figure out a labor negotiation that they’ve known was coming for years.

If you’ve been holding out hope, now is the time to give that up. Regular season games will almost certainly be delayed if not outright canceled. I wish I had better news for you on a Saturday, but there really is no good news in baseball right now. None at all.

UPDATE: Since I wrote this article, MLB itself came out with a hard deadline for Spring Training to start with no delay or loss in regular season games. That date is 4 days after the one I propose above: February 28. One week from Monday. That changes nothing about the conclusions I draw above.

What’s Causing Negotiations to Stall?

The central issue between the players and the owners remains the Competitive Balance Tax – CBT.

That tax, otherwise known as the luxury tax, penalizes teams from carrying a payroll above set limits. Owners want to keep the CBT relatively low – just over $200M – while claiming the tax is necessary for small- and mid-market teams to compete financially with the large-market franchises.

(Let’s just set aside the fact that MLB has seen massive increases in revenue throughout the sport and the “have not” teams that frequently cry poor can almost certainly afford much higher payrolls than they pay.)

Players, on the other hand, rightly view the CBT as a de facto salary cap that artificially lowers salaries. Teams that could spend – like the Cardinals – don’t do so because they can remain consistently competitive while keeping a tight reign on their budget. Other teams – like the Pirates – benefit so much from the revenue sharing included with the CBT that it’s more cost effective not to spend (and not compete) while relying exclusively on the draft to build their roster.

The Players Association believes this system is broken and wants to see more consistent increases in the CBT threshold. They view the luxury tax as one of the most critical issues for their earning potential and seem willing to take the game to the brink of collapse to get it changed.

MLB and the owners are committed to seeing the CBT stay the same or decrease relative to inflation. It’s the best way for them to limit player earnings and maximize their profits. They can afford to wait the players out on this issue.

Where do the negotiations stand?

The problem is that the two sides aren’t even talking about the CBT very much. They know they are miles apart on the issue and have set it aside to try and make progress in other areas.

Sorry… I have to laugh at myself even as I typed that. Progress? Ha!

A step below the CBT in the negotiations is increased compensation from arbitration-eligible and pre-arb players. In their latest proposal, the players made a slight concession. In previous proposals, they demanded that all players with 2 or more years of service time enter the arbitration process. For the Cardinals, that would push players like Tommy Edman, Ryan Helsley, Genesis Cabrera, and Andrew Knizner into the arbitration a year early.

On Thursday the players modified this demand by lowering the percentage of players with two or more years of service who would be arbitration eligible from 100% to 80%.

Under the expiring CBA, 22% of players with 2 or more years of service time were eligible to receive four years of arbitration. These players are referred to as “Super Twos”.

While cutting their proposed percentage of “Super Twos” to 80% is a significant step toward compromise, they balanced that by increasing the proposed “bonus pool” money available for pre-arb players from $100M to $115M. This money would be spread out to 150 pre-arb players. Previously, that pool would go to just the top 30 pre-arbs by WAR value.

The owners are reportedly standing firm with their offer of $15M for the player pool.

It’s all very confusing to the casual follower. Many people looked at the player’s current offer ad concluded – “how could they demand more money at this point in the negotiation process? They’re going backward!”

That’s not the case. By dropping the percentage of “Super Twos” from 100% to 80%, the players are giving up a significant financial gain. Most likely that step backward in dollars is much larger than the $15M proposed gain in pre-arb money.

That’s what makes this so difficult to follow through the casual reports we receive through Twitter. The details matter but hidden within those details are hundreds of millions of dollars that add up to a huge amount.

Take the negotiations on the proposed league minimum salary. The players have proposed a minimum salary of $775,000. The owners are willing to concede an increase, but only to $615,000. In a multi-billion dollar industry, why quibble over less than $200k?

Well, Dayn Perry of CBS Sports reports that $200K difference per pre-arb player adds up to $150M!

Now start adding in other hidden money. There is another $100M difference between the players and owners on the pre-arb bonus pool. And what about the Super Two proposal? By my count, there are 158 players eligible for Arbitration 1 this year. There are at least 80% of that many who would qualify for arbitration under the player’s prosed system. How much would, say, 126 players make in added payroll through arbitration? The answer is a lot.

This hidden money, and the CBT issue, are why there won’t be a deal any time soon. Based on the information in this last proposal from the players, the two sides are between $300-500M apart in their financial proposals.

Negotiation Sessions Might Start Ramping Up

That’s a lot of money and a lot of ground to make up. It’s why games are almost certain to be canceled or delayed, possibly for months.

It’s Saturday though. And we should have glorious images from spring training – pictures where you can actually smell the freshly mowed grass through your computer screen.

I can’t leave you without some hope. Here’s the best I have:

More meetings are coming soon. If both parties are willing to speed up the pace of negotiations, it might be a sign that they are willing to start moving on some of their offers. Might.

Happy Saturday.