The basics of the MLB Collective Bargaining Agreement

With the conclusion of the 2021 World Series, it’s time for baseball to get down to basics…as in the MLB Collective Bargaining Agreement.

That agreement, the document spelling out terms of the relationship between MLB and the MLB Players Association, expires Dec. 1. If a new CBA is not agreed to by that date, the prospect exists for a labor action, either a player strike or – more likely, experts believe – an ownership lockout.

A closer look at the MLB Collective Bargaining Agreement talks

Of course any labor action imposed on Dec. 1 would not, as a practical matter, be especially important since no games are being played over the winter.

That reality gives players and owners until the mid-February start of spring training – and more candidly until the first scheduled regular season game March 31 – to avoid a meaningful work stoppage.

Still there are signals that consensus on a new CBA is unlikely by Dec. 1. Although representatives of the two sides have met periodically all this year, the Players Association, led by former player Tony Clark, has signaled its dissatisfaction with proposals made last month by the league that would change the method by which service time is calculated.

That service time issue is seen as one of the union’s major points of sensitivity with respect to the current deal.

As a purely practical matter, the biggest problem with a failure to come to terms on a new CBA by Dec. 1 is likely to be its chilling effect on the player movement market.

The current agreement stipulates the process by which both arbitration and free agency are determined. Suppose you were a Major League GM…or for that matter a player whose contract has expired. Would you want to sign a new contract, particularly a high-dollar, long-term one, not knowing whether the rules governing either free agency or arbitration are likely to change a few days or weeks later?

If terms of a new deal are not set until, for example, March of 2022, it’s possible that teams could find themselves with significant roster gaps at the scheduled start of spring training.

Negotiations concerning the writing of a new deal have been an on-and-off sore point between players and owners.  Work stoppages were common from the 1970s through the 1990s. But in 2002, the players and owners agreed on terms of a new agreement that narrowly avoided a stoppage, and the three succeeding pacts all have been negotiated without a labor disruption.

Although no formal list of “outstanding issues” exists, it’s easy to surmise what the major sticking points might be. They include:

1.       The share of league revenues committed to player compensation. This encompasses practices euphemistically known as “service time manipulation,” and “tanking.” The former refers to players being artificially being held back even though they are major-league ready. The latter refers to the practice of out-of-contention teams carrying abnormally low team payrolls.

2.       The process by which revenues are calculated. Underpinning all of the issues encompassed in point 1 above is the question of exactly how much money teams make. Since those teams are private entities, they cannot be compelled to open their books to inspection, meaning that he broader question is only answerable by the honor system.

3.       Luxury taxes. The present CBA contains a luxury tax provision that the Players Association has tolerated but does not like. Will it be extended, and if so at what levels? Several teams, notably the 2021 Dodgers, have basically ignored the luxury tax threshold, an action that is better or players than owners In 2021 the Dodgers had a $247 million Opening Day salary, blasting through the $210 million threshold.

4.       Salary floors. In 2021, the average MLB team payroll was about $129 million. But there were wide variations in that average. The Dodgers, as noted above, spent $50 million more than any other team. At the same time, a dozen teams spent less than $100 million, four of them – the Orioles, Marlins, Indians and Pirates, coming in under $60 million. The union would like to see imposition of some level of minimum payroll requirement.

5.       The designated hitter. There is widespread speculation that a new Basic Agreement will impose the DH rule on the National League. On this question, the Union has been interestingly low-key, even though – since DH is among the highest-paid positions in baseball – its players would stand to benefit by its increased use.

6.       Other rules questions. Efforts to legislate restrictions on shifting, use of pitchers and roster sizes all have been talked about and could become part of a new CBA.

7.       The question for the moment is what, if anything, is accomplished over the remaining four weeks of the non-panic portion of the negotiating period. If no agreement is agreed to by Dec. 1, that still won’t (necessarily) threaten the status of the 2022 season. But it would be viewed as an ominous development.