MLB is having a labor problem, and that’s the best of things

On Tuesday, Major League Baseball Commissioner Rob Manfred announced that Opening Day has been canceled — which includes the first six regular season games. It’s the first time since the 1994-’95 seasons that MLB games have been canceled due to a labor dispute.

Being that I have spent more time writing about worker issues — as well as the unbalanced and disjointed relationship between the ownership class and labor — than any other topic over the last handful of years, it is my (obviously biased) opinion that the MLB lockout is currently the most important issue in the sports world. I dare say it is the only important issue in the sports world.

For the sake of clarifying our terms, a lockout is not the same thing as the players going on strike. It was the owners who decided on December 1st to implement the lockout — an unnecessary and symbolic gesture to attempt to get in front of the narrative — when in reality they had three full months to collectively bargain with the MLB Players Association. It was a choice they made as an act of aggression, not a response to anything the MLBPA did.

So whenever someone tells you that both sides need to make compromises, or meet somewhere in the middle, I think it’s important to remember who fired the first shot.

There are several reasons why the owners and players are at odds. Among them are the league minimum salary, the Competitive Balance Tax (CBT), the number of teams who should play in the postseason, the Pre-Arbitration Bonus Pool, and the rules surrounding Service Time.

MLB has long been considered to have the most powerful players union in all of professional sports, but over the last 25 years of previously unprecedented labor peace that sentiment has grown emptier and emptier. As the MLBPA reached the peak of its strength, they replaced labor lawyers like Marvin Miller (who was head of the MLBPA from 1966-1982) and Donald Fehr (from 1983-2009) with Tony Clark — a former player — who has been president of the union since 2013 and has been someone I’ve been critical of in the past.

I felt like things have been moving in this direction since the beginning of 2018. That offseason I wrote an article about how the owners basically refused to spend money on free agents despite there being plenty of big-ticket options available. In a sport that has in the past been punished for collusion amongst owners, it certainly felt at that time like the owners had once again come to an agreement that players like Bryce Harper and Manny Machado — who were worthy of half a billion dollar contracts given the natural uptick of free agent contracts in years prior — were not going to receive their honest market value.

That same trend has only continued over the last two years. When factoring in the luxury (or Competitive Balance) tax — which is another way of saying teams are penalized for spending money on players — or the extreme incentives teams receive for losing baseball games, the sport, as Tony Clark said during Spring Training in 2018, had become a “race to the bottom.”

As a consequence baseball has turned into the least popular, and most unwatchable major sport. While the NFL has turned the page on players like Peyton Manning and (recently) Tom Brady to usher in new stars like Patrick Mahomes and Josh Allen, and while the NBA has turned into the most popular sport globally, baseball finds itself left in the dust.

Competitive Balance Tax

The Competitive Balance Tax is, as mentioned above, a tax that teams have to pay for spending over a certain dollar threshold. The owners are looking to offer a soft salary cap of $220 million for the next three years before raising it to $224 million in Year Four and $230 million in Year Five. The players, meanwhile, are arguing for $238 million in Year One and a $6 million increase in every year after (to account for inflation).

Never forget that salary caps are merely in place as a deterrent for owners to spend money. With draconian taxes on every dollar spent above the salary cap threshold, teams are incentivized to stay under that number. MLB owners would argue that it’s a way for small market teams to compete with big market clubs — hence the “competitive” euphemism — but in reality it acts as an inducement for owners to keep their money in pocket.

League Minimum Salary

The worst-kept secret in Major League Baseball revolves around how little they pay players on their rookie contracts. Currently the league minimum is at $675,000, which sounds like a lot of money (because it is) until you factor in just how much surplus value teams get off of really good, really young players.

Every rookie is under contract with his team for six years, and for the first three — also known as “pre-arb” or “pre-arbitration years — they earn the league minimum salary. Back when I used to write about baseball for an ESPN Sweetspot blog, in the early- to mid-2010’s decade, the value of each WAR — or Wins Above Replacement — was somewhere in the neighborhood of $7 million. So if you take any number of several dozen players playing on their rookie contracts, earning roughly $650,000 per year, and they are worth 3 or 4 wins (or WAR), then the club they play for is effectively raking in something in the vicinity of $25-$30 million of surplus value on their contract.

Sure, once arbitration rolls around in years 4, 5 and 6 those players will make a healthy sum of money. Once they reach free agency they will be compensated with a contract commensurate to their market. But for their first three years they could generate tens of millions of dollars for the organization they play for while simultaneously earning about $1.5 million. Young players make the sport go round, and they won’t complain about it to the press. But oftentimes it’s the organizations themselves that bleed these young players dry and throw them out to the free agent scrap heap knowing their best years are behind them.

The MLBPA wants an escalator salary, which starts at $725,000 per year and increases by $20,000 per year, while the owners want a lower starting point and a more gradual raise. If truth be told, from my vantage point, rookie deals shouldn’t last six years and they shouldn’t be anything less than a million dollars per year — given the abundance of surplus value owners receive — but this is one of those cases where something is better than nothing. A $725,000 starting point is better than a $700,000 starting point, and a $20,000 annual increase is better than a $10,000 annual increase.

Postseason Format

Owners make a substantial portion of their profits from television revenue during the postseason. As such they want 14 teams — out of 30 — in the playoffs. The more teams involved means the more games that will be played, and the more games that get played equals more money for the owners.

The players are willing to compromise with a 12-team format, which already betrays a 162-game regular season. What is the point of playing so many games, factoring in all the luck, and hot streaks, and cold streaks, if something like half of the league is going to participate in the postseason? Anyone who knows anything about baseball will tell you that the best team rarely wins the World Series, because the vagaries of small sample size will trump even the most talented pitchers and position players. Over a 5- or 7-game series, anything can happen.

I hate to sound like an old-timer here, but I saw nothing wrong with the 8-team format (3 division winners and a Wild Card in two leagues). I also saw nothing wrong with the 10-team format (3 division winners, 2 Wild Cards in two leagues). Allowing 6 teams per league seems a bit ridiculous, but 7 is a joke.

The Way This Will Play Out

Apologies for sounding like a stick in the mud, but what the players are doing right now feels more like a statement to the owners that they aren’t going to take any more of their shit than an ironclad My Way Or The Highway. Nobody ever went broke betting on the rich to get richer. The MLBPA, despite my wishes, are not going to win on every single one of these bargaining issues.

The likeliest outcome is that the owners agree to raise the salary cap, and give in a bit on the league minimum wage, but that only a handful of teams — such as the Dodgers and Yankees — actually go through with paying players and pushing that threshold upward. There is just so much incentive to not winning that half the league, or something close to it, will simply continue putting out a shit product for their fan bases.

For baseball to truly fix itself will require teams to spend money. So long as no one is forcing ownership’s hand — via a salary cap floor such as they have in the NBA — they will continue piling up all that television revenue and watching their portfolio’s grow.

It seems crazy to say now, given how much I write about the NFL, but baseball was once my 365-days-a-year sport that I followed. I once knew all 25 players on my favorite team, the Texas Rangers, and I once knew virtually all of the best players in the game.

Unfortunately, over the last five years baseball lost me. They failed at the one job they had: asking me to care. They short-changed their best players during free agency, they did a poor job of marketing their best teams and stars, and they encouraged everyone who had no chance of winning to just go out there and lose baseball games. It was okay when there were only a handful of clubs in the sport exercising a rebuild. When something like half the league was doing it, MLB offered a nice yellow-brick road leading straight to sports like the NFL and NBA that for most of my life were merely in the background.

It’s for those reasons that I am proud of the players for standing their ground, for however long it lasts. I am proud that the world gets to see a labor dispute, even if networks like the MLB Network and ESPN won’t put much of a spotlight on it until things get wrapped up and the season is underway yet again.

I write this in solidarity with the MLBPA, and for workers a world over, who constantly eat shit from the top one percent and move on with their lives because they don’t have better options. If only workers ever realized the true power that they have. That when they unite, they win. Right now the players union appears strong, but a time will come — sooner than later, in all likelihood — where they accept their measly sum and start playing baseball again.

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