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CBA Update: Owners scrap proposal to replace arbitration as talks inch forward

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Stiffer penalties for tax “offenders”, bonus pool for pre arb players proposed

It’s Watch And Wait For Baseball Strike Photo by Tim Boyle/Getty Images

After two consecutive days of negotiations- a two hour meeting on Monday when players made proposals and another hour on Tuesday when the owners countered- the good news is that at least the two sides are talking. That’s something that didn’t happen for 43 days following the owners’ lockout imposed on December 2, 2021.

In terms of substance, each side has removed the proposals which the other side found to be most offensive. The players withdrew a proposal to create age based exceptions to the six years of service time required for free agency. Owners dropped proposals to replace arbitration with a formula and eliminate super two eligibility for players with between two and three years of service time.

MLB’s offer to the players on Tuesday included a modest proposal to provide a total of $10 million in bonuses for 30 players- based on WAR- who are not yet eligible for arbitration. The players had previously proposed a $105 million bonus pool. No doubt the owners see the bonus pool as a substitute for moving the eligibility requirement from three years back to two, and the players would like the bonus in addition to moving the eligibility back. Again, the good news is that they’re talking about the topic.

The owners’ proposals both on Tuesday and on January 13 were far less comprehensive than what the players put on the table on Monday. There are more subjects not addressed than those that were included, and not all details have been revealed.

MLB rejected the union’s proposal to reduce revenue sharing by $30 million. That was down from an initial ask of a $100 million reduction. They also rejected a proposal to give players service time for post season play, that could have helped them to reach free agency or arbitration a bit sooner.

Owners again proposed putting badges or patches on players’ helmets or uniforms. That’s something that the players have been willing to give them, and would generate an estimated $6 million to $8 million per team each season.

Competitive Balance Tax

Owners remain not only dug in on the competitive balance tax, but their proposals would significantly harden what has become a defacto salary cap, by increasing the tax at the lowest threshold from 20% to 50%, and adding forfeiture of a third round draft pick and loss of international bonus pool money for teams who dare to spend too much on payroll. They would only increase the lowest threshold from $210 million to $ 214 million- an increase of less than 2 percent, and then up to $220 million over the five year deal for a total increase of less than one percent per year.

Players have proposed a single threshold of $245 million with a 20% tax, scaling up to $273 million by 2026. Neither proposal includes increasing penalties for “repeat offenders”. Clearly, owners want to stiffen the penalties to make the tax more like a salary cap.

Minimum Salary

MLB also increased it’s offer to increase the minimum salary from the current $570,500 to $615,000. They had previously proposed an increase to $600,000 for rookies, $650,000 for players with one to two years experience, and $700,000 for those with two plus years of service time. The latter parts of that proposal remain unchanged. The players have requested $775,000 in 2022 and $875,000 by the end of the five year term. This gap will be closed more easily than the gap on the Competitive balance tax.

According to Susan Slusser of the San Francisco Chronicle, the minimum salary would also be a fixed salary for those players, so it’s also a maximum. Teams could not reward top performers with a small raise, even though they’re already restricted from earning market level pay.

What’s Missing?

Not covered in the owners’ proposal was anything that might help to eliminate tanking or cause teams at the lower end of the payroll scale to boost their payrolls. There is no talk from reports of the session on Tuesday, of an International Draft, or the draft lottery that both sides had proposed in various forms, or service time manipulation. We already know they want to expand playoffs to 14 teams, and they’re willing to implement the universal designated hitter and eliminate payment of free agent compensation. Not every issue was covered in Tuesday’s session and some may have been talked about but not reported.

What’s next?

Tuesday began with reports of Dan Halem, the owners’ chief negotiator, threatening on Monday to cancel games, and ended with owners making proposals that punish teams even more for spending on payroll while doing nothing to encourage other teams to spend more to improve their teams.

There are large gaps in what owners and players are proposing on minimum salary, competitive balance tax, and arbitration eligibility. There is no evidence of a solution to teams that slash payroll and make little effort to field a competitive team. That’s not surprising from owners, but exactly what do the players propose in order to prevent either service time manipulation or tanking?

The two sides have agreed to resume negotiations at a date to be announced, but “will work on a dozen non-core economic issues”, according to Jeff Passan and Jesse Rogers at ESPN. Then they will return to the core economic issues. It is believed that the parties must have a deal in place by February 1st to avoid delaying spring training