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MLB owners request Federal mediation, won’t counter players last offer

The players may choose to reject mediation, based on past experience.

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MLB: JAN 28 MLB Lockout Photo by Rich Graessle/Icon Sportswire via Getty Images

It’s been two months since major league baseball owners locked out the players and commissioner Rob Manfred called a halt to all player transactions, bringing what was a free agent signing frenzy to a screeching halt on December 2, 2021. After 43 days of silence, the two sides finally sat down on January 13 with the owners making a proposal that covered some but not all core issues. That was the first of four meetings with little progress. Owners were to make a counter proposal to the players’ last offer but have announced that they will not do so, instead opting to request assistance from a federal mediator.

The Federal Mediation and Conciliation Service provides mediation assistance with labor disputes, including those involving professional sports. Mediation is not arbitration, though. It is non binding and the mediator may make some suggestions but has no authority to order either party to agree to anything. The process typically takes several weeks, meaning that we can forget about spring training starting on time, and the start of the regular season is in jeopardy unless some progress is made very quickly.

Whether this is good news depends on whether the players agree to mediation- which would seem unlikely based on past experiences- and how soon they can choose a mediator and get to work. The 1995 and 1996 seasons got underway without a CBA in place after the court issued an injunction against the owners using replacement players and unilaterally implementing salary terms.

“It was a joke. It had no value,” former MLBPA head Don Fehr said in a 2019 interview with The Athletic. “And there were all kind of agendas at work in the mediation that had nothing to do with the agendas of the parties trying to resolve the dispute.”

Mediation did help to solve the 2013 National Hockey league strike and the 2015 Major League Soccer strike. The NHL feud took five weeks to settle.

Owners may believe that the players will reject the mediation proposal because of a bad experience in 1995 when they believe the mediator was heavily biased toward the owners’ position. In that case, it could be a good PR move for MLB as it looks like they’re trying to settle and the players are being difficult. Either way it accomplishes their goal of stalling the players out a few more weeks rather than beginning negotiations in earnest right now.

Bob Nightengale of USA today reported that a player with direct knowledge of the talks referred to the mediation request as “a publicity stunt” from the league.

The two sides are far apart on a number of key economic issues including the minimum salary, arbitration eligibility, the competitive balance tax threshold and penalties, revenue sharing, and broader issues such as service time manipulation and many clubs’ lack of spending on player salaries- loosely referred to as “tanking”.

Some of those issues are more easily resolved than others, and there are some complete non starters in the proposals from both sides. The players are still proposing a way for elite players to earn a year of service time with performance, effectively becoming free agents prior to six years. There’s not a chance the owners would agree to that.

Both sides are in agreement on some issues:

  • The universal designated hitter in both leagues
  • Players to wear advertising patches on their uniforms and helmets, netting $6M to 8M per team.
  • Eliminating payment of compensation for elite free agent players
  • Some form of a draft lottery for three to eight teams
  • Playoff expansion to 12 teams, or 14 if the owners get their way.

MLB owners have clearly wanted to stall the talks until the start of the regular season, and loss of players’ pay checks, is threatened. After demanding in December that players withdraw all proposals regarding free agent eligibility, arbitration eligibility, and revenue sharing before any further offers were made, they then declared a lockout and made no proposals for six weeks. And when they did make proposals, there was no significant movement and they remain stuck on hardening the competitive balance tax (CBT) penalties.

Proposing mediation instead of making a counter offer could be seen as an attempt at breaking the logjam, or just another stalling tactic. Neither interpretation is too far off.

Owners have proposed

  • Increasing minimum salary from $570,500 to $615,000 for first year players, $650,000 for those with 1- 2 years of service, and $700,000 for those with 2+ years of service
  • Keeping arbitration eligibility as is, after abandoning proposals to replace it with an algorithm.
  • Keeping free agency eligibility at six years, after proposing to replace it with an age based system
  • Increasing the CBT threshold from $210M to $ 214M, scaling to $220M in five years. That’s a jump of less than one percent per year.
  • Increasing the tax from 20% to 50% and adding loss of a third round draft pick and loss of international signing bonus money for first time offenders.
  • A bonus pool of $10 million for players not yet eligible for arbitration
  • Converting the minimum salary to a fixed salary, making it a maximum for those players
  • Expanding playoffs to 14 teams
  • A draft for international amateur players
  • A draft lottery among the three teams with the worst records
  • A team would not be eligible for the lottery 3 years in a row
  • A bonus draft pick for teams that have a player on the opening day roster who achieves high performance levels in his first three seasons
  • Uniform patches, universal DH, and elimination of free agent compensation payment

The owners would also like an international draft, but not as badly as they did prior to the last round of talks when they settled for hard bonus limits on teams that have held firm.

Expanding the playoffs is really the owners “must have” wish other than preventing the players from making economic gains in other areas. But it’s also the players’ biggest bargaining chip and while they have proposed expansion from 10 to 12 teams, they’re not going to give it up without some concessions in other key areas.

The players have proposed:

  • $245 million CBT threshold, scaling up to $273M over five years, with a 20% tax
  • Minimum salary of $775,000, increasing to $875,000 in five seasons
  • A bonus pool of $100 million for pre-arb players
  • A reduction in revenue sharing of $30 million
  • A draft lottery among teams with the eight worst records
  • Expanding playoffs to 12 teams
  • Arbitration eligibility after two seasons
  • Players are open to the bonus draft pick, uniform patches, universal DH and elimination of free agent compensation payment

Players are most concerned about the fact that salaries have declined overall over the duration of the last five year CBA while MLB revenues soared prior to and since the interruption of the pandemic.

The players’ proposals, however, don’t necessarily align with their stated objectives, as we explained earlier this week. There is nothing on the table that would put a serious dent in the problem of teams that decide they’re not going to spend on salaries, nor would anything help to prevent service time manipulation.

Sure there is talk of a draft lottery, and an extra supplemental draft pick for teams that call players up by opening day who perform at a high level. But if an owner wants to run their team on the cheap and pocket all the revenue sharing money, as many of them do, there is nothing on the table that would prevent them from doing that. Ultimately, there may be little the players can do to force greater competitive balance throughout the major leagues.

It would seem that the gap could be immediately narrowed by removing the proposals that are most offensive to the parties. Reducing revenue sharing, stiffening penalties for crossing the CBT threshold, creating exceptions to six year free agency, and converting the minimum salary to a fixed amount. Those are the biggest non starters that will never fly.

Owners seem quite unlikely to go for a two year eligibility for arbitration, but they might tweak the super two cutoff to say 2.5 years, which is 30 days less than this year’s 2.116 (two years, 116 days) cutoff. About 35 more players would have been eligible in 2021.

If they can get that far, the rest is just numbers, even if they appear to be far apart. Players would surely agree to expand playoffs and get an extra $20 million cut of the first round gate. They should hold out for as big a bump to the major league minimum as possible. The end of the qualifying offer system and the universal DH are small wins for the players as well. There are small gains the players can make here, but addressing the larger issues at play remains a tall order.

For now, we’ll have to see if the players agree to the proposed mediation. If they decline, it’s difficult to see how the owners and players move forward from there. And even if they accept, we can presumably expect a quiet couple of weeks as the two sides lay out their case. One way or the other, progress seems certain to be stalled long enough to put the league right up against the threat of losing regular season games.