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NO DEAL! MLB cancels regular season games after parties fail to reach agreement

Owners’ competitive balance tax proposal remains the biggest obstacle

Syndication: USA TODAY Greg Lovett / USA TODAY NETWORK

After major league baseball players and owners bargained late into the night on the date of MLB’s self imposed deadline, February 28, reports to the media from the owners suggested that a deal might be close. Sounds coming from the players’ quarters were not so optimistic, as the two sides remained far apart on a number of key issues. After the owners made a “final and best” proposal that was unanimously rejected by the players’ association, Commissioner Rob Manfred announced the cancellation of the first two series of the regular season.

Despite the reports of a deal being near, there were always significant obstacles remaining. MLB attempted to portray the differences as a change in the players’ tone on Tuesday. But let’s be clear that the owners declared the lockout, owners imposed a transaction freeze, owners established a deadline, and owners decided to cancel, rather than reschedule regular season games. Of course, Manfred states that players will not be paid for the games that he canceled.

The Deadlock

At the heart of the deadlock is the owners’ proposal to increase the competitive balance tax thresholds by less than five percent, from $210 million to $220 million at the lowest tier, and not increase those thresholds for the first three years of the agreement. With inflation at seven percent in 2021, that means that the thresholds would actually be lower in terms of real dollars, making what the players view as a “de facto salary cap” even harder than it was previously. This is a non starter with the players as negotiations came to an end.

The parties also remained far apart on the proposed Bonus Pool for pre arbitration eligible players, with owners stuck at $30 million ($1 million per team) and players at $85 million.

The de facto salary cap

The history of collective bargaining is littered with debris from the fallout of the parties arguing over a salary cap. When owners insisted on it in 1994 and would not budge, the players called a strike that ended the season- playoffs, World Series and all.

When the owners declared an impasse in negotiations and unilaterally implemented their own terms in 1995, they included a salary cap, elimination of arbitration and the anti- collusion provisions of the previous agreement. They were all set to start the season with replacement playrs. It took a federal court injunction after the National Labor Relations Board (NLRB) found that the owners bargained in bad faith, to reinstate the previous CBA and two seasons playing without a CBA before a new agreement was reached.

Suffice it to say that the players are not going to allow a de facto salary cap to continue, much less one that grows harder in any new agreement.

Bonus Pool

The most contentious issue remaining from the players’ proposals was an adjustment in the “super two” cutoff for players with more than two but less than three years of service time to be eligible for arbitration. The cutoff since 2011 has been at 22 percent of those players with the most service time being eligible. The players started at two years and worked their way down to 35 percent before throwing in the towel right at the time that MLB dropped it’s request for much stiffer CBT tax rates and penalties.

At the same time, players proposed a $100 million “bonus pool” to come from MLB’s central fund, rather than from individual teams, to reward anywhere from 30 to 150 players based on performance. The players’ last offer was $85 million and the owners were offering $30 million, or $1 million per team. MLB always viewed the proposal as a substitute for any tinkering with arbitration. Owners hate arbitration like the players hate a salary cap.

Minimum Salary

While there was significant movement on the minimum salary, with owners coming up to $700,000 per season, increasing to $740,000 in five years. The players were at $ 775,000, increasing to $ 875,000. As we’ve pointed out before, this issue is one that makes sense to have a significant increase. With up to 60 percent of players earning at or near the minimum and the cost to owners being relatively smaller than making concessions in other areas, owners get more bang for their bucks by increasing the minimum salary. A majority of players will get an immediate and substantial pay raise.

Expanded Playoffs

MLB owners have wanted to expand the post season to 14 teams more than anything else on the table and players denied them that victory. MLB went as far as to negotiate a new contract with ESPN to cover the new first round of the post season, while cutting back from 90 regular season games to 30 on the network.

The players offered to expand the playoffs to 12 teams from the current 10, which would mean that two teams in each league get a bye while one division winner and one wild card team would host a pair of three game series against two other wild card opponents. That’s four playoff series of three games each, versus the current one game playoffs in each league.

At one point, MLB reportedly was offering a $40 million bonus pool and $700 minimum salary for a 14 game playoff, but only $20 million and $675 million for a 12 team post season.

The players had proposed that division winners get a “ghost win”, starting the series with a 1- 0 lead, but there aren’t any television dollars in ghost games. Terrible idea anyway, so it suffered a well deserved death.

Other Issues

The parties had agreed on other terms:

  • Elimination of draft pick compensation for teams signing elite free agent players
  • Use of the designated hitter in both leagues
  • One year of service time for the top two rookies each year
  • A draft lottery for the top five or six selections
  • Revenue sharing to remain unchanged
  • Advertising patches on uniforms and helmets

The two sides discussed possible rule changes regarding shifts and pitch clocks and the owners were pleading for an international draft and players to give up their grievances filed against four teams for failure to spend revenue sharing dollars on improving their rosters.

What’s next?

It’s not clear when the parties will resume negotiations after ending their eight day marathon. Manfred suggested that the ball is in the players’ court to make the next move.

As for the Detroit Tigers, cancellation of the first two series would mean the four game series in Seattle and three game series in Oakland will be canceled. If Detroit has seven games canceled and other teams only six, that would also preclude a tie which could lead to a game 163 being out of the question. Based on recent results on the west coast, things could be worse on that front.