(The following is being syndicated from The Captain’s Blog).
Over the past two days, the NFL and its players association have been engaged in a high stakes game of chicken. Will the league lock the players out? Will the union decertify first and force the fate of a new CBA into the courts? Or, will both parties agree to an extension, thereby allowing each side to stare down the other for at least another week?
Meanwhile, almost 10 months before its current CBA expires, baseball’s management committee and players union met for the first time, and had what new MLBPA head Michael Weiner described as a “productive session”. What a difference a decade makes! Not too long ago, it was the NFL that enjoyed relative labor peace, while baseball had to battle tooth and nail for every new CBA extension. Maybe salary caps aren’t a panacea after all?
As recently as 2002, baseball’s owners and players remained bitter enemies when it came to negotiating a CBA. That year, the players went so far as to set an August 30 strike deadline, but an agreement was eventually reached without a work stoppage. It was the first time since 1972 that the two sides had been able to make a deal without a lockout or a walkout, and the momentum from that negotiation was carried over to 2006, when the current contract was completed two months before the previous one’s expiration.
So, what has happened since 2002 to foster baseball’s current labor peace? Perhaps it was the near doubling of league-wide revenue (even in the midst of a drastic recession) over the past eight seasons?
MLB Yearly Revenue, 2003-2010
Source: Forbes and MLB.com
After so many years of acrimony, it seems as if baseball’s owners and players have found a way to share the game’s enormous wealth. However, that doesn’t mean the upcoming CBA will be completely uneventful. Just because neither side is likely to seek a major change to the sport’s financial system doesn’t mean each party won’t have a wish list they’d like to incorporate into the current setup. Listed below are some possible issues that could come up during the negotiations.
Owners’ Wish List
1) International Draft
The upcoming CBA could go a long way toward defining Bud Selig's legacy as commissioner.
The upcoming CBA could go a long way toward defining Bud Selig’s legacy as commissioner.The spiraling cost of international free agents has led to some rumblings about the need for a draft that includes foreign born players. Not only would an international draft drastically reduce the leverage currently held by players excluded from the Rule IV structure, but it would also remove the imperative for clubs to build training facilities in foreign countries. Paying less money in salaries and eliminating the need to invest in overseas academies would be a double-win for the owners. An added benefit of an international draft is it wouldn’t impact the current members of the MLBPA, who might be more inclined to bargain away the rights of future members, especially if it is presented as a fairness issue when compared to amateurs who are beholden to the Rule IV draft.
Side Note: Of all the potential changes that could come as a result of a new CBA, an international draft would be the most disastrous. As I’ve argued previously, baseball’s immense investment in foreign countries has resulted in a golden age of talent. If owners are given an incentive to cease this investment, the overall talent pool is likely to suffer as a result. It remains to be seen how strongly the MLBPA would oppose an international draft, but perhaps the organization’s growing percentage of foreign membership will prevent it from making a shortsighted decision.
2) Mandatory Slotting
Just as international free agents have become more expensive, so to have Rule IV amateurs. Although baseball currently has a “suggested” slotting system, just about every team exceeds its recommendations. According to some reports, mandatory slotting has become a pet project for Bud Selig, who has been concerned about the inequitable distribution of talent caused by teams passing on superior players with “signability issues”. Of course, the MLBPA is likely to suspect that Selig’s only concern is the monetary cost. Unlike the international draft, the union will have more incentive to resist this change because Rule IV eligible amateurs are already subject to the six-year reserve clause, so fairness will not be an issue.
3) Expanded Playoffs
This is another potential issue that could find minimal resistance from the MLBPA, provided the owners make a corresponding concession. The added revenue from an expanded playoff format (both directly from attendance and television rights as well as indirectly from an alleged increase in regular season interest) could fatten the pockets of both parties, so the main point of contention would likely be agreeing upon the formula to divide the increased money.
4) Increased Drug Testing
Now that baseball has finally seemed to turn the corner in its battle against PEDs, the owners may no longer be interested in enhancing the sport’s already robust drug testing program. That doesn’t mean Bud Selig won’t, however. As he seeks to write the final chapter that will define his legacy as commissioner, Selig could try to convince the owners that more steps are needed in the fight against PEDs. Because an accurate test for HGH has not been developed, there doesn’t seem to be a major area where baseball could augment its current drug policy, but if we’ve learned anything about this issue, it’s that nothing should be taken for granted.
5) Lower Luxury Tax (Competitive Balance Tax) Threshold
Baseball is expected to reach a new CBA without the usual acrimony that has existed so often in the past.
Baseball is expected to reach a new CBA without the usual acrimony that has existed so often in the past.This would likely be the most contentious demand because the luxury tax has worked as a defacto “soft cap”. With only the Yankees and Red Sox regularly exceeding the limit, the MLBPA is unlikely to accept an extension of this mechanism. What’s more, big market owners may not exactly be on board with this change either. However, that doesn’t mean the owners can’t use the proposal as a bargaining chip that is quickly removed from the table in exchange for a concession from the players.
6) Eliminating the “Super Two”
Arbitration remains a bane for the owners, and significant take backs on this issue would be unrealistic. One area in which the owners could seek a reprieve is the elimination of “super twos”, or those players who become eligible for arbitration despite having fewer than three years service time. In an attempt to keep the arbitration clock from ticking, teams have regularly held back promoting their best prospects so as to avoid tripping the super two threshold. In some cases, teams have compromised the success of their season to avoid going to arbitration one year early. Eliminating this potentially expensive inconvenience would allow general managers to make decisions based on talent, not finances, but the players aren’t going to just give it away. However, because of the artificial means owners have used to curb super two status, the MLBPA may be receptive to exhanging it for something else (i.e., essentially giving the owners something they’ve already “taken” by other means).
Players’ Wish List
1) A Salary Floor Penalty
The MLBPA has always been opposed to a salary floor because the natural complement is a salary cap. However, after the embarrassing leaks of the Pittsburgh Pirates’ financials were exposed, the union may seek to balance the luxury tax with a penalty on teams who don’t spend enough. This proposal might have some support among big market owners if part (or all) of the penalty is returned to the contributing clubs. Presumably, if forced to “use it or lose it”, small market teams would spend the revenue sharing dollars they receive, which ultimately would benefit the players.
2) Adjustments to Free Agent Compensation
An emerging inconvenience for the MLBPA has been the increasing value that teams are placing on draft picks. As a result, many clubs have become reticent to sign “type-A” free agents because of the corresponding loss of draft picks. This relationship has effectively created a drag on free agent contracts, especially among those candidates who seemingly don’t deserve to be assigned “type-A” status. As a result, the MLBPA could either seek to limit the number of players classified as type-A, or at least readjust the formula to prevent an undue burden from being placed on a relatively less attractive class of free agent.
3) Adjustments to MLB’s Allowable Debt Threshold
MLB currently has a debt threshold that all teams are expected to maintain, but recent financial troubles involving the Dodgers, Rangers and Mets have called into question whether appropriate standards have been set. Considering that a team’s ability to meet payroll could be influenced by the amount of debt it holds, the MLBPA could decide to make this a defining issue in the new CBA. They likely won’t push too far, however, because the ability to borrow helps fuel revenue growth and leads to increases in franchise value. As a result, the MLBPA may push for better oversight and increased safeguards (e.g., an MLB guarantee of at least a percentage of individual team’s payroll obligations) instead of more strict regulations.
4) Increased Minimum Salary
Baseball’s starting salary in 2011 is $400,000 plus a cost of living adjustment. As a matter of rule, the minimum payout has increased with every new CBA, so there’s no reason to think otherwise this time around. In addition, the MLBPA will likely lobby for across the board increases in benefits: from meal money to healthcare.
Michael Weiner will be negotiating his first CBA as head of the MLBPA.
Over the course of the next nine months, baseball owners and the players union will likely engage in a spirited give and take that will not only include some of the issues mentioned above, but also several others not readily apparent. Although none of these issues should cause a major sticking point, both sides would be wise to maintain an open dialogue and continue making diligent preparations for the final bargaining stage. The biggest mistake each side could make is assuming that an agreement will come easily. After all, despite the current environment of détente, the next labor war is always just around the corner.
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William, great piece.
I personally need to give some additional study to the question of an international draft. I don’t see the MLBPA would have anything to say about such a draft — we already have most MLB players coming through the domestic draft, and the union doesn’t seem to have an issue with this. The bigger issues are the ones you’ve written about, which has to do with what’s in the best interests of baseball. I’m also curious about whether a draft might run into questions of international law. We can discuss this in later comments if you’re interested.
I’ve written over at IIATMS that the union is strongly opposed to mandatory draft slotting — they’ve called it a “salary cap”, which is about the worst thing the union can call something (kinda like Hank Steinbrenner saying that something is “socialism”). But from what I’ve read, the union is willing to consider expanded playoffs.
I’ve written at ESPN and IIATMS about the need to strengthen MLB’s drug testing. The big problem with the existing system is the VERY limited amount of testing that’s done in the post-season. I know that Dr. Christiane Ayotte, who runs the Montreal WADA lab that also does all of MLB’s drug testing, is very concerned about this issue. But on this point, I’ve seen or heard nothing from MLB. MLB would have to be willing to push this issue hard to increase off-season testing.
Regarding the luxury tax, from what I’ve read I think we can expect MLB to push the top tax rate to 50% from the current 40%. Since most of this money goes to the union (in the form of funding for player benefits), the union may not object to this increase. But I don’t see the tax threshold being reduced. The current tax threshold is set at a point where it pretty much only affects the Yankees, which I think is part of the reason why the union has accepted the tax — the union figures, probably correctly, that the tax won’t discourage the Yankees from spending in any event.
The “super two” rule is most certainly going to get discussed. The union doesn’t like the fact that teams are holding their prospects in the minors for an extra month or two to avoid “super two” designation, and the owners don’t like the fact that the “super two” threshold is so difficult to figure out. The question is, can this be fixed without antagonizing one side or the other?
Regarding a salary floor, the union has expressed opposition to a floor in very strong terms. I don’t think this is going to be an issue for the union. I DO expect that ownership will argue revenue sharing among themselves.
Agreed, the “type-A” free agent designation is going to be an issue, a tough one to solve. Wherever you draw this line, the guy who’s just on the other side of the line is going to suffer. Agreed, the minimum salary and benefits levels will be issues, but probably much easier to solve.
I don’t think the MLBPA is going to touch the team debt issue. So long as their players get paid, I don’t think the union is going to care about how it happens. For every issue I can think of, the MLBPA has taken the attitude that “free enterprise is good.” But as with revenue sharing, I think that this may be a contentious issue within the MLB ownership group.
I note sadly the absence of one issue I wish was on your list: minor league salaries and benefits. You’re right to talk about how foreign talent levels would be affected by investment levels in foreign baseball academies. I wonder how U.S. baseball talent levels would be affected by decent conditions and a living wage for minor leaguers.
I honestly think an international draft would be a disaster, so I hope it stays off the table, but it very much would be a labor issue. The Rule IV draft existed before the MLBPA really became strong, so I wonder if Marvin Miller would have accepted it if he was in charge at the time. Although there would likely be legal challenges, playing MLB is an at will endeavor, so I am not sure how foreign countries could prevent it from happening. I guess they could make it near impossible to sign players, but that would be a lose-lose for everyone. What would likely happen is governments would cut deals with MLB to ensure minimum levels of investment, which ultimately would satisfy everyone but the players. I doubt much progress toward an international draft will be accomplished this time around, but it still is an issue that concerns me.
With all due respect to WADA, I take their “concerns” with a major grain of salt. In fact, the organization justifies its existence with its concerns. I am sure we disagree strongly on this topic, but I am more than happy to see baseball develop its drug program without any input from WADA. We both seem to agree, however, that there doesn’t seem to be any desire on the part of owners to push expanded testing. Quite frankly, I agree with them.
Raising the top tax would be more acceptable to the MLBPA (although not to the Yankees and Red Sox), but I think the owners would prefer lowering the threshold. I don’t think it will pass, but I’d have to think it will be an issue the owners try to advance.
The Super Two rule should just go away. The players aren’t going to give it back, but it has essentially been usurped anyway. I can see the MLBPA pragmatically trading something they’ve lost in practice for another gain. So few players benefit from super two, but it now seems as if many are impacted by the attempt of clubs to prevent them from attaining it.
The players wont ask for a salary floor, but they may ask for more defined spending requirements for teams that receive revenue sharing. In other words, they might ask for spending floor as it pertains to revenue sharing money received, not an across the board floor on payrolls.
The debt issue is definitely more complicated, but the fallout from the Rangers and Mets cases (with the corresponding talk about those teams struggling to meet payroll) might convince the MLBPA to take an interest in it.
As for the minor leagues, the MLBPA really can’t negotiate their salaries because those players aren’t members of the union. Besides, that’s not really what discourages domestic talent. The best way to increase domestic talent would be to have teams’ spend more time and money mining it, but that is discouraged by the Rule IV draft. If baseball really wants to increase U.S.-based talent, it should abolish all amateur drafts (which brings us full circle with the international draft).
William, we disagree on so many issues, it’s probably best to address one at a time. I’ll start from the top and address the international draft.
You probably know that the league and the union discussed an international draft as part of the 2002 CBA negotiation. According to Maury Brown at Biz of Baseball, the two sides agreed that there should be an international draft, but “couldn’t get it wrapped up” before the CBA deadline. Both sides agreed to work on the proposal after the deadline, but apparently this work came to nothing. http://bit.ly/dLWqIP As you’ve pointed out, the practical problems in implementing an international draft are daunting: at what age would players become eligible for the international draft? Would you have mandatory slotting for this draft? One combined draft, or two drafts?
You also probably know that baseball is looking to make changes in the way it operates in Latin America. The most publicized problems in Latin America are age and identity fraud, but this is really only the tip of the iceberg. As Moscowitz and Wertheim recent wrote in their book “Scorecasting”, the percentage of Latin American players caught using performance-enhancing drugs is much higher than that for any other group of players. Moscowitz and Wertheim guess that this is because of the high rates of poverty in Latin America, and that may be true.
We can’t ignore the fact that baseball’s operations in Latin America have become a scandal. These operations are seen (accurately, I think) as corrupt and exploitive.
You’re right to point out that an international draft could hurt the development of talent in Latin America. It’s believed by some that the inclusion of Puerto Rico into baseball’s amateur draft caused baseball to decline sharply in Puerto Rico. Others believe that baseball would continue to flourish in places like the Dominican Republic even after the establishment of an international draft. Craig Calcaterra had a piece on this that is well worth reading. See http://bit.ly/hRNs4e.
As for international legal issues … they exist, but they’re complicated and it’s not clear how they might affect an international draft. It appears that many view an international draft as a step towards protecting Latin American youth from the unethical behavior I spoke of above. See for example http://bit.ly/hv9lFF. At the same time, many countries have concerns about outsiders stepping in to dictate a policy restricting how their citizens might be employed. There are laws on this topic in the European Union; I have zero knowledge about how this would work in Latin America, but as you can read here, there are voices in baseball that expect opposition to an international draft from Venezuela and the Dominican Republic (the two countries in Latin America that supply the largest number of players to MLB). http://atmlb.com/4TaFbz
All this being said, I don’t see this issue as primarily a union-management issue. The last union comment on the international draft came from Michael Weiner in 2010. http://bit.ly/csE1zy At that time, Weiner said that the union was “not philosophically opposed” to an international draft. “There’s a lot of sentiment to say whether a player was raised in Venezuela or the Dominican or Florida or Massachusetts, there should be one set of rules.” At the same time, Weiner acknowledged that there are difficult practical considerations to implementing an international draft.
The issue of an international draft is not an easy one to address. But I see the practical and legal issues, and the importance of reforming how baseball operates in Latin America, as being much more significant than any potential opposition from the union.
William, while my international draft comments hangs in moderation, I’ll post quickly on drug testing.
You wrote that “baseball has finally seemed to turn the corner in its battle against PEDs.” I’d be curious to know why you think this. It’s true that baseball players don’t run around like they used to, with sleeveless shirts to show off their “guns”. Doing so can ruin HOF chances.
You wrote that “there doesn’t seem to be a major area where baseball could augment its current drug policy”. Not true. There IS a major and obvious area for improvement, and that’s off-season drug testing.
Under the current drug testing agreement, owners and players agreed to a limit of 375 off-season drug tests for the three years that were then remaining under the CBA. So, figure 125 off-season drug tests to cover the 40-man rosters of the 30 teams. Meaning that about 10% of the players are tested every off-season. Meaning that (given turnover in 40-man rosters) over 70% of current players have never been drug-tested in the off-season.
If drug testing is supposed to prevent the creation of future versions of Barry Bonds, then you need consider that someone like Bonds will be doing the bulk of their doping in the off-season. Doping with stuff like anabolic steroids is primarily something athletes do when they train.
If you read people like Victor Conte, who ought to know, they’ll tell you that the success of an anti-doping system turns on the system’s ability to test frequently and without warning. Baseball tests players on average three times during the season. Two of these are unannounced tests — good. The third is a test scheduled for sometime during the first five days of spring training, and is close to a waste of time (like announcing a year in advance where you’re going to set up your DUI roadblock).
There are a lot of other improvements that could be made in the system — important changes — but unannounced off-season testing is the most important.
For the record, I like to count myself among WADA’s most determined opponents. It would be an unmitigated disaster if WADA ever took over baseball’s drug testing. But you can’t ignore WADA, if only because they’re most of the smartest people in the room when it comes to doping. Consider it this way: if there’s another BALCO-like scandal involving a new crop of baseball players (all doping during the off-season), there may be irresistible public and Congressional pressure to hand baseball’s anti-doping system over to USADA. It’s in the interests of both the union and management to keep this from happening. Not that I think they see this.
Maybe I am more cynical on the PED issue than most, but the reason I say baseball has turned the corner is because I don’t think the public really cares anymore. All of the focus is on the sanctity of past records and little attention is paid to the current game. The only realy incentive for the owners to push enhancements to the drug program is a perception problem, and I don’t think one currently exists.
As for offseason testing, I guess the owners could pursue that (again, I don’t think they’d have anything to gain by it), but if I was head of the MLBPA, I would oppose more extensive offseason testing on the grounds that it is an invasion of privacy. I think the random, but limited off season testing is sufficient. I realize others with a different viewpoint on the PED issue might take this issue more seriously, but I am one who firmly believes it has already been greatly blown out of proportion.
As for the internation draft, in my original post, I mentioned the “fairness” issue as a reason why this would definitely be entertained by the players but it would still be a labor issue, so there’s no reason for the MLBPA to simply give into the owners demands without getting something back in return. Also, as the number of Latin players in the MLBPA grows, it may be less inclinded to accept an internation draft.
I definitely do not agree with the general statement that baseball’s operations in Latin America are corrupt and exploitive. There have certainly been some cases of that, but on the whole, I think baseball’s current operations in Latin America are beneficial to both the players and the game. I’ve written numerous posts on this at The Captain’s Blog, but my bottom line belief is any system that takes away the incentive to invest in these countries will lead to a drain on the talent pool. Besides, I view the draft itself as being corrupt and exploitive, but that’s another story altogether.
William, I shouldn’t have stated so strongly that baseball’s operations in Latin America are exploitative and corrupt. I don’t know enough about the subject to say that. I’ve read some strong characterizations of these operations, and I should only have said that this is an opinion held by some knowledgeable people. I’m sorry if I left any other impression. (Going to have to learn more about this topic.)
The public does not care about PEDs in baseball because there’s a prevailing opinion that baseball has a strong drug testing program that has mostly driven PEDs out of baseball. The first part of this opinion is an exaggeration and I suspect that the second part of this opinion is not true either. I agree that the PED problem is overblown, in that the perceived ability of PEDs to enhance a ballplayer’s performance is probably overblown.
I think we can agree to disagree on the remainder. Great stuff, William. I’ve enjoyed having the chance to discuss this with you.
Thanks Larry, really enjoyed the give and take too. Of course, our time probably would have been better spent debating just how fat Joba really is.
[...] The Yankee Analysts has a post up that clearly and simply sets forth the major issues of contention for the upcoming labor negotiations between the players and the owners. [...]
Re a possible A Salary Floor Penalty:
Given that implementing a return of funds could easily get convoluted, do you think there is any chance that the funds could get returned to fans who have purchased season tickets or mutli-game ticket plans? As a practical manner, it could be applied to the next season’s tickets as a reduction in their cost.
This accomplishes the following:
1- The incentive to reduce salaries for profit is removed
2- Teams are not forced to pay higher salaries
3- Loyal fans get rewarded